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Roadblocks to Good Customer Relations

For many small to medium-sized insurance carriers, government risk pools and captives, providing personalized customer service continues to be a priority. If your organization or your partners leverage digital technologies, you may have customers who expect that personal touch across channels.

For these carriers, having a solid client relationship management (CRM) strategy is a priority. And while in theory a strategy is a great start, execution on that strategy often hits a couple of roadblocks, especially when it comes to finding the right technology to organize and standardize records related to better management of customer service, marketing and sales. After all, customer data is a lifeline to success for any business, but not having all of your customer data in one easily accessible place is usually a challenge faced by insurers that are on a growth path.

See also: Yes, Personalize — but Get it Right!  

This is complicated when insurers’ functional business units operate in silo fashion. For example, consider this workflow scenario: If underwriting can’t access a policyholder’s payment history or other financial records held in accounting, underwriting must email the accounting department to obtain it. Meanwhile, the customer, impatient for his quote, calls the carrier and is connected to a customer service representative who should be able to view all customer transactions, interactions, renewals, cancellations and other changes being made to the policyholder record, yet is unable to view data that reflects any issues that would affect the underwriter’s delays.

Another roadblock relates to a common complaint among small to medium-sized insurers with limited or frozen budgets—the feeling by employees (users) of having to “do more with less.” Here we have a difficult and potentially negative cycle: If the insurer is operating with outdated technologies and processes and its spreadsheets and email platforms are overwhelmed by a growing customer database, the employee is unable to meet the customer’s needs and, over time, experiences burnout. The customer, meanwhile, is already shopping for another insurance carrier.

For companies responding to these challenges by moving beyond a customer service excellence strategy and on to actual execution of a solution, an integrated CRM system is the next logical step.

This type of technology puts the company in control—and requires rethinking of existing processes and creating process efficiencies. The inclusion of collaboration tools in the CRM help make this task possible, and creates a “team” effect even with the smallest of customer service departments.

By their nature, CRM systems are rules-based, so customer data and records can be made available to the employee who needs it, when they need it. For example, consider the importance of receiving an automated alert of policyholder suspension, which triggers an audit trail, or the ability to build out custom fields to include additional categories, contact types based on demographics, channel partner status and more.

The CRM should automate contacts, quotes, sales, tasks, calendar scheduling and more. But remember, this data automation doesn’t take place in a vacuum; it needs to be insurer-driven and should map to the policyholder’s unique requirements. It also should map to the distribution channel’s requirements, yet another source of critical customer data and the key to a better understanding of the policyholder’s existing status and changing needs.

See also: Distribution: About To Get Personal  

Let’s face it, digital technologies are with us to stay and can provide a powerful means to interact with a growing customer base. For small to mid-sized insurers on a budget, an integrated CRM system—once only an expensive pipe dream—today can be a reality. As your company grows and you have more policyholders than you can relate to personally, a CRM system makes it possible to “keep it personal” while providing superior customer service.

How Small Insurers Can Grow

Imagine for a minute that a new competitor started calling on your customers and offering the same—or better—product, coverage or services for much less cost. Are your relationships strong enough that your customers would ignore the prospect of an offering of better, faster, cheaper? Certainly, some would at least be inclined to explore the offer, would they not?

No need to imagine this scenario; it’s the new reality. And in this new reality, highlighted by insurtech startups, software incubators and service accelerators, small to medium-sized insurers are going to be more challenged than ever to keep up with the extraordinary changes taking place in the industry, all while trying to achieve growth in their organizations.

See also: Innovation: ‘Where Do We Start?’  

It’s no secret that smaller insurers are much more sensitive to loss of business, swings in expense and loss of knowledge-based staff. This makes small insurance operations vulnerable to carriers or competing services that are working with new insurance technologies to forge new products, services and business models. In fact, a new survey of 400 global executives by Forbes Insights and Gap International, “Challenge or Be Challenged: How to Succeed in Today’s Business Environment,” revealed that 57% of business leaders across a variety of vertical markets named startups and new technologies as their biggest competitors, while 70% say they are “extremely concerned” or “somewhat concerned” as to whether their company will still be relevant and competitive in two years.

What does this mean for small insurer operations?

Clearly, ignoring the changes taking place doesn’t mitigate the risks down the road unless you have a micro-monopoly in a service segment. Texas recently saw the closure of a fairly large public insurance pool that couldn’t navigate the current.

So, what options are there for the small insurer? Maybe there’s safety in numbers. Merger, acquisition, strategic partnerships? It’s certainly been a successful approach for many small insurers around the country, like Beta Fund in California. It’s hard to say what would work for you.

Then, is combining the only option?

Well, leaders of established companies, large or small, might worry less about being disrupted by a startup if they focused more on organic growth, says Pontish Yeramyan, founder and CEO of Gap International. “When you’re connected to organic growth and your passion is about growth, then you’re busy innovating and being in front of the marketplace, rather than being victimized by change,” Yeramyan said in a recent Forbes report.

This means investments in modern, affordable technologies and R&D, rather than looking outward for companies that might want to merge or be acquired.

Having an eye on organic growth means continuous improvements, whether by development of your staff, new products, service enhancements or innovating your business model. It also means keeping an eye on strategic vision, adopting the most appropriate technologies and staffing with the right skillsets.

The Forbes/Gap report also revealed that our new demanding and shifting business environment requires a change in how leaders think and act, namely, making innovation a part of the working institution, starting at the executive level and cascading into the entire organization. Small insurers can make this modification much more easily than can their behemoth brothers.

“An organization’s ability to change and innovate quickly is a key competitive advantage,” Yeramyan says.

See also: Insurers Are Catching the Innovation Wave  

Technology is certainly an enabler in effecting change; done right, it enables insurers to experience the hallmark of organic growth, expanding their market share and reach even further. Insurers such as Diamond Insurance Group and Utah Business Insurance, both leading regional providers of insurance coverage, understand this first-hand. Both companies implemented a cloud-based insurance software system to enable a variety of insurance processes, including policy, underwriting, billing and claims integration for compliance reporting. And by focusing on improvements in their internal abilities, both companies report that they are able to deliver greater value to their external customers. For Diamond, these changes, coupled with their hard work, have resulted in a 20% increase in revenue in just the first quarter this year.

How ready are you?

Joint Power Authorities: Thanks!

Nature has taught us that climate and environment dictate ecology. When the right set of conditions come along, nature presents the opportunity for something unique to appear and take root in the world. Consider the platypus, a semiaquatic egg-laying, duck-billed mammal with the tail of a beaver. Its mere existence defied all conventional scientific wisdom concerning mammals when it was discovered in the 18th century. Yet, the platypus was a perfect adaptation for its climate and environment, where it had quietly thrived for thousands of years.

Thanks to a confluence of circumstances back in the 1970s, the insurance industry experienced its own change in climate and environment: a hard insurance market characterized by higher costs and limited availability of coverages. Governmental agencies were hit particularly hard by the loss of available insurance markets. As insurance options shrunk, so did the public services that relied on them, forcing public entities to reconsider their risk management strategies to survive and evolve. The Darwinian outcome was something that looked and felt familiar in the world of insurance risk, but on closer inspection is found to be quite inimitable, and perfectly adapted to the new climate and environment. This was the dawn of the public risk-sharing pools.

See also: How to Build ‘Cities of the Future’  

Since that time, public risk-sharing pools (aka joint power authorities, or JPAs, and joint insurance funds, or JIFs) have been growing in their breadth and scope of operations. As a full-fledged risk management community unto themselves, these groups operate in unorthodox ways, combining multi-peril commercial lines insurance options for constituents across a variety of public entities, such as police, fire, transportation, city, special districts, county and state agencies.

The variety and types of public risk pools are as numerous as are their distinctions in risk-sharing approaches, lines of coverage, underwriting methodologies and types of risks. This national network of public risk-sharing pools has emerged to create a unique ecosystem all their own. Today, more than 85% of the 87,000-plus government entities in the U.S. belong to a public risk-sharing pool. By their nature, this unusual self-insurance arrangement is under scrutiny by regulatory bodies, and, while they are not known to become insolvent, JPAs face constant actuarial challenges tied to pricing risk accurately and efficiently for their public entity members. This underserved group of non-policy insurers is challenged with budget pressures, legislative initiatives, staffing issues, changes in elected or appointed leadership and outdated systems that restrict efficiency of operations. Consequently, the average JPA struggles to deal with the layers of complexities inherent in the make-up of their particular realm.

While many public risk pools labor to keep up with an ever-changing world of risk and politics, others are finding ease and opportunity in their operation by embracing new technologies and new methods of managing risk that work within the limited resource environment of their world. Public risk pools, such as Golden State Risk Management Authority (GSRMA), Beta Fund, the Montana Association of Counties (MACo) and the Texas Political Subdivision Joint Self-Insured Insurance Fund, are recognized leaders in their respective domains. They all have figured out the secret of how to deliver value to their individual members while working within their limitations.

One clue to their success becomes apparent when talking with them. They all seem to share a growth-mindset, meaning that they tend to focus on the possibilities rather than the obstacles. Phrases like, “We can’t,” “I wish I could,” “I don’t have the resources,” or “It’s never be done before” don’t tend to show up in their conversations. The people in these organizations are forward thinkers, innovators and early adopters of new ideas.

For example, GSRMA, which has more than 258 member public agencies, such as cemetery districts, special districts (water, sewer and lighting), fire and school districts, counties and cities throughout the California, offers a full line of programs to cover the many exposures of its public entity members. During the Great Recession of the late 2000s, GSRMA recognized the need to create an internal infrastructure that can withstand the uncertainty of national or global events and protect its membership.

As a result, GSRMA became an early adopter of cloud-based technology that was agile, robust in its enterprise offerings and easy on the budget. Not only did the investment in technology give them a workforce multiplier, it also gave them a process accelerator that saved them thousands of labor hours in the completion of seasonal and annual work-tasks.

And because GSRMA retains a large amount of risk, it requires the ability to scale, underwrite with precision and respond quickly to members’ varied requirements. Equally important, like many JPAs, GSRMA must focus on budgeting/funding, so affordable technology that supports staff in all these endeavors is the highest priority for their executive team. It’s no mystery that GSRMA is experiencing success and has been “Accredited with Excellence” through the California Association of Joint Powers Authorities.

See also: How to Outfox Our Brains About Risk  

Against the backdrop of an uncertain economic climate, while living in the most political of environments, I believe the continuing success of public risk-sharing pools will largely be determined by their leadership’s mindset to embrace change, cultivate a smart staff and add supportive technology that serves that staff. Like GSRMA, MACo, Beta Fund and the Texas Political Subdivision, those with a future-proof plan will thrive in this complex climate and environment. Operating a public risk pool is no easy job by a long shot, and we should all take the time to thank them for their service.

Innovation: Not Just for the Big Firms

Small- to medium-sized insurers that want to remain relevant should heed the call of innovation.

There has been a lot of press lately about how innovation can help insurers overcome growth obstacles. It’s no secret that the insurtech startups of the world, for which digital innovation is the hallmark, are garnering the attention — and funding — of venture capitalists and larger carriers, but how is that innovation affecting small- to medium-sized (SMB) insurers?

In some ways, SMB insurers are vulnerable to a fate like what is being experienced by department stores such as Kmart and JC Penney or the local bookshop, all of which hang on by a thread as the online and big-box retailers take control of the market.

Market demographics contribute to this pressure, as emerging generations of customers — with demands for anytime, anywhere digital access to policy, claims and account information — put an additional burden on carriers.

It’s no wonder that SMB insurers may feel overwhelmed at the thought of keeping up with the likes of IoT, machine learning, business intelligence or robotic process automation. But many SMB insurers assume (incorrectly) that they don’t have the resources necessary to climb aboard the innovation train.

See also: Top 10 Insurtech Trends for 2017  

Consider the business culture in which SMB insurers (small mutual insurers, commercial workers’ comp carriers, municipal risk pools, captives and self-insured groups) operate. These carriers work within a known and predictable entity where budgets are firm — often the result of a formalized, collective group mandate. Smaller self-insured pools — such as public entities, under the scrutiny of their not-for-profit, state-controlled state insurance departments — are also frequently held to a more stringent set of business performance and accounting standards and metrics.

But, like their larger counterparts across all lines of business, these smaller self-insured pools are expected to be efficient, productive and successful in every aspect of their operations, including core systems (underwriting, billing, claims), financial management and CRM/workflow.

Unique Challenges

Because of the financial and cultural boundaries under which they operate, many of these insurers — as well as many other types of small insurers — still must rely on Microsoft Office products or cobbled-together, aging, home-grown legacy solutions to support day-to-day business functions.

This may mean that a single technology solution provider (or perhaps the insurer’s own, in-house IT staff) is responsible for the health and well-being of the organization’s technology footprint, architecture, back/front office, distribution, networking, communications and security. And, lately, those that rely on outside help for their IT function are faced with confusion and potential service delays as the surge in vendor merger and acquisition results in their trusted partner being gobbled up by a technology behemoth. The service-level agreement (SLA) may remain intact, but the larger vendor will undoubtedly start pressuring the carrier to rethink outdated hardware and software. This pressure, along with the potential drop in personalized service that typically accompanies a large M&A deal, add to the SMB insurers’ challenges to remain competitive.

In addition, the talent pipeline is drying up because of a retiring workforce. To replace these workers, what’s the likelihood that SMB insurers will be able to recruit top technology talent to manage an outdated AS/400 linked to a client/server front end?

If it sounds like I’m insinuating that smaller insurers should assume a victim mentality, that’s not the case. These carriers play a critical role in risk management, so they need to remain relevant.

But these SMB insurers will not be able to overcome innovation-related growth obstacles until they better understand and embrace affordable technology innovation options that will make their jobs a lot easier.

The first step is gaining an understanding of what’s possible — such as an affordable pay-as-you-go, as-needed migration of core systems and data to a software-as-a-service (SaaS) hosted environment, a gradual sunsetting of existing hardware and the gradual move to a digital platform that pulls all necessary functionality together for reliable, secure, front- and back-end operations.

From there, SMB insurers can implement predictive analytics for use in claims, communications and even cross-selling. Even at a small scale, machine learning and artificial intelligence can help these carriers improve their claims function, customer service capabilities and more.

See also: 4 Hot Spots for Innovation in Insurance  

Risk-management changes within our marketplace — such as legislative issues, changing (read: younger) demographics, the advent of the sharing economy and the growing presence of disrupters — will affect all lines of business and all sizes of insurers.

The SMB insurers that will remain relevant will be those that hear the wake-up call and understand the path to innovation, that choose a stepped approach to business and technology relevance and that greet the future with an openness to what’s possible.