It seems like insurance companies go through many changes, constantly evolving and changing in efforts to capitalize on the market and better serve their customers. One of the ways they accomplish growth is through acquisitions.
Acquisitions allow for multiple benefits, including increased market share, cost savings through economies of scale, shared innovations and technologies, and access to new products and markets.
But what about consumer gains from insurance acquisitions? What do your policyholders think of the move? What can they expect? In short, what is the customer perspective on insurance acquisitions involving them?
That’s a critical perspective to fully understand or be able to predict before your M&A. Here’s what your primary audience might anticipate.
The Advantages of an Acquisition for Policyholders
If done right — meaning with the customer’s point of view always in sight and mind — an acquisition can work to the benefit of policyholders as well as all other stakeholders. Here are five ways that is possible.
1. Enhanced Product Offerings and Innovation
Your company has a leading life insurance product. Your acquisition is known for its leading auto insurance products. Now your customers have access to a fuller inventory of insurance products in multiple lines — something they never had before.
Presumably, your company was focusing on strategies, products, services, or technologies that would improve the lives of your policyholders. Your partner was doing the same but in different areas of business development.
Now your combined customer base can enjoy all of those benefits from the new company.
2. Streamlined Customer Service and Support
Every business executive understands and — to some extent — pursues excellence in customer service and support. The reality is some companies do that better than others.
In the event of an acquisition, you can pick and choose the customer service team that will best represent the new company or retool based on the best customer response facets of both companies.
Your customers should realize the benefits in this area as soon as they contact the new company with questions, requests, and orders.
3. Access to Broader Networks and Resources
Consider two companies that, individually, have relationships with various hospitals, clinics, physicians, and other healthcare organizations, resources, and providers. Your policyholders can seek covered services through any of those entities — but generally not outside of that network.
After the acquisition, things change — and for the better, from the perspective of your customers. They now have access to additional healthcare resources, a most welcome expansion of the services they expected to receive.
4. Possible Cost Efficiencies and Lower Premiums
One leading motivating factor of most acquisitions is cost reduction. Economies of scale mean that the new company might be able to rely on a lower combined head count or eliminate certain redundant services or departments.
If, as a result of those cost-saving moves, you can lower your policyholders’ premiums, make sure you make that news known to your customers and that it’s promoted as a bottom-line benefit of the acquisition.
5. Increased Financial Stability of Both Companies
This is a no-brainer for the executive teams of both organizations. Enhanced financial stability is, after all, quite likely a key reason for making the move in the first place. But what does it mean to your customers?
Plenty, though it’s not always readily apparent. Your greater liquidity and profitability can mean additional services, products, technologies, innovations, or benefits that would have been out of the question with your previous balance sheet.
You might be able to streamline processes to the advantage of customers and access changes that become readily apparent and welcome to your end users.
What you’ve read are just five examples of how your planned merger and acquisition can benefit your valuable policyholders and prospective customers. It’s likely that you’ll find other prime selling points as well.
Be sure to promote those reasons that the M&A should be trusted and that positive change should be anticipated. Done right, it will make the move a win-win for everyone.
Addressing Consumer Concerns
Your mission is to become part of a new entity while maintaining the brand identity and authenticity that attracted your customers in the first place. There are challenges ahead, even if you do everything by the book. Admit that upfront and proceed strategically.
Consolidation in the insurance industry can be a dirty word in some circles. Perhaps even some of your customers feel that your planned M&A will deteriorate the way you do business. The idea is that consolidations represent greater market concentration, which leads to larger companies that stifle competition and innovation while raising premiums.
You can’t blame your policyholders for getting nervous. Suddenly they see new websites, logos, member cards, customer service phone lines — quite likely even a new and unfamiliar company name. What’s going on? All they might see are distractions and disruptions.
It’s critical that you get ahead of these negative thoughts with full transparency. Tell your customers as early as possible what you’re doing, why you’re doing it, and, most importantly, how the changes will benefit them.
Doubts and distrust are natural, but you must get your primary audience back on your side as soon as possible. Make the changeover fast, and as seamless an integration as possible. Promote the multiple advantages and benefits to come. Will your policyholders get lowered rates? Better service? An expanded network? Access to a more generous menu of innovative insurance products?
Be forthcoming about the bad news, too, if there is any. What disruptions in their service or coverage might there be, and how long will it last? Will trusted agents or healthcare providers be lost? Get the word out and assure your customers that a better and more responsive company will be the result of your M&A, even if it takes time and patience.
Learn More About Recent Customer-Focused Acquisitions at Confie
As the nation’s leading providers of personal lines insurance coverage, we have welcomed hundreds of smaller organizations to join the Confie family through mergers and acquisitions. In fact, we have an entire team devoted solely to generating successful M&A relationships with companies we trust. Companies like yours, all over the nation.
Those companies have proven that consumer gains from insurance acquisitions are not a myth. It’s a reality when a merger or acquisition is done right.
Join our team to expand your corporate footprint, enhance customer relationships, and grab a competitive advantage by being able to offer a robust product line from brand-name insurance carriers.
We invite you to visit our Knowledge Center for insurance industry guidance, trends and insights, and acquisition news and details. You can also call us at (714) 252-2500 or drop us a line if you’d like to explore a possible collaboration.
