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Service Capital: Fuel for Insurance Industry - Part 1

By Prashanth N.

New transparency rules, new products, new sales channels are few developments in insurance sector, however the critical development has been shift from product-oriented to customer-oriented model of business. This primarily implies Insurers need to pull customers to them rather than fighting price wars on push-products. Customers are looking for more transparency in communication, customized products and timely service from their Insurers. The relationship of insurer and insured commences with contract of good coverage for a reasonable price. Attractive marketing campaign and good sales effort could sell a product, however the acid test occurs when claim is made; this is opportunity for Insurer to offer prompt, quality and quick customer service.

Customer service has become common denominator for brand value of insurance companies. Emotional elements are always attached to claims, clean and quick claim settlement would create the customer loyalty. In the millennial world, customer service is not restricted to individuals, market perceptions are influenced via blogs, discussion forums, and review on products. Majority of satisfied customer would renew the policies with same insurer and these customers contribute to lowering acquisition cost by over 20 percent [1]. One in two customers mentioned they would not switch insurer at any price and 3 out of 5 satisfied customers would recommend insurers to others [2]; henceforth creating brand-champions out of satisfied customers.

The consumer sentiment has fallen over the years and even more so because of the recent recessionary years. Recession has changed consumer expectations; service expectations have risen and so has need for more transparent communication. Building the 'Service Capital' in insurance requires understanding customer, transparent communication and focusing on associates of business. In the millennial world, these serve as key organizational traits in achieving excellence.

Understanding customer begins by understanding the environment of customer; for instance Jakarta capital city of Indonesia has highest Facebook population [3] (17 million and counting), so social network could serve as profitable channel to do business in Indonesia. The various segment of customers require different types of service; Generation-Yers are most demanding as they want a 24/7 service, older generation require a most personal touch conversely younger generation would prefer all service online. Customers could be segmented into wealth classes, based on behavior or mix of various metrics. In the end, it is about clustering client/potential customers around common interest and to appropriately engage them.  

In the next blog, we will talk on BigData and more on the relationship between the customer and the insurer. Looking forward to have your views on the same as well.

References:
[1] Beyond Satisfaction: J.D. Power 2012 Customer Service Champions
[2] J.D. Power and Associates 2011 US National Auto Insurance Study
[3] www.facebook.com


About the Author: Prashant N. is an Associate Consultant with the SAP practice in FSI domain.

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