Carriers can blend automation with personal service to reach multiple generations and achieve a competitive edge.

The conflicting studies mentioned in the February 2008 commentary, “Don’t Look Too Far Ahead” by INN’s Senior Managing Editor Carrie Burns bring to light the ongoing debate between personal service and automation. As Burns noted, the TowerGroup Inc. research found an increasing demand from consumers for 24/7 electronic access to their financial services, while IBM’s recent survey of 1,000 American consumers showed the majority of respondents were very supportive of their agent-based service and planned to continue that relationship. Which presents the industry with a challenge: how to meeting the demand for automation while providing high-touch, personal service?

Resolving the bifurcation between those desiring an electronic sale and those valuing the agent relationship provides the chance to gain competitive edge. In truth, the opportunity does not require an “either/or” choice. Instead, it lies in the fact that underlying these seemingly disconnected responses is a consistent consumer drive for convenience, accessibility and flexibility: what they need, when they need it.

Many of those same respondents who stated they plan to work directly with their agent for future insurance needs likely share responses with the consumers who are increasingly demanding 24/7 access. Along those same lines, the numerous recent surveys that show a growing displeasure with the automated interactive voice response menus that so many businesses inflict upon their customers, reinforce the same conclusion: It is not the technology that is desired, it is the convenience and accessibility that is driving consumer preferences.

There should be no doubt of the critical importance of the insurance industry shifting from product or channel-centric business models to customer-centric ones. Whether dealing with the retired, less technically proficient Silent Generation, the rapidly approaching retirement baby boomers, Generation X, or the up-and-coming Gen Y, there is a consistent theme demanding personalized service delivered in a convenient and timely manner.

What does that translate to in terms of practical reality? Simply put, when there is a complex process, like purchasing or upgrading insurance, then the personal touch will be needed. When there is a critical touchpoint, such as point of claim, then the personal touch will be a necessity. However, for simple issues such as checking balances, paid to dates, coverage levels, or even changing addresses and billing modes, there is the need to offer options that range from personal service to online, 24/7 access. That is what the market will demand, and the successful insurers will be delivering.

Thus, it is not so much the supplanting of personal service with electronics that is occurring as the melding of industry operations around customized, customer centric flexibility that addresses the different needs by offering alternatives. Choice is the buzzword of consumers. The company that is able to master providing customized options will find itself well received by the multi-generational consumers in the marketplace.

Still, care must be taken not to lose sight of the fact that, for the first time ever, the insurance industry has a wide disparity in the nature of consumers being served, with multiple generations each having unique values and interests. Yet in this disparity lies tremendous opportunity.

THE DELUGE

By the year 2011, when the tipping point is reached and close to 80 million baby boomers in the United States alone are aged 60 or older, an estimated over $30 trillion in assets will have shifted to retirement income purposes, bringing with it the demands of transitioning from accumulation to payout. These longer living, healthier retirees will require trusted and experienced guidance in matching their retirement needs with a secure income stream—a task not to be accomplished through pure electronic means.

At the same time, Generation Y will be entering the workforce en masse, bringing with them their demands for products that have automatic plan features. As an example, the use of social networking, online collaboration and Web conferencing may provide the path for delivering personalized service to this technically adept generation.

Which brings to mind another complicating factor: By 2011, it is estimated that 25% of the U.S. population will be of stated ethnic background. With that, insurers and professionals are not only challenged by the needs of a multigenerational consumer base, but also those of an ethnically diverse population bringing different cultural expectations and languages into the mix of customer-centric service.

One thing is certain: Knowing who the customer is and what they expect has never been more important. Companies that are not already investing in people, processes and technology to meet these demands are behind the curve; and there isn’t a great deal of time left to catch up.

Steven Callahan is a senior consultant and practice development director with Dallas-based Robert E. Nolan Co. Inc.

(c) 2008 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.

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