Editor's Note: Michael Cantwell is verticalsolutions architect, Financial Services at Cisco.

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In today's tight market, insurers have to look beyond theirgrowing advertising budgets and toward meaningful customer-centrictechnology solutions to improve the industry's poor retentionrate.

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Today's insurance industry is changing at an unprecedented rate.Forces at work include the success of direct distribution, newchannels, technology, a more empowered customer, more competitionand a challenging economic climate.

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The industry's advertising investment has exploded over the lastfew years and now exceeds $7 billion annually. The top brands maysoon pause to reflect on this investment as it grows faster thanpremiums. The brand awareness that advertising offers does helpacquire new customers, but does little to retain them.

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A more comprehensive strategy is needed to support acquisition,satisfaction, retention and finally, loyalty. Insurers are buildingand enhancing channels, engaging more personally and socially, andmoving to a service-based relationship that utilizes technology tomeet customer needs.

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The opportunity to acquire new customers and then keep themseems vast. There is a $10.2 trillion gap in middle-market lifeinsurance today, and Americans overall are underinsured by $20trillion. Insurers are trying to be more customer-centric,employing technology that improves the buying experience, service,drives policyholder value, facilitates cross selling and thereforeimprove retention and loyalty.

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The challenge of effectively reaching a diverse customer baseand sustaining a productive relationship is a complex one indeed.Satmetrix, aprovider of cloud-based customer experience software for companiesworldwide, measures the average customer loyalty of variousindustries. Their findings indicate that insurance was near thebottom, with a 'likely to recommend' rate of only 23 percent.

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This number at first seems to contradict increasing customersatisfaction scores for insurers. But perhaps there is a gapbetween a satisfied customer and a loyal one.

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Perhaps satisfaction comes from ease of transaction whileloyalty comes from fulfillment in moments of truth such as claimsand in quality human interactions that build a strong relationship.Distribution and service channels must provide quality service thatexceeds expectations and differentiates a brand from thecompetition.

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Brand perception and reputation are extremely valuable assetsthat must be built and protected. Trust and brand perception arevital, yet fragile and volatile. As the old saying goes, your brandis what people say about you when you're not in the room. In ourage of online social media and an always-connected population, theconstant risk to an insurer's brand has never been greater. Socialmedia has become the new 'word of mouth.'

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Customers easily voice opinions, complaints, and serviceexperiences real-time via blogs and various social-media channels.In order to gain direct customer insight and build trust, insurersmust utilize social media to proactively engage and create a'social impact.'

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Social-media technologies also help capture leads andimmediately link prospects to insurance professionals who canservice their demand in real-time. Deeper relationships are beingformed through social media and often lead to cross-sellingopportunities and higher retention rates.

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As more tech-savvy generations begin to make decisions whenshopping for insurance, it will be crucial for insurers to leveragetechnology for their own benefit. Today, customers are more likelyto obtain information and make purchasing decisions based on whatthey can easily access and interact with online. This will be thesame case when customers choose their insurance coverage.

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Insurers need to improve the manner in which they interact withconsumers. If insurers offer a variety of channel choices,customers can easily pick their personal preference based on theirneed at the time. Channels such as web and mobile apps make simple,low-value transactions—such as making a payment or updating anaddress—easier for customers accomplish without the hassle ofcalling someone or visiting an agent.

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However, as the complexity of transaction increases, interactionwith experienced professionals is needed and the channel preferenceshifts. Modern technology solutions such as a customer-centricdistribution center with a collaborative infrastructure make bothtraditional insurance interactions and newer, online-focusedinteractions possible.

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By incorporating this customer-centric distribution system,leaders in insurance will enable collaboration throughout theenterprise and distribution channels. This model streamlineschannel escalation needs to better address customer requests.

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The interaction can begin in one channel, (web or IM forexample) and then transition to a multi-party video and screensharing session to virtually surround the customer with expertise.This customer web portal enhanced with IM, video and screen sharingcan convert dull insurance transactions into relationship-buildinginteractions, which of course, is great for business.

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The multi-channel approach can reduce customer abandonmentrates, increase the number of products sold to customers, improveagent efficiency and vastly improve customer experience, all whiledriving down costs.

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It is important to note that insurers and agencies will continueto face challenges as they aim to significantly increase customerloyalty. However, these challenges are no longer about what to do,but instead how to incorporate a sustainable, customer-centricinfrastructure effectively to expand relationships with current andfuture customers. If and when successfully adopted, thesecustomer-centric solutions allow insurers to cultivaterelationships with customers, leading to higher retention rates andalso increase operational efficiency.

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