CRM PRACTICES IN LIFE INSURANCE

SECTOR
AUTHOR : PROF. B.C. Thimmaiah – Professor ( Assistant ) – Moskovskaya Shkoloo Upraveleniya
Scolkovo , Novaya Ulitsa , 100, SCOLKOVO , MOSCOW OBLAST , RUSSIA ,143025

Abstract

In any service industry, customer is the king-pin. Days are gone when customer used to wait at
the counters of an Insurance office for hours together. Now is the time for 24X 7 services for the
client at his door-step. Especially in the life insurance sector, there is an adage-Insurance is never
bought, it is always sold. This is because, life insurance is technical and the common man does
not understand the intricacies of the insurance parlance. Now after the Liberalization of
insurance in 1999-2000 and the introduction of the Regulator-Insurance Regulatory and
Development Authority-IRDA-the life insurance companies have started going all hog to win the
customer. For this the most important tool in their hands is the Customer Relationship
Management-CRM.

Aspects of CRM

Different alternate modes of premium payment have been devised besides the conventional
method of standing at the cash counter at the insurance office. These include the payments at the
Banks, through the ECS route-Electronic Cash System where the Bank account is debited,
payment at the Bank’s ATMs, through the Drop-boxes, paying through a few collection agents,
on-line payments etc. The interactive kiosks at a few junctions in the cities provide on the spot
information to the customer on various aspects of life insurance. The customer Portal acts as a
ready source of information and service to the clients.

Customer Grievances

This is another significant development in the customer service. If the client does not get a reply
from an Insurer in a reasonable time, he is free to lodge a complaint through the customer’s
Portal of IRDA. This is given a Tracking number and this is followed up by the Regulator
himself till a satisfactory reply is given.

Claim services
The proof of the pudding is in eating, it is said. Similarly the efficacy of the insurance service is
proved only by the speed with which a claim is settled. There is the system of Insurance
Ombudsman to whom a policyholder or a claimant can appeal in the case of claim rejection or
payment of reduced benefits etc.These Ombudsman are Senior Retired Directors of Insurance
Corporations, Retired IAS and IRS Officers appointed by the IRDA. These Ombudsmen can deal
with claim cases up to Rs.20 lacs.

Policyholder’s Protection Act

CRM measures of an insurance company ensure that the provisions of the above Regulations
brought in by the IRDA are properly complied with. These provisions deal with the different
aspects of servicing to clients like the change of address, renewal premium payments, revivals,
age admission, alterations, nominations and assignment, loans and surrenders, duplicate policy
issue, claims etc. The CRM initiatives are fully geared up to meet any of the needs of the
customers.

Customer is the King

The CRM measures ensure that the customer is served at his door-step, with a smile and at his
convenience. The customer is not made to run from pillar to post. He is not required to visit the
office at all. If at all he visits, his visit should be a pleasant and memorable one. He must walk in
with a problem but walk out with an experience.

Let us always remember the words of Mahatma Gandhi-A customer is not an interruption-he is
the purpose of it. Customer does not depend on us-we depend on him for our survival. With this
aim in our mind, if we take our CRM Measures, that will be the greatest day for the customer
and our purpose would have been served.

Customer Relationship Management-CRM-I s the buzzword in any service industry now.

Especially in the life insurance sector, this is a must to retain the customers. It is a well known
fact that it is six times more costly to get a new customer than to retain an existing customer. A
satisfied customer is the best salesman for the insurance company. Therefore both to get new
customers as well as to retain the existing ones, CRM plays a very significant role in the life
insurance industry.

What is CRM?
CRM-innumerable definitions, hundreds of books, different courses in colleges and training
centers and a lot of articles in magazines-but still the achievements in this area have not been
scintillating in the sense a large of complaints and grievances continue to pour from the
customers and agents. No doubt, this has created a new beginning in the customer-related
functions and this helps making the customers instantly happy and satisfied.

As more players came on the field and competition increased, customers found that they had
more choices than ever before and they could desert one company and go for another. This made
the companies also realize that they should take care of their customers by special efforts and
retain them. It is not just enough to get new business since the premium brought in is fully
utilized for defraying procuration expenses like the commission, incentives, medical examination
costs, administrative expenses etc.Actually it has been estimated that unless the first full five
years’ premiums have been received from the customers, the company can’t make any profits.
Thus companies were forced to retreat on their back foot and retain their market share by
innovating methods of interacting with the clients and maintain the relationships leading to the
birth of CRM initiatives.

Get, Keep and Grow customer Initiatives

These can be broadly classified into four groups:

For premium payment

For claim settlement

For effective servicing

And for sharing information.

Premium Payments

Days are gone when the policyholder had to go the Insurance office all the way to stand in the
queue, wait for his turn, pray for a little smile on the lips of the cashier and then get a receipt. By
this time at least 30 minutes of his time had been wasted. The Banks have shown the way in this
respect by resorting to ATMs.Now who goes to the Bank Branches to withdraw money? So
many new concepts like the internet banking, mobile banking, inter-bank connectivity etc have
come in to existence.

Similarly in the life insurance sector too, the following measures have arrived;

Electronic Clearance System-ECS-Through this, premium can be paid by giving a mandate to the
Banker.

Electronic Bill Presentation and Payment-EBPP-Here premium can be paid through various
Banks and through Service Providers throughout the country.

Credit Cards are another medium for making premium payments.

ATMs of the Banks are also available for payments.

Portal Payment Gateway-on line premium payment through the customer Portal is another
opening.

Premium collection through Banks and their extension counters is also coming in handy.

Premium collection through Franchisees like the AP Online, MP Online, Suvidha Info serve Pvt.
Ltd, One Stop Shop, Bill Desks through Reliance Retail, Sify Cybercafés, Oxigen, Tata Parsec
PCO Network, Atom Retain Network etc is also done.

Drop Boxes are kept in important junctions for the customers to drop their premium cheques.

Some insurance companies have authorized their Senior Agents and Development Officers to
collect renewal premiums from their clients.

Initiatives on Claim Settlement

Insurance Product sold is only a promise to pay on a future date on the happening of a certain
event. The proof of a pudding is in its eating. Similarly life insurance is proved only when a
claim-either Maturity or Death is settled promptly with a smile. How CRM measures help
towards achieving this objective, we shall see now.
Utmost sensitivity is desired and required in claim settlement areas because experience at this
stage creates a lasting impression in the minds of the clients/claimants.CRM initiatives take care
to deliver the promises with sincerity and efficiency.

The Maturity claim payments and Survival Payments (periodic Installments under Cash Back or
Money Back policies) are made in advance-one month before the due date with the help of the
Computer Lists maintained by the Insurer.

The Annuity or Pension Payments are made every month through NEFT-National Electronic
Fund Transfer System-on the respective due dates to the Pensioners who are normally Senior
citizens and this is a great boon for them as they need not be anxious and try to contact the
insurance office either personally or over the phone. All these hassles are removed under this
system as the bank accounts of the annuitants are credited automatically on the due date.

All the Death claims are followed up systematically by the insurance officials. As per the
Policyholder’s Protection Guidelines of the IRDA, all the correspondences are to be replied by
the company within ten days and the Death claims are to be settled with in 30 days from the date
of the receipt of the intimation. If the death claim is an early one-claim arising within two years
of taking the policy, the company is given 60 days’ time for settlement and if any claim
investigation is involved, the time given is 6 months from the date of receipt of the intimation.
More on the Policyholder’s Protection Guidelines, later on in this article.

Initiatives on Servicing

In today’s competitive scenario, the customer demands 24/7 services wherever he is and that too
hassle-free and pleasing. It is no more customer satisfaction- it is more customer delight,
customer ecstasy and even customer surprise. He wants one-stop solution for all his
problems.CRM integrates all the customer touch points and provides a comprehensive solution.

Customer Zones-These are the one-stop resolution for all the servicing needs of a customer with
special emphasis on “quality experience”. There are Info-centers for the phone-in customers,
Help-desk for the walk-in customers and the Relationship desk for the Priority customers.

Customer Zone is endeavored to be a place where the customer walks in with a problem and
walks out with an experience. Solution is basically what the customer wants and experience is
something he delightfully gets in the process. The staff at the customer zone is empowered with
an attitude to serve the customer. There is an unwritten rule-the customer should not be directed
anywhere else once he has entered the customer zone. The staff will get the job of the customer
done through phone or personally going or through the Single Window of the branch or through
the Help-Desk.

IVRS-Inter-active Voice Response System-is another CRM measure providing information to

the customers 24/7. They are also functioning as Info-centers doing on the spot services

Customer Portals-Customers can avail the following facilities on Portal by registering:

Premium payment

Change of address on-line

Policy status report

Revival quotation

Loan/Surrender quotation etc.

Initiatives on Information and Communication

These are major initiatives to strengthen the ties with the customers.

The Information Kiosks provide information to the clients any time they want.

Through the Print and Radio/TV media, there is a continuous flow of information to the
customers.

There is a proper system of looking in to the complaints of the customers in every insurance
company. More on Grievance Redressal System, later on in the article.

There is also the practice of sending customized information to all/select clients.

The High-end customers are separately addressed on specific issues.

Customer Loyalty Programs

These are attempts made by a company to convey to its loyal customers that “we care about
you”. This communication is aimed at making the relationship between both of them more alive,
stronger and meaningful.

Most of the Loyalty programs being run these days are based on “Reward Model”. Here the
customer is offered some direct benefit in the shape of some discount or incentive or some
reward points just on the lines of Frequent Flier Schemes of the Airways.

Here the company ignites a personal touch with the customer based on certain factors like the
number of policies held by the customer, the amount of premium paid per year and the frequency
of purchase. Then a Unique Identity Customer Number is allotted to the customer. These
customers are called the High-end customers and their servicing needs are attended to on a
priority basis throughout the country. They are often contacted by the company’s special service
executives personally for their future insurance needs as well as investment of income leading a
scientific way of Wealth creation.

Customer Grievance Redressal Programs

These are also a part of the CRM measures as there are still a lot of complaints from the
customers.

There is a separate Department in dealing with this aspect in every company. There is a
Designated Officer for this purpose. Normally Mondays are earmarked for this purpose and the
customer can walk in to any insurance office and meet this Officer in the afternoon between 2.30
to 4.30 pm without prior appointment. There is a Board displaying the name of the Designated
Officer.

If still the compliant is not resolved, the customer is free to approach the higher office of the
company. Here too if the response is not satisfactory, the customer is free to approach any one of
the following:

Consumer Council available in every district, State and the National Forum at Delhi.

IRDA Grievance Redressal Cell

Insurance Ombudsman of the area.

Consumer Councils-These come under the Consumer Protection Act, 1986.There is a provision
for an Advocate to argue the case. However as these Councils are meant for all complaints of all
consumer goods, it is better to go to the Insurance Ombudsman.

Insurance Ombudsman-He is appointed by IRDA every three years in almost every State.
Usually he is a retired Insurance Executive Director or a retired Judicial Officer or a retired Civil
Service Officer like the IAS or IRS Officer. Complaints up to Rs.20 lacs are heard by the
Ombudsman. His decisions are normally binding on the company but not on the customer who
can go on appeal to a Civil Court. There is no provision of an Advocate or third party in the
hearing and the cases are normally cleared with in a month of receipt.

IRDA Grievance Redressal Cell-Unlike the Insurance Ombudsman, this Cell does not have the
authority to pass orders. However the complaints are taken up with the Insurer concerned. It has
a toll-free number-155255-and IRDA has done some awareness campaigns for this through the
Print Media.

IRDA has stipulated a time limit for solving the complaints of the policyholders as following:

10 days for

Policy bond not received

Wrong Policy bond issued

Surrender value not paid

Product differs from what was requested or disclosed

Term of the policy differed/altered without consent

Malpractices or unfair business practices

Hidden charges not explained

Free-look refund not paid.

15 days for
Maturity claim not paid

Pension installments not paid

Requirement in respect of death claim not raised by insurer.

30 days for

Death claim not paid.

Policyholder’s Protection Guidelines, IRDA, 2002.

As per these, the insurance company is obliged to reply all the queries of the customer pertaining
to the following subjects with in ten days:

Age admission

Renewal notice not received

Policy bond not received

Any query regarding

Policy revival,

Alterations,

Change in name,

New nomination or change of nomination,

Assignment,

Issue of Duplicate Policy,

Loan/Surrender/Bonus quotation,

Inclusion of any additional benefit like Riders

And any such query regarding policy servicing.

All Maturity claims/Survival benefits to be settled with in 30 days.

All Death claims to be settled within 30 days of the receipt of intimation excepting the cases of
early death claims. Wherever a claim investigation is involved, a time limit of six months is
given.

Free-look period-This is a revolutionary step taken by the IRDA.

The customer has the right to reject and return the policy with in 15 days of the receipt of the
policy, if the customer is not satisfied with the terms and conditions of the policy or if the
customer feels that he has been sold a wrong policy, other than the one which was discussed by
the agent and agreed up on by the customer. This provision is not available in the sale of any
consumer good. Full refund of the premium paid will be made minus the medical fees if any
medical examination had been conducted.

Customer is the King

With the competition heating up, the insurance companies are facing the reality of keeping their
customers happy as well as retaining them. They have to focus on “knowing the customer
better”. Gathering and leveraging this information helps the company personalize their
relationship with each customer and applying predictive analytics helps them offer products and
services that can help increase the value of every client. Predictive analytics make it possible to
take advantage of data from every channel-Web data, claims data, Policy data etc in closed loop-
analysis that helps results to improve interactions.

The two points of concept are:

Understanding the customer’s unique requirements

Offering them the products and services over their life time that will maintain or increase their
profitability and retain them as customers.

Life insurance is a complex product where high personalized service-achieved through an

intimate knowledge of customers, their products and service preferences and their histories with
the insurance company-is critical to the company to make sales. As insurance options broaden
and products grow more complex by addition of new benefits and services, customers look for
superior, personalized service more than ever. Hence insurance companies need to ensure they
know their customers.

The important CRM Tools

An old Chinese proverb says-Give a hundred year lease on desert and it will become a garden;
give a one year lease on a garden, it will become a desert.

The point is that ownership and long term commitment make a difference when it comes to
undertaking important tasks, and building customer relationship is a big deal. After all, look how
far we have come from product marketing to mass marketing to segment marketing and all the
way to the total customer experience.CRM promises a wave of change in world wide business.

The core subject of CRM is the customer satisfaction. In short, customer satisfaction is the
customer’s fulfillment response to customer experience. Customer satisfaction can be achieved
effectively by giving prompt responses to the customer calls, providing right customer complaint
resolutions in time, building up the customer relationship through meaningful interactions to
attend to his needs etc.

A relationship is said to exist only when the parties move from a state of independence to
dependence or inter-dependence. If one goes to grocery shop to buy some item, it denotes only a
transaction and not relationship. If the person goes to the same shop again and again, it is the
beginning of the relationship-this may be due to the service given at the shop or the smiling face
of the sales person or the ambience etc.But the fact remains that the Repeat sales have been
done.CRM helps achieving repeat sales.

The success of any new initiative depends up on the level of commitment of the persons posted
there and CRM initiatives need committed personnel.

Listening an effective tool

Technology costs money-but what about a powerful but yet an inexpensive tool that can go a
long way in strengthening customer relationships and building customer loyalty? That is
EMPATHETIC LISTENING. This comes free, each one is equipped God-given gift and this can
be used in every interaction with the customer. It is not dependent on hardware or software. It is
actually Heart ware.

Every human being longs for a few personal or psychological needs:

Feeling of importance-whenever a customer visits an office, he wants to be treated as an

important person.

He wants to be respected.

He wants to be understood.

He wants to be comfortable like a chair to sit, neat and clean atmosphere.

All the above can be achieved by a patient listener. The customer is greeted with a smile, a
greeting like Good Morning, offered a seat, offered a glass of water and then he is enquired-
What can I do for you Sir?

The customer is listened to patiently.

The customer’s problem is not solved-but already half the battle is won.

Conclusion

Today’s insurance companies certainly face a daunting challenge in maintaining and increasing
their competitive edge.

By focusing on three key imperatives-gaining a unified enterprise view of the customers,

retaining customers with great service and controlling costs while expanding-insurance
companies can turn challenges into strategic competitive advantages and enhance their long term
viability and profitability. In this endeavor CRM is an effective tool which they could easily and
flexibly deploy.
CRM initiatives appear to be small things when compared to hard tasks of selling and marketing.
But I always recall an adage which says-Show me a man who can not bother to do little things
and I will show the man who can not be trusted to do big things.