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Industry Research : RSA Performs Offshoring U-turn as Customers Demand UK Call Centres
An increased appetite among insurers to return offshored customer-facing roles to the UK is being driven by a renewed determination to compete on customer experience rather than price alone, according to market commentators.
While the influence of aggregators has been blamed for the increasing commoditisation of insurance in recent years, heightened consumer awareness has prompted a number of major carriers to fall back on service as a key differentiator.
Last week RSA unveiled plans to close its customer-centric call centres in India. The move is expected to create around 350 new customer-facing roles in the UK by mid-2014.
Explaining the decision, a spokeswoman for RSA told Post: "Our research has shown customers prefer talking to people in the UK. We will continue to have employees in India and offices will remain open – we’re not closing them – but we won’t have any customer-facing jobs there."
KPMG insurance partner Andy Masters believes the trend is reflective of a more discerning public that considers service levels as well as price when judging whether a product is good value. "It doesn’t surprise me that [insurers] are bringing back customer-facing roles," he said. "Consumers still want low cost but there is much more reality in this day and age that you get what you pay for, and if you want to get [good] service then you have to pay for it.
"The other reason the customer-facing roles didn’t really work in India was that [although insurers] invested millions in cultural training, you can only go so far. If you are sitting in a call centre in Bangalore, it is nothing like the UK."
He added: "For insurance and financial services in general, because the industry has been through the mill so much in the last five years and consumer confidence is still very low, consumers need to feel like they have a relationship with an organisation and that they are understood."
As a traditional price war continues to send motor premiums plummeting, Masters warned falling rates sometimes cause consumers to have unrealistic expectations. "We are a nation that is obsessed with price comparison sites and getting a lower premium price," he said. "You can’t have it both ways. You can either have a slightly more expensive service that feels like it engages and understands you or, based on the current operating models, you have the service offshore at lower cost."
Describing RSA’s decision to transfer its Indian call centre roles to the UK as "good news", Scott Kelly, head of motor at Go Compare, said aggregators should take note of the changing attitudes of direct players: "Currently, between 55% and 75% of UK new car insurance business is sourced directly through price comparison websites. But for most consumers it’s not just about price, it’s about the quality of the product and the quality of the service they get with it.
"We often get feedback saying [they thought] the product was great but the purchasing process, or the claims service, was awful."
However, LV sales and service director Peter Sinden said RSA has been slow off the mark in terms of its relocation of customer-facing roles. "Our belief is that it is fundamental to our business to have control of the customer journey," he said.
"You can outsource that sometimes, but we believe we can do it better than an outsourced supplier – and certainly a non-UK based supplier – based on our business experience.
"I don’t think RSA is at the vanguard of this – you could argue it has been a little bit slow to recognise it. But a growing recognition that it’s about the customer experience is a positive shift for our industry. I see more evidence of insurers trying to compete not just on price but also on customer experience."
The industry remains divided in its views on offshoring, but many agree the practice is more appropriate for back-office functions than customer service staff.
Earlier this year Aviva revealed plans to offshore approximately 200 bodily injury claims-related roles from Manchester, while also moving 600 back-office processing jobs to India – a move that sparked criticism from union leaders.
The firm has maintained it will continue to use offshoring in cases where it is considered appropriate. A spokesman for the insurer said: "In making such decisions we take account of many issues, including service to customers, our ability to offer competitive products and the efficient management of our cost base. The work we direct offshore is almost entirely non-customer facing – 95% of all Aviva customer sales and services demands are handled in the UK. The functions that operate offshore include some claims work, finance and IT."
Elsewhere, Post understands Direct Line Group will continue to target offshoring, which has been an element of the leadership team’s transformation plan since 2009.
Posted by Veronica Silva Cusi, news correspondent
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Published: Monday, September 2, 2013