The 'magical answer' of CRM just isn't coming true for property/casualty insurers who are being bombarded with offers from IT vendors, according to a new study, 'CRM in Personal Lines Insurance', published by Conning & Company.
The study finds that cultural and business-model hurdles often challenge the effectiveness of customer relationship management (CRM) systems in personal lines insurance businesses. Conning says that CRM software has been touted by IT vendors as "the genie in the bottle, granting every insurers' wish to significantly improve business performance." But the costs (often up to US$100 million) and the failure rates are alarmingly high, and early CRM results for property-casualty insurers have been less than magical. After analyzing the results of some of the insurers' efforts, the study highlights three main problems:
· One size does not fit all;
· CRM implementation must include thorough employee education;
· CRM software solves nothing unless the insurer's culture and business model are supportive.
It's about people first...
Conning found that insurers were split on the effectiveness and usefulness of CRM technology, and that most of the challenges in its implementation were not technology-related. Some insurers view CRM as little more than a technology initiative rather than a fundamental strategy to establish and build customer relationships.
"When CRM fails, most of the time it's not because of the technology; rather it's because of corporate culture, a failure to identify customers' needs up front, and lack of a rigorous organisational assessment," said Clarence Smith, the author of the study, adding that "Companies must not only implement the right CRM package but the employees must also embrace it and be trained to use it effectively. Some PC insurers have simply not been able to meet all these challenges. CRM requires a customer-centric culture and should also be consistent with an insurer's business model."
... then the technology
And Conning found that some PC insurers had invested only in 'operational' CRM and not in the analytical side of it, leaving service representatives and field personnel collecting a great deal of data without being able to analyse the data to identify ways of building stronger customer relationships. With an incomplete or unwieldy CRM package, customer service agents do not have all of the data they need for direct and meaningful interaction with customers. Analytical software is available but many insurers have not purchased it yet due to budgetary restrictions.