By Tom Higgins and Christian Bieck
You don’t need to watch much TV before you notice all the ads for car, property and life insurance.
In fact, some of the characters appear on TV so frequently they’ve become iconic. Who knew what a gecko was before the Geico ads? And if you want to dress up for Halloween like “Flo, the Progressive Insurance Girl,” several sites offer advice on how to recreate the “Flo look,” right down to a bright blue hair band.
Here, in the “insurance capital of the world,” companies like Travelers and The Hartford still market and sell insurance products to customers via traditional avenues — securing leads through referrals sending targeted paper mailers and meeting with customers face-to-face. But they’re also looking at new ways to communicate with their customers.
The reason is simple: people are buying insurance differently these days. Price is not the only factor, and only about one in five of us shop for insurance traditionally, just going to one insurance broker in his office or paying a bill mailed to our house once a year.
Buying insurance now is in the consumer’s control.
According to a new survey of 21,000 consumers in 20 countries by IBM’s Institute for Business Value, we don’t want information being funneled down to us from an insurance provider. We want access to our insurers and the ability to interact with them in new ways.
The survey found:
• Customers are becoming harder to satisfy and harder to maintain. About 60 percent of them don’t trust the insurance industry. And that’s a problem for insurance companies: if you’re one of those people who don’t trust insurance companies, you’re 20 percent more likely to switch providers.
• While there is no actual substitute for insurance, consumers can and will switch insurers if they can’t interact with their provider they way they want to. The ability to shop for and compare insurance prices online puts us in charge like never before, making it easy for us to jump from one insurer to another with just a click of the mouse.
• However, consumers don’t want to limit their contact with insurance companies to the web. Insurance is still a product that relies on personal trust, and people want to buy from people — after collecting information from all available sources, the web, friends, Facebook, and of course their friendly agent from down the block.
Today we have the ability to evaluate insurance plans via sources that weren’t available 20 years ago. We want to go online, check out an insurance company’s web site, then compare one company’s rates against another’s at sites like Netquote.com or Bestquoteus.com. If we use social media tools daily, we’ll go on Facebook or LinkedIn to ask our network of contacts how they feel about dealing with one insurance company versus another.
But that does not necessarily mean we want more than one insurance company or want to change insurance companies frequently. “In fact, slightly more than 30 percent of us prefer to have all our coverage with the same insurance company — and that number is falling.”
The top five most popular ways consumers want to interact with their insurance companies are:
• Research the company’s web site;
• Talk to an insurance company’s agent;
• Collect recommendations from family or friends;
• Maintain personal contact with an independent agent or broker;
• Research independent websites that provide comparison between insurers.
Technology will be the backbone of these efforts, often the kind of technology we’re used to seeing on the Web. In the past, it was impossible to understand what prompted our loyalty, what convinced us to move from being a browser to a buyer, why we changed insurers.
But now insurance companies can use analytics to understand in real time which products appeal to us and which don’t, what points of contact are working and which ones aren’t. This technology can help insurers monitor the quality of our experience and pinpoint ways to make us happier. Meantime, internal dashboards that managers use to track the performance of agents and brokers can also help pinpoint the effectiveness of the sales and marketing approaches they use with us.
What all this means is that the insurance industry has shifted from a seller’s market to a buyer’s market. Despite the long-held myth that premiums are the first consideration, we no longer want just the lowest-priced insurance. We want high-quality service and a company that’s willing to communicate with us on our own terms, when and how we want to 24/7. And we’ll demand it.
Thomas E. Higgins is director of IBM Global Financing, responsible for growing financing assets, revenue, profit, and customer satisfaction among general business clients world-wide. He lives in Avon. Christian Bieck is insurance leader with the IBM Institute of Business Value. In this role, he conducted extensive research and authored several papers on trends and implications in various areas of insurance. Reach him at christian.bieck@de.ibm.com.
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