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Carriers Must Think Like Distributors

The most successful small commercial carriers have been able to establish highly profitable books of business by cherry picking low-complexity risks that can be efficiently underwritten and processed. These carriers monitor and adjust underwriting decisions at a portfolio level to ensure underwriting discipline and profitability.

There has been a focus on building advanced, agent-facing technology, primarily through proprietary portals. This technology streamlines the acquisition and, in some cases, servicing of this highly profitable business to provide incentives to agents to increase their submission flow.

However, this strategy has not led to any single dominant carrier in the $60 billion to $90 billion U.S. small commercial insurance market, and increasing competition is threatening the historically comfortable position of market leaders.

Several fundamental characteristics of the U.S. small commercial insurance market (e.g., higher retention, lower price volatility, large number of uninsured and underinsured business owners) and renewed optimism in small-business growth have led existing carriers to sharpen their focus on small commercial. In addition, several insurtech startups have entered the market with solutions for underserved customer segments. And, the relatively benign Cat environment has fueled further competition from various types of capital providers (e.g., hedge funds, pension funds, foreign investors, capital markets) looking to diversify their investment portfolio with uncorrelated insurance assets.

See also: A Tipping Point for Commercial Lines

At the same time, recent pricing pressures and slow organic growth have led many distributors to leverage their positions to improve their placement yield through higher compensation. Limited organic growth opportunities also have led to a broad consolidation of distributors, with an increasingly large number of private equity-backed brokers looking for short-term gains and opportunities to reduce systemic inefficiency. Moreover, mid-market, publicly traded and bank-owned players have effected similar consolidation and focus on operational efficiency.

Serial acquirers have sometimes inherited some large books of small commercial business that are expensive to service. To lower costs and simplify operations, these intermediaries have reduced the number of carriers they do business with and abandoned servicing. Distributors increasingly favor markets with broad risk appetite, easy processes for placing new business and minimal servicing requirements.

The carriers that will succeed in this rapidly changing landscape will approach the market with an agency perspective and focus on agency economics in addition to their own performance goals. This requires evaluating opportunities to drive economic value across the whole value chain. By shifting their focus from maximizing profitable growth in terms of direct premiums written on their books to maximizing profitable premium under management (both theirs and their distributors), leading carriers can avoid the race to the bottom on price and to the ceiling on commissions.

Stretching the limits of automation

The obvious starting point is to extend the limits of what can be acquired, underwritten and serviced through a relatively automated model. The “Main Street” small commercial segment, which consists of small, low-complexity businesses with straightforward insurance needs was the first segment that carriers automated. Today, distributors can request, quote and bind “Main Street” business policies in near real time from several carriers that have successfully identified classes of business that have a lower loss ratio and require limited to no underwriting ”touch.” These carriers have established strict guidelines and knock-out criteria for the types of businesses that can pass through, leaving tougher classes to second-tier carriers or non-admitted markets. As access to information currently not captured in traditional apps and artificial intelligence becomes more prevalent, carriers can judiciously loosen restrictions on the risks that need manual review and accordingly increase automation.

Confirming underwriting classification and fit with appetite is a common reason for manual underwriting review, and is especially likely for more complex or hazardous classes. Most carriers don’t want to insure general stores that sell firearms or landscapers who climb trees. Referral underwriters must verify the classification and gather additional information by reviewing company websites, or even reaching back out to the agent or customer. Fortunately, third-party data and analytics now can provide this information. This is leading to new risk segmentations and redefining where money can be made.

Historically, distributors have (potentially unknowingly) placed the majority of their simple, easy-to-place risks with a few large carriers that can digitally “set and forget” this book. Distributors have struggled to place more complex risks across myriad markets. Classes that are not within the appetite of standard carriers are much more expensive for distributors to place and service. This is especially problematic on smaller accounts. As distributors reassess their portfolios and look to streamline their markets, they will increasingly start using their “Main Street” small commercial book as a lever for carriers to also write their complex small book. Accordingly, carriers must offer solutions for tougher classes, both to meet distributor and customer needs and to increase their own revenue opportunities.

Eliminating unnecessary hand-offs

There are many hand-offs between the customer, agent and carrier throughout the lifetime of a policy. This creates operational friction that increases costs and compromises the customer and agent experience. In many cases, carriers are in a better position to efficiently and effectively handle the transactions that distributors currently perform or initiate.

When it comes to acquisition, real-time quote and bind for low-complexity risks is already table stakes. However, carriers usually require a significant amount of information from the customer and agent to facilitate this process. Current apps are extremely cumbersome to populate, and a new streamlined application process will constitute a fundamental change to the economics of acquiring new business. Imagine being able to enter just four pieces of information about a business (e.g., business name, business address and owner’s name and DOB) and receiving a real-time quote with the option to immediately purchase and electronically receive policy documents. The transaction can even be facilitated via direct integration between the distributor’s agency management system and carrier systems to avoid redundant data entry. Furthermore, imagine this approach being implemented with no impact on underwriting quality or manual back-end processing requirements for the carrier.

See also: Commercial Insurers and Super Delegates

Leveraging internal data from prior quotes and policies, integrating external structured data feeds and mining a business’ website and social media presence can provide carriers with enough information to determine a business’ operations, applicable class codes, property details, employment, payroll and other key risk characteristics to underwrite and price low-complexity risks. In cases where more information is needed, dynamic question sets with user-friendly inputs can augment the application process without sacrificing underwriting quality. And if the agent wants to negotiate on coverage, terms and conditions or pricing, there can be options for requesting underwriting review, supported on the carrier side by advanced routing that passes the request to the appropriate underwriter based on expertise and agency relationship. These investments are an obvious way for carriers to improve data accessibility, consistency and quality for underwriting analysis, and also increase underwriter productivity. Distributors also benefit from these carriers’ increased efficiency and ease-of-doing business and are more likely to send business their way.

Servicing can be another drain on agency resources. The amount of paperwork and transaction flow for small commercial accounts (e.g., requests for certificates, new employees or drivers) is often disproportionate to the amount of premium that they generate. As a result, it is common for carriers to offer service center capabilities. Larger agencies that are looking to streamline their operations most often use these services; in fact, they are often a key factor when agencies look to transfer their book to a new carrier. These capabilities are also appealing to smaller agency owners who may not want to hire an additional customer service representative (CSR) to manage the renewal book.

Carriers are typically in a better position to service the book on behalf of the agent because they own the master policy, billing and claims information, have the authority to process changes and have the expertise to address any customer questions or concerns. They also have the scale needed to optimize the process and manage capacity, which they can even leverage to offer servicing and other back-office capabilities for an agent’s entire portfolio (even that written with other carriers), completely eliminating the need for a CSR. Furthermore, seamlessly servicing the business that transfers to another player’s balance sheet can enable another important strategic aspiration: helping new capital providers enter the small commercial insurance game.

Renting underwriting acumen

As we mentioned, alternative risk-bearing capacity is proliferating. Various categories of capital providers may have an appetite for different risk profiles (e.g., high-volatility, long-tail risks). Some of them may enjoy a higher net investment income ROE and therefore can afford lower underwriting profitability thresholds. However, they still need an underwriter and “A”-rated paper. Currently active fronting arrangements are already providing a more direct link between capital and (currently mostly short-tail) primary risk. Small commercial carriers could “rent” their underwriting expertise via similar fronting ventures and significantly “write” more, including classes of business with a higher loss ratio that may still be attractive to certain capital providers. This would be an effective way to artificially broaden underwriting appetite, leading to improved ease of doing business for distributors. Risk placement of small, complex risks can pose challenges for agents who have to procure and maintain a significant number of appointments, each of which may require distinct and inefficient acquisition and servicing processes. By underwriting risks on behalf of another party, a carrier could earn additional revenue for fronting the business while offering a valuable service to their distribution partners.

A carrier that offers services in these three areas could become the one-stop shop for placing small to mid-sized risks for distributors. And if that carrier could continue to offer a competitive compensation package, it would have an outstanding value proposition. Value-added offerings could be part of a strategic compensation package that drives desired agency behavior – for example free servicing on year 1 business if they meet new-business growth goals, or broadened appetite and placement services if they maintain profitability standards. Ultimately, it may be able to fundamentally restructure the economics of providing insurance and ancillary protection services, with tangible benefits to all constituents.

See also: How to Win in Commercial Lines  

By thinking like a distributor and identifying opportunities across the insurance ecosystem to drive value, a carrier can compete on ease of doing business rather than price – changing the playing field to protect margins and drive profitable growth. This goal would have been difficult to achieve a few years ago, but recent technology advances have made it possible.

How to Reinvent Call Centers

The landscape for customer service is changing.

New platforms are emerging that change how consumers seek service and engage with brands. In doing so, these platforms are disrupting the traditional call center model. Today’s call centers range from the ancient and decrepit to the ultra-modern and technologically streamlined. Despite the differences in capability, though, they still rely on the telephone to call and connect with customers. As we shift into the messaging era, this is going to change.

The maturing millennial generation is sparking a mobile messaging revolution across all age groups. Text-based communication is fast becoming the most-preferred communication method. And to attract, engage, acquire and retain customers in the text-based era, businesses need a customer communication strategy that incorporates mobile messaging.

Executives are facing three key challenges:

  1. Offering a mobile-native, text-based customer service solution to keep up with changing communication preferences of consumers.
  2. Satisfying the demand for always-on, 24-7 responsive service.
  3. Maintaining cost-efficiency in the call center.

A solution comes in the form of new technology: chatbots and intelligent automation.

Chatbots allow businesses to automate the 80% of general inquiries that are repetitive. This leads to a smaller volume of inquiries requiring live assistance from agents and reduces operational costs while maintaining — or even improving — customer satisfaction ratings. It’s this combination of chatbots and human agents that can usher businesses into the messaging era while reinventing the call center model.

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The Current State of Customer Service

Every business strives to provide exceptional experiences that increase customer satisfaction and raise their Net Promoter Scores (NPS). The reality, however, is that executing an effective customer communication strategy is challenging. Often, exceptional customer service is limited by the capabilities of traditional service channels: email, social media and call centers.

By 2020, customer experience will have a such a significant impact on business success that it’s expected to play a bigger role in competitive differentiation than price and even product quality. Customer experience and NPS are fast becoming the new business battlegrounds. Providing experiences that meet or exceed the ever-increasing demands of customers could be the difference between success and failure.

Call center performance has a significant impact on a company’s NPS and customer satisfaction ratings. Given the direct and personal connection a call center enables between a business and its customers, the overall experience of the interaction can have a major influence on how that person perceives a brand on the 1-10 Net Promoter Score scale.

And while call centers work positively by enabling direct connections between businesses and consumers, there are endemic problems for both sides. Businesses are faced with high operating costs and are vulnerable to changing communication trends. Meanwhile, consumers often have to deal with long hold times, outdated Interactive Voice Response (IVR) systems, inter-departmental transfers and inefficient service.

See also: 4 Hot Spots for Innovation in Insurance  

As new technology such as chatbots and intelligent automation emerges, any business that relies on strong customer service can benefit from innovation.

There is a significant opportunity to gain competitive advantage and lead the market by developing call centers that are not only technologically advanced, but also resolve issues with far greater customer satisfaction.

The ideal result is customer service that improves the relationship with customers while maintaining cost efficiency for the business.

What follows is an outline of the current state of customer service in today’s fast-moving, on-demand and customer-driven world. We also detail how the call center can be reinvented through mobile messaging and intelligent automation to deliver a win-win solution for both businesses and customers.

Connected and Demanding: Generation Z, Millennials, Gen X and Baby Boomers

There is a reason why there is so much buzz around millennials: Their generation is one of the largest in U.S. history, and they are maturing into their prime spending years.

Starting in 2017, they will have the purchasing power of more than $200 billion annually. The opportunity for businesses to drive revenue and gain market share with this generation is unprecedented.

The driving force for new technology and communication trends

Millennials are driving mobile and instant messaging adoption. Because they have grown up with technology and information at their fingertips, millennials are highly connected and expect 24/7, on-demand access to the businesses and brands in their lives.

Gen X, baby boomers

In addition, the millennial obsession with mobile messaging is influencing older age groups, with text-based customer service now an increasingly popular choice for generation X and baby boomers.

Generation Z

Millennials have also set the precedent for generation Z. Mobile messaging use is even higher among the first true digital natives; they place even more emphasis on personalization and relevance when interacting with companies.

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The Challenge of Delivering What People Want

The adoption of mobile messaging as the preferred communication channel is forcing companies to change how they approach customer service. Today’s call centers no longer meet customer expectations. From long wait times to frequent departmental transfers and ineffective IVR systems, customer service can be a frustrating experience for consumers.

Now, in 2016, with the proliferation of new technology and 24-7, on-demand services, the shortcomings of customer-contact centers are even more apparent.

The competition is fierce, and customers have no forgiveness for poor service. A sub-par experience can destroy a consumer’s relationship with a business.

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Key Business Challenges Affecting Call Centers and Customer Loyalty

The shortcomings of the current call center model and its inability to effectively meet the needs of today’s customer also represent a significant opportunity for businesses. There has never been a more appropriate time to dissect the call center and explore new ways to increase its effectiveness.

Executives and business owners need to address the following three business challenges to ensure the future success of their contact centers:

  1. Offering a mobile-native, text-based customer service solution to keep up with the changing communication preferences of consumers.
  2. Satisfying the demand for always-on, 24-7 responsive service.
  3. Maintaining cost-efficiency  in call centers.

Each of these areas needs to be explored to maintain, or even improve, customer loyalty and Net Promoter Scores.

Challenge 1: Offering a mobile-native, text-based customer service solution

One of the drawbacks of telephonic customer service is the limit imposed by the phone on call center agents; they can only answer one customer inquiry per call. This limit drives costs up. In comparison, using mobile and web-based chat, agents can effectively manage as many as five inquiries simultaneously. This significantly reduces operational costs while providing a better experience for customers.

Fortunately, thanks to mobile messaging’s rapid rise in popularity, it’s now easier than ever to incorporate mobile chat into an existing customer communication strategy to better engage consumers. Mobile messaging is the modern vehicle for businesses to deliver great customer service at significantly lower costs. The result is a better customer experience that drives loyalty while improving the bottom line.

See also: How Chatbots Change Open Enrollment  

Using an intuitive interface familiar to more than two billion people, businesses can effectively engage with customers and fans using simple decision trees for fast and convenient issue resolution.

Benefits of mobile messaging solutions:

  1. On-demand customer service that allows consumers to get the information they need, when they need it, without having to look for it.
  2. Faster issue resolution thanks to an agent’s ability to manage more inquiries simultaneously.
  3. Reduced, or potentially eliminated, hold times.
  4. Real-time conversational connections with customers.
  5. Improved customer experience with greater omni-channel service capability.
  6. Secure identity authentication and user verification.

Challenge 2: Satisfying the demand for always-on, 24-7 responsive service

The role of automation, bots and artificial intelligence in customer communication has become an increasingly popular topic. And as the technology continues to develop, more businesses are starting to realize the benefits of automated customer service and how it can drive customer service ratings higher.

Chatbots are virtual agents that operate through natural language processing, meaning they are able to absorb, identify and react to a number of different queries. These sophisticated programs and targeted automated strategies provide an efficient solution to handle the high-volume, repetitive inquiries that overwhelm call centers. Businesses are then freed to devote more time and resources to customers who need one-to-one conversations. They can deliver a far better customer service experience at a far lower cost.

As with any emerging technologies, automation and chatbots need to be approached with tact. Currently, the best strategies use both human agents and chatbots. Businesses can test bot technology and assess what’s right for them without drastically affecting customer satisfaction.

A good starting point is a website’s frequently asked questions. Today, people are more inclined to seek information themselves than engage with a human agent. Using chatbots to automate FAQs is a cost-efficient test that can form the foundation for larger automation plans as the technology develops.

Chatbots can be used as the front-line customer service interface to answer the majority of repetitive inquiries. This combination helps businesses improve efficiencies without compromising customer satisfaction ratings.

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Challenge 3: Maintaining call center cost efficiency

Businesses can improve customer communication and drive customer satisfaction ratings by following a simple five-step process to automation:

1. Opportunity Analysis

  • Review customer service data
  • Examine IVRs and CSR scripts
  • Conduct Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis
  • Identify all opportunities for automation

2. Chatbot Design

  • Sketch blueprints including flow designs for all areas
  • Identify integrations needed to enable bots

3. Engineering and Integrations

  • Receive blueprint approval
  • Develop bots for intuitive user experience.

4. User-Acceptance Testing

  • Demo bots in test environment
  • Adjust as necessary

5. Activation and Optimization

  • Conduct marketing efforts for Phase I onboarding
  • Track usage analytics and fine-tune
  • Benchmark performance against key performance indicators.

With this approach, businesses are able to automate as much as 80% of low-level, repetitive inquiries, saving call center agents for the complex and uncommon issues that require the nuanced knowledge of a live agent. This results in faster issue resolution and more efficient service.

Chatbots: An Emerging Technology

Other technologies may help improve call centers incrementally, but chatbots offer the best, most revolutionary opportunity to scale their capacity and ensure future success. If archaic call center models can’t innovate and keep up with changing consumer trends, they’ll fast become obsolete.

See also: Mobile Messaging: How to Meet Rules  

As with any emerging technology, chatbots are still experiencing growing pains. They’re not perfect; key development issues must be overcome to improve the flow of conversation. Increased investment in chatbots and NLP will help the technology mature fast. And as it does, chatbots will increase in capability and become more common, providing new opportunities for businesses across all industries.

5 Ways to Onboard New CSRs

After going through the process of finding candidates, interviewing prospects and eventually choosing the individual who’s perfect for the customer service representative (CSR) position you’re trying to fill, it may be tempting to take a deep breath, sit back and think that the hard part is mostly over.

And while taking a deep breath is certainly never a bad idea, thinking that new employees will simply figure everything out on their own is. This is especially true for CSRs, whose main responsibilities include being the face of the company, answering questions and helping clients and customers through their issues. In this case, proper onboarding couldn’t be more critical.

Providing CSRs with the information and tools they need to feel comfortable on the phone, via chat or in person, will not only make them better at their own jobs, but it will ensure that the image your company portrays is accurate at all levels of the business.

Here are five ways to onboard new CSRs to help make their transition much smoother and to make them productive team members sooner.

  • Create or customize a customer service employee handbook

Having a go-to source for every question and concern, while a sizable undertaking to start from scratch, can be extremely helpful for new employees. Fill a CSR handbook with information about the company, policies, FAQs, insights about customers and anything else that would help new CSRs feel as though they’ve been with the company for years. Or personalize an existing handbook by adding notes with tips, tricks and helpful message points. Your advice and suggestions can help new hires feel welcome and comfortable with you as a colleague or boss.

See also: How to Redesign Customer Experience

  • Set up new employee meet-and-greets

Usually during the first few days on the job, employees are bombarded with countless names and titles, making it stressful for them if they believe they are expected to remember everyone immediately. By organizing ice-breaking meet-and-greets between new and current employees, supervisors can provide everyone with the chance to learn a bit more about each other, and new hires may more quickly feel like part of the collective group.

  • Organize regular check-ins

Starting a new job is overwhelming. It’s often difficult to know how you’re doing, if you’re doing the job right and if there’s anything you should be doing differently. By setting up weekly check-ins with new hires, even just for 10 minutes in the morning, employees can ask any questions they have, and you can provide helpful feedback on their performance. This can also be a great time to review customer service reports or calls to ensure that all steps are being taken to solve customers’ issues. This small time commitment can help employees stay on track early in their development.

  • Write an onboarding checklist

During the first few weeks of a new job, there are seemingly dozens of forms, meetings, technology setups and more that an employee has to complete. Developing a checklist for new employees to make sure they are prepared to do their job is a great way to take the full onboarding onus off of you or HR. This checklist can also be a great place to set immediate, concrete goals that you’d like new employees to achieve within a scheduled timeframe. To ensure that the checklist doesn’t seem like one more piece of paperwork, make it a little less formal by adding a few must-visit lunch spots, important people to meet or other fun aspects of your corporate culture.

  • Run through some mock customer service calls

New CSRs are ideally hired for interpersonal skills and their ability to solve problems. However, the way those things are conveyed to customers can vary dramatically from one company to the next, and new employees will often default to the methods and messages they used at their last employer. To gauge how new employees will respond to your company’s calls and test whether they’re staying on message, run through some mock customer service calls — from simple to exasperating — before allowing them to answer phones on behalf of the company. If adjustments need to be made, you can alert them to how things are done at your company and correct any issues before they present themselves during a live call.

See also: Are We Listening to Our Customers?

These suggestions are surely just a few ways to optimize your onboarding process. Do you have anything to add that you’ve found helpful? Please share your advice below so other professionals can learn from your experience. Thanks!

How to Find, Keep Good Service Reps

The best customer service representatives (CSRs) are a rare breed. Not only do the best understand the technical details, but they also have well-developed soft skills, including communication savvy, and grit. Because let’s face it, CSRs take their fair share of abuse. It’s not easy talking with customers all day, especially when those customers are often unhappy. Yet great CSRs can make or break your company’s image. Hanging on to CSRs who “get it” and are engaged in the essential job they perform is a must.

Experienced agents and brokers know that’s easier said than done. Fewer than two-thirds of customer service employees are engaged, according to the 2015 Employee Engagement Trends Report from Quantum Workplace. That’s a lower rate than for almost every other department, including human resources and sales. A study from Bain & Co. looked at Net Promoter Scores (in part, a measure of how likely employees are to recommend their job to qualified family members and friends) and found that customer service ranked dead last among 10 common business departments.

Retention rates for CSRs in insurance aren’t much better. Our industry had a 28% turnover rate for CSRs in 2015, according to data from ContactBabel. That’s slightly better than the average across industries, which hovers around 33%. Even Zappos, with its laser focus on customer service and employee culture, suffers a 20% annual turnover for CSRs.

The high cost of losing employees and hiring and training replacements is well-established. A CallMe! survey found that the average turnover cost for a CSR is $3,500 per person.

That’s the bad news. The good news is that you can take three specific steps to make sure you’re bringing in the right customer service reps—and keeping them.

1. Watch for resume red flags

Not everyone is cut out to be a CSR. In fact, the top reason CSRs quit is that they were “just the wrong type of person for the job,” according to the ContactBabel report. Refine your hiring process so you’re employing only the right type of people for the job—otherwise, they’ll never be engaged.

Watch for red flags in resumes, including a lot of short stints at past jobs, especially other customer service positions. Also, keep an eye out for experience that didn’t involve a lot of communication, such as in data entry, administration and so on. Give special attention to applicants with an interest in new technology and experience working with social media channels. And that cliché interview question, “Where do you see yourself in five years?” can actually give you a good idea about whether a person’s career goals align with your customer service values.

Some agencies play one or two particularly unpleasant customer service calls to measure how a prospective CSR might react to the most difficult calls he may receive. Others role-play an interaction with a customer, headset and all. You want to make sure would-be CSRs know what they’re getting into. A little extra vetting during the hiring process pays off big-time in building an engaged team.

See also: A Practical Tool to Connect to Customers

2. Treat them right

Study after study has shown that if you want to boost CSR retention, you have to keep reps engaged. A little flexibility goes a long way in keeping people happy at work. Two-thirds of female CSRs are working mothers, meaning unexpected scheduling issues are going to come up. While the job itself requires CSRs to work set hours, finding ways to give CSRs the flexibility to find a suitable work/life balance will help them stay engaged.

CSRs also want a chance to advance their careers. The International Customer Management Institute (ICMI) recently surveyed call centers on the top causes of CSR turnover. The most frequent source may surprise you: better opportunities inside the organization. But representatives don’t always see career opportunities within the call center itself. With CSR-to-supervisor ratios (known as span of control) averaging from 12:1 to 15:1, CSRs realize there’s a less than 10% chance they’ll ever be promoted to the level of their direct supervisor. That means you need to spell out the possibilities for advancement within the department. Consider adding titles—mentor, tech expert or shift supervisor, for example—so CSRs can increase their responsibility and compensation.

You can’t offer a promotion with a big cash bonus to every representative. But other small rewards, from a quick thank you to public praise for handling a particularly tough call, can make day-to-day work much more enjoyable.

See also: 3 Skills Needed for Customer Insight

3. Learn from departing reps

If you’re not picking the brains of CSRs who quit, you’re missing out on a valuable source of information that your competitors are taking advantage of. More than 80% of organizations conduct exit interviews with departing agents, according to ICMI. Make sure your exit interviews attempt to reveal specific things your call center can do differently to keep good CSRs on the job.

But you don’t have to wait until a CSR is headed out the door to figure out what she wants—instead, ask. A brief, informal survey about the perks they’d value most is an easy way to figure out where to focus your efforts. Armed with more information about the benefits and responsibilities CSRs prioritize, you’ll be better able to keep your best reps engaged and serving your customers.

No More Need for Best-of-Breed Solutions?

Every five years or so, the insurance industry changes course. Hard market, then soft market. Keep the lights on, then innovate. Build, then buy. Outsource, then in-house. Best-of-breed, then suite.

Unlike with most politicians, some measure of this waffling is certainly beyond the control of insurers truly in the thick of it. However, other preferences reflect the uncertainty of markets and economies, the fluctuation of consumer expectations and demands and what some may call downright desperation to stay ahead of the curve.

Technology has long been recognized as an enabler, and it definitely fills that role when planned for strategically and implemented well. As the industry has taken up the challenge of providing faster, better, more personalized service to consumers, the demand for technology to facilitate the necessary processes has increased, as well. Core system modernization has become a top priority for insurers across all lines of business (LOBs). This means analyst firms and consultants are being engaged at a staggering (and expensive) rate to help spec out requirements, develop the request for proposal (RFP) and narrow things down to a very short list.

Interestingly, the biggest question for most insurers is not whether all of the core administration systems need to be replaced, but rather how and when is the best time to do it. Enterprise rip-and-replace projects traditionally come with a big stigma, a heavy dose of fear and bit of skepticism. Can it be pulled off successfully? With advances in technology such as the move toward cloud for deployment, the incorporation of configuration tools that promote insurer self-sufficiency and better implementation methodologies, the dark skies are definitely clearing.

Today’s most modern enterprise suites provide better integration, better capability and better results than niche-focused solutions of the past. While suite components can, by and large, all be implemented individually, pre-integration, reliance on a single data repository, use of a common architecture, an ensured upgrade path and common user interfaces mean these solutions still have a serious competitive edge over standalone systems. But does this really mean there is no more need for best of breed?

Better Integration

Once famous for creating silos and building “kingdoms” within the enterprise, insurance technology has come a long way. Recognition that insurance processes could be completed faster, and with greater assurance of accuracy, if every relevant employee was looking at the same information, insurers are turning to enterprise suites as the solution of choice. The core administration (policy, billing and claims) components of most modern enterprise suites offer increased integration and conveniently draw information for customer service representatives (CSRs), agents and underwriters from a single data or document repository. Further, by building on similar workflows, user interfaces (UIs) and processes, enterprise suites minimize change management issues and decrease downtime needed for training.

Better Capability

It’s pretty common to hear technology vendors talk about how their solutions let insurers concentrate on core competencies, but rarely is this turn of phrase actually applied to technology vendors. Insurance suites of the past typically built out full, robust capability for core administration processes, but only invested in the bare minimum when it came to supporting processes, functions and components. The best enterprise suites available today not only handle, but excel at, providing capability for peripheral processes that support core administration, including reinsurance, underwriting, document/content management, accounting/general ledger, agent/producer and consumer portals. This depth of capability was once only available to insurers through best-of-breed solutions, but now only highly customized situations and processes require such niche-focused systems.

Better Results

Even though everyone suspects it’s a much higher number, best guesses throughout the industry say that insurers replace core administration systems only once every eight to 10 years. That low frequency hardly allows internal IT staff to gain any kind of proficiency in implementation methodologies or change management. The tightly integrated nature of suite components eases implementation challenges measurably, and at the end of the day, once you get into a groove, why get out? By taking advantage of teams already established for one replacement project for another, insurers can lessen business interruption significantly. Plus, using an agile implementation methodology that incorporates iterative releases will eliminate the scope creep and missed expectations inherent to waterfall projects.

Conclusion

Five or 10 years ago, it may have been necessary to buy a best-of-breed technology solution to get capability specific to a certain LOB or process. However, modern enterprise suites, whether implemented together or individually, today offer the same robust capability once offered only by best-of-breed solutions, but with better integration, faster access to critical data, significantly easier upgrades and ultimately, better results.