Heightened competition along with more informed and demanding consumers is causing insurers worldwide to rethink their strategy. Insurers can no longer afford to provide poor customer service, nor can they continue failing to understand each policyholder, says a new report by independent market analyst Datamonitor. The report, “CRM In Global Insurance”, concludes that in order to remain competitive and to maintain profitability, life and non-life insurers globally must expand beyond their core competency of risk management and focus on customer management.
By focusing on the customer, Datamonitor points out insurers will be able to identify and grow their most profitable ones, while minimizing the resources spent on the less profitable customers. As a result of this one strategy, insurers will reduce customer acquisition costs and decrease customer churn, resulting in improved margins. Furthermore, insurers can enjoy better returns on marketing campaigns by closing the loop between the sales and marketing departments.
Datamonitor projects CRM software licenses and Software as a Service (SaaS) subscriptions to grow from a world-wide total in 2007 of $284 million to $440 million by 2012, representing an average annual increase of 9%. Non-life, or property & casualty, insurers spent and will continue to spend more than life insurers, though the split is fairly even.
The fastest growing region is tipped to be Central & Eastern Europe. The more mature markets of North America and Western Europe are expected to expand at rates lower than the overall global market.
Despite its promise, CRM is still regarded with some skepticism by insurers. At the height of the dotcom boom, CRM was sold as a technology panacea, rather than a business-wide strategy, which resulted in numerous suboptimal implementations. Today’s insurance IT decision-makers haven’t forgotten those times. Getting those decision-makers to look beyond the past and towards the future is a significant hurdle to full adoption.
In order to optimize the success of CRM within the insurance sector, insurers must approach CRM as a business strategy, and understand that technology is simply an enabler of that strategy.
More information on Customer Relationship Management can be found at www.CRMindustry.com