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Category:
Insurance
News /
Insurance
Companies
/ March 2008
Insurers Set Their Sights On Self-Service
Just ask Dell, Multichoice, Airports Company of South Africa, Barnes
& Noble and Amazon.com.
They are five companies which have found the benefits of
self-service:
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Dell was able to allow buyers of PCs to choose and customise
their own machines online, before ordering and paying for them.
Dell then modified its internal and back-end processes and
supply chain to support the ability to assemble and deliver
people's PCs faster and more profitably than competitors could.
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Multichoice used speech self-service to allow DSTV subscribers
to fulfil the bulk of service requests, resolve decoder requests
themselves, and remove the burden of three quarters of mundane
calls to live agents. Caller wait times were dramatically
reduced, while customer satisfaction levels soared.
-
Airports Company of South Africa went the same route, connecting
its flight inquiry system to a speech self-service system so
people could service 95% of their inquiries themselves. The
range of benefits experienced was much the same as those of
Multichoice. These two companies represent among the best
examples of technology-enabled customer self-service in South
Africa.
-
Barnes & Noble and Amazon.com created the potential for people
to browse online, viewing and reviewing millions of books before
making their selection. This obviated the need for bricks and
mortar, creating instead "clicks and mortar" retail outlets,
whose success has in some cases exceeded that of traditional
outlets.
The
theory, and in some cases the practice, is that by removing layers
which add cost and complexity but no value, services and goods can
be delivered at a lower cost.
This is often the case with middlemen, such as insurance brokers,
who skim a significant percentage of the overall value of
transactions off the top, but without adding value to the
transaction.
The
ensuing process is known as disintermediation, and it has had a
massive impact on the world in the last decade. It works best in
commodity markets, where low-value, high-volume goods can be sold
with little consultation or value-add.
Now, the insurance sector is targeting many of its products for
precisely the same treatment, looking to go direct via the Internet,
traditional resale outlets or via cellphones. The principle is
sound, but the thinking a little flawed.
First of all, when it comes to Internet-based self-service, of
necessity it applies to the top end of the market where people both
have easy access to the Internet and know what they want.
It
is also useful in enabling policyholders to manage aspects of their
engagements with insurers: payments, upgrades, the issuing of
contracts, claims, inquiries, data updates and the like.
For
the rest of the market, especially the lower end, which is
significantly under-serviced and hard to reach through traditional
channels and impossible to reach through the Internet, the cellphone
presents itself as the instrument of choice.
Given that the bulk of South African adults have a cellphone, this
makes perfect sense.
However, the first rule of this new channel is that insurers must
keep it simple. If in any way they make the sale of insurance
products through this channel as complex as it is currently made out
to be, it will not work. So processes and the overall approach to
marketing, selling and communication need to change.
Secondly, insurers need to understand the needs of this new market.
From my experience, we in the insurance market don't have a clue as
to what people really want. We've made too many assumptions, and
they are not necessarily valid.
As
an example, we know that millions of people in the lower end of the
market buy funeral policies, but not other products. Why is this?
One
reason for this is that everyone knows the consequences of dying
without adequate cover. They can clearly see the benefits of having
such a policy in place.
Accordingly, people in the lower end of the market need to be sold,
and passionately, the benefits of investing in specific instruments,
such as life insurance. These benefits need to be explained clearly,
as right now they are too intangible in this market sector, where
short-term considerations often have priority.
One
way is to begin at grassroots, and start with children at school. If
children are made aware of the importance of buying the right
instruments early in their lives, investing wisely, and staying the
distance with their investments.
Any
person who has invested for three decades or more knows the power of
compound interest, and of remaining invested.
While at it, insurers would do well to consider changing the
back-end systems and the processes that allow them to go to market.
That would have the benefit of reducing cost and boosting return on
investment, key issues for people investing small amounts and
seeking decent returns.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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