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21 May 2007:
US consumers want personalized service and human interaction from their insurance providers. A survey of 1,000 American consumers, commissioned by IBM (
The study demonstrates consumers' unwavering loyalty to their insurance agent regardless of potential savings that online channels alone can provide, and it indicates how insurance carriers are providing their agents with innovative technologies to deliver more personalized customer services. For example, only 15 percent of respondents said they would consider dropping their agent to save $150 annually by purchasing insurance online. Fifty-four percent indicated no amount would make them switch. Forty-four percent of consumers said their insurance provider is innovative as compared to other industries, and 71 percent of respondents said they will work directly with their agent for future insurance needs.
Personalized service and human interaction emerged as key factors in driving consumer loyalty with their agents. More than half (53%) of consumers cite personalized service as what they like best about the services offered by their insurance agent, and quality of service topped the list of the key factors in choosing an insurance provider. For example, face-time continues to play an important role in helping agents deliver quality services; 36 percent surveyed said they like to visit their agent.
"The insurance business is still very much relationship-based, and consumers are willing to pay a premium for agents that instill trust and provide ongoing advice regarding their insurance needs," said Norbert Dick, General Manager, Global Insurance Industry, IBM. "But insurers should not ignore the potential in the online channels for maintaining existing customers' loyalty and capturing additional market segments. A combination of back office process improvements and customer experience improvements across channels like the Web, e-mail and cell phones can pay dividends in terms of repeat business and brand loyalty. And for customers who are looking at direct channels, particularly younger, emerging market segments, channel investments stand to gain new business."
The Agent's Point of View
The continued gradual shift towards direct and independent agent models, combined with the decline in agent retention and recruitment, means insurers with captive agent forces face increased competition for high performing agents and difficulties expanding into alternative channels without cannibalizing their agent base. Since agents wield a great deal of influence over the customer-carrier relationship and many customers still place high value on that relationship, managing agent productivity and retention becomes critical.
IBM recently polled captive agents from companies that represented over 46 percent of premiums generated in personal lines insurance segments. The 200-page survey covers 11 areas of agent behavior, needs and attitudes. The study found that carrier reputation and amount of carrier support were the main drivers of agents' satisfaction. Agents also reported a high degree of satisfaction with their work environment and are optimistic about growing their customer base. For example, over 60 percent of agents polled have seen an increase in new business in the last 12 months.
Cross selling and customer retention has become critical success factors for captive agents and will be important to growing their premium share. Agents reported that 42 percent of their new business came from cross selling and 56 percent surveyed said that their primary focus was on managing existing customers.
Innovation Drives Agent and Customer Satisfaction
In response to consumer demands for personalized service, insurance providers are now equipping agents with innovative tools to improve communications and deepen relationships with their customers. Consequently, 44 percent of consumers now recognize their insurance provider as innovative in using technology as compared to retail and travel industries. Agents indicated they are satisfied with the use of technology in their day-to-day activities and point to the centralization of sales-relevant software applications and data and use of customer analytics to better target products and services as key drivers in agent and customer satisfaction.
However, the study revealed there is more work to be done in providing the right mix of product and customer centric tools to provide the right types of products and services to the right customer, through the right channel. Knowing and accurately managing each customer's and agent's lifetime value will become more challenging and critical in today's marketplace. Innovation in data management, customer experience management and effective distribution channel management will become important enablers for growth.
For more information on IBM insurance solutions, visit www.ibm.com/insurance.