Next Generation Insurance: Leading from the front.: Customer who? Insurers regaining abdicated role...

Insurance companies had typically abdicated their customer ownership role to agents who would be able to reach the customer face to face and drive the sales & service processes. But insurers are increasingly asserting their primary role nowadays with customers willing (and desiring in many situations) to work directly with their insurance companies.

For most of the 20th century, insurance companies have considered their distributor / agent as their actual customer- whether it was for gathering inputs & feedback for new products, driving sales or even for servicing needs during the policy lifecycle. The model has spanned both career (exclusive) agents and even independent agents (brokers) with the effect that insurers fearing channel conflict were a typical late comer to direct models like the Internet and have left customers to get the "one shop" experience mostly with their insurance agent.

With a significant trend in moving large chunks of the value chain directly to the policyowner- insurer interaction model, most companies are emphasizing "one company" customer experience in prioritizing their operational improvements. But they are only dealing with basic "lift and shift" tactics at this point- simply delivering basic operational capabilities directly between the policyowner and the insurance company (granted with some simplification to make that possible).

Going forward, insurers will need to consider key changes in the following areas as they move beyond implementing the simple & basic capabilities to differentiate themselves in the marketplace

1. Marketing & Branding- ensuring a strong brand that the customer identifies and aligns with (several branding lessons can be leveraged from the Retail/ Consumer Products sectors)

2. Customer-driven Sales- call it upsell/ cross-sell or referrals, insurers will need to be in the forefront driving sales strategies by market segments, a lot more than in the current agent driven model as they take primary role in driving and influencing customer perception and behavior.

3. Operational innovation- given that most of the "product" experience felt by policyowners are driven by operational processes (besides contract specifics), insurers will need to innovate extensively in key business functions such as Sales, Servicing & Claims to enhance their positioning relative to competitors.

Of course, another big To-Do in this evolution to a customer driven business model is figuring out an appropriate new model for compensating the distribution force who will continue to drive quite a lot of sales for insurers. Most companies are today busy rebuilding their compensation capabilities as they strive to prepare for the coming re-configuration of compensation models.

Comments

George,

Curious to know your thoughts on whether carriers would think of passing the power of defining the insurance products to the hands of customer. You can call it the “Build a Bear” inspiration. Currently, carriers study customer needs and then build the product. I was thinking whether they may allow, thanks to the web 2.0 features, the customers to come to their site and build an insurance product of their own.

Souvik

Posted by: Souvik Roychoudhury | October 21, 2009 5:02 PM

I absolutely agree with George on this. These so-called agents are the face of the insurance company and hence the face of insurance companies relies heavily on the Agents. A lot of time, I have found that these agents are not well-trained enough and hence they do not sell any products beyond what they already know.

Apart from using mass-media, as a marketing tool, insurance companies might also have to look into co-creation of products so that the customer is not aliened.

Posted by: Vinod Sisodiya | November 16, 2009 8:14 AM