Impact of direct channels in the insurance industry - Essay Example

Impact of direct channels in the insurance industry Businesses and companies in the industry use different methods their customers. They achieve this task through online and retail channels. Insurance companies have shaken up the industry by applying customer-centered approaches to market consumer insurance products using different channels (Insurance information institute). Services are intangible, and since most of the insurance products are services, one cannot handle them, touch, or look at them.

One cannot own insurance products or return services offered to the provider since they are services. Delivery of the insurance services is the insurance company that has the capacity to render the services (International Monetary Fund). The services are perishable since when a customer enjoys a service, it vanishes as the customer has consumed the service. Most of the insurance services are perishable since they are services. The insurance services are inseparable from the service provider.

For service delivery to occur, the specialist must generate and render the service. The insurance services are simultaneous since the customer consumes the service at the same time when the service provider delivers it. Progressive enables customers to transfer information from snapshots to the websites through wireless technology. This enables the people who drive few miles earn discounts (Insurance information institute). The progressive products are at the maturity stage of the life cycle since the manufacturer is struggling to maintain the market share.

The products have emerged as unique and the best in the market. The customers enjoy choice of the transaction they want to initiate. The transaction can be through an insurance agent or online transaction. The customers choose the most appropriate method of transaction depending on their location or the resources available. They are able to make transactions online when they are far and when they are busy elsewhere doing other activities (International Monetary Fund). An indirect channel is critical to the customer s as they will get additional and deeper information from the insurance staff.

The online program disadvantages the customer where the insurance company monitors their driving habits. They have to be extremely careful not to make mistakes, since the system will reflect them (Chen and Huici 17). According to the progressive video, prices will be different depending on the method the consumer uses. This pricing strategy is not customer focused since the main aim of introducing it is convincing all the people to adopt the online service. The company has given discounts to the people who drive well and who have registered with the online service.

The management uses this favor to increase the number of the policyholder who will adopt the new product online service (Group of Thirty). Both customer service and online methods should have similar charges to customers. Progressive and its competitors, All State and State Farm have come up with Flo, Mayhem, and Jessica to earn competitive advantage for their companies. The companies have adopted a humorous approach to earn changes in the market (Chen and Huici 49). The use of humor is an approach which when done appropriately leads to success.

Progressive uses a lighthearted theme where a man is hugging his dog when driving to advertise the Snapshot. This is a humorous approach since it sticks to a person’s mind, and it is hard to forget. People will, therefore, recognize the Snapshot easily. State Farm and Onstar operate a partnership program to track the miles that a person drives and offer discount where the policyholder drives for the 12,000 miles in one year. This policy is not humorous since it does not engage the prospect to remembering easily (Group of Thirty).

The program that Allstate uses called “DriveWise” is identical to the Snapshot but only available in Illinois. The company has not established an approach to market the device since the company is only monitoring the market. Work cited Group of Thirty. Reinsurance and international financial markets. Group of Thirty, 2006. Print. Insurance information institute.Financial Services Fact Book, Book 2009. Insurance Information Inst., 2009. Print. International Monetary Fund. World economic outlook: December 2001: the global economy after September 11.

International Monetary Fund, 2001. Print. J. Chen, Shi Huici. Banking and insurance in the new China: competition and the challenge of accession to the WTO. Edward Elgar Publishing, 2004. Print.