lit gas ring

Why the utility industry has lots of synergy with the insurance sector

If we had a choice none of us would “choose” to spend our hard earned money on utility bills – gas, electricity and water. Whilst all essential services, they just don’t have any aspirational value to us living in the developed world. A huge amount of infrastructure and capital investment has been made over the past decade assuring our utility services in the UK, so we tend (rightly or wrongly) to expect these services to “just work” and be there when we need them. This makes it difficult for utility companies to create a relationship with us – their customers – as most don’t want, or see, any value in having any contact or a relationship with our utility companies.

Typically, there are four journeys we will take with a utility company:

  1. To register or amend our details, or leave the provider. Currently for water companies this can be a relatively rare event given the current lack of competition and choice in the industry and we see our water bill more like an additional tax
  2. To query our bill. For gas and electricity companies, this is the most likely reason we will contact a utility company today, as the majority of the industry still runs on estimated bills. The planned roll out of Smart meters, however, will dramatically change bill queries, which in turn will drive down customer interactions
  3. To complain – the most frequent reason for us to contact utility companies! According to the Institute of Customer Services the utilities industry remains rooted to the bottom of the UK Customer Satisfaction Index (UKCSI)
  4. To report a fault, for example, when a loss of service occurs. This is the time when we expect and demand a high level of engagement, given the inconvenience the service loss will cause

These “customer” journeys tend to be very similar with the insurance sector. A small amount of contact occurs at the time when we register for an insurance policy, amend our details or exit. We might query the price at the time of renewal, although more and more, we do this through price comparison web services. The insurance industry ranks higher for customer service than the utility companies in the UKCSI so customer complaints tend to be fewer in number, but do still occur. And, when we have a problem – typically an event has occurred where we need to make a claim – we expect that claim to be processed with ruthless efficiency and by staff who show huge empathy to our circumstances.

This final customer journey, processing a claim, is one where the insurance companies have invested in heavily to differentiate themselves. Expensive advertising by insurance companies will often focus on how they manage claims, recognising the distress we may have at such times. Therefore, utility companies should invest in their people, processes and systems as well to provide much needed support during a loss of service – a very stressful time, particularly for vulnerable people.

Finally, insurance premiums, like utility bills, are ones we would all prefer “not” to pay but we know we “need” to ensure we have insurance policies to cover our loved ones, property, vehicles and possessions.

Utility companies should aspire to benchmark themselves against the leading insurance companies. Aspiring to align themselves with the best in class customer service organisations, such as John Lewis or Amazon is a flawed strategy – the companies at the top of the UKCSI all offer a product or service that we “want” rather than we “need”. Perhaps this is why British Gas has picked an insurance industry veteran, Mark Hodges from Aviva, to be their new Managing Director?

Published by

Stuart Allan

I have worked in the IT and business processing outsourcing industry for nearly 30 years. I joined Sopra Steria in January 2006 and currently head up the UK Transport and Utilities sector, a £30m business unit with more than 700 people working in it across the UK, Germany and India. Prior to joining Sopra Steria, I worked for several large financial services and insurance organisations, including RBS and Capital One Bank, and in the Lloyds of London insurance market in a variety of senior management positions.

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