The importance of UX in the digital insurance industry

The insurance industry is experiencing a significant digital transformation. Insurers can now create risk protection adapted to real user needs in a constantly changing society and a world of technological advances. Covid-19 accelerated this digital shift, we’ve seen an increased use of data and AI, and the expectations of users for a seamless digital experience has grown dramatically. 

The question for insurers is how to connect the dots between the data, the technology and the user and ultimately the question of how to create an insurance product people want. And it all comes down to understanding the human nature of customers. This is where the importance of UX comes into play.

Consumers won’t be satisfied with a poor digital experience

Whether related to digital transformation or traditional legacy issues, today’s digital insurers have to find solutions to a range of challenges.

The complexity of the insurance industry can lead to a lack of trust from consumers

As was noted by Robert Burr, CEO of iptiQ in iptiQ’s Insurance Pulse: Digital Trust podcast, insurers who ask customers to engage digitally are asking a lot. Indeed, Robert notes “We want customers to pay for a product they can’t try before they buy. We ask them to pay for a promise, that they hopefully won’t have to call in. And then on top of all of that, they’re buying from a website or an app, with little interaction from a person.”

A report from IBM Institute of Business Value, revealed 42% of customers don’t fully trust their insurer. Plus, 63% don’t understand the extent of their life insurance coverage and 50% aren't confident they'll receive benefits consistent with their coverage¹. To complicate the issue of trust in insurance further, the level of trust an individual places in an insurance policy varies from person to person, based on factors such as their culture and social status and can even change for a given individual at different times relative to their experiences and emotional state. Indeed there are many determinants of trust which the Swiss Re Institute have written a detailed study about in a white paper titled "Decoding digital trust". 

So, how can UX teams help to build consumer trust in digital insurance? Trust needs to build across the different touchpoints in the insurance value chain, whether focused on reliability, security or reassurance².

Let’s first consider the application process. The language and content on any landing pages must provide clear, accurate and digestible information about what is covered and what isn’t. Consumers may also believe that certain questions are unnecessary and intrusive which can foster mistrust at this early stage. It’s therefore valuable to explain clearly why these questions are asked and how it impacts pricing as well as what the company does with this private personal data.

The job of the UX team here is to analyse the customer personas for each product and define their level of knowledge, tailoring the language and tone to their needs. For example, a student taking out insurance for the first time will have a limited knowledge of technical terms compared to someone renewing an existing policy that has been through the process before.

This mistrust can also be exacerbated during the claim handling process. If it’s poor, cumbersome and difficult to understand, trust can be lost. But if a user can speak to someone quickly through web chat, upload videos or images as evidence and have a clear timeline for their claim, trust can be built. 

Consumers won’t be satisfied with a poor digital experience

People used to running their lives online expect the same experience with their insurers as they have elsewhere, and if they don’t get it, they have no qualms of switching. In fact, according to the World InsurTech Report 2021, 80% of consumers would switch providers if their insurer’s responsiveness was less than stellar. 

But despite the fact that 50% of insurance customers would consider a new tech-driven entrant to the market³, 60% of traditional insurers admit to a lack of customer experience strategy in their organisation⁴. So, what is the starting point for traditional insurers to catch up with the competition?

It all begins with the needs of the user. Through multiple research methods – whether data-driven or via user interviews – UX designers can uncover friction, pain points and opportunities to enhance the users' digital experience.

At iptiQ, the UX team consist of a range of experts of, researchers, designers, analysts and writers uses diverse sources of data to simplify each step in the journey and to provide a simple information architecture that reduces the cognitive load. Through deep knowledge of the customer, you can build and iterate your online experience and continue to look after the needs of your users. At iptiQ, we strongly believe that user research helps in cutting development resources by identifying user needs and preferences early on in the development process, allowing for more targeted and efficient development.

An overreliance on AI decision-making can lead to potential biases

As businesses become digital, more data is generated which can be used to make predictions and recognise patterns. In the insurance industry – where 40% of Chief Information Officers plan to increase their spending on AI⁵ – data is being translated into more creative and accurate insurance pricing. For example, usage-based insurance makes use of telematics technology to measure driving behaviour to offer personalised coverage and premiums. And it’s something that consumers want, with 89% of people interested in pricing based on behaviour⁶. 

What neither consumers nor insurers want is to see biases coming into play through the use of AI. Several studies have shown that AI based systems can be biased including where AI systems have been involved in making lending decisions and were found to discriminate against some minority groups and individuals on low incomes. These problems arise because the AI systems used were trained on historic lending data that reflected biases and discrimination which leads to the AI systems repeating those biases.

The good news is that unlike human decisions, the recommendations made by AI can be objectively examined and interrogated. It’s here that an expert UX team plays a key role in verifying any assumptions made by AI. Your UX team must be evaluating customer data as well as speaking to your users to define their needs and wants – detailed customer personas are therefore essential to evaluate any AI assumptions. 

It’s all about the human touch

As insurers transform their digital offerings, it can be too easy to forget the personal nature of insurance for each of their clients. But a fully functioning UX team will keep human nature at the forefront of any decision making. 

So, no matter the customer and no matter the claim, detailed knowledge of your users brings the opportunity to tailor products to your customers’ needs, build trust and deliver an exceptional digital experience. 

Thanks to our colleague David Morales, UX Designer iptiQ, who contributed to this article.