Just how important a role the Web plays in the sale of insurance is a question weÃ¢â‚¬â„¢re often asked. Luckily Celent has published Ã¢â‚¬Å“Online Insurance Sales and Marketing: WhatÃ¢â‚¬â„¢s Happening and WhatÃ¢â‚¬â„¢s Happening NextÃ¢â‚¬ , an update toÃ‚ a 2002 study. The updated report projects that insurance sales will double by 2011 and that the Web will play a major role in most purchases of personal insurance across auto, life and health. Celent notes that the Web has become an increasingly important communication channel between sellers and buyers of personal insurance. Most consumersÃ¢â‚¬â„¢ purchasing process is Web-influenced, it says. Further, search engines like Google and Yahoo! are critical channels for insurers that cannot afford massive consumer marketing campaigns to drive shoppers directly to their sites and more insurers are embracing search engine optimization to help capture these shoppers. While pure online sales are growing, Celent estimates they will still account for less than 15 percent of sales, even in personal auto. It also believes 100 percent online sales are unlikely to exceed 30 percent in any business area. Do you agree with these findings? Is the face-to-face sale becoming a thing of the past?Ã‚
While weÃ¢â‚¬â„¢re on the subject of take-up rates, a just released RAND Corp study finds that price is not the only barrier in the decision to purchase health insurance. The study contradicts suggestions that large numbers of people without health insurance would sign up for coverage if government provided subsidies or tax credits to reduce the cost of health insurance. An estimated 45 million Americans donÃ¢â‚¬â„¢t have health insurance, but government subsidies that would halve the price of health insurance would reduce that number by just 3 percent, according to RAND. Apparently, people surveyed for the study cited numerous factors influencing their decision to purchase individual health policies, including: personal attitudes toward risk; whether they believe they can get good health care without insurance; perceived difficulty in selecting a health care plan; and even concern that insurers require too much personal information for individual plans compared with group plans. So, price alone does not solve the take-up issue. I.I.I. has further info on health insurance online.Ã‚ Ã‚
A perennial concern of insurers everywhere is why take-up rates for certain insurance coverages remain low, even as the risks increase. How to boost take-up rates among individuals and businesses is an ongoing challenge as insurance competes with any number of products and choices with higher priority onÃ‚ the shopping list. Earthquake, flood, terrorism, and renters insurance are just some examples. LetÃ¢â‚¬â„¢s take earthquake. The powerful quake in Japan this week is a reminder of the importance of having adequate coverage. In Japan, as in the U.S., residential earthquake coverage is available in the form of an endorsement. While traditionally the take-up rate of residential earthquake coverage in Japan has been low, recent reports suggest it has been rising and is now at around 37 percent. Meanwhile in California, the U.S. state most commonly associated with earthquakes, itÃ¢â‚¬â„¢s estimated that only 13 percent of homeowners buy the coverage. ItÃ¢â‚¬â„¢s hard to generalize on the reasons why, particularly across countries and different risks, but some contributing factors may be: perceived high cost of insurance, lack of awareness about the risk, and the mindset that expects a government bail-out to follow a disaster. People also may be more likely to buy insurance when the perceived need is greatest (i.e. just after a major disaster has struck). So how can we change the stats and make our products more desirable to the buying public? What are your thoughts? For more on earthquakes and other catastrophes, check out the I.I.I.Ã¢â‚¬â„¢s disaster site and facts & stats.Ã‚
ItÃ¢â‚¬â„¢s long been acknowledged that claims handling and service are key to customer satisfaction in the insurance industry, so the findings of an inaugural carrier evaluation survey conducted by Willis are worth reading. As part of the survey, more than 2,500 Willis Associates were asked to rank carrier groups on a scale of 1 (lowest) to 10 (highest) against four categories: underwriting; policy administration; claims; and service. The results show that while all insurers were ranked above the mid-point, they need to do more to further differentiate themselves through service and performance. For example, underwriting was overall the highest rated category, with a mean score of just under 7, but when it came to policy administration, claims and service, there was a much wider variation in opinions about the performance levels of carriers. Claims (e.g. attitude, settlement and technical support) and service (e.g. loss control, risk assessment and post placement services) actually received the lowest overall category ratings. Interestingly, the survey respondents were highly experienced, with 62 percent having more than 10 years of industry experience. Now weÃ¢â‚¬â„¢re just a bit curious as to what a similar evaluation of brokers by carriers might reveal.
ItÃ¢â‚¬â„¢s interesting to see that customer satisfaction in the finance and insurance sector apparently reached an all-time high in the fourth quarter of 2006. According to the latest University of Michigan American Customer Satisfaction Index, every industry except one in this sector improved its customer satisfaction ranking. The sector includes commercial banks and property and life and health insurance. In the aggregate, finance and insurance jumped 2.7 percent to 76, its highest score since 1994 (78.5). Improvements in quality and value drove customer satisfaction gains for life and health insurance. However, we note that property and casualty insurance was the odd one out with a customer satisfaction ranking of 78 — unchanged from the previous yearÃ¢â‚¬â„¢s ranking. The index measures customer expectations, perceived quality and perceived value of companies in various industries.Ã‚
In todayÃ¢â‚¬â„¢s increasingly competitive marketplace, itÃ¢â‚¬â„¢s not surprising to hear thatÃ‚ a satisfiedÃ‚ customer is not necessarily a loyal oneÃ‚ when it comes to insurance. How to attract new customers and retain existing ones is an ongoing challenge for this industry, as any other. In their inaugural World Insurance Report, consulting group Capgemini and the European Financial Management & Marketing Association (EFMA), offer insurers tips on how to better meet customer needs. The report throws out some interesting findings. For example, while price is the most important factor overall in choosing an insurance product, the degree of price-sensitivity varies substantially by insurance type and by country. American customers, in particular, also view product and brand/trust as key factors when purchasing insurance. Further, despite customers showing a strong preference for buying insurance via the Internet, the number actually buying online is low.