The Future of Cross-selling

ReMark Americas is introducing new technology intended to facilitate a more effective cross-selling of life insurance to the mass market property and casualty insurance policyholders. Current distribution models have focused on face-to-face selling, whereas ReMark’s technology will facilitate mass distribution, resulting in a new distribution model.

ORIGINS OF THE NEW MODEL

The North American insurance market faces an ongoing challenge of managing communications between brokers and their existing policyholders. Although this is a key focus and many approaches have been tried, obstacles still remain. Why?

Over the past decade, there has been a move toward independent policy distribution, in which brokers who are not tied to any one financial institution are authorized to give objective financial advice to their clients. This move away from tied agents – those authorized to give advice and recommend products from only one particular firm – has made it difficult for insurance firms to recruit new brokers and their policyholders.

This dynamic has led to an increasing lack of control over distribution, and insurers say they are witnessing the abandonment of middle-market consumers. Older, experienced brokers with large customer bases are now targeting new high net-worth clients, or focusing most of their efforts on estate planning. This is not isolated to new business: as brokers grow their practice and focus on high net-worth customers, existing policyholders lose contact with them. However, the middle market policyholder customer base contains significant untapped opportunities, not to mention unmet protection needs.

Property and casualty insurance is one area in particular in which life insurers have had limited success in leveraging broker communications; the result is an inability to penetrate existing customer bases and drive revenue growth.

Generally viewed by customers as an expense rather than as a savings or investment vehicle, P&C insurance is fundamentally different from other financial sector products. As a result, sellers specializing in life insurance and mutual funds often have less success selling P&C insurance.

Although consumers of both life and P&C products have similar financial planning needs, there has been very limited success to date in combining the selling of life and P&C products, which would allow for the large-scale marketing of both through a single sales force.

NEW DISTRIBUTION MODEL

Recent marketing and technology advancements have created an opportunity for insurers to overcome these challenges. A consolidation of services – generated by an industry-wide push for cost efficiency and a greater share of broker business – has given rise to what some call the “distribution revolution.”

As merger activity slows and cost efficiencies are realized, insurers focus on the distribution aspect of their operations more than ever before. Some key drivers include:

* Banks and insurers in countries outside Canada have demonstrated success when using non-traditional methods of marketing insurance to their customers.

* Insurers see Canadian banks are focusing more on direct marketing and other non-traditional methods of insurance sales, lending greater credibility to these vehicles.

* Significant technological advances made mass client marketing feasible.

To this end, cross-selling, or networking through multi-channel marketing, is seen as an important new method of distribution for the insurance industry. It presents life insurance brokers with an opportunity to penetrate and cross-sell offerings to P&C clients more effectively, resulting in improved customer relationships and revenue growth for insurers.

NEW TECHNOLOGY

ReMark Americas has leveraged this new distribution model and is seeing great success. How did this happen?

First, ReMark developed a structured marketing strategy for clients in the banking and life insurance industries. Then it partnered with Transact One, a Toronto-based IT service provider, to build a platform to support the new strategy. The distribution solution leverages Transact One’s BlueSun software – a specialized insurance value chain solution (developed with Microsoft tools) based on a Microsoft SQL Server 2005 database. The BlueSun solution enables ReMark to take an insurance provider’s entire policyholder database from multiple mainframe systems, and merge it into one relational marketing database.

The solution improves the integration between broker systems and policyholder marketing programs, giving brokers better access to client data and enabling them to deliver more effective campaigns. Brokers can access, through a secure Web interface, the details of an insurer’s marketing program before it launches; in addition, they can view all marketing program results for their policyholder base in real-time. The new solution allows brokers the flexibility to ‘opt-out’ particular clients that are not a fit, and generate new business leads through increased policyholder interaction.

Collecting information contained in individual broker management systems can pose an interesting challenge for large financial institutions, since policyholder information often resides in various locations. Some insurers hold all client data; other insurers hold very little information because their brokers manage customer transactions. Many of ReMark’s clients in the banking and insurance industries have stored critical policyholder information in aging legacy IT systems, making it difficult for staff to extract and leverage the data.

The Blue Sun solution provides seamless access to client systems because a process has been developed for managing data feeds with insurers. For example, the software allows for the extraction of data and the subsequent ability to deliver marketing programs based on that specific information. As a result, ReMark is able to conduct post-campaign analysis and simplify future modeling, because the solution combines reporting from all of the insurer communication channels and systems. One customer was able to generate US$2 million in first-year premiums based on the results of one six-week campaign. Today, ReMark’s policyholder-marketing programs consistently generate response rates 5% or better, compared to industry averages of between 0.5% and 1.5% for direct marketing.

Enabled by technology, multi-channel marketing clearly presents a significant opportunity for the insurance industry to overcome challenges in cross-selling of P&C and life and health insurance products. Aligning a face-to-face channel with several thousand clients is virtually impossible without a multi-channel approach. Using technologies that support independent brokers through integrated, multi-channel campaigns – including full broker integration and post-campaign analysis – insurers can overcome the cross-selling hurdle. The end result will be greater revenue, better customer retention, and continued growth within the industry.