Survey shows that insurers increase revenue with CRM strategies

Customer Relationship Management (CRM) solutions are producing increases in revenue generation for insurance companies according to a survey conducted by Datamonitor on behalf of global eBusiness solutions provider PeopleSoft. The survey also concluded that insurers are not taking full advantage of the internet.

200 interviews with key decision makers in the European insurance sector were conducted across 15 countries, reports PeopleSoft SA MD, Jan Coetzee. Insurers were questioned about the primary strategies behind companies who have an internet presence. When asked to rate their main objectives out of 5, customer retention achieved a rating of 4 out of 5 suggesting that insurers see the internet as a channel of serving existing customers with a better service, rather than for attracting new customers. "Surprisingly, cost saving was rated 2.8 out of 5, and is not high on the list of criteria for implementing an internet strategy," he says. "This suggests that insurers see the internet as a complementary, rather than a replacement, channel of business."

Life insurance and motor insurance, although still relatively low figures at 15% and 14% respectively, rated the highest in terms of which insurance products companies would provide over the internet. Health insurance was low (5%) which Coetzee says could be because it is a more personal and complex area. Out of the 97% of insurance companies who already have a website, 50% have online quotation, but only 32% offer online purchasing. As seen in other industries, online purchasing can provide customers with a greater level of service by offering another transactional channel, explains Coetzee. "If, as the survey findings suggest, customers must use more than one channel to complete a transaction, the insurers` primary objective of achieving customer satisfaction and retention is not being fulfilled as they are not making the most out of what the internet can offer."

However, 26% of the insurance companies questioned have already achieved customer retention and 72% expect to achieve it. 66% expect an internet strategy to help them achieve customer satisfaction and 52% expect increased cross sales. Despite these expectations, 15% of those questioned don`t expect any cost reductions to be achieved through a CRM solution. Coetzee says that this suggests that insurers are not appreciating the process leading up to an increase in revenue even though their primary objective is increased customer satisfaction and retention, which inevitably leads to increased sales.

Commenting on the survey results, Donovan Wright, PeopleSoft director of financial services strategy and enterprise performance management (EPM) for financial services, Europe, Middle East and Africa, says, "There is an increasing amount of pressure on insurance companies to re-focus their business strategies and IT capabilities as a means of turning individual transactions into profitable customer relationships.

"Insurers are recognising that online access to individual portfolio performance details is of great importance to their internet strategies as it gives them real-time access to what their customers are doing as well as a means of sharing information between insurers, brokers and customers." He continues, "This is then supported by one-to-one marketing, which gives insurers the opportunity to cross-sell products to their clients, and so delivers more effective CRM solutions, and therefore an increase in revenue."

Adam Hill from Datamonitor says, "The key drivers for insurers` planned investment in internet strategies are customer retention and improving customer service. 22% of the insurers interviewed felt they had already achieved four out of their six objectives when questioned about their CRM strategy." He says this indicates that a significant number are already advanced in terms of CRM strategy and are starting to realise the genuine business benefits across a range of areas.

"This should influence the 78% who haven`t achieved the benefits into believing CRM is not about cutting costs, but about achieving growth and revenue," He adds.