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Insurers, Intermediaries and Interactions - From Channels to networks
Type
applied research project
Start Date
01 August 2012
End Date
01 July 2015
Status
ongoing
Keywords
Insurance
Intermediaries
Channels
Networks
Customer Value
Trust
Integrated Partner
Relationships
Value Proposition
Description
Insurance is a peculiar product. While it is generally defined as "the equitable transfer of the risk of a loss," the reality perceived by customers is much simpler.1 They buy a promise that when the negative event they insured against happens, their provider will replace the loss.
Purchasing a promise requires trust. Today's customers have instant access to almost unlimited information, and are willing and able to share facts, opinions and experiences with their peers. This imposed transparency changes expectations toward insurers, and makes it more difficult for them to be perceived as trustworthy providers of the security promise.
How can insurers serve their customers personally while coping with the
broad information and interaction demands of the digital age? How do they
make sure it is their intermediaries that matter? How should the connections among insurer, intermediary and customer be constructed? To find out, we surveyed consumers and intermediaries, and interviewed insurers in 17 countries.
The interaction triangle
In the past few years, newer tools and technologies have enabled the Web
to become truly interactive. Customers use multiple interaction points at
the same time to interface with a provider - what we call multi-modality.
In 2010, consumers used three different interaction points, on average,
when shopping for insurance and 20 percent used five or more.2
When customers are multi-modal, they expect the same from their service
providers. When they move from one interaction point to the next, they
want the information they shared to move as well. Customers expect
insurers to be informed about them and their needs; insurers cannot
afford to have any part of their sales channels keep relationships
exclusive anymore.
In the age of the active and informed customer, intermediaries cannot simply be
a selling channel anymore. They need to become trusted advisers - and insurers
have to enable them to reach this goal. Indeed, all relationships in the triangle
- insurer, intermediary and customer - need to adapt (see Figure 1).
Building new relationships
Insurer and intermediary as integrated partners. Many people, even
insurers, believe incentives and compensation structures are most important
for intermediaries. The reality is more complex. The question is: what does
the most preferred insurer do to earn that higher preference?
In short: they are better partners. They help their intermediaries more in
their daily business, enabling them to work better, advise their clients more
effectively and ultimately sell more. How else can insurers positively influence
their intermediaries' performance? Besides the partner benefits, three
other factors had a measurable impact: cost of coordination with the insurer;
how constructive the conflicts with the insurer are; and communication
density and frequency.
The intermediary as trusted adviser to customers. Since insurance is a
product strongly based on trust, customers believe that when a claim is
submitted, the provider will indemnify the claimant. Some contracts, mostly
in life insurance, are extremely long term; without a minimum of trust,
customers will not sign these contracts in the first place.
Our data show that personalizing the insurance shopping experience is good
for all parties in the triangle. When customers are treated personally, insurers
are rewarded with higher loyalty. In fact, the personal side of being a trusted
adviser is the easy part. Maintaining professionalism, knowing customers
personally and treating them personably is something the vast majority of
intermediaries have been doing for as long as they have existed. But intermediaries
cannot act alone here - insurers have to provide support.
The insurer as multi-modal provider to customers. When customer
multi-modality increases, insurers have to adapt. Becoming a multi-modal
insurance provider is about being flexible technologically, organizationally and
culturally. It also requires a strong strategic commitment. Often, organizations
and systems supporting various channels have grown more or less randomly
and can be understood only from a historical perspective. These entities have
to be streamlined and aligned to each other to be consistent and provide the
integration that customers expect.
Providing customer value
For today's empowered customers, good products at a reasonable price are a
given. However, when customers buy a promise, like in insurance, providers
need to do more to differentiate themselves. Where and how should insurers
invest in the interaction triangle? In our experience, many insurers around the
world could improve in these areas:
- Integrated partner: Improve speed and flexibility of systems and processes
- Trusted adviser: Focus on quality and reliability of data and analytics, and
improved transparency
- Multi-modal provider: Integrate existing information and be open to new
avenues of interaction, both within the organization and through internal
and external social channels.
Underlying all these actions, many insurers need a cultural shift. Customer
centricity can't be implemented by a change in incentives or even in
departments - it has to be the mindset of the whole organization. Now that
insurance customers can easily find each other, and exchange experiences
and ideas, the tides are changing. To create customer value, insurers need to
adapt. The most successful will still emphasize intermediaries, but above all,
they must offer integrated, consistent customer experiences - and move
away from channels to interaction networks.
Purchasing a promise requires trust. Today's customers have instant access to almost unlimited information, and are willing and able to share facts, opinions and experiences with their peers. This imposed transparency changes expectations toward insurers, and makes it more difficult for them to be perceived as trustworthy providers of the security promise.
How can insurers serve their customers personally while coping with the
broad information and interaction demands of the digital age? How do they
make sure it is their intermediaries that matter? How should the connections among insurer, intermediary and customer be constructed? To find out, we surveyed consumers and intermediaries, and interviewed insurers in 17 countries.
The interaction triangle
In the past few years, newer tools and technologies have enabled the Web
to become truly interactive. Customers use multiple interaction points at
the same time to interface with a provider - what we call multi-modality.
In 2010, consumers used three different interaction points, on average,
when shopping for insurance and 20 percent used five or more.2
When customers are multi-modal, they expect the same from their service
providers. When they move from one interaction point to the next, they
want the information they shared to move as well. Customers expect
insurers to be informed about them and their needs; insurers cannot
afford to have any part of their sales channels keep relationships
exclusive anymore.
In the age of the active and informed customer, intermediaries cannot simply be
a selling channel anymore. They need to become trusted advisers - and insurers
have to enable them to reach this goal. Indeed, all relationships in the triangle
- insurer, intermediary and customer - need to adapt (see Figure 1).
Building new relationships
Insurer and intermediary as integrated partners. Many people, even
insurers, believe incentives and compensation structures are most important
for intermediaries. The reality is more complex. The question is: what does
the most preferred insurer do to earn that higher preference?
In short: they are better partners. They help their intermediaries more in
their daily business, enabling them to work better, advise their clients more
effectively and ultimately sell more. How else can insurers positively influence
their intermediaries' performance? Besides the partner benefits, three
other factors had a measurable impact: cost of coordination with the insurer;
how constructive the conflicts with the insurer are; and communication
density and frequency.
The intermediary as trusted adviser to customers. Since insurance is a
product strongly based on trust, customers believe that when a claim is
submitted, the provider will indemnify the claimant. Some contracts, mostly
in life insurance, are extremely long term; without a minimum of trust,
customers will not sign these contracts in the first place.
Our data show that personalizing the insurance shopping experience is good
for all parties in the triangle. When customers are treated personally, insurers
are rewarded with higher loyalty. In fact, the personal side of being a trusted
adviser is the easy part. Maintaining professionalism, knowing customers
personally and treating them personably is something the vast majority of
intermediaries have been doing for as long as they have existed. But intermediaries
cannot act alone here - insurers have to provide support.
The insurer as multi-modal provider to customers. When customer
multi-modality increases, insurers have to adapt. Becoming a multi-modal
insurance provider is about being flexible technologically, organizationally and
culturally. It also requires a strong strategic commitment. Often, organizations
and systems supporting various channels have grown more or less randomly
and can be understood only from a historical perspective. These entities have
to be streamlined and aligned to each other to be consistent and provide the
integration that customers expect.
Providing customer value
For today's empowered customers, good products at a reasonable price are a
given. However, when customers buy a promise, like in insurance, providers
need to do more to differentiate themselves. Where and how should insurers
invest in the interaction triangle? In our experience, many insurers around the
world could improve in these areas:
- Integrated partner: Improve speed and flexibility of systems and processes
- Trusted adviser: Focus on quality and reliability of data and analytics, and
improved transparency
- Multi-modal provider: Integrate existing information and be open to new
avenues of interaction, both within the organization and through internal
and external social channels.
Underlying all these actions, many insurers need a cultural shift. Customer
centricity can't be implemented by a change in incentives or even in
departments - it has to be the mindset of the whole organization. Now that
insurance customers can easily find each other, and exchange experiences
and ideas, the tides are changing. To create customer value, insurers need to
adapt. The most successful will still emphasize intermediaries, but above all,
they must offer integrated, consistent customer experiences - and move
away from channels to interaction networks.
Leader contributor(s)
Funder(s)
Topic(s)
Customer Value Management in Insurance
Changing roles of intermediaries and customers
Multi access
Changing roles of intermediaries and customers
Multi access
Method(s)
Online survey
Range
Institute/School
Range (De)
Institut/School
Principal
IBM Institute for Business Value
Division(s)
Eprints ID
227021