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The insurance industry faces a great number of challenges as it becomes an integral part of the financial services marketplace. Insurers are challenged to make customers the center of their business instead of focusing on individual insurance products.

By Jamie Bisker, TowerGroup

The insurance industry faces a great number of challenges as it becomes an integral part of the financial services marketplace. Carriers and their distributors are faced with more animosity than normal because of rising premiums, lower earnings from equity investments, and the ever-present resentment that comes from the mandatory nature of many P&C products. Carriers are challenged to make customers the center of their business instead of focusing on individual insurance products. Carriers of all types have recognized that contact centers are essential for their operations and need to further understand how important they can be to solidify their commitment to customer-centricity.

The modern call center is key to the success of insurance operations for financial services providers. Call centers, also know as contact or customer service centers, provide carriers with a customer touchpoint that is used around the clock on every day of the year. This level of accessibility is crucial to insurance customers of all types because of the combination of planned and unplanned life events. For the large portion of the population that is approaching retirement age, access to a "live" voice can mean the difference between simply holding financial instruments and having a plan for retirement that allows a restful night of sleep. Likewise, property and casualty call centers become the "face" of the insurance company when accidents occur or a natural disaster becomes more than a headline that happens to someone else.

Recent studies by The Center for Customer-Driven Quality at Purdue University confirm the critical nature of call centers to modern commercial enterprises. According to these findings, well over 90 percent of the public forms their perception of a company based on their call center experience. Because so many aspects of insurance operations use contact centers for major portions of their customer-facing activities, this is both a plausible and critical statistic for carriers. In addition, the study also indicated that over 60 percent of the public will terminate their relationship with a company based on a bad experience with telephony-based service centers. Clearly, the public expects all companies, including insurers, to be able to utilize and excel at delivering service over the most basic of modern technologies -- the telephone.

Insurance call centers are frequently the largest internal user of customer-focused applications. This includes information systems such as customer information files, customer relationship management (CRM) applications, as well as sales and servicing solutions that address cross-selling and up-selling. Just as important are the business-to-business (B2B) relationships that carriers maintain with their distribution and service partners. Both of these aspects of customer service need to be the primary focus of customer-centricity efforts that allow for seamless call-to-call handling, awareness of the customer's individual situation, and integrated marketing efforts needed to enhance sales opportunities. Even if it is necessary to use temporary mechanisms to provide a consolidated view of the policyholder or third-party claimant, it will be worth the effort.

Examples of information technologies that can provide the necessary connections between important data sources include enterprise application integration (EAI) tools, messaging oriented middleware (MOM), and, more recently, solutions that use Web services to bridge the customer information gaps inside insurance companies.

Carriers need to view call centers as opportunities to show their commitment to the concept of customer-centricity. As insurance companies begin to put real effort into improving, replacing, or rebuilding core systems, they must place a high priority on customer-facing applications. There are very few projects that will provide a faster return on investment than those that deliver consolidated policyholder information to most widely used customer-facing mechanisms -- the call center.

You can learn more about contact centers' role in customer service at Insurance & Technology's Customer Service Leadership Forum, April 2, at The Roosevelt Hotel, New York City.

Jamie Bisker is Research Director, Insurance Practice, at TowerGroup (Needham, MA), which provides a comprehensive range of research and advisory services focused on the financial services industry. Visit TowerGroup online at

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