Case Study: Insurance Company Used Behavioral Science to Get 30% More Customers to Use Certified Repair Shops

Behavioral nudges that focus on convenience, familiarity, and social trust

Understanding the importance of trust and the barriers that change customers’ concerns helped revolutionize the way an insurance company designed their communication and empowered their customer service teams.

In this article, you’ll discover:

  • Why not to fixate on price and instead address the emotion;
  • How to erase customers’ doubts on a webpage;
  • What tools to use to make agents feel empowered; 
  • And how listening first can help with a buy-in.
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Imagine you need to fix a fender-bender. You contact the insurance company, but after you hang up, you’re still none the wiser on where to have it fixed. So you turn to a friend. He points you to a repair shop just around the corner. “You can trust them dude. They’ll fix whatever you need,” he says.  

What he fails to mention, however, is that if you take his advice, the repairs will end up taking longer than you want and will cost you way more out of pocket than you might have anticipated. If you had just chosen any one of the qualified repair shops your insurance company has partnerships with, then the repairs would have cost you far less and save you days or even a whole week of your time cruising around in a hoopty rental car.

So why would anyone willingly pass on that option?

An American insurance company providing this service wondered that too. It just didn’t add up; their qualified repair shops had multiple advantages and yet fewer and fewer insurees were choosing them. 

The company didn’t have a formal program to address the issue, so they turned to someone who had a reputation for solving these kinds of problems in insurance and finance: behavioral science consultancy firm Pragmadik. 

The goal was to steer claimants’ decisions towards qualified repair shops by improving the claim process and communication.


A double whammy problem: Bad for business and customer satisfaction

The fact that customers turned to out-of-network repair shops hurt both parties. The insurance company was paying more out for claims, and if there was an issue with the repair, it was more difficult to get that corrected because they had no relationship with those shops.

And since the insurance company only paid up to a certain amount, the claimant had additional out-of-pocket expenses. This had a downstream effect on satisfaction because the customers then perceived the insurer as someone who had higher costs compared to competitors.

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The company suspected (as many companies do) that customers were fixated on price. Not only is this a bad strategy because everyone else is shouting price, it can make you miss out on crucial selling points. 

Because prices were comparable to market rates, they then concluded the problem was a lack of information: that customers simply didn’t know about these in-network repair shops. Because if they did, there was no way they wouldn’t have chosen a lower-price repair! 

Based on these presumptions, the insurance company thought that all they needed was a communication strategy that reinforces both awareness about qualified repair shops and its low prices.

Commitment and consistency

When people actively and publicly commit to doing something, they are subsequently more likely to do it.

But they were still missing a crucial piece of information! 

Andrea Belk Olson, a two-time author and CEO of Pragmadik, says it’s not at all surprising; companies are often unaware of the emotional drivers of their customers

Her team of behavioral experts and psychologists have found that the emotional drivers of familiarity, consistency and ease of the experience were, in this case, more important than costs. 

Some of these drivers may be influencing your bottom line without you even being aware of it. So how can you discover and instruct your call center teams to address them, or even design a webpage with them in mind?

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