The insurance industry worldwide is undergoing a significant change accelerated by the financial meltdown and changing demographics of its customer base. In this blog, we will discuss the challenges, approaches and possible solutions to dealing with the transformation that the industry has unwittingly entered into.

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February 5, 2011

Social media making serious political impact, wake up call for corporates

This week we saw the confluence of two powerful forces - youth mobilization and social media driving big changes across the Arab world. While the dramatic influences of the social media have often been talked about, it is now moving beyond the realm of glitzy devices and big market cap start ups to the political world. Though only the most optimistic amongst us will see the unfolding changes as creating a better immediate future for the impacted citizens, there is no doubt that the Internet and the blogosphere and its potential impact is now firmly ingrained in the psyche of a large segment of what is often considered a not so modern society. (It is no wonder the authorities even experimented with turning off the Internet and cell networks for a couple of days across entire regions)

Time for corporates to sit up and take notice in more mature markets? You bet. For financial services firms that have only been paying lip-service and tip-toeing into the frontiers and indulging in "social" contact but not so much of the associated "commerce", it is time to think hard on what the underlying forces are that are emerging in their own customer segments. Otherwise, they will be caught by surprise and their 30-year old platforms will be as out of date with reality as the 30-year regimes have shown to be in the Arab world.

June 23, 2010

Time To Get Personal

The percentage of 17-year-olds with a driver's license dropped from 75% in 1978 to under 50% in 2008. Even if you go up two years, the drop is still significant, from more than 90% of 19-year-olds in 1978 being licensed drivers to only 77% of them 30 years later.

 

The reason for this shrinking of the pie seems to be a) movement towards urban areas with abundant public transportation and b) evolution of digital commerce.

 

With the rapid evolution of technologies, the second aspect above could only accelerate the change in consumer needs vis-a-vis protection. Auto manufacturers are already doing everything possible to get the demographic into a vehicle - ranging from making the vehicle equate to a "computer-on-wheels" to introducing "community cars" for the infrequent drivers.

 

The underlying question though is - will this trend influcen a change in the personal insurance products? Can the consumer demand an auto-insurance product that he/she pays for on a need-basis? Can the consumer demand a true "personal protection" product that will insure the individual regardless of the risk?

 

I guess the answer to all the questions above is Yes. It will be imperative for carriers to understand, engage, sell-to and service the new demographic in ways that they have never done before. How they will react and who emerges as a leader remains to be seen. There is no doubt, however, that it is time to get a lot more personal with the consumer base.

 

What do you think?

April 18, 2010

Consumer 2010- Opportunities for growth!

With the markets looking up, recession receding, insurance industry is no exception and is poised for growth.  However, the industry is facing a new consumer- one being careful, more mindful of what and where to spend - an indelible mark left by the brutal down turn and recession.

Reason? The great downturn of 2007-09 has impacted people from all strata of the society - the well heeled, middle class and the poor - alike, and the dent has been deeper than any in the past with capital losses ranging from 70% to 90 % in many cases.  Though the recent market recovery has brought back some of the value, the scars are still raw- with the average investor still keeping away from the market.   

There is a major change in the consumer buying behavior at all levels - moving away from the indulging type to the need focused, necessity driven model.  From a rapid spend consumerist economy, we are moving into the more careful, thoughtful set of consumers who will look for value over class and jazz for every penny they spend.

Major retailers like Wall mart are focusing on furthering quality, enhanced service and need fulfillment than promoting indulgence.  Financial Services firms are vying one another to cut down the fee.  Many carriers have started to relook at their product portfolio trimming the frills and furs and exploring products that fulfill the basic needs for protection and savings. Exotic products with higher fees and charges are losing the glamour.  Simple products with superior service quality are the need of the hour to retain the customer and grow. 

Better customer segmentation, analytics and intelligence are critical to position the right proudct and grow in this market!

October 19, 2009

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.

Continue reading "Customer who? Insurers regaining abdicated role..." »

October 5, 2009

Tale of two captive agents

For coverage of my home and 2 cars, I have been with the same insurance company / agent for the last 6-7 years. My insurance agent (Agent A) is a business like person whom I have spoken to only the phone. She was referred to by my friend who told me that she can get me the best deal for car insurance. On the phone, she comes across non sense but very efficient and quickly helps me complete the transactions. She has called me to prompt me if I forgot a payment, ensured that I had all the possible discounts and been very responsive to any phone requests. Every once in a while, I have compared rates (mostly online) in response to a TV ad and found the alternatives to be far costlier than what I currently pay for the same coverage.

Continue reading "Tale of two captive agents" »

September 25, 2009

When Generation Z starts buying insurance

Generation Z (say born after 1990) has grown up with internet. When they were very young, they demanded the computer playing games to be online & are getting increasingly networked, when they have come to age of sharing, they invented ITunes, when they have come to live in the ‘world of friends’, they invented Face book, YouTube. And now they are for the first time entering the workforce in increasing numbers. That means for the first time this generation will have more money (their own money!!) to play with than ever before. If they could bring about this change in the world order without the money, I wonder what they would with money power (I hate to see them get distracted/corrupted with money!)  Would we see a gradual shift of buying & service expectation patterns that will shake up the Insurance Industry. Now this group when they get the money, the first indulgence, one would expect, will be a car (especially in US!) and there you have, their need for Car Insurance. I guess the first time they buy a car, they will continue to be with the Insurance cover their parents have & may end up buying with the same agent. A natural expectation, but I guess servicing requests will see a dramatic shift and they will not go along the line their parents are used to.  I guess in next 2-3 years, we could very easily see the demand for online service channels far more than what many carriers are ready for.

Continue reading "When Generation Z starts buying insurance" »

August 3, 2009

Product offerings targeted at the retiring boomers – Still a priority?

For a few years, developing and launching new products have been a high priority in insurance companies. The Pension Protection Act (PPA) of 2006 opened the door for product innovation and design creativity by allowing the introduction of tax-advantaged combination annuity-LTC insurance products, starting in 2010. This in conjunction with the estimated $ 9 trillion baby boomer market driven by the unfunded life span presented a significant opportunity for Financial Services companies.

Continue reading "Product offerings targeted at the retiring boomers – Still a priority?" »

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