The insurance industry of yesterday can be summed up in one sentence – Hindsight is 20/20.
Traditional insurance carriers focus on making homeowners whole … after an event. It’s a reactive business model that impedes resilience in today’s ever-changing marketplace.
The onslaught of IoT in 2016 saw the rise in home automation and the advent of advanced technological mitigation. Automated leak sensors began to inform homeowners of potential leaks in their homes through an app on their phones. Cameras placed around the property alerted homeowners relaxing on a beach 500 miles away of a package placed on their doorstep. From a desk in the office, homeowners turned up the heat of the programmable thermostat, so they would walk into a comfortable environment once home.
While insurance carriers began giving discounts for such smart home devices, which can mitigate water damage, theft, and other claims, next-gen insurance carriers, agencies, and insurTechs challenge these long-held paradigms with a focus on prevention, leveraging predictive analytics and marrying data with preventative insights directly to policyholders. Rather than waiting for a home claim to occur, future-ready organizations prevent homeowners insurance claims from happening in the first place, and it’s only a matter of time before the entire industry follows suit.
Proactive > Reactive
Many insurance carriers use phrases such as #ThinkSafe or #MakeSafeHappen, but how many actually encourage their policyholders to do just that? Nearly nine out of ten carriers focus on improving the home insurance buying process and nearly 70% are investing in changing the buying process. Yet one of the biggest concerns for most carriers is increasing customer expectations, and many of the top 50 carriers fear they’ll lose customers and fail to win new ones.
The way to boost customer retention and entice potential new policyholders is by delivering best-in-class service that goes beyond the traditional reactive policies of yesterday. Today’s AI-driven capabilities allow insurance companies to adopt a granular – and innovative – approach to claims prevention and customer engagement.
A Lexis-Nexis’ study found that self-service apps for customer-led inspections and photos impact the way almost all carriers (93%) do business. Self-service apps will continue to disrupt carriers’ organizational models with the key to exceeding customer expectations and welcoming new policyholders being: engagement with customers before a home claim happens.
Rather than requesting the homeowner take pictures of their $10,900 water damage claim (this is the average cost of a water damage claim, which happens to one in 50 insured homes per year, or 2%), carriers can use predictive analytics to identify which homeowners are more likely to have a water claim and offer steps to reduce their risk. Geo-centric notifications can also encourage homeowners to check their pipes during periods of extreme cold temperatures and apply preventative measures to avoid an issue. When it comes to fire claims, which cost on average $78,838 each, carriers can remind homeowners to clean their dryer vent annually and install smoke alarms. Even the number of burglaries can be reduced by taking precautions such as installing outdoor lighting, motion sensors and appropriate perimeter landscaping.
Why continue to emphasize the past when your company can save your policyholder from future perils and your company from future claims?
Shifting focus to preventative practices with the help of digital enhancements will amplify your brand with policyholders and prospects through enhanced personalization. By increasing positive engagements that encourage risk-averse behaviors, you’ll lower your exposure to home claims and reduce losses while also meeting customers’ rising expectations.
As structure fires caused over $12 billion in property damage in 2019 alone, it’s only a matter of time before the insurance industry evolves beyond its current reactive policies and aligns its business to take advantage of preventative technologies, data insights and predictive analytics to boost bottom-line growth.
Will your organization evolve, or will it be left behind?
If you operate in the insurTech space or any other industry within the greater digital transformation landscape, you have already learned that to drive performance – trust is a business imperative.
Unfortunately, trust can be difficult to attain in a digital world when the speed of innovation outpaces consumer awareness. It is absolutely essential to first strike a balance between the need to drive sales and building your brand properly through appropriate consumer education. The urgency to push new products and services through targeted ad placements and social media posts, without first properly educating consumers on your brand and mission, can and frequently does lead to distrust.
Though today’s digital-reliant consumer digests more advertisements than calories per day, consumers rarely trust them. KPMG’s Me, My Life, My Wallet found consumers had the least trust in advertising (26 percent), while healthcare (60 percent), technology (59 percent), and banking (51 percent) were ranked highest.
Given this data, it is obvious that today’s overwhelming culture of targeted, digital advertisements to promote emerging products and services, perpetuates an atmosphere of distrust. Perhaps having digital presence and clever ad-placement strategies alone are not the holy grail of customer engagement young startups believe them to be.
While some businesses can forgo trust in favor of convenience in the digital space, young insurTechs, IoT innovators, and other technology-driven companies at the forefront of the digital transformation landscape must achieve both to thrive in today’s digital-driven market.
Consumer skepticism vs. consumer awareness
Since consumers are having a hard time spotting the difference between targeted ads and genuinely valuable content being placed onto their screens, all types of digital content are questioned. Failure to strike this balance further promotes a continued lack of consumer awareness and adds to a growing sense of consumer skepticism.
Case in point: Less than one in four people fully understand the term Internet of Things (IoT), with almost 90% of survey participants concerned about privacy and their IoT devices.
This warrants the question whether targeted advertisements are as effective at driving consumer awareness as social media platforms would lead you to believe. Industry experts would argue that the spreading culture of targeted ads has triggered a growing consumer pain point – privacy.
When it comes to data, it’s personal
As privacy remains paramount with consumers, insurance organizations looking towards technology and IoT solutions to promote loss prevention and profitability, must foster digital trust for these innovations. It’s a matter of survival, and transparency is key. Despite having numerous IoT solutions available today designed to prevent losses or curb damages, such as automatic shut-off valves or other proptech gadgets, consumers remain skeptics due to lack of awareness and growing privacy concerns.
More than half of consumers want companies to provide more information on how their data is used and stored. Fifty-five percent want more security steps online, and 45% want companies to go insofar as to provide why they are requesting their information. A staggering 27% of consumers don’t completely understand how companies use their personal information.
In today’s digital world where large-scale hacks are routinely breaking news, consumers want more control over their personal data. Salesforce found 86% of consumers want more transparency from companies regarding their personal information and its use, but an unfortunate 61% believe they’ve lost control. Sixty-three percent believe companies aren’t transparent about how they use their personal information.
“Privacy is starting to collide with data ethics as organizations begin to explore if they should be using personal data and if so, how and for what?” says Mayuran Palanisamy, Privacy Lead for KPMG, in Building the trusted personal data compound. “It’s a new frontier which is going to strike hard at the bottom line for organizations that do not get it right.”
Turn transparency into (digital) trust
Few customers give companies a second chance. In fact, 65% of respondents would stop using a brand if it was dishonest on how it was using its data, but McKinley & Company found that half of their consumer respondents are more likely to trust a company that reacts quickly to a security breach and discloses the incident to those affected.
Thus, the more trustworthy and transparent a business is, the more likely consumers are to use it again and the lower its churn will be. (With high customer acquisition costs in the digital world, organizations need to become a trusted source to relay content and educate consumers effectively. This is critical to the overall business strategy and every organization’s sustainable growth.)
Trust inevitably leads to a more personalized customer experience and potentially, a more profitable one. Almost 7 out of 10 (69%) of consumers would share significant data about their health, exercise, and driving habits in exchange for lower prices from their insurers. More than three out of four consumers said they were more likely to make repeat purchases and recommend a brand that personalized their customer experience.
Perhaps most shocking is the consumer demand for a personalized customer experience. Seventy-one percent of consumers now expect personalization and 76% get frustrated when they don’t find it. Thus, insurance companies must accelerate their personalization initiatives and while also prioritizing customers’ privacy to drive profitable and sustainable growth.
High-performing organizations understand that to maximize a customer’s lifetime value and achieve trust with their consumers, they must go beyond transparency. They must use the data in service of the customer, and in the homeowners insurance field, this means generating value throughout a customer’s homeownership journey.
Instead of focusing on reaction, insurers can focus on prevention through tailored home recommendations and personalized home maintenance reminders. Future-focused insurers reduce their exposure to claims while also strengthening their relationships with policyholders, which will in turn increase the digital trust their clients have for them.
Super Bowl champions change. The stock market fluctuates, and there’s a new Picture of the Year every March. However, there’s at least one constant in the universe: customer acquisition costs are high in the insurance industry. With some experts estimating the total cost at $900 per customer, retention remains a business imperative in the insurance space.
Unfortunately, holding onto customers is easier said than done. An early 2022 survey from Prosper Insights & Analytics found that almost 10% of all home insurance policyholders were planning on buying or switching their insurer in the next six months. The number increased to 12.5% for millennial policyholders, who represented the majority of home buyers in 2022.
It doesn’t help that insurance is generally a commoditized market. In fact, the industry isn’t so different from the canned goods aisle at the supermarket. There are 5,000 varieties that all look very similar.
So how can you differentiate your offering to not only hold onto policyholders but also drive customer acquisition? The answer is simple: Deliver a superior customer experience (CX) that adds value to policyholders through trusted, positive engagements. Now that is hard to do since the majority of interactions between insurer and insured are neutral or negative. However, vipHomeLink, the leading digital engagement and prevention platform to the industry, is changing that through continuous, positive engagement that can help to deliver top-line impact and bottom-line growth to insurance carriers.
Top line impact
We know you’ve thought about how to better engage your policyholders. Since billing interactions are considered negative to neutral and a claims interaction is practically always negative, even when the policyholder receives exceptional service – the struggle is real when it comes to creating positive interactions with your policyholders. (A birthday card just doesn’t cut it anymore.)
vipHomeLink’s branded platform differentiates your business and impacts both retention and business production. While you focus on what you do best – helping homeowners through difficult times in their lives – vipHomeLink’s branded platform maintains a positive, consistent dialogue with your policyholders. Through our home management app, policyholders see their insurer as a trusted partner who provides them with essential home knowledge and guidance, not just once or twice a year, but on a weekly basis.
Leverage home content to connect with policyholders
The vipHomeLink digital home management solution engages its members – and your policyholders – four to five times a month through a comprehensive, multi-channel content strategy, including:
Personalized reminders for routine, but necessary, home maintenance that helps to prevent costly repairs and save homeowners money.
Tailored home improvement recommendations that can improve the safety and increase the value and efficiency of the home.
Expertly-generated, branded emails with consistently strong open rates, covering a broad range of relevant home topics.
In-app tips, blogs, and podcasts from home experts to engage and empower homeowners about the many facets of owning a home.
According to IBM Institute of Business Value, as many as 42% of customers don’t fully trust their insurer. With vipHomeLink, insurers can flip the script on this statistic and create a deeper connection with their policyholders, fostering brand loyalty through an enhanced CX strategy.
Satisfied customers who enjoy positive interactions with their insurance company will not only stick around longer, but also boost referrals, which will help to grow your revenue and expand your product lines.
Engaging policyholders with hybrid experiences
Leading insurers understand that customers want a variety of engagements with their insurer, depending upon their personality, the time of day, even the nature of the request. That’s why vipHomeLink offers digital engagement (the app) as well as a virtual, interactive experience – the Virtual Home Checkup (VHC).
Similar to tele-medicine, the VHC is a simple, informative 25-minute virtual Zoom experience that takes place right inside the home. One of vipHomeLink’s Home Experts shares preventative home maintenance recommendations and helps homeowners ensure their home is well cared for and their family is safer. The Home Expert highlights certain safety concerns, such as potential electrical issues, plumbing leaks, and fire hazards along with several other checks and recommendations.
By speaking with a vipHomeLink Home Expert, policyholders enjoy a personalized, positive, branded experience that helps to keep their family safer and their home cared for. Coupled with direct and agent-based interactions, insurers can deliver the omnichannel and varied experiences policyholders crave.
Bottom line impact
Of course, we’d be remiss if we didn’t tackle vipHomeLink’s significant impact upon your bottom line. While brand loyalty and retention are business imperatives – 90% of insurers now have a C-suite CX representative – insurers typically focus their business models on driving down the cost of claims.
Experts suggest that one third of all homeowner claims could have been avoided. If insurers can discover the secret sauce to help homeowners prevent claims before they happen, then they can not only achieve bottom-line growth but also an unparalleled edge in the market. To achieve claims prevention – or avoidance – insurers need to attack two out of three of the reasons home insurance claims occur. (The third reason, of course, is bad luck or certain types of severe weather events.)
Awareness of homeownership responsibilities
Many of today’s first-time homeowners lack the knowledge of simple homeownership responsibilities. While most homeowners know they need to pay their bills, how many actually know which tasks they need to perform?
A recent survey found that one in five people believe it’s not important to change their HVAC air filter. Twenty-nine percent admit to never changing their air filter, and of the people who change their air filters, only 31% do it every few months.
An Ipsos survey found that one-third of homeowners wait for something to break with 28% citing the lack of home maintenance knowledge as the reason. Over half of all respondents (52%) say they are concerned about staying on top of home maintenance.
Without simple home maintenance knowledge, policyholders are unable to prevent home insurance claims because they simply don’t know, for example, that they need braided metal hoses on their washing machine, that they need to clean their dryer exhaust vent at least once a year, or flush their hot water heater.
Unfortunately, some homeowners are negligent, and many times, it’s not even purposeful negligence. If homeowners don’t know how to fix an issue or perceive the fix to be too expensive, they may avoid it.
According to a study by Consumer Reports, the average home needs $3,150 worth of repairs that have not been made yet, and approximately one in four homes need serious repairs. In fact, 45% of homes are less safe as a result of neglected repairs. Unfortunately, 86% of homeowners held off making repairs due to financial reasons.
Depending upon how bad an issue is – such as a small leak – it may not affect the homeowner’s everyday life. Of course, insurance professionals know that a small leak can lead to expensive water damage, mold, and a myriad of other home problems, some of which aren’t covered by a standard insurance policy. Not only can that lead to an expensive claim but also additional out-of-pocket costs for the policyholder. (Sixty-seven percent of homeowners paid more for a repair because they waited.)
Ultimately, disrepair of a home can lead to a negative interaction between the insurer and the insured, which can be avoided by empowering the homeowner with home knowledge, tools and guidance.
Empowering and enabling homeowners to take care of their largest investment
Knowledge is power, and for the insurance industry, it’s also bottom-line growth. As mentioned earlier, vipHomeLink helps homeowners know how to take care of their largest investment. Personalized reminders for home maintenance and in-app tips help homeowners learn how to complete routine maintenance tasks – or at the very least, to know when to call a professional. With the right information, policyholders can stop a small leak from becoming a major headache.
If a homeowner installs a braided metal hose on their washing machine, they’re less likely to have a burst hose and water damage. If they know how and when to clean their dryer exhaust vent, they can prevent a costly home fire. If they’re reminded to do so through push notifications and emails, a higher percentage of homeowners will do so.
Influence positive homeowner behaviors toward safety and prevention – improving your loss ratio and providing value to your policyholders – with a branded vipHomeLink solution.
If you think it’s getting hot in here, you’re not alone.Already this year, India and Pakistan hit triple-digit temperatures with a deadly heat wave that lasted more than three weeks and caused birds to fall from the sky. Last year, the Pacific Northwest saw record-setting temperatures that soared above 110 degrees with a “heat dome” that buckled roadways and killed more than 200 people.
“At this point, understanding climate change’s role in a heat wave has become highly routine,” says Stephanie Herring, a NOAA climate scientist, in “How 2021’s floods and heat waves are signs of what’s to come.” “Around the world, it’s extremely rare to find a heat event not made worse, to some degree, by climate change.”
Temperatures that used to be seen once every 300 years are now coming every three years, but oppressive heat waves aren’t the only severe effects of climate change. More droughts, changes in precipitation patterns, stronger and more intense hurricanes, an increase in wildfires, rising sea levels – all these endanger homeowners and have also created devastating losses for the insurance industry.
Continued survival for humanity (and the insurance industry) depends on the reduction and mitigation of risks.
Estimated global insured losses topped $112 billion in 2021, the fourth-highest loss since 1970. Devastating hurricanes and winter storms contributed to more than half of the total losses. Industry experts also emphasize the disturbing trend of the fast-rising secondary perils – severe flooding, snowstorms, and wildfires. In recent years, at least one secondary peril has led to losses northward of $10 billion each year, triggering insurance companies to rethink their policies in volatile areas.
Wildfires continue to increase in severity and loss cost as the effects of climate change worsen. The 2020 record-breaking wildlife season cost insurers in the U.S. up to $13 billion, with economic losses exceeding $20 billion. A rare winter wildfire in Colorado at the end of 2021 cost insurance companies upwards of $1 billion.
In order to thrive, the insurance industry will need to make hard choices. Carriers can either withdraw or cancel insurance in high risk areas (which has been met with backlash in states like Florida) or help to significantly mitigate the impact from climate change-induced events. By leveraging mobile technology, big data, AI and behavioral science — as vipHomeLink offers — insurers can empower today’s digitally-connected homeowners to reduce their risk and exposure to climate-damaging events, which will in turn safeguard insureds and enable continued growth and stability for carriers.
So, here we address two questions: What can the Insurance Industry do more of? How can insurance carriers help?
#1: Mitigate wildfire risks
Knowledge and actionable advice are key to combating the rising threat wildfires pose and are equally important for insurers to sustain their business.
Here, insurers can make a critical impact. The Department of the Interior estimates that up to 90% of all wildland fires are caused by people, which means the billions of losses incurred by insurers can be avoided by increasing the public’s knowledge of wildfire causes and preventative measures. Push notifications during red flag alerts can enable homeowners to understand the real-time risks to their homes and neighborhoods and know how best to safeguard their property. Step-by-step guidance through email can help homeowners make decisions for the betterment of their communities or drive change that may not only affect their own property but their neighbors’ homes as well.
#2: Combat hurricane and wind damage
Wind continues to dominate homeowners’ woes and insurers’ nightmares with claim frequency and severity seeing dramatic increases in 2020. Loss cost, especially, saw a significant increase of 63%. Some experts attribute this increase to climate change. Though the frequency of hurricanes remains unchanged, more hurricanes in the North Atlantic each year are reaching “major storm” status – or Category 3 to 5 on the Saffir-Simpson scale. Research shows a 2% increase in wind speed yields a 10 to 12% increase in losses, and insurers may see losses grow an additional 19% by 2050.
The intensity and complexity of these claims require insurers to empower consumers to take advantage of technologies and preventative measures that can help thwart rising wind speeds and rising losses. Open protection techniques may help to mitigate some wind claims and eliminate others altogether with the help of impact-resistant doors, shutters, and roofs. Even knowledge of where to park one’s car can save homeowners from costly damage and repairs. Insurers who actively guide customers on their homeownership journey have the strategic advantage of both lowering the frequency and severity of claims, while also strengthening their customer relationships with the help of current and emerging technologies.
#3: Prevent water loss
Water damage and freezing claims is one area where smart home technology implementation can make a vital contribution. Water damage claims account for almost a quarter of all homeowners insurance claims and almost a third of the costs. Though 2020 saw a dip in losses compared to 2019, reports attribute this to homeowners spending more time in their homes and possibly the increased use of smart water leak systems.
However, a 2020 Chubb study found that few homeowners take a proactive approach to water damage.
Approximately a third checked an appliance water hose.
Approximately 15 percent conducted water heater maintenance.
Less than 10 percent installed a water shut-off device or insulated their pipes.
Unfortunately, less than 20% of homeowners took any water damage risk mitigation steps in 2019 – perhaps hampered by COVID-19 and a general reluctance to have service professionals enter their home. This is concerning because the climate impact of in-home water leaks is also significant. Minor water leaks account for nearly 1 trillion gallons of wasted water each year or equivalent to the use of nearly 11 million households!
Some leading insurers are leveraging digital tools, such as vipHomeLink, to remind homeowners to take preventative steps to lower their risk of water damage. With personalized, actionable insights, these future-focused insurers also deliver the personalized customer experience today’s consumers demand.
Many also leverage smart-home technology to help alert homeowners to a potential issue, such as a water leak, before it becomes an expensive repair or claim.
#4: Promote energy efficiency
As the effects of climate change persist, many homeowners in the southern and western states have endured rolling blackouts and brownouts. These can lead to expensive insurance claims with security system failures and the loss of water leak detection systems.
While many Amerians have embraced electric vehicles, few have made meaningful efforts to reduce their energy consumption (and their reliance on fossil fuels) at home. According to the National Resources Defense Council, homeowners can help to cut 550 million metric tons of carbon pollution by the year 2050 simply by using efficient appliances, electronics, lighting, and other equipment. This amount is equivalent to the electric power emissions of six U.S. states, including California, Texas, and Florida.
Interestingly, many energy efficiency efforts also align closely with home maintenance and safety recommendations, which would lower a policyholder’s risk of home fires and water damage. For example, home maintenance tasks – such as cleaning out a dryer exhaust vent, using LED light bulbs, and replacing HVAC filters regularly – all help to lower energy consumption and prevent home fires. By providing policyholders with energy efficiency information and recommendations, as well as the necessary materials and professionals to perform these tasks, insurers can reduce their exposure to risk while also helping to combat climate change.
#5: Improve the world, one home at a time
Undoubtedly, insurance carrier boardrooms are already devising strategies to combat climate change in order to save the industry. Many members may be asking: who are the bad actors regarding climate change, should we still invest in these companies, and more importantly, should we insure them?
As management teams and boards engage in these discussions, they must also take immediate action to identify the needs and opportunities in the residential sector. An ecosystem of services – such as that delivered by vipHomeLink and branded for carrier partners – can help insurers to deliver and promote these prevention and mitigation steps to their policyholders through push notifications reminders, tailored home recommendations, and regular email communications. A home management platform that advises policyholders to take preventative steps can save not only numerous homes from wildfires and major water damage, but also entire communities. By connecting homeowners with smart home technology and digital resources, insurers can excite and engage homeowners to ultimately take vital steps to protect their home, and not just when a major storm is barreling their way.
The insurance industry must take preventative action and help protect their insureds from the effects of climate change. As wildfires, floods, and severe temperature fluctuations intensify, insurance companies are faced with difficult decisions. Only by leveraging all the resources at their disposal – including digital tools, behavioral science, big data, awareness-building campaigns and IoT devices – may we sufficiently contribute to the solution.
Modern consumers want – and expect – the world to be in the palm of their hands. They download apps and pay their bills online. “Buy it now” comes in the form of a button, not a brick-and-mortar store.
The Amazon Effect, or learning how to “deliver and capitalize on heightened tech-driven consumer expectations,” has penetrated all facets of business. From buying groceries in the comfort of the home to virtually touring a new house without stepping foot inside it, today’s technology-inclined consumers demand quick, easy, and seamless transactions online, many times without human interaction.
The insurance industry is (fortunately or unfortunately) not immune, which means in order to succeed in the ever-evolving marketplace, insurance carriers and independent agencies must upgrade their products and services to meet increasing consumer demands.
If it’s not broke – someone will disrupt it
The insurance process was straightforward and expected. A homeowner purchased homeowners insurance when buying a new home and stayed a loyal customer for many years. Getting a new quote or switching carriers or agents was bothersome and time-consuming, and yielded few, if any, benefits.
In “Elevating the insurance customer experience,” IBM partners and leaders write, “Insurers thrived on the fact that they had vastly more knowledge about risks, its causes, and effects than their customers. As a basis for their business models, this worked well for centuries.”
This organizational model led to legacy systems and practices that allowed insurTech companies and agile entrants to capitalize with quick, easy, and frictionless experiences. (Who doesn’t remember the three-second insurance payment?)
At one time, loyal customers needed to be swayed to leave an insurance carrier or agent, but they have overcome their inertia with a few clicks on their cell phones.
High-performing organizations have already identified digital transformation as paramount to ensuring longevity, but true leaders in the industry realize they cannot rest on their laurels. Profitable growth and even reduction in loss ratios demand a digital customer experience (CX) strategy that underpins better engagement and constant evolution.
Today’s digital tools and advancements are tomorrow’s table stakes. The LexisNexis Risk Solutions Home Buying Trends Report found that the top 50 insurance carriers regard “minimizing customer friction” as the highest priority for their business, yet insurance carriers still use “old-school” methods when engaging with their customers. In fact, where customers desire an omnichannel experience through apps, devices, and websites, many insurance incumbents still rely on traditional methods of engagement, including phone and traditional mail.
These antiquated communication methods defy efforts for a painless, integrated experience with several challenges to digitizing traditional mail communications, including a lag in documentation and increased costs.
Insurance carriers must invest in digital and transformative technologies to continuously improve and innovate their CX, products, and services, or customers will eventually look elsewhere. And by the time they do, it’s already too late.
Leaving behind all outdated practices
“Profitability becomes the main focus of overall growth, which can only be done by retaining customers,” says one respondent of the LexisNexis’ study.
Where improving the insurance buying process is a top concern for many carriers, incumbents need to look beyond courting new policyholders and focus on retention. Not only are customer acquisition expenses expected to rise to 17.9 percent of the gross written premium in 2022 (up from 15.8 percent in 2018), but customer retention is at least four times more cost-effective than onboarding new business.
To retain policyholders, insurers must engage their clients in the channels they desire with the methods they prefer – and all that can be found in the palm of their hands.
Many insurance companies fail to deliver the values and services that today’s consumers want. J.D. Power 2019 Home Insurance Study found 74% of customers believe the home insurance industry needs improvement, and 13% call for radical improvement. To us, these numbers reflect the current state of engagement in the industry – with most interactions revolving around three key areas: claims, billing, and disputes.
With the third-highest customer acquisition cost ($303), online insurance agencies providing coverage within 90 seconds, and most insurance agents losing an average 16% percent of their policyholders annually, the traditional insurance industry can no longer rely on passive and often times, contentious engagement with their policyholders.
In order to win in today’s competitive marketplace, homeowner insurance carriers and agents must avoid costly customer acquisitions by prioritizing customer retention and achieving it through continuous, positive interactions. A better customer experience begins with insurers meeting customers where they’re most comfortable, and these days, that’s most often on their mobile devices.
There’s a new customer in town
The 2018 Customer Behavior and Loyalty in Insurance report by Bain & Company found the number of “digitally active customers” increased by more than 60% in the previous four years with a 70% increase in mobile adoption since the 2017 report. Millennials are leading this charge with Gen Z (Americans born 1997-2012) on their heels.
“The Gen Z folks have grown up literally with the internet and with cellphones in their hands,” says Caleen Alexanderson, a UX researcher at Duck Creek Technologies, in an article by Insurance Business America. “They are the generation of instant gratification, so to be maneuvering through a clunky insurance product that doesn’t have the bells and whistles that they’re used to in the other technology that they have, creates an unpleasant experience for them.”
Bain & Company’s report found that most insurance customers value quality and ease of use, driving the need for carriers and agents to harness and champion services that provide digital solutions. Through social media, SMS, email, apps, and online content, carriers and agents can win loyalty and achieve policyholder stickiness.
Says Alexanderson, “That’s why it’s really important right now, as we’re seeing this shift in insurance technology to be more digital, to provide that awesome experience from the get-go, which is what [customers] are expecting.”
The latest engagement buzzword – “delight”
For insurance carriers and agents, “delight” is a hard word to champion but not impossible, and those who do succeed are historically rewarded. Insurers that top the JD Power Ranking for customer service typically are the most profitable, and 86% of buyers say they are willing to pay more to receive a better customer experience.
The same digital landscape that allows policyholders to secure quotes from competing insurers within minutes also provides unparalleled opportunities for insurance carriers and agents, especially independent agents, to develop better customer relationships. A key driver in higher customer satisfaction is leveraging knowledge about the customer to personalize interactions. For example, Physicians Insurance, a liability insurance provider, adopted marketing automation, which delivered tailored content to their subscribers via email. This initiative yielded a 95% customer retention rate, higher than the average insurance company.
Bain & Company’s report also found more than 80% of customers would entertain an ecosystem of service, which provides not only coverage to homeowners but also advice, a bundle of smart home technology, and other services, such as interactive apps. Customers who used ecosystem services gave their insurers the highest ratings.
Championing the “moment of truth”
By understanding what the customer appreciates about the insurance carrier and agent, as well as their pain points, insurers can deliver coverage and services their customers desire at the “moment of truth,” that critical interaction when the company can delight or alienate the customer.
In the homeowner space, carriers and agents can win with the help of digital solutions. Personalized reminders and home improvement recommendations to their policyholders can provide a higher level of customer service and deliver to customer expectations as well as help to mitigate claims and increase the value of the home. This not only delivers a solution that provides the customer with the services and advice they expect, but also helps to bolster profitability for insurance carriers and agents by creating stronger customer relationships and helping to develop more informed homeowners. These empowered policyholders will be able to better care for their homes and submit a reduced number of claims.
Here at vipHomeLink, our app provides homeowners with expert tips to help improve the safety and value of their home. Tailored recommendations and reminders “delight” users, serving as a digital solution to frequent, positive engagement. The app provides home maintenance advice today’s homeowners demand with the digital convenience Millennials and Gen Z crave, and it can easily be delivered in an insurance carrier’s and agent’s ecosystem offering.
No longer will insurance carriers and agents only interact with their policyholders for billing, claims, and disputes. Instead, they will promote a positive dialogue by providing policyholders with the information and tools they need to take better care of their home.
By transcending the traditional policyholder engagement and creating new, personalized interactions, insurance carriers and agents can increase policyholder retention and reduce the number of claims while simultaneously boosting their profitability!
When you think about home value, what comes to mind?
“A home that not only functions well but nurtures,” says Laurie Smith, designer from the hit TV show Trading Spaces. “That’s a timeless goal in design, but people really embraced and craved that when they all of a sudden could not depart their walls.”
During the early months of the pandemic, many homeowners resorted to home improvement projects when they realized their homes were not functioning well. Others looked for new homes that would fit their current needs, leading to an intense real estate market with low inventory and high prices. This, in turn, prompted even more people to redesign their homes.
If you’re looking to upgrade your digs, Laurie Smith recently stopped by the vipHome Podcast with tips on how to add value to your home – both in comfort and dollars.
1. Boost value with the usual pre-sale upgrades
“In a perfect world, people want to move into a home and say, ‘Oh, we really just didn’t have to do anything but freshen up the walls,’” says Laurie. “Then they could put their money into drapery and furniture. Those are the things we want to put our money into.”
That’s why the usual pre-sale upgrades – kitchens and bathrooms, and even laundry rooms – help add value to your house. However, these projects must be done thoughtfully to attract home buyers. When searching for her own new home, Laurie ran into kitchens with questionable redesigns.
“[These homeowners] sadly made some cosmetic choices that all I could think was, ‘Now I’m have to come in here and rip out the tiles.’”
This brings up the age-old question – if you’re about to put your house on the market, do you renovate it and then sell, or do you sell at a lower cost and let that person have their way with it? It really depends upon the buyer.
Explains Laurie, “When I’m working with a client who’s considering purchasing a house, sometimes I’ll go and consult with them and ask, ‘What could we really do with this?’”
However, you can help to get a return on your investment by paying attention to the layout and investing in good, solid appliances.
2. Don’t forget your home systems
“Think about the things we don’t see either,” says Laurie. “A great air system. How old is the electrical system? These are things that you need to look at and need to update, or you’ll be paying more for it later.”
3. Invest in lighting
“I am a huge proponent of dimmers in every room,” says Laurie. “I think that makes such a difference, and it’s a very inexpensive investment.”
Most dimmers can be installed by an electrician in an hour, and they can cost less than $20 a switch. As always, design with purpose and pay attention to the layout.
“When I tour certain homes and people have made Swiss cheese of their ceiling with like 50,000 cans and they’re glaring down on you – you just want to run out,” laughs Laurie. “Watch lighting patterns. They only need to be where you’re working, like over an island in the kitchen.”
If you can’t afford to take out canned lighting – which may require you to “refloat” the ceiling – a dimmer switch can help to lessen that “holey” look.
“A dimmer switch will make a heck of a lot of difference for you walking in the evening and not being in a lit-up fishbowl,” says Laurie.
4. Create a space that functions well for you
With remote working happening in the confines of the home, many dining room tables became office tables.
“I think it really pushed us to look and see how spaces function,” asks Laurie. “‘Not everyone can say, ‘Oh, now I’m going to convert this bedroom into my own home office.’”
“‘How is this working for us? How is this working for our family?’” says Laurie. “Maybe I want to put bookshelves in the dining room. I know that sounds crazy, but one of the most beautiful installs I just did is a round dining room table.”
The homeowners wanted bookshelves around the table because they were book collectors.
“They had nowhere to put bookshelves that worked for them,” says Laurie. “Now it’s like this cozy library/dining room area.”
5. Consider how to deliver the best laundry room experience possible
When it comes to your laundry room, you want to make it as functional as possible for you and any potential sellers. Laurie’s current laundry room has a clever design, hidden behind double pocket doors.
“Would it be nice to have a big, fabulous laundry room with its own sink and hanging space in it?” asks Laurie. “Yes, I’ve been fortunate to have those in my life, and there are times I miss it very much. But this works.”
Depending on your design, you may decide to add a hanging rod or a sink, which can add tremendous value. Cabinetry is another great feature that adds value to a home.
“I’m thrilled to have the cabinetry,” says Laurie. “That’s great storage, and as you can see, the knobs are handy for hanging.”
(Make sure to watch the podcast to see how the former owners solved the pocket door conundrum with their laundry room and pantry!)
6. “Curb appeal is huge”
“Some people are constant gardeners and love to take care of their yard,” says Laurie. “Other people hire others to do it.”
How much does curb appeal add value to a home? A study by the University of Alabama and University of Texas at Arlington found that aesthetically pleasing curb appeal can boost a home’s value by 7%, so consider your natural landscape – the trees, especially.
“I hate to see new builds when every tree is stripped out of the yard,” says Laurie. “It just killed me for years to watch that. Trees are so important for our environment and also frame a house so beautifully.”
Laurie suggests planting a few ornamental trees, such as Japanese maples, which decorate her front yard. “They’re not very old, probably about 20-year-old hard Maples in the front, but oh, my word, what a vibrant surprise to experience during fall here in Atlanta. I woke up one day and had brilliant yellow just everywhere.”
If the exterior of your home needs a fresh coat of paint, then consider a paint color other than white.
“It’s become such a trend, at least in the South,” says Laurie. “It’s like everyone just says, ‘Well, just paint your house white. Give it dark mullions.’ So now everyone’s home looks the same.’”
7. Don’t overlook your windows
“Sometimes you’d be amazed by the simple task of cleaning your windows inside and out,” says Laurie. “It doesn’t have to be huge.”
8. Think about the transition between curb appeal and your interior spaces
The entry way of the home should be inviting and open where people can gather, so think of it when you’re looking how to add value to your home.
Laurie has recently updated her ranch, which originally had a high-glass aqua door and low, eight-foot ceilings.
“It was dark,” says Laurie, “and on the right was a long solid wall. It wasn’t a wide space.”
Thanks to some creative thinking, Laurie was able to raise the ceilings to more than nine feet, widen the opening to the dining room, add a center light fixture and a new door, which gave the room lovely natural lighting.
“From the exterior you can see there, it just became seamless,” says Laurie.
9. Outdoor living spaces still rule
“People were coming in and building outdoor fireplaces and hardscapes,” says Laurie, “and don’t underestimate the use of a screen porch.”
Depending on where you are, mosquitoes and different pests can prohibit this kind of idyllic outdoor setting.
“Take those things into consideration. What is going to function again for your climate, for your environment?”
10. Designate your living areas for potential buyers
In a former townhouse, Laurie was missing a “keeping room,” or an area off the kitchen where the family can relax. Since her outdoor space was not functional due to the community’s layout, Laurie used her designing skills to enclose that space for better use.
“Sometimes the outdoor space just isn’t working and would be better closed,” says Laurie. “That added tremendous space, but it was a painful bill.”
The remodel paid off in the end and helped to add value to the home.
“That sold my house in an instant,” says Laurie. “Where before – it was questionable. Where’s the little family room? Where’s somewhere to sit and relax? So this added great value.”
As you should with every place you live – it should be about what works for you and your family.
“When I work with clients, I’ve always said that a home is a reflection of you, the people living there,” says Laurie. “How can I facilitate, how can I make this feel like you, so when you walk in, you are the one embraced. Because that’s what home is.”
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Subsequent to my design debut on TLC’s Trading Spaces, over 20 years ago, I have been fortunate to share my approach to designing a space countless times. No matter how my palette or use of materials changes through the years, the rudiments of how I design a room remain the same.
I like to refer to the first step as evaluating the space.
What is the function of the space? Is it a place where many gather to socialize or is it a personal retreat shared by only a few at a time? Sometimes it takes emptying out a room to see it with fresh eyes. Take detailed measurements, notice window placement and architectural elements such as a fireplace or bookshelves. What draws to the space? Is it the high ceilings, hardwood floors or beautiful tile? If so, those are items you can enhance in the design process. Or perhaps these elements are lacking, and you can focus your efforts to correct inadequacies in the space. Evaluating each space in your home helps you decide whether you need structural changes or merely some cosmetic updates.
The second critical step is determining your layout.
Furniture layout is the foundation of the room’s design. If furniture placement and the traffic patterns around it are incorrect, the design will not be successful. It is amazing how merely rotating a chair can make an impact. Does the space have multiple uses like a living room with a functional desk or an eat-in kitchen?
How the space flows and accessibility is key. A fool proof way to play with layout if you are not proficient with CAD, is to take your detailed measurements from when you evaluated your space, measure your furniture, and pull out a trusty piece of graph paper. I like to cut out my furniture shapes and move them around like pieces of a puzzle. In this step you can determine if the scale of your furniture is harmonious with the space. Remember you want at least 12-14 inches between a coffee table and the edge of a sofa cushion.
Mix wood furniture with upholstered furniture and make sure the furniture varies in heights to add visual interest. Challenge yourself to be more of a curator and a decorator when choosing furniture. Spend time falling in love with pieces because of their uniqueness and solid construction.
Addressing the lighting is a vital third step.
Lighting is possibly the most powerful tool in design. What is the point of investing in furniture, fabrics, accessories and artwork if a room is poorly lit? While there are entire courses in design school dedicated to lighting, there are three basic sources available in design.
The first is natural light.
When you evaluate your space, pay attention to window placement and daylight intensity. These factors not only will contribute to your lighting plan, but will determine how you dress your windows and position your furniture.
Second light source is lamp light which I love for its warmth and how it grounds a space.
Sometimes the body of a lamp is timeless and can receive an update by simply changing a shade.
The third light source is recessed lighting or ceiling fixtures.
A wonderful ceiling fixture can make a dramatic impression, but a ceiling that looks like Swiss cheese with too many light cans is a mistake. Be deliberate in the placement and my most important advice…
Always install dimmers to your wall receptacles!
You will thank me at the end of the day.
The most fun part for me in the design process is deciding your textiles which naturally flows into accessory and art choice.
I often work with the largest upholstered piece first or maybe it is a rug or floor tile that is your primary pattern. Regardless, you add interest to a space by combing different textures and patterns. Coordinate colors in a space instead of matching them. Introduce an unexpected hue to create a bit of “healthy tension.” Allow geometrics and florals to reside together and let small and large scale patterns play off each other to create personality.
Lastly, I cannot stress enough, wall color should be the final step in your design process.
I know you may think, “but the first thing you always revealed on Trading Spaces was the wall color?” That is simply because we had less than two days to design a room. In reality, I encourage you to go through the previous steps and then determine your wall color based on the above factors. Consider your wall color the icing on the cake. It is much easier to take a fantastic textile and color match a subtle or dominant color at the paint store than the inverse.
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