INSURANCE companies will have to radically change their business methods and their approaches to customers, if they wish to survive in the next millennium, a new report has said.
It forecasts that the traditional insurance companies are going to face intense competition.
The report, carried out by Irish consultants, Prospectus, on behalf of the Financial Times has found that European customers want greater transparency. It says insurance companies will have to fight very hard to retain existing customers and grow.
"Customers are becoming much better informed and will no longer be prepared to take what they are give," says Mr Simon Glancy, one of the report's authors.
The aim of the report was to identify what factors will influence the European insurance industry over the next to years.
Mr Glancy says insurance companies must start examining how retailers gather information on, and treat, their customers. He says a number of retailers are set to offer insurance products.
He believes it is "only a matter of time" before retailers such as Marks & Spencer enters the Irish insurance market.
"People want proper services, transparency and value for money," he says. "They also want flexibility and will not be prepared to incur penalties for changing policies.
Mr Glancy admits that this "sounds like common sense", but says the insurance industry has not excelled at serving the customer.
Banks and building societies, especially in Ireland, will also become bigger players in the market. Branding will also be a key issue. Insurance companies will have to invest far more in this area. This is already happening in other European countries and Britain, where Virgin has entered the market.
"People feel more comfortable with a brand they know," says Mr Glancy. He points out that everybody in Ireland knows the names of AIB and Bank of Ireland, but the names of insurers is a different matter.
New technology will also have an increasing influence on the way people do business, through personal computing, television, the telephone and Internet. Customers will feel more at ease doing business through these media, he says.
This should help insurance companies to cut costs, he says, as they will not need the same amount of personnel or buildings to service customers.
The Prospectus Report identifies pensions and healthcare as the major growth opportunities for the insurance industry.
Mr Glancy says people are realising increasingly that they will not be able to maintain their current lifestyles on State pensions.
Private health insurance is identified as another growth area because of a progressive reduction in State expenditure in healthcare services.
