Insurance penetration remains low in Kenya. FILE PHOTO | NMG
The insurance industry has certainly undergone tremendous transformation over the last couple of years. Customers have more choices than before regarding price, delivery, coverage and provider for their insurance needs. As a result, they now have the ability to buy insurance from non-traditional players who deliver these choices differently, in addition to providing innovative options for the services they offer.
Unfortunately, insurance firms have been at a disadvantage compared to other service providers like other financial institutions, since they sell roughly the same product as their competitors. The only competitive edge often touted by providers is that they offer “the best service” or “this policy has broader coverage”. This alone does not guarantee loyalty.
Additionally, their presence in customers’ lives has been confined to relatively infrequent transactions, such as policy renewals, premium payment and claims that are insufficient to generate positive long-term associations.
However with time, insurers appear to be slowly reading the writing on the wall for the need to reinvent their business models or risk being confined to bin of history.
With changing customer preferences, expanded business models and increased competition, insurance companies are finding it necessary to now position themselves as partners in customers’ lives and gaining deeper understanding of their customers, in order to help them provide better services.
Insurance service providers might therefore be asking themselves; What can an insurance company do to make it stand out from the crowd?
The answer to this largely lies on the ability of an insurer to provide its customers with value-added services. These include the non-core services or the enhancements made to the core product or service offered to the customer.
In a competitive industry like the insurance sector, provision of value-added services play an integral role in the client’s overall insurance journey.
With the advent of connected technologies, value-added services may as well be the answer to the low insurance penetration in the country and the reinvention of the insurance sector.
The use of advanced analytics is making it possible for insurers to derive better insights and connect with customers on a more personalised level.
Incorporating value added services requires a fresh thinking on the core beliefs and behaviours of their customers.
It requires understanding the clients and evaluating what value added services and products the client might need and will want.
This involves the combination of supply and demand forces to provide innovative, value-added services around the core insurance offering throughout the customer life cycle, and not just specific touch-points.
A LASTING RELATIONSHIP
For insurance companies, they have the option of choosing to offer value added services to their life, home and health portfolios respectively.
The impact of value-added services is that they provide a competitive edge to companies who would otherwise have to pay for expensive products to gain an edge.
Life, home and health insurance provide a perfect platform for insurers to provide additional services to clients.
A provider for a home-owners policy might also be able to deliver better rates for home security, moving companies, cable television, and Internet services among others, thus developing a new fee income stream.
By providing value added services, insurers are also bringing to their fold die-hard advocates who are less likely to move to another insurance provider because of the value these services provide them.
The roll-out of our in-patient beauty therapy service known as “Recover in Style” gives policy holders an opportunity to receive critical beauty services free of charge on hospital admission in response to the changing needs of our customer.
Deployment of health management apps and services to enable customers mitigate health risks while incentivising them to lead healthy lifestyles provides a strong competitive differentiation as they can now develop unique offerings.
VALUE PROPOSITION
It is also a cost-saving measure aimed at improving customer acquisition through attractive value proposition.
Value-added services are, therefore, becoming more relevant to insurers and are likely to become one of their core offerings as insurers leverage on data to personalise their offerings.
With a rapidly changing insurance ecosystem, customer retention will require a renewed focus by insurers to compensate for their decreased control of customer acquisition.
The writer is head of customer service at Jubilee Insurance.
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