A recurring theme at the Annual Insurance Executives Conference,held in early December, was "know your customer."

The presenters generally agreed that the most successful agents,brokers and carriers are those who understand customers, theirbusiness operations, and their needs better than their competitors.For example, David Hollander, Global Insurance Advisory Lead forErnst & Young (EY), observed that this conference was"radically different" than it would have been three years ago. "Theattendees are more insightful, more aware of customer segments andneeds, and more attentive to risk mitigation strategies," he toldPC360.

Insurance brokers and agents have to move away from productsilos and become consultants to business. "When I understand whatthe risks are, how to transfer risk, and a how to mitigate therisk, premium will come," Hollander said.

These views are borne out by the results of the EY GlobalConsumer Insurance Survey 2014, released in early December. Thesurvey's overall finding was that customer relationships at alllevels had direct impacts on the bottom line. Survey results alsoconfirmed that the insurance industry is facing the same type ofdigital-driven and consumer-led disruption that retail, banking andother sectors have experienced recently.

Here are the key findings from the global survey:

1. High turnover and low trust signal seriousrelationship issues.

When marketing to all customers, especially millennials, "youhave to talk in ways they can hear," Hollander explained. Rightnow, many younger customers have the perception that the insuranceindustry is there just to take their money. They're looking forservice and a reason to purchase from a particular carrier orbroker. To be successful in the current economic climate, insurancecompanies need to communicate what makes them better than thecompetition—to employees, customers, agents and brokers, andpartners.

2. Just because they leave you doesn't mean they don'tlove you.

Hollander noted that "The industry isn't reaching out tocustomers who left," which leaves a lot of sales leads behind.Former customers are heavily influential in purchasing, and theymay continue to recommend your company to their friends andcolleagues, even though they have switched carriers.

For most customers the switch has more to do with product offersand pricing than customer service. Product innovation is replicableover time. How well you know your customers and partner with othersthat add value and capabilities is the differentiator, according toHollander.

3. Insurers have so few interactions with theircustomers that each one becomes a critical moment oftruth.

The global survey defines a "moment of truth" as an interactionor experience that positively or negatively changed customerperceptions of their insurer or broker. By handling theseinteractions effectively, insurers can take advantage ofopportunities to strengthen customer relationships and increaserevenue. In the global survey, the quality of communications wasthe most important factor in elevating typical interactions orinquiries into a moment of truth, reported by nearly six in 10customers.

The survey also found that customers purchasing from a brokerare more likely to report experiencing a moment of truth and apositive outcome than those who purchase directly from an insurancecompany.

4. Customers want more frequent, meaningful andpersonalized communications.

According to the global survey, insurers, brokers and agents areall falling short in meeting customer demand forhigh-quality and relevant communications. Clearly, insurers benefitfrom more contact with each customer, but customers must determinewhat they receive, when and through which channels. The surveyfound that this kind of personalization is the key to optimizingcommunications; however, few insurers offer this level ofcustomization.

"Customers are used to instantaneous communication, especiallymillennials, so be sure to use text messages with them," saidHollander. More customers also are used to multichannelcommunication, which means the carrier and the broker have to havethe infrastructure for such communications in place. Some carriershave made investments in infrastructure while others continue touse legacy systems.

5. As consumers embrace digital, insurers must rethinktheir distribution strategies and partnerrelationships.

Most customers are willing to consider remote and electroniccontact as an alternative to in-person contact, for example, whenseeking information about an existing policy, general policymanagement and filing a claim. When customers are seeking advice onmaking changes to coverage, however, they prefer more personalinteraction, either over the phone or face to face.

Key questions to ask yourself

The global survey report recommends that insurers seeking marketadvantage through better customer engagement must understand theircurrent capabilities, as well as take a snapshot of where theorganization stands with its customer relationships. Here are somekey questions for insurers and brokers to ask themselves:

• How effectively do we serve and satisfy customers?
• Why do we lose customers today?
• Whom do we want as customers tomorrow?
• Which products and services do our customers want from us?
• Which channels work best to reach our customers?
• Which tools and technology do we need to understand whatcustomers really want?

2015 EY U.S. P&C outlook shows similarconcerns

The EY US Property-Casualty Insurance Outlook, published inearly December, confirms the global survey findings. Hollanderobserved that "Never has there been more money invested by theinsurance industry to improve itself." He has seen "unparalleledinvestment," particularly in P&C. According to the report,market-leading performance in this sector is being driven byinvestments in technology, distribution and risk managementsystems. To segment and reach profitable new customers, insurersalso are using new technologies to develop and manage multipledistribution and communication channels. For example, some insurershave a presence on Pinterest, which describes itself as "a place todiscover ideas for all your projects and interests, hand-picked bypeople like you." It also includes boards for businesses to connectwith potential customers who are looking for similar products.

EY's Outlook noted that, to succeed in the P&C market,insurers need to invest in new markets, products and approaches toexisting customers. Growing the top line will requireorganizational realignment, a commitment to innovation and theimplementation of advanced data analytics. With organic growthuncertain, insurance industry management must explore acquisitionopportunities, particularly more strategic expansion rather thanlarge scale consolidation.

More effective use of data by agents andbrokers

Regarding agents and brokers, although the model has to change,Hollander said, many customers still want an intermediary to findthem the best insurance coverage available. According to EY'sOutlook, agents and brokers will find it easier to collaborate withan insurer that leverages data analytics. This will enable them toidentify potential high-value lifetime clients and guide them tothese prospects. Improved data and implementation technology alsoprovide deeper insights into customer preferences, identifying themost profitable customers. Products and pricing can then becustomized or bundled to address individual customer needs,providing the attention to detail and level of service thatcustomers are looking for.

Hollander urged P&C insurers to make more effective use ofthe data collection and analysis tools available to them. Thiswould enable insurers to compete on their respective levels of datasuperiority and develop new, more strategic, business models. Forthe industry as a whole, improved data acquisition and predictivemodeling capabilities provide a more detailed understanding ofcustomer risk profiles, generating more customized insurancecoverage, better pricing and cross-sell opportunities suited toeach buyer's needs. Customer loss analyses also speed claimsresolution, further improving customer retention and brand loyalty.The detailed analyses present the opportunity for an integratedcustomer solution—what the market is demanding.