INN's Annual Top 5 Trends for 2012 - Consumer Centrism

The economic crisis of the past few years has given P&C and life insurers new reasons to be competitive, and new reasons to be concerned. During this period, consumer spending on insurance dipped, while spending on personal technology reached an all-time high. In fact, experts say that we have entered an era that marks a turning point for consumer technology-for the first time, the combined shipment of smartphones and tablets is predicted to eclipse that of PCs, notes International Data Corp. (IDC), giving customers the power to access information and transact business at any time from any place. Just from 2010 to 2011, the number of mobile devices shipped is expected to increase from 305 million to 472 million, the company says.

"There is a greater awareness in the insurance industry that competition is based more on customer satisfaction," notes Kimberly Harris-Ferrante, distinguished analyst and VP at Gartner, "and consumer centrism is the hottest topic right now."

Regardless of how you define the "customer," be it internal employees, agents, brokers, third-party partners or the consumer, technology is the genesis for an escalation in customer expectations not seen before in the insurance industry. With those expectations comes a new sense of urgency, as insurers focus on adopting new business models and practices in order to deliver on the promise of quick and easy access to policyholder and claims information. It also means developing an internal focus on external media: managing the organization's brand on a host of public social networks.


The New Charge

What does this mean for the typical insurer? If you ask an insurance IT professional to spell "consumer centrism" he or she will spell "app." Many insurance IT departments, once charged with back-office development and maintenance of core systems, are now overwhelmed with creating mobile applications for use by internal employees and external customers.

At Allstate, app development is serious business-and fun. When the insurer launched its internal App Attack contest last year, 100 employees on 43 teams competed, under a 48-hour deadline, to conceive, design and code a mobile application that would improve their job performance. The program was so popular that Allstate launched App Attack II in January, this one comprised of 74 teams with the charge of creating a mobile app for safe driving. The result? All of the ideas are available to sponsors inside the company, and one has a patent pending.

For many others, says Harris-Ferrante, the light bulb is coming on. "Recall in the 1990s when everyone wanted a single view of the customer? Unfortunately, investment in customer facing technology has come and gone." With the availability of the Internet, customers have access to networks where they can talk to other customers, complain about their insurer's customer service and access Youtube for information. "All of this makes the customer smarter," she says. "Instead of guessing, they now have the power to find the cheapest policy, best customer service, etc. "

For Rob Robison, SVP of Life and Loans at Alpha Insurance, understanding customer expectations is especially important. The company's 400 service centers house personnel dedicated to both Alpha's P&C division, which services more than one million policies, and Robison's division, which has more than $25 billion in force.

"Expectations are also being set by other financial institutions," he says. "We need to be able to interact the way the customer expects us to, mobile and 24/7." With the customer at the center of its corporate strategy, Alpha is introducing novel ways to attract and retain business; most recently, offering credit/debit cards for renewal payments.

Harris-Ferrante agrees that following a financial services model is important, but says the larger opportunities to engage the customer lie with retirement products. "Life insurers have been a bit slower to understand the power of the consumer," she says, "maybe as a result of caution, fear and denial. But like P&C, the life industry can't take a blind eye to this because they need to have the right products for the right people. Those insurers that help their intermediaries, drive mobile technologies and provide extra services will be able to compete."

Robison, who spent many years in technology before accepting his current position, brings a unique understanding of the complexities of nurturing this new category of life insurance customers. "Traditionally life insurance was sold and not bought," he says. "To engage the new consumer, we realized we had to simplify our death benefit products and make it easy to do business with us."

Eliminating the need for the typical blood tests and doctor office visits ahead of qualifying the risk, the company relies on other data to get the right rates attached to those risks, adds Robison. The company also is monitoring social media. "The industry is in its infancy with social media, but it's a huge opportunity," says Robison.

Although the insurance industry's efforts as a whole have struggled to effectively use social media as either a marketing tool, to handle claims, or better communicate with its customers and employees, some carriers are on their way, (Alpha monitors and updates its sites regularly), using it to brand the business and give agents ammunition to increase business. They also use it to study the marketplace, seeking information about demographic sets and customer preference, potential pockets of new business and opportunities for cross-selling into existing customer bases. Finally, the carriers that understand the power of the customer are using social media to manage public communications-monitoring, engaging and responding to positive and negative messaging that has the potential to affect the carrier's reputation.

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