By Aitbar Ahmed Khan
CRM Practices in Indian Insurance Sector
In today’s dynamic environment, the insurance industry has witnessed many spectacular changes in terms of advancement in technology, strengthening of the existing customer base and acquiring new customers. In this age of information and uncertainty, more and more people have started recognising the importance of insurance. However, the present situation in the insurance industry is characterised by complexity and competitive situations. At present, insurance industry is one of the leading industry in India. There are about 30 players operating in both life and non-life segments and one is reinsurer. Today, the main challenge before the insurance companies is the attraction and retention of customers to its various policies.
The Indian insurance industry is in a booming phase. In the post-liberalization phase, due to the opening up of industry for private players, there is greater exposure to various products and customers have started demanding for world-class facilities and services. This has forced the companies to rethink on their customer service strategy by adopting a customer-centric approach. According to a report by independent market analyst data monitor, the insurance sector is all set to become a front-runner in the adoption of Service Oriented Architecture (SOA).
After banking and telecom sector, it is now the turn of insurance sector to adopt the CRM strategies for acquiring customers, serving them at their convenience and also retaining them. After liberalisation, with the opening of insurance industry to private players, the competition has intensified and it has become very difficult for the companies to attract and retain the customers (policyholders). Every company has recognized the need for shifting from a traditional strategy to survive in the market. It is in this context, the process of CRM has been adopted by various players in the segment.
CRM basically is “A process or methodology used to learn more about customer’s needs and behaviour, in order to develop stronger relationship with them.”
The concept of CRM is relatively simple concept to insurers. The key points in this are:
• Understanding the unique requirements of the customers.
• Offering the customers with the services and products over their lifetime which helps in maintaining, increasing the profitability and retaining the customers.
Though it looks simple, but in reality CRM is difficult to adopt as different customers have different preferences. Customer service involves the service before, after and while rendering it. This can be handled tactfully when dealing with a product, but in delivery of services particularly for insurance, the delivery form assumes a totally different approach because of its complex nature. It is estimated that the cost involved in attracting customers is five times more than that incurred on the existing customers to make them happy (Philip Kotler).
The steps involved in implementation of the CRM strategy are:
• Understanding the requirements of prospective customers.
• Understanding about the products and services which help the companies to attract and retain customers. It involves the following steps:
➢ Having clarity on the objectives behind the implementation of CRM and organisational goals is very important for the success of CRM. The objectives differ from company to company and so, they should be realistic and beneficial to the firm in the long-run. The goals should be set up after thoroughly scrutinizing the requirements of the company. The more clear the goals the more chances of success of CRM.
➢ The companies also must understand that CRM implementation in insurance is not only the technology, but also should meet the needs of the customer. CRM is a collection of people, processes and technology.
➢ To make...