Why is becoming more 'customer centric' important for insurance companies?
Firstly, until now, insurance companies have been competing primarily on price. Given that there's little margin left to do this and that it's becoming increasingly difficult to attract and retain customers, insurance companies need to find something else to differentiate themselves from the pack.
Secondly, the Retail Distribution Review and a move towards a direct-to-consumer market mean that insurers need to better understand their customers' needs and behaviours in order to sell them the right products. In addition, customers are becoming accustomed to receiving tailored and targeted offers – it's no longer acceptable for insurers to offer products that are irrelevant to the individual.
Lastly, the potential for brand damage through social media (such as Twitter) is significant, so having happy, satisfied customers is more important than ever.
In terms of customer centricity, the insurance sector is far behind other industries. It's not untypical for insurance companies to make only two points of contact with the customer: sale and claim/termination. Surprisingly, many companies are still not using the obvious opportunities that exist to cross-sell to their existing customer base; even when they try, they often do not understand the customer well enough to know what to offer. Perhaps this is to be expected given that we've had a heavily intermediated market for many years, but change needs to happen.
There is a lot for us to learn from other industries about creating quality interactions to enhance the customer experience. Through the use of clever analytics, digital communication and 'next best action' programs, insurance companies can start to create relevant and meaningful touch points with customers along their lifecycles, improving retention, the likelihood of cross-sell and, ultimately, the long-term value of the customer.
Learn more about turning policyholders into customers at the Life Conference 2013, 10-12 November in Edinburgh.
Colin Forrest
Colin is a Partner in Deloitte's actuarial practice,
specialising in data analytics for life insurance companies.
He spent the early part of his career working for life companies in
various roles before moving into consultancy, working initially in
the Solvency II space and then becoming involved in
analytics. He also leads a large team of actuaries who
provide data analytics services for other industries.
Susie
Nursaw
Susie is part of Deloitte's Customer Analytics practice and
leads the Next Best Action proposition. She specialises in campaign
execution processes and direct marketing strategy, helping
organisations to use analytics and insight to manage customer
experience across multiple channels. Having worked as a client and
a consultant across various direct to consumer organisations
including Sky and large retail banks, Susie is now working with
Insurance clients to develop their direct to consumer customer
management strategies.
Kiran
Sandhu
Kiran is a manager in Deloitte's actuarial practice and has
spent the last two years specialising in data analytics for life
insurance clients, developing our propositions in this space. In
particular, she is interested in applying the techniques and
methodologies used in other, more advanced industries to
insurance.
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