Not satisfied to be slowpokes in sales and customer service, the life insurance industry has continued to invest in customer relationship management (CRM) technology even as others have shied away from making capital expenditures in the current economy.
No matter the market’s misery, these insurance underwriters have set their focus on spending to secure an operational efficiency for the home office and for salespeople at their agencies across the nation.
“The capital constraints of the current economy have not stopped insurers from investing in CRM, but, rather, have further focused their CRM investments,” says Seth Montgomery, principle at Deloitte Consulting in Minneapolis, Minnesota.
“We are seeing insurance companies working harder than ever to deploy scarce resources in the most effective ways,” he continues. “In many cases this means improving relations with their customers — getting more from existing relationships and improving the efficiency of sales and service processes.”
With the home office’s investment in CRM products, 99 percent of Allstate agent Mike Howe’s life insurance clients do more business with his agency and Allstate Insurance than just a single policy. Those relationships have expanded to include more Allstate products and services.
“Generally clients set up a relationship with home and auto insurance and then we sell into life insurance and financial planning services,” Howe, owner and office manager of an Allstate office in Schererville, Indiana, says.
“Our technology is very much on the cutting-edge on the property and casualty business — home and auto and renters insurance. It helps clients build a confident relationship with agents and lets them go ahead and talk about retirement planning, life insurance, IRAs, long-term care, financial planning and even business insurance,” he says.
John Ector, a Northwestern Mutual Life Insurance agent in Crown Point, Indiana, explains Howe’s point. “People buy life insurance not because they understand the proposal but because I understand them,” he says.
CRM programs, updated monthly for Northwestern Mutual agents by CD-ROM, enable the agent to input an entire client history into an easy-to-use database that yields immediate electronic access to a customer’s service history, information to fill out new policy applications automatically, and a lifestyle profile that not only tells Ector and his clients what coverage they have, but makes the holes in their coverage more apparent.
The recorded detail helps Northwestern Mutual, the underwriter, process “paperwork” — now all electronically transmitted — overnight, generating premium quotes, customizing payment plans and projecting payouts for new policies when customers’ lives change.
“Proposals run five to 25 pages long, with an awful lot of calculations,” Ector says. “Those are all done for us. The home office has done a tremendous job with the customer relationship management system,” he says. It ensures data accuracy and consistency and saves money through automation.
Not only has the home office investment resulted in increased sales for Ector’s office — growth in his business has been obvious, he says, so much so that he hasn’t had to analyze the positive impact of CRM — it has aided more personal service. “Change is what generally prompts a person to buy, and those detailed file notes help me understand and know the client better,” he says.
Northwestern Mutual recently renamed agents “financial representatives,” reflecting an anticipated CRM side effect: customer use of life insurance agents for comprehensive financial solutions.
“Industry studies indicate that the cost to acquire new business from an existing customer is one-sixth the cost of signing up a new customer,” Deloitte Consulting’s Montgomery says, explaining the efficiency benefit that complements CRM’s effectiveness.
“In addition, a 5 percent improvement in customer retention can generate an 80 percent improvement in customer profitability,” he says. Insurers acknowledge these statistics. They have made winning and keeping customers, often through CRM efforts, one of their top-10 priorities, according to Deloitte’s “2003 Global Insurance Industry.”
With its broad portfolio of products, insurance companies such as Allstate are expanding their share of their customers’ wallets by pursuing cross-selling opportunities, Montgomery says. “They are leveraging a loyal customer base by utilizing advanced customer analytics and CRM marketing tools to identify and pursue improved revenue and service opportunities.”
Insurance policy holders interested in investment advice from Allstate, for instance, provide local agents with basic information about how they handle money. An Allstate software product then determines what kind of investor is sitting across the desk and recommends allocation of his or her savings into the mutual funds, certificates of deposit, life insurance policies and money market accounts that Allstate sells.
“Without changing with the technology, you die on the vine,” says Schererville Allstate agent Howe. He describes another useful CRM initiative from the home office — a 24-hour, seven-day customer care center at which “a live, warm voice will answer the phone when the office is closed,” he says.
From Allstate’s perspective, the consolidation of contact centers improves profitability and customer service through seamless management of telephone, e-mail, Web and fax inquiries and claims. Howe indicates he appreciates how the home office lifts some of the burden from his shoulders.
It means that on a Monday morning, he can open an e-mail alert that confirms that one of his customers already has coverage for the Grand Prix she bought Friday at 8:30 p.m. or read about a prospective client’s need for a consultation.
“In the past, there was a lot slower processing and delivery time through the mail,” he says. “Now everything is electronically transmitted, and 90 percent of policy processing and policy changes are not even seen by human eyes and processed overnight. That’s good for retention and referrals. Most of our business is from referrals. Take good care of your clients and they’ll refer their friends.”