Even in this price-obsessed era, customer service is vital, says Theodore Agnew, Town and Country Assistance chairman....

With increased marketing and a bigger online presence, the insurance industry is discovering a greater conflict between cost and customer care.

Insurer marketing campaigns are working their spell. Consumers are learning to shop around for better-priced deals and the internet is making more options easily available.

But price alone is not enough to retain customers and sustain competitive advantage. Customer service is a key factor in retaining business and is essential for suppliers who cross-sell insurance products.

The feel-good factor even applies on the internet. The consumer must have confidence in making an online purchase and the experience must be a positive one, because an alternative supplier is literally seconds away.

We have created a dilemma for ourselves. We need to keep costs down so savings can be passed on to the consumer, yet we face the increased overhead of delivering high-quality service.

At least we have reached the point where justifying investment in IT infrastructure to the board is no longer the difficult task that it used to be. IT is the new competitive-advantage tool.

I confess that Town and Country has succumbed to the lure of computers. It has bought internet technology to deliver value-added services to its clients; workflow technology to refine its processes for higher levels of productivity; and quality-control systems to minimise error and deliver a professional customer service.

I have no illusions that it will end here. The firm is continually exploring new ways to deliver cost savings or service improvements.

Yet despite all this, it seems impossible to remove the people factor. Every budding entrepreneur would like their business to operate effectively with automated systems. But the real world of insurance service provision does not operate in such an ideal environment.

However much we automate and innovate, it is staff that differentiates good companies from the bad and the market leaders from the stragglers.

Unless insurance professionals are careful, we will become the victims of our own marketing success. Customers originally lured in by marketing gimmicks will then be disillusioned by the service they receive.

Sustainable business balances good service at a fair price with the attributes that are used in marketing to win the customers in the first place.