Market penetration: The task before insurers

For insurance to make meaning to the ordinary everyday consumer, the life products have to meet specific needs of the consumer and must be presented in a manner that makes it appealing both in terms of accessibility and pricing.

This is the only way to deepen market penetration and also achieve the desired growth the industry needs to make reasonable impact in the economy, Chike Mokwunye, group managing director, Royal Exchange plc, has said.

Analysts looking at the global insurance market in a recent research say that the insurance industry continues to experience challenges in stimulating demand for its (often poorly understood) key products. The gap between the need for protection in a time of economic uncertainty and softening consumer demand highlights how traditional insurance offerings are generally unresponsive to changing demographics, especially younger consumers, say PwC analysts.

However, there are potentially significant opportunities for companies that can change with the times, as accelerating demographic shifts and creating new and important customer segments that span a wide range of cultures, ages, socio-economic backgrounds, and family structures would bring positive changes, they said.

According to its 2014 survey with top chief executive officers, they argued that technological change has created new and potentially superior distribution and communication channels that are changing both the nature of the business and relationship management.

“We believe that successful carriers will most effectively take advantage of these transformational changes by understanding and in turn addressing households’ holistic, long-term – even multi-generational – needs,” the analysts stated.

One of the best ways to create a holistic customer experience is via actionable consumer segmentation that incorporates multiple data sources to create a detailed understanding of consumers’ demographic profiles and their psychographics (i.e., attitudes and behaviours). Armed with this information, insurers can address any significant gaps that consumers and advisors may face during their respective decision-making life cycles. The end result will be value to the customer, including greater satisfaction and loyalty, as well as greater profitability for the insurer.

That said, optimal returns will occur only with a careful balance of customer and insurer goals. In order to achieve this, the carrier must break down product and channel silos to shift from a product to a customer focus. The goal is to align consumer segments with their desired channels, and thereby enable carriers to reach new segments and optimise their distribution channel strategy and investments. Insurers can therefore focus on consumers’ holistic needs and extend their target markets.

Consumer demographics, behaviours and expectations are very different than they used to be. In order to differentiate themselves and grow, insurers need to have a deeper understanding of them than in the past, and adopt strategies and tactics that meet consumers’ long-term, holistic needs. Use of more advanced analytics techniques for data analysis, interpretation and application will help make this a reality.

Distribution channels need to better incorporate current technology to provide a more tailored and customised experience for the different segments that carrier’s target. Doing so, can facilitate unique and differentiated interaction with customers, as well as streamline and simplify research and purchases. In turn, this can significantly increase producer effectiveness and optimize channel economics.

Fostering trust and confidence – a feeling that “my agent/carrier really knows me” – will go a long way toward developing the long-term (instead of one-off) relationships that result in more cross-selling opportunities.

Optimal returns will occur only with a careful balance of customer and insurer goals by broadening target market to address needs of underserved demographics; focus targeting strategies towards younger consumers; the less affluent; the middle market; and multicultural, multigenerational, and non-traditional families; re-allocates resources toward segments that offer a potentially greater ROI; greater inclusiveness will drive brand awareness and consideration, increase sales opportunities, and raise brand perceptions and loyalty among non-traditional consumer segments.

Focus on holistic advice and needs driven product design and support with an integrated, high touch, high tech selling strategy; focus on products and solutions that address the consumers’ overall financial health and wellness, as well as change with customers as they age.

Modestus Anaesoronye