Record disaster losses, new competitors and Internet-empowered consumers are all conspiring to force insurers to expand and perfect their mobile apps, social media outlets and websites to retain tech-savvy customers, according to a new study.

The “2012 North American Insurance eBusiness and Channel Strategy Trends” report from Forrester Research found that 97 percent of IT budget decision makers in the insurance industry thought of technology as critical to serve and support customers.

“What surprised me the most was the degree to which mobile apps, social media, analytics and the Internet are a fundamental part of the way that insurers do business compared to five years ago,” said Ellen Carney, senior analyst serving eBusiness and channel strategy professionals at Forrester and author of the study. Claims from storms and catastrophes totaled $380 million globally with 37 percent of those insured losses occurring in North America, according to the survey. In addition to record losses, new and innovative competitors are giving established insurers a run for their money.

For example, when Google purchased the UK insurance comparison site called Beat that Quote in March 2011, it spurred traditional companies to consider online business capabilities differently. About 66 percent of insurers who responded to the survey said that technology is central to how they differentiate themselves from competitors. “There’s more competition for customers. If an insurer’s website, mobile apps and customer service is not up to par, customers will switch to a new carrier who gives better Web experience with comparable pricing,” Carney told Insurance Networking News.

“Speed of page load time, interactive tools and first impression servicing are all areas that insurance executives need to be perfecting on the websites in 2012.” Word of mouth among mobile users of the internet is also raising the bar. According to the 2012 Trends Report, about 38 percent of U.S. online adults now carry smartphones or some similar device in their pockets and purses. Canadians are also adopting smartphones rapidly, with 16 percent of Canadian adults already owning a smartphone. Almost all online U.S. adults own a mobile phone and close to half access the mobile Internet at least monthly.

“Customers are complaining if they don’t get top notch service. If a health insurance claim is rejected, for example, customers are more likely to complain online and word of mouth spreads quickly because there’s so much transparency and access to information with Facebook, Youtube and other social media outlets on the internet,” said Carney. As a result, insurers are increasingly becoming obsessed with customer service. In fact, U.S. insurers spent $5.2 billion seeking to lure new customers in 2011, according to J.D. Power and Associates. “This obsession will lead insurers to be more attentive than in the past,” said Carney. "Executives are paying attention to what their customers are experiencing and care more than ever before.”

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