While the downturn in the economy has slowed strategic IT spending across financial services, insurance companies that have committed to new customer relationship management (CRM) strategies have not slammed on the brakes. But they are proceeding with caution, according to Meridien Research Inc., Newton, Mass.In a report titled "Insurance Client-Centric Strategies: Reach for the Stars with Service," Meridien highlights insurers that have launched ambitious CRM projects, including an Australian P&C direct underwriter.
Although impressive in its scope, the Australian insurer's CRM initiative has been on the agenda for several years, and has been pushed back as other projects were deemed more important, Meridien reports. In the aftermath of September 11, for example, the company does not plan to deploy CRM until next year-focusing on consolidation rather than growth.
Other industry research reveals that CRM is not high on insurers' priority list. For example, despite optimistic predictions and promises for the technology, Hartford, Conn.-based Conning & Co. is convinced that property/casualty insurers are not spending heavily on CRM.
The costs (up to $100 million) are high, and so are the failures, according to Conning, in a report titled "CRM in Personal Lines Insurance."
Two sets of interviews with insurers by Conning found that their spending plans appear to be significantly different than those presented in pre-September 11 estimates from research and consulting firms Meridien and Gartner Inc., Stamford, Conn.
"Some insurers reported they had evaluated CRM, but had concluded that it did not meet their cost/benefit threshold, and therefore, decided not to undertake a CRM effort," states Conning. Many insurers report that they continue to evaluate CRM and find its benefits alluring, but have not committed to it. And insurers that have committed to CRM say they are still in the early project phase.
Recent estimates by Meridien predict that global spending on insurance-related CRM technologies will reach $1.6 billion by year-end and $2.5 billion by 2006 (see chart).
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