Insurers must use tied agency channel more effectively to improve customer experience, and thereby improve customer loyalty and advocacy
One of the reasons why insurance industry is unable to realise its full growth potential in India is because of below-par customer experience. This is a worldwide phenomenon. Insurers everywhere find that it is not enough to provide efficient customer services. A lot depends on customer experience which is the sum total of all experiences of the customers about an insurance company, including customer servicing. Capgemini World Insurance Report, 2015 has been able to discover a clear quantifiable relation between positive customer experience and customer loyalty.
The question is how insurers can develop that customer experience. Insurers had earlier thought that customers and especially the Gen Y could be better served through brokers, social media, mobile apps, banks and telemarketing channels. But, they have found, much to their dismay, that none of these channels have been able to produce the expected level of customer experience. On the other hand, the tied agents have done a shade better than all these channels in generating some positive experience although they were also found unacceptable in many cases.
The Capgemini report tells us that more than 40% customers have a positive customer experience through the agency channel, while only 20% customers have reported about positive Drop in customer experience in 2014-15 was most pronounced in the Gen Y segment. Even developed markets of the US, Western Europe and Asia Pacific failed to rise to the expectations of the customers. This is one of the reasons why life insurance business is down worldwide and last year’s growth was only 4.3% (as compared to India’s 1%) according to Swiss Re report of April 2015.
Most customers are accustomed to getting excellent services through the digital channels in areas of retail, travel and banking. Insurers have not been able to provide that kind of rich experience to the customers. Customers continue to get delighted by the personalised services which a band of professional agents are still able to offer.
The learning point is, while insurers should continue to explore ways to procure and serve customers through digital channels, that should never happen at the expense of the tied agents. Insurers in India should try to take the positive features of both types of distribution channels to generate great customer experience.
Here, tied agency channel needs to be revamped. The agents should be empowered more and more with digital tools so that they can remain relevant to the new generation of customers. New kind of training inputs should be given to the agents. The industry needs better educated, confident and tech savvy tied agents at this hour.
Insurance penetration is considered the best indicator of the maturity of an insurance market. It is defined as the percentage of total insurance premium to the GDP of a country. Taiwan has the highest life insurance penetration in the world at 15.4% followed by South Africa at 14.8% (as against India’s 2.6). What makes these countries so successful? The reason is that the tied agents have been able to make people understand the value of life insurance both as a risk management mechanism and as a safe savings instrument. The agents, therefore, are benefiting not just the customers but the entire economy of those countries.
The insurance agents of Taiwan use a famous “Double Ten Tule” which suggests that a household should invest 10% of annual income in insurance and insurance cover should be 10 times of annual household income. Agents are trained to complete proposals in less than ten minutes with their tablet computers anytime anywhere. The same agents also help the claimants in getting claims fully processed in less than 30 minutes using a novel Photo Claim Service. The agents even rush to the customers when they fall ill or look for assistance while in hospitals. The New Vision Cloud Platform allow busy agents to access training material using their own mobile devices anytime anywhere.
Ultimately, all this gives the customers a very satisfying experience. The top insurers of Taiwan recruit such youths as agents who are tech savvy and capable of learning the trade fast. The agents are as respected as employees there and the more competent among them can assume managerial positions in course of time.
In India, insurers are trying to increase the respectability of the agency profession. LIC has come out with an innovative advertisement through which it is encouraging the well educated youths to take up insurance profession as one can have a lot of freedom and an opportunity to earn huge income in this profession. Indeed, this profession is for the well groomed and well educated people only. One needs a lot of confidence and self belief to succeed in this profession. And our youths have that in abundance. The agents can give positive customer experience to the insuring public. But, they need to be trained thoroughly. The government has advised LIC to create new generation of professionalized agents under Skill India mission.
The insurers have to be careful while recruiting agents. Those who exit from the industry are damaging the reputation of the insurers and also agency profession. So, people with some minimum educational qualification, patience and self-belief are only to be recruited and groomed thoroughly.
Most of the Indian and Chinese customers find it useful to research on insurance products online but are more comfortable buying from tied agents. Insurers must use tied agency channel more effectively to improve customer experience, and thereby improve customer loyalty and advocacy.
The writer is research associate, Zonal Training Centre (Kolkata), LIC of India. Views expressed here are author’s personal