The global insurance industry faces challenging times ahead where ‘winning’ will involve a much greater emphasis on the customer, as well as global expansion and the development of a broader portfolio, according to a new report by Deloitte Research.
The report, ‘1999 Top Ten Insurance Industry Outlook’, identifies ten major challenges which confront the insurance industry, and suggests strategies which might confront these issues effectively. The survey finds that, since many insurers are on the move into asset management and banking businesses, inter-segment financial services battles for customers will ‘rage’. It is claimed that since eighty per cent or more of the profits at financial service firms is typically generated by twenty per cent of the customers, the development of customer retention strategies is all-important. Referring to research on the subject, it is submitted by the report that if the average firm boosted its rate of customer retention in life or car insurance by just five percent, this would result in an increase in customer profitability by more than eighty per cent. Thus, attention is shifted away from attracting new customers and towards retaining profitable ones.
The report suggests that in order to succeed with such a strategy, insurers must ‘evolve their products to meet the changing needs of their customers’.
Insurers are encouraged to ‘do a much better job of understanding each customer’s individual needs and preferences’. They are pointed towards tools for this job, including data warehouses, data mining, call centres, contact management applications, websites and e-mail. It is claimed that ‘by combining data mining with the latest call-centre technology, financial institutions can know the customer’s full profile on the screen the moment he or she calls, e-mails or browses. It’s the ultimate in individual marketing: technology that not only recognises the customer but then structures the perfect sales or service strategy on the spot’. |
