This report is based on a specially-commissioned Insurance 360 primary research study, to which senior and upper-middle managers in marketing, customer management, operations and strategy at general insurance companies in Great Britain and Ireland contributed. With industry profitability low and radical changes afoot both in technology and the competitive environment, it explores how personal lines insurers can best configure themselves for future success.
The two areas of greatest concern to respondents were customer centricity and differentiation from competitors. But there was a wide degree of variation in frequency of communication with customers - from weekly to no more than annually. Insurers generally lacked mechanisms that could give any one manager a 360-degree view of customers, divisions within the same company often communicating independently of one another.
Asked about their current communications infrastructure, 46% of respondents gave their company's website one of the two lowest grades. Confidence in their SMS and social media capabilities was lower still. Managers saw particular potential to improve their companies' functionality in the newer technologies, where insurers lag behind the retail banks - and, increasingly, their younger and more digital-minded consumers. At most companies, the shift to online quote-and-bind and electronic documentation remained a work in progress.
In home and contents and particularly in motor, insurers still seemed conditioned to rely on short-termist ‘dual pricing' strategies, accepting high churn rates as a fact of life and focusing heavily on new customer acquisition. They had yet to get a real grip on the concept of lifetime customer value. Few insurers had more than 30% of their customers holding multiple policies.
With price comparisons available at the click of a mouse, however, insurers can no longer base their business on customer inertia. The industry will have to shift to a ‘share of pocket' strategy. But to make that work, insurers will need to get to know their individual customers far better. Specifically, they need to know what policies they hold with other companies and also what products their partner, or their family, might need. The more dynamic insurers are starting to shift towards combined or modular family policies, allowing them to deliver sharper pricing, better cover and an overall insurance proposition and relationship that competitors will struggle to match.
In short, insurers have yet to fundamentally change the way they deal with the customer. Although data-rich, they are information-poor. Their retention strategies are relatively weak and they are missing the chance to identify the lucrative customers they most need to retain and develop if they are to be profitable in the decade ahead. Insurers that can turn existing single-policy customers into holders of combined policies will capture stronger, more durable relationships, higher customer lifetime values and better, more consistent profit. To do so, however, they first need the capability to maintain an active, coherent dialogue with the customer through all today's forms of communication, from conventional post, telephone and email to SMS and social media.