The consequences of even a few dissatisfied customers can be enormous: "Dissatisfied customers turn to competitors; loyal customers spend more, refer new clients, and are less costly to do business with" (Arendt & Harris, 1998, p. 27). The authors point out that because it costs about five times more to gain a new customer than to keep an existing one, and since dissatisfied customers tell at least twice as many friends about bad experiences than they tell about good ones, it is clearly to the small business owner or manager's advantage to seek high levels of customer satisfaction and retention. According to Gebhardt and Townsend (1990), although the notion that little things can add up to have an enormous positive effect has gained wide acceptance, many companies continue to remain sluggish in their response to the reality that little things can also have an immensely negative impact on a company's perception of performance from their customers' view. "There have been fundamental misapplications of the principles of continuous quality improvement with deleterious results, all of the avoidable. Examining what can go wrong is instructive" (Gebhardt & Townsend, 1990, p. 3). Clearly, the potential exists for just as many things can go wrong during the claims settlement process as for them to go right, and it is incumbent on the carrier representative to ensure that things are done correctly, particularly from the client's perspective. The current popular GEICO television advertising campaign featuring the "GEICO Gecko" are an excellent case in point; these commercials emphasize that despite their best efforts, the company's customer service approval rating remains at 97%, showing that it is virtually impossible to satisfy everyone every time.

According to Benjamin (1997), the one factor that helps to distinguish a great insurance company from its competition.".. isn't cost (the government determines that), accessibility (your biggest competitor stares from the glassy windows across the street), or size (you're the biggest in the state), but customer service" (emphasis added) (p. 11). In his book, Policies and Perceptions of Insurance: An Introduction to Insurance Law, Clarke (1997) notes that the reasons for people selecting one insurance carrier over another are as varied as the human condition itself; however, there are certain commonalities that have been identified that companies can use to help them determine whether they are going a good job of delivering services to their targeted market. According to Clarke, "At the point of choice, like the purchaser of any other product, the purchaser of insurance may be torn between price and reliability, i.e. security. Some will go for the lowest premium; others for the insurer with the reputation for support and prompt payment" (p. 18). The choice may also depend on whether the policyholders will eventually have to come to terms with consequences of their decision as to which carrier represents the best alternative for them. According to Clarke, "A longer view may be taken by the householder buying fire insurance than, perhaps, the exporter of goods who sells an occasional buyer a package including insurance on the goods; he is obliged only to provide commercially acceptable insurance, and, if there is a claim and if the insurer drags his feet over a claim, it is the buyer rather than the seller who suffers" (Clarke, 1997, p. 19). Automobile insurance policyholders represents a more classic example of consumers who will most likely seek the least expensive policy, particularly if circumstances such as legal requirements of the state or policy requirements from lenders require them to purchase minimum levels of coverage. Clarke suggests that these people assumes risk lightly and buy insurance only because they must: "Convinced that 'it won't happen to him', he seeks the cheapest insurance he can find" (Clarke, 1997, p. 19). While cost is a fundamental component of choice, the selection of one carrier over another may also depend on the experience of the insurance purchaser; while the cost of the policy remains a primary factor in almost all decision-making processes, some recent surveys suggest that, among buyers of commercial lines, security, integrity, and continuity are now even more important. "The speed with which Lloyd's paid on the Californian earthquake of 1906, when other insurers were dragging their feet through the dust and the small print, did much for the prosperity of Lloyd's in subsequent years" (emphasis added) (Clarke, 1997, p. 19). When people are treated right, they clearly remember and will tell their friends. These personal testimonials represent powerful incentives for consumers to choose one insurance carrier over another.

Current and Future Trends. There is a clear trend underway in how people go about insuring their property that...

For instance, in the United States, analysts have estimated that the share of alternative coverage" types of insurance will have reached 50% of total premiums marketed by the end of year 2000. According to Lencsis (1997), so-called "unisex" ratings are becoming increasingly popular today, in spite of the fact that, for example, that women tend to live longer than men and male drivers have more automobile accidents than female drivers. "These statistical patterns have traditionally been reflected in the rates insurers charge for life insurance, annuities, automobile insurance, and perhaps some other coverages" (Lencsis, 1997, p. 58). Insurers will also be increasingly called upon in the future to support these new levels of coverage with specialized "unbundled" insurance services such as loss analysis, loss prevention, and claims handling. In fact, only a very small number of large insurers will be able to allocate the resources necessary to offer the level of specialized technical and legal expertise, financial capacity, and international presence that many of their customers will be seeking. Muth (1993) maintains that the majority of the insurance carriers today will ultimately be compelled to leave the industry in a fundamental reorganization comparable to the one that occurred in the United States in the 1980s.
According to Muth, "Providing financial capacity will not, by itself, be enough of a value proposition to attract and hold corporate customers. After the fundamental consolidation of the industrial risk market that will take place over the next few years, there is a chance that profitability will return to adequate levels for the competitors that remain" (Muth, 1993, p. 75). Failing that, industrial insurers will continue to suffer their cyclical profit and loss waves until profits from private customers no longer suffice to cover industrial losses. For the foreseeable future, Muth believes that personal lines of insurance will continue to be a local business, influenced by local variations in legal systems, crime rates, buying preferences, drinking and driving habits, life-styles, and the like. "Only in the very long-term is it conceivable that an individual insurer will be able to offer a uniform product, price, and business system. But this does not mean that personal lines markets are safe" (Muth, 1993, p. 76). Here again, though, insurance companies will increasingly be confronted with the same types of fundamental challenges to providing an across-the-board approach to ensuring customer satisfaction. Consumers are increasingly questioning why particular risks need to be covered (for example, why a home should be insured from the first dollar onward) and to insist on receiving acceptable customer service from their insurance carrier; for instance, the current average settlement period for claims frequently exceeds six weeks (Muth, 1993).

Overall, Thierauf (2001) believes that newer collaborative-enabling technologies -- "from multi-user, multisensory virtual reality environments to 3-D data streaming across the Internet -- "promise to reshape collaborative processes for insurance carriers over the long-term; however, the short-term, decision-processing portals are emerging that promise to provide carriers and their customers with the solutions needed to help ensure a more satisfied customer after every claims settlement event. Furthermore, these types of avenues allow users to switch seamlessly from a decision-processing system to the E-business environment. "For example, an insurance company could provide analytical and other business information about insurance claims to its key customers" (Thierauf, 2001, p. 70). A company representative at the customer's location could use the insurance company portal to access and analyze this claim information and then switch to an E-business application to complete any adjustments that might be required to the customer's insurance coverage. "Such an effective customer and insurance company collaborative effort could help ensure a continued, successful business relationship over time" (emphasis added) (Thierauf, 2001, p. 70). Other initiatives that insurance carriers can take to take improve the quality of their customer service include taking advantage of the power of e-mail for communication with customers, suppliers, stockholders, and business partners (Thierauf, 2001).

Patrick (2001) recommends adding a sufficient number of staff members to handle the additional amounts of external e-mail that can reasonably be expected to develop on a 24/7 basis and to identify ways to justify the cost based on increased business, improved customer satisfaction, and offsets to paper-based processes. "Use flexible, predrafted responses and use software to categorize the e-mail by department or product and by whether…