Insurance Industry Should Enhance Communication Efforts to Satisfy Pending Legislation

Online, July 25, 2012 (Newswire.com) - To comply with the obligations of the pending Treating Customers Fairly (TCF) policy, the South African insurance industry must speed up the implementation of customer profiling and targeted, effective communication strategies.

According to Nicola Els, Commercial Director at Striata, "In this traditionally intermediated industry, a great deal of insurance business is done through a 'middle man' - third party brokers and personal financial advisors (PFAs). The result is a break in communication between the insurance companies and their policyholders which, in many cases, is nurtured by the 'middle man' to retain control over access to the customer."

"Brokers and PFAs fear being cut out of the loop if they allow the product owners to communicate directly with their valuable customer base" says Els. "As a result, they may either block or channel all direct communication via themselves, to protect their customer relationships."

However, the Treating Customers Fairly policy (an addendum to FAIS) requires some transformation of the insurance supply chain. According to Els, three of the six main principles of the policy can be achieved by implementing digital communication strategies:

1. Suppliers need to know more about the customers they are selling to, and segment appropriately.
2. Customers must have access to information and be kept informed before, during and after purchasing a product.
3. Customers must be able to submit claims and complaints easily with no unreasonable barriers.

According to Els, the introduction of a strategically inclusive, two-way digital communication plan can not only achieve the above compliance requirements, but also benefits all parties in the supply chain. "The argument about who owns the customer becomes moot when the insurance company works alongside the broker or PFA to present appropriate products and information to the end customer."

Els points to the flexibility of digital communication; it enables agile segmentation and targeted communications which is key to complying with the new legislation. "The outcome is a relevant communication that the customer receives from their broker, which enables them to take up the offer or request further information from within the email. This way, customers are not only made aware of products that cater to their individual needs, but also the channels through which they can communicate with the broker, PFA or insurance company."

"Through interactive digital communication, Striata is successfully helping to bridge this communication gap by using a three way approach that markets an appropriate product on behalf of a broker to a customer. Everybody wins in this scenario, and the insurance supply chain takes an important step towards compliance with the TCF policy."