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AM BEST'S MONTHLY INSURANCE MAGAZINE


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Technology
High Score

The Net Promoter Score gives insurers perspective to engage customers and grow their businesses.
  • Gates Ouimette
  • November 2019
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As insurers recognize the need for digital transformation, there are solutions, processes and tools to help them become more agile. While agility is most often associated with technology and software development, insurers will recognize that the term agile also applies to business transformation.

One valuable driver of business transformation is the Net Promoter Score, a management tool used to gauge the loyalty of a company's customer relationships.

Today, two-thirds of Fortune 1000 companies use the customer loyalty metric.

There are many ways to measure customer experience and satisfaction. However, the increasing popularity of NPS is due to its simplicity.

The score is based on a single survey question: “How likely is it that you would recommend organization X/product Y/service Z to a friend or colleague?” Scoring is just as simple with an index ranging from -100, or “never a recommendation,” to +100, or “recommendations given without asking.”

Companies providing NPS survey tools and assistance provide cross-industry and insurance-specific NPS benchmarks to help dig further.

In the world of insurance, NPS benchmarking can also be done for internal employee, policyholder and agency satisfaction measurements, and further analysis can reveal why a score lands where it does.

Is a score due to all survey respondents being “passive” consumers, or those who score a seven or eight on a 10-point rating scale because they are not necessarily negative but are not entirely loyal? Or is enough being done to get “promoters,” or loyal enthusiasts who score a nine or 10, energized about your business? Or, is there a mass of “detractors” (unsatisfied customers who score a zero to six and are unlikely to buy from you again and may even discourage others from buying from you) rescuable by one single policy, process or technology change?

There are numerous insurance-industry Net Promoter Scores that can be used as benchmarks. For example, while life/health companies' average and individual index scores range from 14 to 40, those in property/casualty average a score from 35 to 73. Other metrics exist too. Looking at industrywide distribution, the insurance industry's average is 28, which is much higher than last year's average score of 20. However, it still leaves much potential for improvement.

While the NPS is easy to capture, interpreting it requires a greater degree of sophistication. How can a midsize insurer get started with agile business transformation to accelerate along the NPS customer satisfaction curve? One example would be the approach Ohio Mutual Group took with its NPS.

Knowing it had to use a different approach and a nonsiloed, cross-departmental perspective, the insurer used a Phoenix Project business simulation workshop to accelerate broad-based learning across the company and to provide consensus on the “why's.”

From there, Ohio Mutual was able to narrow down the “how's” of achieving its NPS goal for policyholder and agent experiences. That allowed them to become more acutely in-tune with customer feedback and recognize a significant influx of customer experience focus opportunities.

Carriers don't need to be big to implement, act upon and benefit from the NPS. By thinking and acting outside the box, insurers are now in line to achieve the industry-leading Net Promoter Scores they set out to achieve.


Best’s Review columnist Gates Ouimette is founder and principal of ITconnecter. He can be reached at gateso@itconnecter.com.


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