Car insurance news
Car insurance industry must adapt to a changing world
Some 20 years ago, Direct Line changed the way personal insurance was bought in the UK. In those early years, the industry's response was: "It will never work; they must be underreserving; customers want face-to-face advice" - and so a new industry leader was born.
I wonder how much we have learnt from that last dramatic change in consumer buying behaviour. Is the internet just a bolt-on to our existing business model or is something fundamental changing again? Those who treat it as an extension of the telephone are likely to be as disappointed as those businesses that treated the telephone as an extension of paper processes.
The internet needs its own processes designed for that medium - customers will turn to those who make internet purchasing relevant to that channel.
There are parallels from history in ratings as well. When direct writers started, those emerging from existing broker-based models just discounted the price. The real prize was the more sophisticated rating you could develop in the direct channel; now everyone is clambering to give internet discounts. Are they really justified? The clever players will be looking for new rating factors that the information-rich internet may supply.
The internet demands a different approach. We need to understand that customers buying on the web demand to be treated differently. They can remain anonymous until it suits them - customers demand fast seamless processes and shopping around can now take just 10 minutes rather than an hour or more.
Already we have seen new innovators enter the market, with the web aggregators blurring the lines between direct and intermediated. Will they be the new big success story? If history repeats itself, new winners will emerge and there will be some big losers.
There are also opportunities for businesses. The web can significantly cut operating expenses - it is a cheap medium through which to communicate more regularly with customers and it brings new ratings factors. However, to take advantage, you have to think differently.
Article by Adrian Brown, director personal insurance, Royal and Sun Alliance
Source - http://www.instimes.co.uk