Tag Archives: lifecycle

Much Higher Bar for Customer Service

“It’s all about the customer.” How often have we heard that statement?  More times than we can count, Yet it is more relevant than ever as we exit the “pre-digital” age and enter an environment where survival will be measured by rapid adaptability (see our recent blog post An Ocean Apart: Pre-Digital and Post-Digital Insurance Models).

In our prior posts, we focused on two areas of the insurance value chain that likely are not top of mind when thinking about digital transformation — billing and claims.  In this post, we’ll cover policy and customer serving, which is certainly a higher-profile area for digital enhancement. Policy and customer servicing should be near the top of insurers’ “to do” lists when it comes to embracing the digital shift and transforming into a digitally optimized, customer-focused enterprise.

While many insurers express the desire to become more digitally enabled, most are struggling to catch up, let alone position themselves as leaders. Technology is evolving, and customer demands are growing faster than most companies can deal with. Add to this the challenge that insurers are often saddled with legacy systems, siloed data and product- (not customer-) focused processes that make anticipating and adapting to these changes all the more difficult.

A McKinsey survey from earlier this year reported that most insurers in the U.S. and Europe focus their digital attention on sales and marketing, in particular on the earliest stages of the lifecycle — research and quoting. While these two areas are important, the survey noted that insurers were lagging in their ability to service customers digitally after they were on-boarded.

See also: Key to Digitizing Customer Experience  

Improving Customer Service Is a Great Way to Differentiate

Majesco’s primary research studies on consumers and small-medium businesses showed that, compared with other industries, insurers are pretty bad at service. Life insurers are ninth out of 10 in terms of “ease” of servicing (of the industries shown in comparison, only streaming TV/video/music gets poorer marks for service), while P&C insurers are in fifth place (behind online banks, local retailers, national retailers and online retailers). All small-medium businesses (SMBs) ranked life insurers and employee benefits providers no higher than eighth out of 10 different industries they use as suppliers. P&C insurers also ranked low (fourth out of 10) among the smallest SMBs (those with fewer than 10 employees), but fare much better among larger companies, rising as high as third and second.

Furthermore, our research noted that poor marks have a demonstrable effect on success. If a respondent reported that any one of the aspects surveyed (research, purchase, service) was “not easy” then their Net Promoter Score dropped significantly. And NPS is recognized as a key predictor of a company’s growth and profitability.

According to Celent research, even agents, who are understandably worried about digitally enabled self-service reducing their importance in the sales process, recognize the need for digitization of insurance service processes. The research notes that agents are asking insurers to invest in technology enhancements to, among other things, improve online policy changes.

But It Isn’t Easy (of Course)

At first glance, policy and customer service appears to be an important and straightforward – if not particularly sexy – way to apply digital capabilities to improve outcomes. But looks can be deceiving.

Some of the basic tenets of good service – a 360-degree view of the customer, for example – can be difficult and expensive to implement. Regulatory barriers may prevent streamlining how policy changes are implemented online, varying significantly from state to state and country to country. Legacy policy management systems may not be able to connect to digital front ends in a direct way.

But all of these challenges provide an opportunity to focus on a customer journey-map-based approach to digital transformation! By starting with a vision for digitally enabled customer service (what you want the service experience to be, what business goals you are trying achieve, what key performance indicators you will measure for success) and then creating customer personas and journey maps, you will be able to create a transformation road map. That road map will include people, process and technology changes that you will make over time to reach that vision, allowing for incremental change (instead of taking a riskier, big-bang approach to changes).

Don’t Ignore the Shiny Objects

Just because we recommend an incremental approach doesn’t mean it can’t be fun! There is a lot of cool and interesting insurtech investment in this area, which can (and often should) be leveraged to roll out needed functionality without having to build it yourself.

For example, having e-signature (and as per this blog post on digital billing) and multiple e-payment capabilities can make a policy change paperless and seamless for the customer, something that has been shown to improve service “ease of use” scores. Chat capabilities (human or chatbot) to walk customers through basic to tricky processes is a boon to customer service, with leaders like Lemonade and Geico leveraging them at almost every step of the customer lifecycle. Co-browsing options can be used to help customers navigate particularly tricky process steps. Customer analytics can be used to identify customers at risk of leaving, help them manage their risks and even identify cross- and up-sell opportunities.

Even artificial intelligence (AI) shows promise in customer service, and far beyond just chatbots. IBM’s Watson is assisting customer service efforts in dozens of industries, and all indications are that it will be especially useful in insurance, where matching customers to products and services can help generate revenue and improve customer satisfaction. An excellent non-insurance example is the work Watson is doing with H&R Block. Watson is used to feed appropriate question prompts to tax professionals during client consultations. Bill Cobb, H&R Block president and CEO, said, “Watson is learning more and more as it does more tax returns.” According to a recent IBM blog, “Watson has learned 600 million data points relevant to the industry as well as the U.S. tax code.”

Imagine Watson in insurance, rolled out to give agents prompts based on both individual knowledge and “learned” experience. Watson will help insurers translate regulatory requirements and improve relationship management. Cognitive customer service will give real depth to the possibilities. The Future Today Institute has stated in its 2017 Tech Trends Report that artificial intelligence will soon be integrated into nearly every facet of work life. In a detailed look at industries covered in the report, AI is the #1 trend in every industry.

But Keep an Eye Out for Pitfalls

One potential pitfall is to think this service mentality applies to just personal lines, which, as I’ve highlighted in my other blog posts, is far from the truth. Commercial carriers have a lot to gain from digitally enabled servicing, particularly in the SMB market, where margins can be thin on a per-policy basis. Commercial carriers may be very amenable to service outreach that includes risk-mitigation advice as well.

See also: ‘It’s the Customer Experience, Stupid’  

Insurtech is not just for personal lines, either: A recent SMA study highlighted more than 400 insurtechs targeting the commercial space, and the carriers themselves are interested in leveraging them for, among other things, customer servicing.

Other pitfalls include trying to do too much at once or taking a scattershot approach to service improvements. These dangers reinforce the critical importance of leveraging customer journey mapping to create a disciplined approach to capability deployment.

How to Start

As we have consistently advocated, start with a vision of what you want to achieve. Check this against other investment priorities and pain points for your customers and other stakeholders (for example, if the biggest area of complaint is with the claims process, you may want to consider starting there). Create personas and journey maps to guide your decision-making.

Is There a Future for MGAs?

The insurance industry is one of the oldest and most straightforward businesses in the world. It’s a numbers game. Risk gets calculated, quantified and priced. If the odds work out, the house always wins.

Anything is insurable as long as it’s measurable.

In the insurance world, MGAs (managing general agents) partner with carriers to manage programs, working with brokers or offering insurance directly to the customer.

The majority of carriers and MGAs have been rather slow to spot opportunities to significantly improve the insurance lifecycle (rate, apply, bind, manage and renew), which is leaving room for competitors to move in.

In fact, the insurance startup Lemonade just made news for using AI to pay a claim in three seconds. That is not a typo — Lemonade took as long to pay a claim as it took you to read this sentence.

If you’re reading this, thinking, “well that’s renters; my programs are different” — it’s time to wake up. This disruption is real. And it’s happening right now.

MGAs have a unique role in the insurance life cycle, and they will either innovate and evolve or be eliminated from the food chain.

To stay relevant, they will need to assess their strategy, place technology at the heart, improve the customer experience and remove inefficiency.

Large-Premium, Low-Volume MGA Programs

For MGAs that do high-dollar, low-volume sales through brokers, technology should be deployed to make the entire process more efficient, less time-consuming and easier for their brokers and customers.

Whereas a typical lifecycle interaction like an insurance application or a claim processing may take days or weeks with hours of human time involved, with technology it doesn’t.

MGAs of the future must create the fastest, most convenient experience for brokers to differentiate themselves and succeed in this new insurance economy. MGAs should identify and prioritize the areas in their lifecycle that cause the most friction between them and the broker and apply technology to improve the experience.

See also: MGAs 4.0: The Role Evolves Yet Again  

As an example, if the turnaround time for rating policies is causing friction for your brokers, begin introducing cognitive AI to automatically rate a portion (e.g., 60%) of submitted policies. Then, over time, increase this percentage until your firm is able to rate all policies instantaneously with technology.

Ultimately, this will mean lower costs and more efficiency, which bodes well for consumers and sellers. This also means that customers will come to expect this level of service–they will no longer be willing to wait days or weeks for processes that your competitor can perform on the spot.

MGAs that fail to improve their processes and embrace technology will lose customers to those that do.

Here are the top 5 signs it’s time to wake up:

–Requests for quotes are submitted to your underwriters as PDFs
–Providing quotes and feedback takes more than an hour
–Policy issuance is manually generated
–Policy management or renewals are handled manually
–You are not applying cognitive analysis to your policyholder and claim data

If this sounds like your firm, then the time to act is now. Seek out digital solutions to these problems. Invest in technology before it’s too late.

Small-Premium, High-Volume MGA Programs

Much of the bulk and overhead of the insurance process comes from the layers and steps involved. For lower-premium, high-volume programs, the only way forward is to automate your program and either offer it directly to consumers or provide brokers with the keys.

Great insurance experiences are no longer limited to major lines.

As technology eases the entire process of selling, quoting and binding, there’s no need for a legion of brokers and agents to do the leg work. People can just sign up online in minutes and manage their policy directly through a web portal.

In fact, 67% of millennials buy popular policies (auto, renters, etc) online, and this trend will permeate and grow into niche programs.

Great agencies have always differentiated themselves on service. In the modern insurance economy, technology will usher in the next level of service that customers already expect.

MGAs will cut the middlemen out of the equation and build branded, digital products to offer niche programs directly to consumers, controlling the entire experience to deliver a higher quality of service.

Additionally, MGAs that position their platforms to integrate with wholesale channels or online commerce will see dramatic growth.

Great agencies have always differentiated themselves on service. In the modern insurance economy, technology will usher in the next level of service that customers already expect. This all means better service, lower costs (read: better margins) and higher renewal rates.

Here are the top 5 signs it’s time to wake up:

–Customers cannot get an instant quote on all devices
–Policy issuance, management or renewal is manual
–Payment is not automated
–Your program brand is not a digital product
–Applications can be submitted with incomplete or inaccurate information

If your firm deals in low-cost, high-volume policies and is seeing these signs, then it’s time to start thinking about the innovation happening around you–building a competitive advantage through technology.

Bottom Line for MGAs

Regardless of the size or type of your program, technical innovation and advancement is your responsibility.

While carriers may provide portals, platforms or tools, it’s critically important to continually evaluate each of your customer, employee and broker touch points.

See also: M&A: the Outlook for Insurers  

MGAs are in a unique situation right now. They’re at the precipice of an emerging wave of digital tools that will disrupt much of their business–from quote to renewal.

Those that succeed will be the ones that paddle toward the wave of change and adjust their business to use technology to better serve employees, clients and customers.

The question is: Will your business see the wave?