Frank Heaps
Director, P&C Product Marketing
StoneRiver
The past 18 months have been tough for the property and casualty insurance industry. The soft market coupled with a weak economy has put companies under pressure to grow the business while working to retain customers. The consumer that may be more directly affected by our economy is the most price sensitive shopper: younger consumers. That is not to say that the more affluent income earner is not price sensitive or at risk, but they are not as likely to evaluate new carriers to save a few percentage points a year for their insurance. At a recent meeting of our advisory group of customer executives, several members indicated that retention rates in personal and consumer lines are weakening.
There are several ways to attract and retain customers. Price is one method to retain customers but with soft rates there is only so much you can do as a company. Another option is to provide better customer service or innovative customer service. Your marketing department probably has diagramed your customer base by demographic information: income, age (personal lines), technical abilities, price sensitivity, etc. Being more dynamic in your approach to servicing your customers can benefit all of your customers regardless of income or demographic.
In some ways, the P&C carrier market has been slow to adopt innovation across the policy, billing, and claims departments. More and more consumers are expecting innovative tools and self-service. Consumers today look for a carrier that provides an insurance product at an affordable rate with the ability to purchase insurance and browse for information on their schedule. Your challenge is to provide service and support across your customer base according to the needs of each customer demographic: personal communication through an agent, call-center support, self-service portals, etc.
This is the first of three posts that look at the three major domains of P&C insurance: Policy, Billing, and Claims.
Carriers have been extending the ability to quote to customers for a few years now. Larger carriers have opened up the ability to quote, compare rates, underwrite, and issue a policy without human touch for simplified personal lines policies. Mid size and smaller carriers have provided the ability to offer a quote but that often is limited to being only a sample quote. That drives potential customers to contacting the carrier through an agent or a call center. For many people that is a preferred channel. But another group of potential customers sees that as a barrier to doing business with you. A recent study supports the notion that agents prefer portals for their own self-service.
Opening the ability to quote / rate / underwrite / issue a personal lines policy and maybe simple commercial policies (like BOP) would be a way to attract customers by being easier to do business with. Sometimes offering the ability to process a quote directly may make a customer purchase the policy without further shopping. The benefit to you is saving money by not having to support an agency force or call center for every new policy quote and issue. That lowers expense over time and allows only policies flagged for additional underwriting to be reviewed by an underwriter. You can carry this farther down the road and allow consumers to change address information online or conform basic policy details prior to renewal. Why would they shop for a lower premium if you have already started processing the renewal 45 days early?
The example above primarily applies to personal lines where customers may be more fickle than a commercial lines customer. Commercial lines is much more complex but you can expose information for them: add vehicle to a policy, payroll information, certificates of insurance, etc.
You can also become more innovative and dynamic by minimizing your production of paper policies. Many jurisdictions are allowing for the electronic delivery of policies and correspondence through electronic means: email, PDF, etc. Not all customers want paperless, but you can offer an innovative approach for those who prefer electronic delivery. Eliminating the direct costs of mailing and printing policies and forms as well as reducing the expense of handling and processing can save you significant points in your expense ratio.
We are interested in hearing about your experience with policy innovation. Have you begun to offer more services to your customers such as rate / quote issue? Have you allowed customers to see an account summary and possibly make changes online for review by an underwriter? What else have you considered or are you thinking about?
Be sure to check back in on Tuesday for part two of three.