It’s a competitive world out there. But if your product does what it says on the tin, your customers will stay with you, says Paul Meehan

What an interesting first five months I have had as customer experience director at AXA. I had spent 30 years in broking so really had to break down the instinctive “what good looks like” for the customer. Is it product, price or relationship, or perhaps a mind-blowing cocktail of all three?

It starts to get tricky when you talk to people who sell insurance and show them that, for customers, they sell promises and peace of mind.

As with most insurers, these promises are at the core of AXA’s customer offering – the “what” in the process, with quote delivery, documentation and so on. This has to work well for them to even consider renewing their policies.

Unfortunately, the “what” is poor with most carriers, reflecting sub-standard service to brokers and a failure to respond to claimants correctly.

What I see as key to competitive advantage is the “how”. Were we good to deal with when the customer or broker needed us? Positive, friendly, timely in our response, respectful and, most of all, caring?

Philippe Maso, our chief executive, wants to put the customer at the centre of everything AXA does. By placing the claims teams in the customer experience area, he has given a clear message to our people and a commitment to our customers that we aspire to deliver on the promises we sell.

As far as brokers are concerned, they want insurers to do what they say – solve problems in a timely manner, show integrity and behave like close family. They also want them to care.

Customers want easy access to decision-makers, positive quick responses, fair treatment, promised delivery – and care.

As an industry we spend millions on new business generation and brand creation or transition, but I believe our views on a brand are largely formed through our close experiences with that brand, particularly with a claim. I also believe that converting a customer into an advocate is hugely important as it is cheaper to retain an existing customer than to win new ones.

Research also shows that loyal customers are less promiscuous and price sensitive. The best way to build that loyalty is to “do what it says on the tin”.

In this 21st-century world of instant access, convenience and control, we may have to rethink how we transact the claim for the customer (I can already hear the howls of derision and protest from insurance lifers who believe we must have a claim form and an estimate and an inspection and the inside leg measurement in triplicate of the third party).

If insurers do the “what” well, brokers will have the confidence to abandon copying claim forms and babysitting the process to protect their clients’ interests.

What cost efficiencies could be made by eliminating this duplication?

Sooner or later, some opportunist geek will create a trading model for risk transfer that looks nothing like the cumbersome process-driven inefficient platform most carriers proudly inhabit. The pace of that competition might be devastating.

My local cinema – which had been in business for 80 years – woke up two years ago to find a new multiplex nearby. Revenues fell by 85% in two weeks, never to return. It is now a restaurant that shows films.

Brokers and insurers have to prepare for this kind of potential despotic competition by providing something that such competition cannot replicate easily. That something is loyalty.

We hammer on about claims leakage, fraud, why the claim is excluded, why we need XYZ detail to pay, why average applies, and so on.

And we wonder why the customer chases price. Where can that lead?

I remember when the critical illness market was created by one innovative insurer whose wide policies with few exclusions met what customers wanted. Underwriters had no historic data so it was priced fully for uncertainty.

Demand was huge and the insurer made good returns. This, in turn, attracted other, less sophisticated insurers who undercut the price and inserted exclusions and narrowed policy definitions – only certain cancers covered and so on.

Within a few years the market had been discredited as honest claimants were rebuffed on wordings or exclusions. That line of protection now has few buyers as its claims reputation has been destroyed.

Some would say this is happening to the travel market as prices fall and cover shrinks.

We must deliver the promises expected and then care – and care some more. It is a common-sense approach to building a successful, sustainably profitable business.