Taking into account the entry into effect of the Solvency II Directive the insurance industry must go on working on the adaptation of its business processes and policies to the new management environment, based on risk and capital control. With the finalization of the pre-application process for internal models (Pillar I) and the publication in the autumn of 2011 of the consultative documents on risk and solvency self-assessment (Pillar II) and on reporting to the watchdog and market (Pillar III), it seems pretty certain that convergence with the Directive is definitely going ahead .Nonetheless, in the next few months, we will see the approval of the legislative second and third level texts that develop the framework legislation.
Entities that are already carrying out the preparatory work should therefore not slacken in their efforts and evidently, for those that have not yet started their adaptation to Solvency II, there is not a minute to lose.
As compared with the traditional channels through which insurance companies related to customers (own networks, agents, brokers, contact centres etc), channels such as Bancassurance, Internet in its different forms (portals, comparing, social networks etc), distribution through alliances (shopping centres, travel agencies, dealers etc) have become particularly important as is borne out by business figures. Single-channel customers have developed into multi-channel customers or more precisely and to use their full name a "multi-channel 2.0 mobilised customer". It is therefore essential to have an overall approach to this reality from the differing perspectives involved (strategy, processes, organisation and technology), in the search for greater customer satisfaction, enhanced efficiency in the development of new distribution models and the reactivation of traditional channels .
New customer vision and greater understanding (customer focus, extended vision and loyalty and retention management)
Enhancing insurance industry customer relationships and loyalty is currently one of the basic aims of any insurance company. The costs of winning customers are increasing and the accumulated loss of the most profitable customers triggers significant losses in the income statement. Revolving door customers are less profitable in the medium and long term than those customers with a more stable relationship with the company. Therefore business management places the customer in the centre of the organisation and should aim at building long-term relationships: adding, multiplying and not subtracting customers for the entity. The future business management model should allow for the 5 C world: Culture, Customer, Commerce, Capacity and Control, which define the steps to take on the path to excellence in customer centricity. The trust and commitment that the entity’s customers perceive and the experience lived with it will clearly be one of the basic pillars to ensure the successful management of the business.
As a result of growing market competition and falling margins, insurance companies are increasingly aware of the significance of improving efficiency levels. In this respect, the aim is to develop an understanding of internal operations, identify customer and member expectations from an operations viewpoint and drive process improvement by adopting radical or tactical solutions on the basis of needs. Radical solutions are understood as the outsourcing of non-core operations or concentrating operations in service centres in the hope of a notable improvement in perceptible efficiency in the income statement.
Tactical solutions envisage the optimisation of critical processes through the detection of value operations, automation as a basis for the creation of flows and control and finally, the development of management capacities in each process.
"... Trees don’t always grow upward …” with this, the CEO of a leading communications company urged a group of executives to develop innovative ideas. In the last few years the industry has seen far-reaching diversification in the development of new products and services that it offers its customers, in order to set itself apart from the competition and avoid a fight for market share only on the grounds of price. Within this scenario, it is key to “organise innovation”, understood in its broadest sense in order to leverage as far as possible the actions carried out and know how to transmit the right messages.
Following the right path and establishing appropriate structures may significantly improve the chances of creating profitable business growth.