The insurance industry and the internet
Even though the internet is only a few years old, it has revolutionized the traditional insurance industry which relied heavily on high levels of staff and an agent network to sell and service policies. Everything depended on paper streams passing through many different hands to achieve results. The new technology has allowed many of those processes to be automated and, in virtual offices, document sharing improves efficiency.
The insurance industry rejoiced, shed staff and grew more profitable during the first few years of this century. The network of agents was rationalized and, with incentive schemes and commissions restructured, selling became more targeted and often aggressive. But these agents now also sell investment products and offer advice and guidance in ways that do not work well over the internet. The personal touch is still a strong “selling” point. They also offer claims support which can smooth inefficiencies in the companies’ centralized facilities and maintain customer goodwill.
The customers have also adopted the internet to research insurance companies and shop around for information on premiums and the quality of service offered. Thus, all insurers and many agents now run online systems to give ballpark price quotes. More radical are the sites that collect and display comparative pricing information. One of the ways in which insurance companies used to keep their customers (apart from natural inertia) was making it difficult to find out what their premiums were. Since all the companies were less than transparent, the effort in shopping around and ferreting out information encouraged customer “loyalty”. This business model is now broken. Customers can sit at their PCs and quickly find out what the range of premiums is across multiple carriers.
To improve customer relations, they are being given direct access to the companies to check on their accounts - there are sometimes problems in money transfers between banks, credit card providers and the insurers - and so avoid problems in policies lapsing. Most larger companies now allow claims to be filed online and offer customer service and support services through e-mail and chat facilities. This offers further opportunities to reduce staffing costs while still improving the customer experience.
The more customers come online, the more personal data can be collected about them personally and their insurance needs. The additional information is useful to the actuaries who calculate the risk profiles. With the claims process automated, it also allows companies to track loss trends in real time and to continuously adjust premium pricing to maintain profitability. This is a significant improvement on the old paper-driven system.
