CUP Corporation was one of the largest insurance firms based in Europe. It had a worldwide operation and was recently acquired by another major insurance company. The firm had made a series of acquisitions to broaden the types of insurance offerings and expanding the market needs. It sold a various forms of insurance in the health, life, casualty, property and automotive areas. Customer segments of the firm’s services are divided into two groups of agents and brokers as well as end-customers. Over the last couple of years, the growth of premium income in German industry is somewhat instable. The declining growth rates had affected German insurance industry due to some reinforcing trends:
1) Worse economic climate such as increasing economic downsizing, increasing unemployment and fluctuations in real income.
2) Higher taxes and social welfare levies.
3) Increasing competition resulting from the deregulation of the European market.
4) Extensive satisfaction of the demand for insurance in German.
CUP Corporation had enjoyed remarkable growth despite economic downturns. However, the increasing competition and increasing client price sensitivity in the private insurance market has led to the shorter contracts and more cancellation of existing contracts among customers that is varied by the intensity of the products. Particularly, CUP Corporation is facing some problems regarding to the customer loyalty as well as in the corporate area.
In customer loyalty problems, there is increased in the “lapse rate” which refers to the customers who are shortening or cancelling the contracts compared to the total amount of contracts which is varied to the range of products. It is reported that the lapse rate is much higher against the total premium revenue. As a result, they had lost most of their customer base because of their own faults where dissatisfied customers claimed to have problems with the agents, bad claims processing, slow and bureaucratic responses and too little information. Besides, there is also compensation inefficiency with regard to the contracts in which it is reported that the commissions of the agents were almost tied to generating new contracts because customers keep cancelling the existing contracts.
In corporate problems, there is lack in critical mass especially in communication whereby there are numbers of customer complaints about the difficulties of reaching clerks and the level of service they received. The firm also had insufficient sophisticated technology and lack in personnel training so, nothing much could be learnt from customers. As a result, they were having insufficient feedback from customers.
With regard to the problems that were occurred in the firm, the CUP Vorstand (Board of Directors) have been decided to implement a center to stem the increasing defection of customers resulting in dissatisfaction of the firm’s services, namely, Customer Care Center (CCC). Derrick Westmuller, a project manager, is responsible for the creation and development of CCC. He was tasked to display the kind of entrepreneurial behaviour the chairman of CUP was seeking to develop. Mr. Kirk, the chairman, was seeking to change the CUP from a stiff bureaucracy to an entrepreneurial-driven firm.
The idea and goals of CCC were to provide customer to have one and only one telephone number for all their questions and problems; the center would be open 24 hours per day and 7 days per week to finalize 90 percent of all customer inquiries in one telephone calls; to reduce the “lapse rate”; as well as to become a service leader in insurance industry while increasing number of customers with multiple policies.
As an advisor to the project manager, Derrick Westmuller, what set of measures would you advise they adopt?
As an advisor to the project manager, Derrick can use a set of measures firstly in...