Ensuring the Success of Insurance Companies
Ask a dozen people what they think about CRM in the insurance industry, and you're likely to get a dozen answers. Part of the problem is that insurance is really a composite of several very different products, from life to healthcare to property and casualty (P&C) to automotive--each possessing very different business processes and life cycles. Even more confounding is that insurers' direct customers are often independent brokers.
No matter whom you speak with, however, the consensus is clear: When it comes to CRM, "the insurance industry tends to be laggards compared to the bankers and investment types," says Stephen Ross, director of the AlignIT Group's financial services practice.
The business model may be the culprit. "The insurance industry is still very product-focused, as opposed to relationship-focused," says Shaw Lively, research director at financial services consultancy Financial Insights.
That structure often keeps insurers from immediately seeing the value of CRM technology. "When you walk into an insurer and mention CRM...they think 'CRM doesn't apply to us,'" says Tom King, insurance industry principal at SAP America. "They think it only means interfacing with the end-insured."
According to research conducted in August 2003 by Kimberly Harris, a Gartner research director, only 45 percent of life and health insurers and 59 percent of property and casualty carriers said they had a CRM strategy in place.
Given the nature of the industry, Lively says, "there isn't a need to have regular contact [with the end-insured], but when you have a claim [filed], that's when you really want to delight the customer and show your skills."
Denise Garth, vice president of membership and development for ACORD, a nonprofit insurance-industry trade group, agrees. "Most buyers of insurance, once the premium is paid, don't really connect again with their agent or broker until it comes time for renewal or the infrequent filing of a loss," she says.
That's why CRM vendors have come around to a new way of addressing the needs of insurers: to help them address the needs of their brokers in serving end customers. According to SAP's King, "An insurance executive's not going to say, 'I have a problem with CRM.' He's going to say, 'I have a problem with claims, or with channels.'"
But, as Kim Seabrook, manager of Healthcare Solutions for Saratoga Systems, points out, "Brokers can sell better to their customers when they have better information on their providers: new offerings, additional riders, or cross-sell opportunities," to name just a few. Take, for example, Safeco.'s insurance arm: "Our focus is on providing top-notch service to our channel, which includes wholesalers and providers, so they can effectively match the needs of their clients to the products we offer," says Susan Davis, assistant vice president of Safeco's Sales Center.
It is Safeco's type of approach that will deliver a strategic advantage against competitors. "The real opportunity in insurance is that insurers have started on the path to change their business model from just the product sale to a broader set of financial services," Lively says. "They'll begin to look more like a bank or a diversified company like American Express, where that agent might also be interested in a loan product or an investment product." Once that happens, experts say, the gulf between insurers and customers will shrink considerably--along with insurers' reluctance to embrace CRM technology.
The industry as a whole is always looking to optimize its product offerings, which is a goal that can be reached through a better understanding of customers. "The [industry's] credo is 'the right risk at the right price,'" King says. "You can underwrite anything if you price it right." With CRM, according to Safeco's Davis, "Everyone has a better and more immediate view of the activity that takes place in the field, which allows all business owners to act more proactively."
Another way some insurers are being proactive is through their Web sites. "Insurance was slow to adopt the Web, and faces some unique challenges," Lively says. But, he says, the most forward-thinking insurers are "using CRM technologies to help the advisor be smarter about when to contact the customer and what to contact them about."
As in most industries, end users often have multiple touch points to interact with their insurers, which creates the need for a single source of customer data. As Garth puts it, "The business of insurance requires an enormous aggregation of information." But doing so can be a starting point for building relationships and creating future sales.
"It has always proven to be a challenge [for insurers] to leverage existing relationships," says TowerGroup Research Director Jamie Bisker. "CRM could help here."
WHO UNDERWRITES INSURERS?
Analysts' picks of vendors known to be prominent in serving the insurance market (in alphabetical order):
Helping Brokers Connect with Customers
Safeco is A
$7.4 billion behemoth focused on property and casualty insurance. According to Susan Davis, assistant vice president of Safeco's Sales Center, CRM is a big part of the company's long-term plan, in part because that's the only way the company can identify the end-insured, who purchase Safeco products from
"Our use [of CRM] is very similar to [that of] a mutual fund company that is selling its products through a broker channel," Davis says. And whereas other financial services companies "are more focused on the end customer or individual investor," she says, Safeco Corporation "focuses on a long-term business relationship" with those brokers.
Using both the online and offline versions of Onyx Employee Portal 4.5, Safeco's wholesalers "build relationships with financial advisors to promote the sale of Safeco products," Davis says.
In addition, there are internal users and a call center to promote and support those sales. In all there are 130 field personnel tied into Onyx.
Before implementing Onyx, wholesalers couldn't track connections to the customers--by region, or affiliation, or anything, really. Even worse, Davis says, "marketing had no way to target specific demographics for marketing campaigns and couldn't track the results or response rates."
Now, Davis says, CRM "provides a whole new level of efficiency throughout the company."
Wholesalers "track every interaction with financial advisors and...monitor which advisors are the most productive," Davis says. And they're able to ensure that customer data is absolutely up-to-date. As a result, marketing is better able to target campaigns, and the call center--no longer tied up answering redundant questions--is able to treat each call as part of an ongoing conversation rather than a brand-new introduction at each touch point.
Field reps, who are out of the office four days a week on sales calls, now "can make all of their updates while in the field and simply sync during their one day in the office," Davis says. As an added bonus, this gives executives "a better view of the exact activities that took place in the field," she says.
Though Davis declines to specify exact numbers, she says that increased efficiency, streamlined selling efforts, up-to-date customer information, targeted marketing campaigns, and the ability to conduct business proactively have had a positive impact on the company's sales. --J.W.