What customers need is key, but finding out what this is requires getting out of the office

Policies and programmes designed behind a desk will always flounder out in the field, no matter how good or earnest the intentions behind them. Bridging the gap between what practitioners assume and what customers want is essential if financial inclusion is to have meaningful impacts, and as plans are made for expanding microinsurance coverage, ensuring that new customers are loyal and happy will be essential if institutions are to thrive and continue in their mission.

Much of the work here lies outside the confines of the office - meeting and engaging with customers, investing time and resources into building up a rapport with target audiences. To be effective, a customer-centric approach must be wholehearted, and not restricted to leadership - although sending the CEO out on a field trip with an agent is probably a good idea - and inform the ethos of the whole organisation.

Joining the Microinsurance Network’s latest Expert Forum to discuss these issues and share their insights on growing a customer-centric mentality were Antonique Koning, a Senior Financial Sector Specialist at CGAP in Belgium and Geric Laude, CEO and President of CARD Pioneer Microinsurance in the Philippines. Bert Opdebeeck, founder of Microinsurance Master, moderated the discussion.

Antonique shared research conducted by CGAP on why customers do not activate or renew policies. Feedback suggested that disconnects between what those designing and offering the policies thought customers wanted and what they actually wanted loomed large here, and that policyholders often simply did not believe the policies they had signed up for had any relevance to their lives. Others complained of poor service delivery, or of difficulties and delays in making claims. The consequences of the mismatch between desk and field was stark: of the 700 million accounts opened between 2011-14, half were used less than once per month, and 20% remained unused at all.

While the data painted a bleak picture, Antonique also argued that adopting a customer-centric business model and a mind-set that sees challenges as opportunities, can result in higher retention rates of happier customers, who bring added value to the institution.

Several pillars make up CGAP’s model for ensuring customer-centricity, beginning with a leadership that is thoroughly attuned to customer-centricity (here is where the field-tripping CEO comes in). All operations should have customer-centricity at their core; not just at the customer service level, but throughout the company, whose staff should be empowered with customer-centric tools and insights that allow them to understand and engage with consumers. Service delivery should be simple, hassle-free and not off-putting or intimidating, and finally, customer value should increase business value.

And spending more time on customers works. After abolishing a 3-minute limit on phone calls to its call centre, insurance provider MetLife found that both customers and staff were happier, and that increased phone time was negligible: the average time needed to resolve an enquiry turned out to be only 3 minutes and 4 seconds. Antonique pointed to another example: by allowing customers to build up a customised policy that suited them from a number of options, like choosing ingredients for a sandwich, MetLife managed to reverse a trend of one of the highest rates of customer loss in the US.

The discussion then turned specifically, to the Philippines, from where Geric Laude shared his experiences of how adopting a more customer-centric outlook for Pioneer Insurance helped the company on its ten-year journey from a grassroots organisation to a company reaching 18 million customers.

The approach is simple, Geric said. Pioneer has three rules to ensure it maintains its customer-centric approach: never operate from behind the desk; if there is something you don’t know, ask the customer, and constantly use knowledge gained from customers to re-engineer how the organisation works. In short, no one knows better than the customer.

It’s an approach that didn’t come immediately, and one that requires constant fine-tuning and listening to some hard-to-hear feedback. One complaint from Pioneer customers was that the claims process was too lengthy and difficult. Geric decided to allow other community members to vouch for individuals seeking to register for claims, removing the need to produce birth certificates or other documents, which low-income groups often struggle to access. Claim times were cut down, customers were happy and decided to stick around, and Pioneer’s portfolio continues to grow.

Barbara Magnoni from EA Consultants in New York added some examples of financial institutions missing this vital customer-centric aspect in their work, specifically in Latin America, where stricter regulatory controls on interest rates for other financial products were driving companies towards microinsurance in search of profit. Applying aggressive sales methods (or even mis-selling products) used to sell different financial products to microinsurance has resulted in many examples of customers losing out. In Peru for instance, some farmers waited for up to 90 days for evaluators to turn up and assess crop damage. When they decided to re-plant crops themselves in order to still make the harvest, they found themselves disqualified from the crop insurance policy they had signed up for.

Reaching out to and working with low-income groups can be a precarious venture for financial institutions. Returns on microinsurance in particular are generally low, markets are extremely competitive, and simply chopping traditional insurance products down to smaller pieces does not work. But with some determination, an ethos where the needs of customers inform the products that are offered to them and shape the services they receive can work, and even be profitable. Pioneer Microinsurance’s journey - and its 18 million customers - are proof of this. In the words of its CEO: “we needed to prove to ourselves that we could do it.”

This blog was written by Ross Adkin.