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February 23, 2003 at 07:00 PM
By Ara C. Trembly
A recently released report from TowerGroup asserts that insurers with “technological acumen” can gain an edge on the competition by using automated advice systems, especially for those customers who are likely to be less profitable.
The report–”Advice Delivery Models: Where High Tech Meets High Touch”–notes that while it was once common for financial services institutions to offer one-on-one advice to all investors, “it is increasingly difficult to offer advisory services to customers economically.”
Insurers can address that problem by “seamlessly transitioning investors to utilize more economical advice services, such as the Internet and automated response systems,” the report says.
According to Cynthia Saccocia, senior analyst with the Needham, Mass.-based TowerGroup and author of the report, automation is preferable for customer activities with a low return on profitability, such as address changes, funds transfers and other administrative tasks.
In addition, says Saccocia, “you want to keep face-to-face advice oriented with customers who meet certain [financial] break points who have investable assets to use.”
“The premise is that a fully developed advice delivery model incorporates high-tech and high-touch delivery channels to increase the range of service options to attract more customers and retain more agents,” the report explains. “At the same time, insurers realize bottom-line savings by distributing associated costs more efficiently.”
Julie Dorey, vice president, Insurance and Financial Services, for Seattle-based Xerox Global Services, agrees on the usefulness of such systems.
“In an uncertain market where carriers and brokers need to focus on gaining clients while they retain and grow the business with current clients, implementing an advice-oriented delivery channel can be a competitive advantage,” says Dorey.
“This model offers the full knowledge of a provider to be mined without the training and turnover issues of a human interface,” she adds.
According to Saccocia, the role of technology in this process is to get information out of legacy systems “so you dont have disparate views of the customer. You need to understand the whole relationship of customer to insurer.
“Its customer relationship management, sort of,” she continues, “but taking it beyond and actually directing customers to the appropriate service level. It can be very expensive to offer face-to-face advice to low-profit customers. You need to direct customers with low balances to the Internet or the call center.
“Many insurers have used CRM systems more to manage distribution partnerswire houses, banking channels and independent agents,” Saccocia explains. “This is understanding the person who actually writes the checks. You can expand the relationship a person has with the agent and expand share of wallet.
