The key driver for internet strategy is customer retention
Reading, ENGLAND – March 7, 2001 –
Responses confirm that Customer Relationship Management (CRM) solutions are producing
increases in revenue generation for insurance companies according to a survey conducted by
Datamonitor on behalf of PeopleSoft, worldwide eBusiness solutions leader. The survey also
concluded that insurers are not taking full advantage of the internet.
200 interviews with key decision makers in the European
insurance sector were conducted across 15 countries.* Insurers were questioned about the
primary strategies behind companies who have an internet presence. When asked to rate
their main objectives out of 5, customer retention achieved a rating of 4 out of 5
suggesting that insurers see the internet as a channel of serving existing customers with
a better service, rather than for attracting new customers. Surprisingly, cost saving was
rated 2.8 out of 5, and is not high on the list of criteria for implementing an internet
strategy. This suggests that insurers see the internet as a complementary, rather than a
replacement, channel of business.
Life insurance and motor insurance, although still
relatively low figures at 15% and 14% respectively, rated the highest in terms of which
insurance products companies would provide over the internet. Health insurance was low
(5%) which could be because it is a more personal and complex area. Out of the 97% of
insurance companies who already have a website, 50% have online quotation, but only 32%
offer online purchasing. As seen in other industries, online purchasing can provide
customers with a greater level of service by offering another transactional channel. If,
as the survey findings suggest, customers must use more than one channel to complete a
transaction, the insurers’ primary objective of achieving customer satisfaction and retention is
not being fulfilled as they are not making the most out of what the internet can offer.
However, 26% of the insurance companies questioned have
already achieved customer retention and 72% expect to achieve it. 66% expect an internet
strategy to help them achieve customer satisfaction and 52% expect increased cross sales.
Despite these expectations, 15% of those questioned don’t expect any cost reductions
to be achieved through a CRM solution. This suggests that insurers are not appreciating
the process leading up to an increase in revenue even though their primary objective is
increased customer satisfaction and retention, which inevitably leads to increased sales.
Commenting on the survey results, Donovan Wright, director
of financial services strategy and enterprise performance management (EPM) for financial
services, Europe, Middle East and Africa, said: “There is an increasing amount of
pressure on insurance companies to re-focus their business strategies and IT capabilities
as a means of turning individual transactions into profitable customer relationships.
“Insurers are recognising that online access to
individual portfolio performance details is of great importance to their internet
strategies as it gives them real-time access to what their customers are doing as well as
a means of sharing information between insurers, brokers and customers. This is then
supported by one-to-one marketing, which gives insurers the opportunity to cross-sell
products to their clients, and so delivers more effective CRM solutions, and therefore an
increase in revenue.”
Adam Hill from Datamonitor commented: “The key drivers
for insurers’ planned investment in internet strategies are customer retention and
improving customer service. 22% of the insurers interviewed felt they had already achieved
four out of their six objectives when questioned about their CRM strategy. This indicates
that a significant number are already advanced in terms of CRM strategy and are starting
to realise the genuine business benefits across a range of areas. This should influence
the 78% who haven’t achieved the benefits into believing CRM is not about cutting
costs, but about achieving growth and revenue.”
Over 200 interviews were recently conducted with key
decision makers in the European insurance sector across 15 countries including; Austria,
Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands,
Norway, Spain, Sweden, Switzerland and the United Kingdom. Belgium, Netherlands and
Luxembourg were combined as BeNeLux in the final analysis. The focus of the interviewees
was from a business (58%) and an IT (42%) perspective, and in most cases, an interviewee
from both perspectives was interviewed for each insurer. The insurance areas covered for
the survey comprised of the composite sector (39%), insurers who sell life and non-life
insurance; the life and pensions sector (33%); general insurance (24%) such as motor and
property and any others (4%). The objectives of this survey were to understand the current
and projected key business and IT issues faced by business leaders in Europe’s insurance sector,
and to analyse both the differences and similarities in the views of such business leaders.
PeopleSoft Inc. is a world leader in providing eBusiness
applications that enable people – customers, employees, and suppliers – to power the
internet. PeopleSoft’s pure internet Customer Relationship Management, Supply Chain
Management, and Enterprise Management solutions provide the industry’s most open and
flexible e-commerce platform. PeopleSoft employs more than 7,900 people worldwide,
including 2,400 eBusiness consultants. More than 4,600 organizations in 107 countries run
on PeopleSoft eBusiness applications. For more information, visit us at
In Europe, Middle East and Africa PeopleSoft has operations
in the UK, France, Germany, The Netherlands, Belgium, Switzerland, Spain, Italy, South
Africa and the Nordics (Sweden, Denmark, Norway and Finland).
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Copyright © 2001 PeopleSoft, Inc. All rights reserved.
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