A simple definition of CRM is “A system for managing a company’s interactions with current and future customers. CRM involves using technology to organize, automate, and synchronize sales, marketing, customer service and technical support.”
How challenging is CRM in Insurance?
The U.S. Insurance Industry is complex, hard to understand, and difficult to ensure a “one size fits all” technology solution that will answer each one’s requirements. The business requirements for a life insurance carrier with carrier agents is vastly different from a property and casualty company that sells its products through the independent agency system.
Few technologies or applications have grown in use and purpose as CRM. The goal of the early vendors of insurance CRM was to organize and manage contacts and customers in a simple database. Interestingly, the success of CRM can be seen in its ROI. In sales circles, ROI is defined as saving the client money, saving the client time, or increasing revenue. Obviously, the ROI in CRM directly linked to increasing revenue.
Carriers, Agencies and CRM
Carriers view agents as independent businesses that are hard to control and are always eager to pass costs on to the carrier or to increase commission rates. Agents, in contrast, view carriers as large successful businesses with thousands of employees, sophisticated technology and resources, and the recipient of 85% of the revenue agents bring in. When you get into a discussion of technology, the agent is at a clear disadvantage because they are not experts in technology and don’t have large systems or information-management experience. They are dependent on the carrier for marketing and sales support.
In the independent agent/agency paradigm, the agency is the first line of customer engagement. Agencies are first and foremost in the Business to Consumer (B2C) realm and operate as a retail organization. Hence, in the insurance industry, agencies were the early adopters of CRM and not the financially and technologically advanced insurance carrier, and this has remained true for many years. Because of the fundamental differences between how an insurance carrier operates and that of an agency, the role
of CRM has grown with agencies as they evolved their own customer-engagement models. The challenge for many agencies is that they are small with limited resources, limited database and contacts.
Insurance Carriers are responsible for building the business relationship with the agency, help them increase sales, improve their loss ratio, earn a higher level of commissions, and provide feedback to the carrier’s management team in underwriting or policyholder services. They soon realized that their agents and advisors were ahead of them in deploying and using CRM technology. Although carriers may have been slow to adopt CRM technologies, they have implemented it in many ways. For direct writers, the deployment of CRM into their field organization was a straightforward endeavour. Because they had captive agents, the direct-writing companies were able to get sales-management tools into their agent workforce quickly, easily, and with few administrative problems.
It is often said that “knowledge is power” and CRM delivered a bunch of horsepower into the sales and marketing mix.