Fortune News | May 08,2021
Oct 9 , 2021
By Asseged G. Medhin
Insurance customers are increasingly demanding simplicity, transparency and speed in service delivery and product innovation. Insurers should rise to this challenge through innovation, writes Asseged Gebremedhin, an insurance professional with over a decade of experience in the finance industry.
No power is more potent than that of customers' bargaining ability in today’s business environment. It goes without saying that this impact will bring about bankruptcy in any industry if companies are not proactive in managing it through strategic thinking.
Toady’s bargaining power is not the way we think of it traditionally. Consumers are not just seeking a reduced price for the services delivered. They are challenging product providers from the perspective of dynamism, uniqueness, flexibility, timeliness and even social and environmental sustainability.
If we take the insurance industry alone, the doing business environment has extensively changed. New and ongoing social trends are shaking up traditional business patterns, resulting in an increase in consumer power and knowledgeable customers.
Insurance customers are increasingly demanding simplicity, transparency and speed in their transactions with businesses, including insurance agents, brokers and carriers. The relentless march of online and mobile technology continues to fuel this change in customer expectations though Ethiopia finds itself far behind in digitalisation.
For instance, providing claims notification through technological devices reduces insurers' and the insured’s time and energy, and creates agility. The customer can also, at a distance, easily renew their existing insurance policy. Most of us think digitalisation is complex and costly and believe that if it is once started creates dependency syndrome on the innovators. This is far from the truth. In today’s world, there is no way around the march online.
But mere automation is not what is needed to transform the insurance sector. We need to transform the claims, underwriting and marketing management processes and the human capital element. The role of insurers and the agents and brokers in the industry needs to be re-examined for their relevance to end-users to grow. And the chain has to be seamless, a fluid service that will meet customer expectations of simplicity and transparency and foster innovations in product and service design and delivery.
Those insurers that have stayed in the market for longer have a better advantage, but only if they can build on that loyalty through innovation. This can be done through effective leadership and governance, especially in the Ethiopian financial sector, which is highly regulated.
The most important factor boosting customers' power is competition. As the number of suppliers increased with diversified products and services, the power of customers has relatively been enhanced. The competition in the market helps customers predict what a cost-effective, convenient service or product should be like. This could be devastating for some insurers.
Who is responsible for this? The customer who has got the power of dominance to take out an insurance policy at below-market premiums? The regulators? Experts in the field? Technological development? Executives? The board members?
Whoever is responsible, unless diversified products and services through innovational business models are built, we cannot control the bargaining power of customers. If we innovate in our service and product delivery, any price war can be managed, profits made, and our strategic position is maintained. As we navigate and explore our business deeply, we can certainly reach a win-win situation that benefits both insurers and policyholders.
The workable strategy for experienced insurers is customising product and service attributes to meet the specific needs of their existing and potential customers, which will eventually amass more customers and ultimately improve the diversity and speed of service demanded.
Leadership from the top should focus on translating innovation into investments in mobile and interactive technologies and transactional capabilities across multiple digital platforms.
Most of us may think differently that emerging risks in the sector can incur us a huge amount of money that will reduce the share of profitability. Wise business leaders will instead take it as a challenge and work to get their firms to adapt to the times by absorbing shock.
Let us then change our mindset towards managing the power of customers through innovation instead of blame-shifting to the customer. The customer is always king, a reason for the existence of any business. It is always our responsibility to find a solution. In fact, in an increasingly competitive playing field, there is no option to attract and continually improve service for consumers to survive. The days of monopoly and constant undercutting of one another is long gone. It is time for innovation.
PUBLISHED ON
Oct 09,2021 [ VOL
22 , NO
1119]
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