SHORT term insurance business is ordinarily transient in nature.
The period of cover usually runs up to a maximum of 12 months ceteris paribus followed by a renewal process.?Under the renewal process neither party is contractually bound to renew the contract.
The insured may decide to change their insurer and the current insurer may opt not to renew cover.
Insurers therefore have a very short period of time to demonstrate their worth and win the hearts of customers.
A claim is always an opportunity for insurers to give a more tangible product but what if there is no claim over a period of time??A few months ago I embarked on a journey to visit commercial farmers in the Mkushi farm bloc.
In particular, there was a white farmer whose farm was more than 80 kilometers from the main road that I had keen interest to visit.?Being the first time of meeting him, he told me that he insured with this insurer for more than 10 years and had no intentions of changing unless under some serious unforeseeable reasons.
He said for the period he had been insured he never had a claim.?As we continued our tete-a-tete I became so intrigued by his sentiments and I really wanted to learn how his heart was won by this insurer even without a claim.
The farmer explained that he was very impressed with the relationship he had built with the insurer concomitant with their timely delivery of documents.
Their regular visits, friendliness, flexibility and being able to listen to his various issues were the reasons to pledge his allegiance to the insurer.
He went on to say many other insurers had tried to engage him but he decided to stick to his long time insurer despite the fact that those competitors had at times offered lesser premiums.
Well, this is a typical example of customer loyalty.
A customer who decides to stick to an insurer even where they have not experienced a claim I bet many will agree with me that commercial farmers can only be loyal when service delivery is not compromised.
If you make an appointment with them you better get there either before or right on time otherwise they will not attend to you.
Customer loyalty is something that is not developed overnight.?In comparison to products like mealie-meal where one may become a loyal customer because they like the taste of that product insurance is intangible.
For one to come to a level of identifying with the brand a lot of work must be done.?Starting from advertising i.e. before a customer buys the product, to the time of closing the business, producing the documents and after sells services such as visitations or holistically speaking customer?relationship management.
There is no better way to stimulate customer loyalty than befriending your customers.?When you become friends you create a bond such that it becomes very difficult for competitors to snatch them.
Although for insurers this is usually possible to direct clients as brokered ones the broker will want to retain that close relationship but the same principles applies.
At claims stage an insurer has the opportunity to give a more tangible experience to the customer.
As far as customer loyalty is concerned in insurance other services may ‘fail’ but not claims settlement.
There are customers who are willing to pay more premiums but with certainty that should the known unknowns occur they are assured of being compensated.
The insurer who has loyal customers stands to benefit in both the short and long term.?Firstly it becomes difficult for competitors to snatch such customers.
Secondly it is common knowledge that it is cheaper to retain a customer than to get a new one.?By keeping loyal customers the insurer stands to reduce their expenses and thereby improving their bottom line.
For a loyal customer the ‘devil you know is better than the angel you don’t know’.?Having a relationship with a particular insurer has many benefits which otherwise may not be enjoyed with a new one.
If you have that relationship with your insurer you can easily call them at anytime when you need their service and they will definitely serve you even when it means going out of their way.
A loyal customer also stands a better chance to get ‘out of grace’ or ex-gratia claims settlements. These are claims which otherwise are not covered by the policy but are settled at the discretion of the insurer.
Comments: webster@picz.co.zm or webster_tj@homail.com or face book search for Insurance Talk-Zambia page or call/text
0977 857 055
(The author is a chartered insurer with more than 10 years industry experience).