CRM IN INSURANCE SECTOR INTRODUCTION Analytical CRM can be deployed to understand processing of claims in Insurance sector.

Deregulation of Insurance industry in the global has resulted in increased number of players in the market hence competition. In India also Industry has undergone a major change. Before 2000, two state insurers i.e. LIC and GIC were the only players in the market. These companies were created after the nationalization of the life and non-life sectors in 1956 and 1952 respectively. Eventually government took a decision to dismount the monopoly. One of the reasons may be that competition would promote better products, value & service to the customers. This will increase the overall size of the sector. There are about twenty new entrants and majority of them (about 12 or so) in life and about 6 in non-life sector. Initially life sector has attracted more participants than non-life sector. Eventually the prediction is there will be about 16 to 26 companies in life and about 8 to 12 in non life sector. In general performance of non life sector is more challenging than life sector. With deregulation of Insurance sector financial companies, banks are getting into non life insurance sector to their existing customer base. This requires non-life insurers to add value in the value chain. Analytical CRM can be used in the insurance industry for the following applications. - Acquiring new customers - Identifying cross selling/ upselling opportunities - Establishing the premium rates - Assisting the regulators to understand from Rate and Models.

The two cases given below address the issue of establishing the rates and identification of cross selling opportunities. Establishing the premium rates is an important aspect of insurance business. The goal is to set rates that reflect the risk level of the policy holder. The lower the risk, the lower the premium rate. Identification of cross selling/ upselling opportunities involves identification of those customers in the existing database whose likelihood of responding to a product which they do not hold presently is the highest. As an example consider a case where we have a customer database of about 100,000. out of the 1,00,000 customers, say about 10,000 are currently holding a specific product and the balance 90,000 are not holding the product. We are interested in identifying about 20,000 customers out of the 90,000, the criterion being their probability of responding to the promotion/ marketing campaign is the highest so that we do not waste time and energy on those whose likelihood of buying is not high. This will also help to develop a focused marketing campaign/strategy. The above concept can be illustrated diagrammatically as given below : Existing and Potential Customers Profile of those most likely to Purchase Profile of those most likely to remain loyal