Fifty years from now, will the business community look back at this period as a time when the insurance industry accepted the challenge to reshape itself-or as a time when the industry settled for continuing to do business as usual?We already know that the insurance industry requires constant adjustment because of new laws, regulations and competition. Although the industry is surviving, insurers' low return on equity consistently under-performs other industries. With accelerating changes in consumer expectations and technology, it is a particularly good time for insurance executives to examine and recreate their organizations to compete more effectively.
Resolving customer issues
The amount of time and phone calls needed to resolve an issue are primary indicators of customer satisfaction.
Indeed, the ability to resolve customer issues on the first call positively affects customer satisfaction, according to J.D. Power and Associates' 2003 National Auto Insurance Study.
Insurers can also increase their competitive profile when they tune into "life events" that create insurance opportunities-such as job changes, marriage and having children.
Roughly one-third of insurance shopping stems from these life events, research indicates. Victors in the competition for new policyholders understand that providing peace of mind when these "life events" occur is part of their mission.
There are eight keys to becoming stronger in today's environment:
* Be reliable. Information from A.M. Best and the Insurance Information Institute reveals that consumers are interested in the financial stability of their insurers because insurer insolvencies are on the rise. Policyholders want to protect important people and possessions, not roll the dice on whether their carrier will be around if disaster strikes. Companies providing a reasonable flow of information to consumers and agents have an edge over those that don't.
* Be easy to work with. Insurers that offer choices on how consumers interact with them attract and retain more customers. Agents, toll-free numbers, and Web portals all need to focus on delivering a consistent message about the products and services offered and where to get help.
* Develop new policy offerings. The market calls for basic insurance products, but emerging areas of risk require innovation. With more employees working from home offices, how are accidents in the home covered during working hours? Forward-looking companies continually evaluate and develop new coverages and services.
* Improve customer communications. Insurers that are attracting new customers communicate proactively about subjects important to policyholders-policy and claims status, the meaning and cost of newly mandated changes, and renewals, for example.
* Price the product correctly. The U.S. Department of Labor's Bureau of Labor Statistics reveals that insurance as a percentage of total household spending has been essentially flat since 1990, with the biggest jump in health insurance, which rose from 2% to 2.7%. Programs and products should fit the trends.
* Provide first-class claims management. Claims are the key contact point with customers. Claim assignment and initial contact should happen quickly. Claimants want to be able to "watch" the progress of their claims and know that they are being cared for. Insurers that set up template workflows so communication occurs automatically are ahead of the game.
Some insurers that realize the importance of claims service actively distribute storm warning notifications based on geographic location containing contact information and safety tips.
* Implement solid, yet innovative billing practices. Invoices are another contact point that demands care. The most competitive companies offer multiple plans and payment options such as credit card, direct deposit, and others.
If a customer is late with a payment, being proactive is critical. Taking the initiative to contact the customer to work out a payment plan can often save the account. But more than saving an account, revenue grows, expenses are contained, and insurers have a satisfied customer who is more likely to stay with them over the long haul.
* Have or develop the right people. Carriers need to invest in their employees, in their education and in helping them learn how to work with others internally and externally.
Competitive insurers are continually reshaping their business to stay at the head of the pack. They have the right resources for the job, including the right people, making the right decisions and using the right technology. They are the companies that hire the best people and provide training so employees continue to grow and improve. They are the companies with procedures for selecting the best technology, and they achieve ROI with measured implementations.
And, they are the companies that focus on what matters-whether it's customer service, delivering new products to market, or something else-and they measure outcomes so they can continue to evolve and reshape the insurance business.
Chester Gladkowski is regional vice president of Fiserv Insurance Solutions.
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