Uppsala universitet

3.2 Relationship Marketing in an Insurance Environment
A relationship marketing approach allows the insurance marketer to offer a product in
response to needs triggered by the customer and based on experience and information gathered
over time. Sales and profitability can be dramatically increased because the more a marketer
knows about a customer the more effectively the customer can be approached with
appropriately targeted products (Harrison, 1993).
One of the major themes in relationship marketing, as well as a key to profitability, is to
develop long-term relationships with customers. This involves the ability to retain customers,
and is in turn, dependent on agents possessing the “right” characteristics. What is “right” varies
depending on whether the customer is an individual or a company. In insurance language these
two types of customers may be called personal lines policyholders and commercial lines
policyholders respectively.
A recent survey among insurance customers in America was undertaken by
Independent Insurance Agents of America (IIAA). They reported that personal lines customers
defined retention as dependent on the provider’s professionalism, value, accuracy, and
helpfulness, whereas (small) commercial lines customers claimed that retention was dependent
on quick service, value, and an understanding of the company’s needs (Sonhine-Pasher,
1996b). The same study showed that of the 1500 personal lines policy holders surveyed, 52%
were more interested in forming a long-term relationship with their agent than finding the
lowest price, compared with the so-called “automatic pilot” buyers, representing 26%, who
wanted insurance matters handled without agent contact. Considering the 750 commercial lines
customers in the survey, 67% regarded property and casualty insurance as a good investment
in the long run, whereas 33% were less likely to agree on that, many of them having switched
agents in the three years preceding the survey.

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IIAA concluded that “achieving service excellence is an ongoing process of integrating
several areas, including management leadership (setting a vision for commitment to superior
service), tangibles (the appearance of physical facilities), information (data and management
systems), human resources (customer service) and processes and procedures (examining work
flows)” (Sonhine-Pasher, 1996a, p. 3). This is very much in line with the discussion so far, and
emphasises the customer relationship and relationship management. However, the tangibles
referred to by IIAA are different from the concept of tangibility discussed above. Clearly,
business strategy has shifted and there is a strong movement towards exploring the economics
of relationship management and customer retention as researchers as well as practitioners refer
more and more to the customer relationship as the unit of value (e.g. Gummesson, 1997;
Goldberg, 1997).