Insurance firms need to retain, not just win over customers

Antony Jacob

With information on their fingertips, customers now are more educated, less loyal, and highly independent. They are driving companies to respond more efficiently to their needs. As a result, companies need to be more customer-focused and far more efficient and transparent to win and retain loyal customers. In the insurance sector, until now, the individual agent has been the main channel for selling products. But now additional channels, including brokers, banks, corporate agents and the Internet will be used by companies to reach millions of potential customers.

As rapid changes sweep the insurance industry, it has become clear that the opportunities are enormous. The entry of new companies will result in increasing customer awareness about the kinds of products. Hence the need for insurance companies to develop products and services based on direct consumer research.

The focus has to shift to customer service. As for the customer, the single biggest benefit will be that he will get more value for money. It is important to remember that whilst we Indians are price-sensitive, we are also value-conscious. Financial strengths, long-term commitment and a well-thought-out business plan will ensure success.

In today’s scenario, new channels of distribution are emerging. Insurance companies are more willing to outsource and are partnering with other companies in different lines of business—banks, retailers, finance companies, to maximise sales. The bancassurance model will work effectively in India where local and multinational banks have strong brands and even greater customer loyalty.

Insurance companies in India are also looking at capitalising on other strategic alliances with companies like health insurance providers, e-businesses, and multinational banks. In effect, the future may see insurers define a strategy that is not dissimilar from that of a manufacturer—a behind-the-scenes provider of products, packaged and sold through a number of distribution companies and channels.

Distributing life and non-life products through non-traditional channels, such as the Internet, bancassurance and other channels means distributing products that are unique and specific to a particular marketplace. Product differentiation is a critical factor in non-traditional channel success. Successful products will be those that consistently satisfy the needs of customers.

Whilst transactions over the Net are beginning to take place globally, it will take time for it to catch on in India. This will happen once legal issues are sorted out. However, this is an avenue that Indian insurance companies will need to keep an eye on, as it is likely to have an impact on their business.

It must be reiterated here that if the customer is to be king, insurance companies need to invest in time and training—factors that are essential in ensuring that staff reach their optimum potential. Staff at the frontline or in the strategy development room can then offer customers the service and the products that they demand.
One of the critical elements of customer service in the competitive landscape is the timely and accurate settlement of claims. No insurer wants to be known for being tardy in settling claims.

(The writer is deputy managing director, Royal Sundaram Alliance Insurance Company)