Channel Management: New Ways to Reach Consumers
Insurance Networking News, July 1, 2012
To get a fuller view of the customer, Ameriprise makes use of public databases, which it also uses to pre-fill applications and provide quicker quotes. "If we can do that, we get a more satisfied consumer. It's more efficient, meaning cheaper for us, so we can offer more competitive pricing and rates for the consumer," Ciak says.
Two years ago, the company entered an agreement with Progressive for the creation of Progressive Home Advantage. While Progressive is a fierce competitor in the auto insurance domain, it wanted to cross sell home-owners insurance to its current policyholders and partnered with Ameriprise to do so, Ciak says.
"They are a marketing machine," Ciak says. "Companies in the personal lines space are realizing that if they have auto and home for your customer, retention is higher and your profitability is higher. A multi-policy client is overall a better insurance risk."
To succeed with such technology-based distribution, Ciak says companies need to keep the solutions as simple as possible and encourage customers to self service for such things as changing billing modes, downloading ID cards and declarations pages, and adding vehicles. Companies also need to consider how much information they collect, and its value.
"Ultimately the whole personal lines arena is going to be driven by the likes of Amazon.com," Ciak says. "You see it happening in so many different businesses and we are not immune to it. The products are pretty straightforward. They are almost a commodity, so it's going to be how effectively and efficiently you price them and how effectively and efficiently you set up your acquisition and service structure and give customers what they want."
While every distribution channel presents different challenges and returns, all insurers need to prepare for new communications channels and relationships with customers and distributors.
"Right now we are in a model that is very traditional, and we are going through incremental change," Harris-Ferrante says. "In the next two or three years we will need to be more aggressive. If we don't do it faster, there is going to be a substantial gap between consumer expectations and what is actually delivered." And that would leave the door open to new competitors.
Analysts agree that the crucial factor in managing multiple distribution channels is being able to access information from legacy billing and policy management applications. "Many of the old systems are not up to the task," Fitzgerald says, much less the challenge of managing and reporting on that data, given the different sorts of relationships insurers may have, even with the same distributor. However, legacy applications also are not likely to go away soon and therefore will need to evolve in terms of architecture, application and data modernization.
An additional challenge is determining the value that each channel contributed to the sale. "How do they make sure they are not overpaying for the contribution from each channel? Pick your spots," Deloitte's Berry says. By selecting the most-valued customers, thinking from the outside in, and then creating targeted experiences, insurers can avoid overspending.
"When you talk about multiple channels, I get hung up on the data and how it gets moved. And insurers are stuck there," Smallwood says, but with the right game plan and strategic outlook, insurers can make this happen. "It's doable," Smallwood says. "They need to think big and act small. They absolutely have to get the back-end systems under control to make this happen."
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