If an insurer were to downsize its tied agency channel it could result in a high rate of customer defection for a customer segment that seeks a personal relationship based on reliability, sound advice, and competence.
Being flexible to the customer's needs: The insurer should make room to tailor the offerings to the specific requirement of the profitable customer. Furthermore, in the life insurance industry, multiple insurers offer similar products but the ones that offer flexibility are the ones that are able to hold their market position as well as attract the competitor's customers.
In North America and Europe, customers have identified various aspects of flexibility from their insurance providers. These aspects are covered in Figure 7.
As customers in the Asia Pacific region become more and more sophisticated for their life insurance needs they will require similar levels of flexibility (as noted above).
Need for CVM in the Life Insurance Industry
Based on the challenges faced by players in the global life insurance industry, we have identified the Strengths, Weaknesses, Opportunities and Threats (SWOT) typical to the industry and the impact of such on the insurer as well as the customer. The objective of the exercise is three-fold:
* Firstly, identify the key strengths, weaknesses, opportunities, and threats in the life insurance industry.
* Secondly, identify the impact of the strengths, weaknesses, opportunities, and threats on the insurers and their customers.
* Thirdly, to justify how an insurer can implement strategies and solutions to mitigate the weaknesses and threats and capitalize on strengths and opportunities.
STRENGTH
KEY STRENGTHS
IMPACT ON INSURER
IMPACT ON CUSTOMER
STRATEGY
Consolidated customer and marketing databases.
* More accurate prediction of changing customer needs
* Faster turnaround time in resolving claims and disputes.
* Customer has products that meet insurance/investment needs.
* The systems and customer data should be shared across the organization to promote innovation in business solutions.
Multiple products offerings
* Targeting and acquiring various customer segments
* Increases customer retention by cross selling and up selling
* Customers have multiple products to meet their changing needs and circumstances.
* Identify the most profitable customer segment and retain them by offering innovative products and quality service.
Multiple distribution channels.
· Increased profitability.
· Multiple distribution channels have given access to a wider customer base.
· Customers obtain product knowledge from their preferred touch points.
· Increases brand perception and product knowledge.
· Target specific customer segments through cost effective and customer preferred distribution channels.
Flexible payment options (ex. payment in installments, cash, cheques, and credit/debit cards).
* Increases revenue generation, customer acquisition, and retention.
* Customer values flexibility and convenience and remains loyal.
* Marketing strategy to showcase the differentiating
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