Page 1: Introduction
The Co-operative Insurance Society (CIS) operates in one of the most dynamic and complex markets in the world. Insurance is one of the UKÕs major industries with an estimated 700 businesses providing investment and protection products to over 46 million customers. In recent years, competition in the financial services industry generally has intensified. To survive and to continue to prosper, financial services organisations have had to adapt both their business operations and their strategies. As a result, there are now a wide variety of ways for customers to purchase financial products - by phone, by post, even over the Internet. CIS has always applied the personal touch to financial services, offering a high quality service in customers’ homes through its own professionally trained field staff.
This case study examines the CIS approach to customer relationships and the steps it is taking to bring a modern face to the traditional values of personal selling.
CIS was established in 1867. It was the world’s first co-operative insurer and today remains the only co-operative insurer in the UK. As a co-operative it operates solely for the benefit of its customers. All profits are applied for the customer’s benefit, through bonuses on life and pension policies and discounts on motor and household insurance policies. CIS is one of the most successful insurers in the UK providing a broad range of products covering pensions, savings, investments, mortgages, unit trusts and PEPs, protection, household and motor insurance to some 3.5 million families.
Home service – a brief history
Insurance is not a modern idea and many of the products in existence today have been developed in response to the needs of people over many years. Insurance as a concept really caught on with the Industrial Revolution. As towns and cities grew, so did the risks, for example of fire and theft, and insurance companies emerged enabling customers to insure property, belongings or their life for just a few pence a week. This money, known as the premium, would be collected regularly - usually on a weekly or monthly basis - by an insurance agent, who was someone the customers knew, more often than not living in the same neighbourhood.
These are the origins of an insurance distribution channel known as home service. For CIS home service remains the most important way of distributing its products and means that it can maintain a close relationship with customers and gain an excellent understanding of their needs. This is not least because each CIS customer has their own agent who is often a personal friend rather than someone who simply sells them insurance.
The way CIS manages to grow its business is to ensure that not only is the distribution mechanism efficient, but that the following principles also apply:
- Easy to understand products
- Good investment returns
- Low running costs
The combination of these factors helps ensure that customers are provided with value for money products that they understand. CIS customers can be characterised as loyal, long-standing and large in number, as the following facts and figures show:
- 20 per cent of customers have at least five CIS products.
- Customers can often measure their relationship with CIS in decades.
- CIS has the second largest customer base in the UK insurance industry.