Welcome to iLeads Insurance Market Minute, where we bring you the latest, most relevant news regarding the insurance market. Last week you were reading Why Snow, Hail and Wildfire Are Expensive for Insurance Industry. This week we’re bringing you:
Call Center Humans vs. Automation: How to Make Inertia Work for Firms and Customers*
In the digital age, service center operations, including call centers and help desks, are increasingly important to organizations for interacting with their customers. Companies are looking for ways to manage service centers more efficiently — including routing calls to appropriate representatives — because service centers have a direct impact on customer satisfaction and firm performance.
New research out of Notre Dame University centers on a tendency of call center agents to stick with the status quo. Because of their cognitive biases and social relationships, they tend to route calls the way they’ve always done in the past. The researchers call this behavioral inertia.
“In general, this inertia costs time and money compared with the optimization you can get with automation,” says Nicholas Berente, the Viola D. Hank Associate Professor at Notre Dame’s Mendoza College of Business. “However, there are certain situations where inertia actually improves service center operations. When agents are experts, or when they are handling particularly complex, difficult calls, these inertial behaviors are beneficial in terms of efficiency and effectiveness.”
Berente, a former entrepreneur who studies how digital innovation drives large-scale organizational change, is co-author along with Kaitlin Wowak, associate professor of information technology, analytics and operations at Mendoza of “A behavioral perspective on service center routing: The role of inertia,” a study in the Journal of Operations Management.
Ideally, organizations want to route calls to the right place without requiring excessive time, attention and money. This leads to widespread automation.
“Often the automation is awful, so you can never replace humans entirely,” Berente said. “Instead, we end up with combinations of humans and automation. It is critical to understand when one outperforms the other. This is particularly important now, since artificial intelligence technologies are increasingly being used in service centers. Services will inevitably involve humans working in conjunction with technologies, and it is critical to understand when the technology provides benefits and when the human does.”
Cyber prices soar 25.5% in Q2: CIAB*
Commercial insurance prices moderated across all account sizes with an average increase of 8.3%, but cyber saw a premium hike of 25.5%, according to The Council of Insurance Agents & Brokers’ second-quarter Commercial P/C Market Survey released Tuesday.
Premiums increased for all lines of business for the fifth consecutive quarter, even though prices moderated compared with prior quarters, the Washington-based trade association said.
Cyber’s steep premium increase, up from 18% in the first quarter, was the highest of all lines and surpassed a 17.4% increase for umbrella.
A rise in ransomware attacks, lackluster risk management protocols and lack of employee training were among the primary drivers behind the notable increase in cyber prices, respondents said.
Some 64% of respondents said clients had been reimbursed by insurers for ransom payments after a ransomware attack. “30+ [payouts] in the first half of this year alone,” one broker said in the report.
An increased frequency and severity of claims also contributed to cyber price hikes in recent quarters, which some respondents described as “alarming.”
As well as price increases, insurers are cutting limits and demanding buyers complete additional risk management protocols, the report said. Still, some 95% of respondents said there was an increase in demand for cyber coverage.
“Carriers continued to approach writing cyber risk with caution in Q2 2021,” said Ken A. Crerar, president and CEO of CIAB.
“The rapid increase in ransomware attacks highlighted the need for brokers to work with clients to develop and practice robust risk management strategies to confront the growing threat,” he said.
Capacity for cyber and umbrella lines also contracted, with more than 80% of respondents reporting decreased capacity for cyber, and 73% reporting the same for umbrella, the report said.
‘Hey, Insurance Industry: What About Us?’ Ask Small Businesses as Satisfaction Wanes*
Insurance carriers and agents may want to pay more attention to small business insurance customers, especially those with commercial auto and workers’ compensation policies. They’re feeling neglected.
According to the J.D. Power 2021 U.S. Small Commercial Insurance Study a lack of proactive support and personalized attention has put a strain on customer satisfaction among small commercial insurance customers. The small business J.D. Power insurance satisfaction scores have fallen significantly for a second consecutive year.
Small commercial lines customer satisfaction has declined 15 points in the past two years—a 7-point decline from a year ago and an 8-point decline in 2020 from 2019. These represent the only declines in the study’s 9-year history. Satisfaction with interactions shows a 20-point decline from a year ago.
“We see a real pattern of small business insurers missing the mark on soft skills, such as interaction with agents and proactive outreach—both being areas in which commercial insurers have historically thrived,” said Robert M. Lajdziak, senior consultant of insurance intelligence at J.D. Power.
The study examines overall customer satisfaction among small commercial insurance customers with 50 or fewer employees.
Lajdziak said small commercial customers “spend three times more effort” interacting with their carrier on websites, on the phone or with agents. The largest declines in the study are among customers who had workers’ compensation coverage or commercial auto policies.
“Carriers will want to pay particular attention to customers with these types of policies,” he said.
While insurers doled out tens of billions of dollars in refunds to personal lines customers during the COVID-19 pandemic, small business insurance customers got no relief since their coverage was not affected. However, they took notice and felt ignored, the survey suggests.
Some other findings of the 2021 study:
Finding highly affordable leads to keep sales coming in
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