Here’s how bad UX is hurting your insurance company’s bottom line

Simply by looking at the average yearly premium for health insurance in 2021 - $7,739 per person and $22,221 per family - it’s clear how much is at stake for insurance companies when it comes to winning over potential customers. 

‍

[.figure]$7,739. per person[.figure]

[.emph] Average yearly premium for health insurance in 2021 [.emph]

‍

This means that it can take only 100 or fewer potential customers to leave due to bad UX for you to miss out on a million dollars in revenue. 

So which insurance company ends up with the revenue? Considering how so many modern consumers prefer to buy their insurance online, the answer is simple: The one that can offer users an intuitive, easy user experience (UX).

That’s why investing in UX can prove to be a highly financially solvent idea: a study by Forrester showed that every dollar invested in UX design results in a $100 return. 

So how can you ensure that bad UX isn’t seriously hurting your bottom line? And how can you improve it?

But first - why is bad UX such a common problem in insurance?

According to Amazon Web Services, businesses lose 35% of sales due to bad UX, and that number is probably even higher for the insurance industry, where bad UX is often the norm. 

We’ve identified two main reasons for so much bad UX in the insurance industry:

‍

Legacy technology

During an interview with the Acceleration Economy Network, Dean Del Vecchio, CIO of Guardian Life Insurance, had this to say while discussing Guardian’s massive digital transformation: 

“In 1967, before we put a man on the moon, we built our first policy-admin system. I like to say the good news is it’s still running and the bad news is it’s still running.” 

In a nutshell, the insurance industry is old, and as such, pretty rigid and held back by legacy systems that weren’t built with the modern UX requirements in mind. As such, it’s only natural that businesses might struggle to adjust to such major changes as the rise of the internet and the discipline of UX. 

In addition, many legacy systems comprise different silos, different technologies, and multiple, separate databases that don’t communicate with each other. As a result, creating a smooth, efficient user experience is often costly, requiring significant time and resources. 

Legacy mindset

The insurance industry has always been confusing and complex, mostly due to the deeply granular levels of regulations, legalities, and guidelines required. The agent-centric sales model evolved as a result, which worked well for many years (although others might argue otherwise). But when established insurance companies tried to replicate their traditional model online, with agents at the center, they quickly discovered it fell short of meeting the needs of their modern consumers - 74% of whom research insurance purchases online and 65% of whom are keen to buy insurance online.  

That’s why disruptors like Lemonade (whose revenue was $94.4 million in 2020) are proving to be big competition. When it comes to success in the modern consumer landscape, focusing on your customer needs, prioritizing UX, and offering efficient online self-service is key.

Tips for better UX

It’s clear why bad UX is harmful to your business. So how can you improve it? Here’s where to start.

‍

1. Keep it simple

Part of the reason why insurance can be hard to sell is that the industry uses so many complex, jargon-y terms that can make the average person’s head spin. When creating your customer-facing materials it’s important to ensure that the messaging can be easily understood by a layperson. As part of their best practices, marketing and product teams often use prototyping and prototyping and user testing to ensure the content is clear and the flow makes sense. 

In one sentence: Make it easy for your potential and existing customers to find the answers they need.

2. Allow for personalization

While your company may offer a number of different types of insurance, people visiting your website to get information about pet insurance policies have no need to hear about your personal injury and auto policies, and may find it confusing and distracting to have to dig through that irrelevant information. That’s why it’s so important to offer simple navigation and separate your website into sections that are easy to find.

3. Use responsive forms, not PDFs

If you’re asking potential customers to download PDFs, fill them out, and email them back to you, you’re losing frustrated prospects in the process. Make it easier on your audience by offering a seamless digital process, with forms broken up into small, manageable steps. From uploading documents to signing forms to making payments, your customer should be able to navigate the whole process without leaving your portal.

4. Go quote-forward

Facilitate your audience’s shopping experience by making quotes available in as few clicks as possible. It’s also a great idea to offer an online premium calculator to make it easy to compare policies. Don’t forget to add clear, bold buttons allowing people to purchase the policies they are comparing. Remember, for both you and your customer, you want it to be as easy as possible to get a quote and make a purchase.

5. Offer self-service (but don’t skimp on the support)

As we’ve clarified above, the agent-centric model of insurance is outdated. Today, customers want and expect self-service, so it’s important for your website to offer self-service for things like getting quotes, making claims, and buying policies. However, don’t forget to make it as easy as possible for your customers to get human help if they need it. Offering 24/7 support via phone or chat can increase sales: 81% of consumers say a positive customer service experience increases the chance of them making a purchase.

How can insurers fix bad UX?

If reading this article has helped you realize that your organization has a UX problem, congrats!! Recognizing that you have a problem is the first step, and now you know where to focus your efforts. 

Work with a partner

You don’t have to do it alone. Like any other element of your website - from the graphic design to the back-end development - good UX requires expertise and experience. To save time and labor while ensuring the best results, it’s highly recommended to work with a partner who has proven expertise optimizing insurance websites and online processes for the best possible customer experience. 

Think of an end-to-end customer journey, not a single interaction

One of the most important things you can do to improve your website’s UX is to change your mindset. Rather than thinking about the customer’s experience on a single page or in a single interaction, think of their journey as a whole. Developing a keen understanding of your audience’s digital customer journey will allow you to create an optimal experience from beginning to end. By leading users through a simple process of evaluating policies, getting a quote, making a purchase, making claims, or renewing policies, you’re greatly increasing the chances they’ll become paying customers. You’re also reducing the chances that existing customers will churn away to another provider. 

Utilize technology that focuses on good UX

While UX can be highly technical, you don’t have to be a tech whiz to improve yours. By choosing the right solutions, you can optimize UX without having to dive into lengthy and expensive development projects. No-code development platforms can help you create a smooth, intuitive customer experience with just a few clicks, drags, and drops - and all with your organization’s unique branding. It will even optimize for both desktop and mobile with no extra effort on your part.

The bottom line

Insurance carriers and agencies that aren’t willing or able to meet the expectations of modern consumers are going to pay the price, as more existing players become more customer-centric (and put their money where their mouths are), and new disruptors enter the field. Good UX is no longer just “nice-to-have”. Investing the necessary resources to create good UX for their potential and existing customers on their digital journeys is now a major deciding factor for the future survival of every insurance provider in the industry.