Insurers Are Missing the Boat on GenX, GenY - CSC Future Focus Panel

For over a decade insurers have been talking about their commitment to shift their orientation from policy- to customer-centricity. We continue to see signs that this is happening, but the geological pace of its advance is too slow to meet the rapidly evolving expectations of customers, and especially those of the so-called Generations X and Y. That was the gist of observations made by a panel of analyst and carrier executives held during the Future Focus portion of CSC's Connect for Property and Casualty user conference, here in Nashville, Tenn.

It has been about two decades since CRM technology debuted and yet fewer than half of insurers currently have a single customer file, observed Kimberly Harris-Ferrante, an analyst with Stamford, Conn.-based Gartner.

"We have a huge gap in this regard," Harris-Ferrante opined. "We are not creating the quality of customer experience needed for today's customers, and the customer of the future will find us a very distasteful industry." Harris-Ferrante said that insurers need urgently to recognize that its systems user-related shortcomings apply not only to potential customers, but also to distributors and other business partners, and to future employees and decision-makers as well.

Demand for better user solutions is by no means confined to young customers, noted Scott McClintock, CIO, Arch Insurance (New York). "My senior management team suddenly gets iPads or other devices and wants everything on those platforms," he related. "Expectations about access to data are growing exponentially, and it is certainly a challenge to make a dent in that, to say nothing of staying ahead of it."

The impact of those changing expectations goes beyond sales and service to the arena of product development, added Chad Hersh, a partner in New York-based research and advisory firm Novarica. "The attitude of the emerging consumer is one that says, 'I'm going to Mexico for the day and need a policy that will cover me. I can get travel insurance for one trip; how come you can't sell me a one day auto insurance policy?'" Hersh.

"It goes through products, HR -- every aspect of the company, and we're so far from dealing with it effectively that it's embarrassing," Hersh added. "It will allow for a new entrant to come in and succeed in the market.

Dan Pitcher, General Manager, Property/Casualty Companies, Farm Bureau Financial Services (West Des Moines, Iowa), struck a qualifying note, emphasizing the enduring importance of agents as trusted advisers to insurance customers. "I have children [in the demographic groups being discussed] and after 20 years, I still can't get them excited about insurance," he said to an amused audience. "You have to segment your market, but at the end of the day they just want a simple solution they can get to when they need it. I don't think we'll ever be able to elevate insurance to the level of excitement associated with a new Apple product."

Gartner's Harris-Ferrante agreed with Pitcher's point about agents' role but said that the influence of disruptive technologies on consumers' decisions about insurance should not be discounted. Gartner research has shown that consumers make decisions about insurance based on price above all, followed by convenience, experience with an insurance company, and then the influence of friends and family -- which has taken on greater importance with the multifarious connections people have through social networking technology.

"Think about the hundreds of Facebook friends that people haven't seen since elementary school -- it really turns our industry on its head in this regard, and is more important than agent/broker referral," Harris-Ferrante asserted. "I'm not saying that agents won't continue to play an important role, but people looking for the first touch will go to other places."

Most carriers have social media strategies in one or another state of maturity, said Novarica's Hersh, but the best have gone beyond broadcasting what they deem attractive messages or images of the company to active engagement with customers. "More and more we're seeing carriers use social media as a tool for two-way communication," he said.

Harris-Ferrante said that insurers must learn to both push and pull information, and in the case of the latter, they need to get sophisticated about pattern recognition. One customer may bad-mouth an insurer at a social networking site and it could very well be regarded an anomaly by consumers, she explained. However, she said, "if you have 20 people saying it you have a problem that you would never know about without pattern analysis."

Harris-Ferrante added that insurers need to energetically study what customers expect, and to deliver according to those expectations in consistent ways across multiple channels. But in doing so, she insisted, insurers need to go beyond traditional demographic age cohort segmentation to more varied factors such as race and ethnicity, socioeconomic status and lifestyle.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio