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Technology Can Help Life Insurers Go Where the Customers Are

The retail industry has developed very sophisticated and precise models to evaluate where storefronts should be placed. Winning carriers will need to develop similar virtual market coverage models, leveraging analytics to determine exactly where to place sales capacity.

By Kevin Kraft, Accenture

Mention "life insurance" to people of a certain age (let's say 45 or so) and the same image always comes up - a friendly agent sitting down with a couple at their kitchen table to talk about whether they have enough coverage. People who are a little older may remember that Robert Young, the ultimate sitcom dad, played a life insurance salesman on "Father Knows Best."The insurance industry was built on the ultimate in "going where the customers are" - in many cases, right into the customer's home. The traditional selling model provided both personalization and customization. More and more frequently, however, insurers are finding that prospective clients - particularly those in the under-45 demographic - don't want to meet in person, at least not initially.

Younger clients are much more comfortable with "kicking the tires" on life insurance purchases by using a variety of investigative techniques, many of them enabled by Web 2.0 or smart phone technologies. These individuals are used to modeling their own financial situation - and their anticipated insurance needs - on interactive media sites. They may use social media to find out what sort of decisions other individuals in their age and income bracket are making.

When we examined customers' attitudes towards life insurance in a large-scale global consumer survey in mid-2009, we confirmed that buying life insurance is not an emotional purchase. The bonds that customers form with their insurers are not likely to be broken, but that is because of the high "hassle factor" of trying to switch carriers, not because of any real emotional link between client and carrier.

This should not come as a surprise. Compared to other industries, life insurance carriers have fewer opportunities to interact with their customers. Many of the interactions beyond the initial sale have moved to service centers, the Internet, or self-service. Winning insurers, however, will deliver a distinctive and consistent experience - both for key customer segments and for key producer segments.

We believe, for example, that life insurers must do a better job of connecting the purchase of life insurance to life events such as college graduation, marriage, and the birth of children. Ironically, users of social media are essentially broadcasting this information onto the Internet; insurers need to systematize their approach to collecting, analyzing and acting upon the data they receive. Social media provide insight into the prospective client's personal preferences, attitudes and psychographics. This data, by the way, is often accompanied by highly relevant financial information that consumers broadcast about themselves. Insurers can use social media to help prospective clients share stories, open dialogues about financial needs, and educate themselves about specific products.

To do this, life insurers need to take steps to enliven their presence on the Web. Most insurers are still at the stage where their websites do little more than direct consumers to nearby offices and/or agents. While this is a useful function, it doesn't satisfy consumers' emotional needs - and may discourage younger consumers from further exploration. The fact that the under-40s are generally under-insured reflects this resistance to traditional sales channels.

Website themes that help establish a customer's true profile - with financial personality, a personal P&L statement, and life maps that chart life events already experienced, as well as those anticipated - can go a long way toward closing this gap. At the same time, the information derived from such models provides a better framework for segmenting customers and the producers who serve them.

The retail industry has developed very sophisticated and precise models to evaluate where storefronts should be placed. Winning carriers will need to develop similar virtual market coverage models, leveraging analytics to determine exactly where to place sales capacity.

Working within these market coverage models, carriers can then use multiple channels - including the Web, social medial and smart phones - to educate consumers and generate demand. The emphasis should be on making insurance a product that is bought, not sold.

For instance, companies need to incorporate their underwriting rules into smart phone technology, including iPhone, .NET, Blackberry or Android deployments. When consumers use smart phone applications to seek information, carriers will then be in position to provide more informed question and answer sessions, lower error rates in applications and shorter turnaround times. Smart phones can also make an agent's day more connected, building a stronger social bond among the carrier, the agent and the end customer.

Similarly, carriers can leverage collaboration technologies such as Cisco's TelePresence to develop a virtual -- but powerful -- "kitchen table" customer experience. This connects with the customer needs of the under-45 crowd using a cost-effective, 24x7 channel.

Of course, it will not be enough to establish a presence in the channels that consumers prefer to use. Performance scorecards should also measure how effective each channel is in capturing both the mindshare and the share of wallet of desired consumer segments. By evaluating results from their distribution-related technology investments, carriers can then make more informed decisions on aligning channels, recruiting new production capacity, and changing the experience offered to customers.

About the Author: Kevin Kraft is senior executive in charge of growth and distribution for Accenture's life insurance practice. He can be reached at [email protected]The retail industry has developed very sophisticated and precise models to evaluate where storefronts should be placed. Winning carriers will need to develop similar virtual market coverage models, leveraging analytics to determine exactly where to place sales capacity.

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