4 mins read . 11 Apr 2023
There are strong reports on the street that Indian general insurance companies may be allowed to offer add-on services. For the customers, it is convenience; but for the insurance companies, it is a new revenue model. More importantly, it allows them to offer a one-stop solution. For example; selling a car servicing contract with car insurance or selling a diagnostic package with health insurance are cases in point. It may sound small, but it could have much bigger implications for how general insurers approach their customers.
In order to permit insurers to sell products and services not directly related to their insurance operations, the Insurance Act has to be amended. This is likely to be introduced during the Parliament’s monsoon session. This gives the insurance company a better chance to own the customer rather than allowing another service provider to own the customer. It also enhances the possibility of cross-selling at a future date.
There are enough global templates for this model. The United Kingdom permits both value-added services and cross-selling services by insurers. A car insurance agency in the UK can provide core insurance as well as supplementary services such as car repair and service products. Singapore and Malaysia allow life insurers to provide financial advisory to clients as well as services incidental to life insurance businesses. Australia even allows insurers in general to conduct businesses whose wavelengths resonate with the type of insurance being offered.
In any marketing activity, the existing customer is always the low-hanging fruit, so deepening the relationship counts a lot. That is where the easy growth is. Getting new customers is expensive and the average cost is nearly 7 to 9 times higher than money spent on selling products to existing customers. In short, providing the right offer at the right time can help guide existing customers to choose better options through a hyper-personalized experience. For the insurer, they can identify new segments within the customer base and efficiently deliver more relevant content.
According to a recent Forbes study, 71% of customers are unhappy with shopping experiences being too impersonal. Meanwhile, insurance companies are those who actually form a personal connection with each of their customer at all stages of their life. Insurance companies will thereby fill in the void of providing customers with a personal touch through marketing automation and tapping into customer databases. The outcome would be customer delight.
More importantly, insurers can build meaningful connections to support growth and serve customers better. The challenge will be to integrate networks to offer these services, but that would be the next step.