Property and casualty insurers understand that technology is continuously reshaping consumer expectations and exerting pressure to change the way they do business. In our research, 73% of insurers are seeing demand for digital distribution, but delivering online buying is only the tip of the iceberg when it comes to meeting consumer experience standards.
The most complicated task for insurers comes in connecting the multitude of back-end systems required to run existing operations, into a connected web that facilitates the lightning fast exchange of information necessary for today’s digital age.
Standardizing the Customer Experience
When it comes to creating a consistent customer experience, insurers face new and evolving challenges. In the old world order, before consumers demanded digital engagement, customer relationship management was simpler.
“The insurance industry was once dominated by policy-centric, inside-out thinking,” wrote Mark Breading, partner at Strategy Meets Action (SMA). “Relationships were simple – a policyholder was matched with a policy and perhaps an agent/producer. Much of the executive focus and corresponding technology investment was designed to improve operational efficiencies and manage the portfolio of risks.”
To that end, insurers implemented complex technology solutions to manage customer relationships and insurance policies. CRM systems stored information related to the customer’s contact information, coverages, product information, recent transactions and account balances. With little visibility between CRM systems and policy administration systems, they did nothing to help agents when it came time to quote and issue policies.
As agents spoke with consumers about coverage such as auto, information was entered into a policy administration system related to that product. A year later, when the customer phoned the agent to get a quote on coverage for a newly purchased property, the agent could view customer data from within the CRM system related to auto insurance, including the policies already in effect, but the information wasn’t visible through the policy admin system related to homeowners coverage.
To make matters worse, data from the auto policy administration system was also inaccessible to the homeowners’ system, so agents had no way to use existing data to facilitate a faster response to the customer’s request. Instead, the agent had to gather and re-enter customer data into the policy silo to quote, bind and issue the homeowners coverage.
The problem for many insurers is that these disparate and disconnected systems still exist today, with the addition of digital channels of engagement to further complicate the matter of meeting consumer experience standards.
Digital Demands Require United Systems
According to Breading, insurers are placing a high priority on gaining digital capabilities.
“One of the key findings of our recent research on strategic initiatives for 2017 is that digital is gaining more momentum than any of the 16 initiatives we have been tracking,” Breading wrote in a recent blog. “Strategies to become a digital insurer have now reached a high penetration in the industry, with 72% of insurers now claiming that they have this initiative underway.”
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Digital channels create another layer for insurers to address in the customer-centric movement. Lack of visibility between CRM, policy admin and agency management systems creates roadblocks and bottlenecks in the consumer experience.
Insurers will have one record on a customer as a homeowners lead, and this will live in a separate silo than a lead on the same customer seeking auto coverage. To make matters worse, these databases often disagree.
Currently, many insurers have no way of combining data across operational silos or of tying information from third-party vendors, such as credit agencies, into the real-time actionable insights necessary for digital engagement.
Agency Management Suffers Too
While 74% of consumers start an insurance buying transaction online, J.D. Power reports that 22% will move to a consumer-facing call center to finish the purchase. Consumer-facing call center agents are responsible for assisting consumers with questions generated during web-based engagements and for reaching out to consumers who start quotes online without completing the transaction, but agency management systems often provide little visibility into activity initiated through digital channels.
Agents are required to re-enter information already provided by consumers online and to move from one policy admin system to another to quote, bind and issue multiple policies. The opportunities for error increases as information is re-entered, and customer dissatisfaction rises.
Without clear insight into digital activity, agents lack information that could guide measurable follow-up, such as when a consumer abandons an application or leaves the online storefront after receiving a quote. Agent productivity suffers as well without tools to track web-based activity and prioritize leads and follow up.
According to Breading, insurers are limited by a customer view that delivers only “an awareness of the current and former products owned by the customer, the performance of those products, information related to product needs of the customer and perhaps some relationship information like the agent involved.”
To deliver streamlined interactions and facilitate engagement, as well as the instant insights required to meet consumer expectations for immediacy, insurers need a single view of the customer. Breading calls this the ultimate 360-degree view, where every employee and system has the information necessary to engage in informed interactions with the customer in real time.
Gaining a Single View of the Customer
To gain this 360-degree view of the customer, insurers need visibility across all back-end systems from a central vantage point. According to Novarica’s research, 70% of carriers are in the midst of implementing new core systems to unite these operational silos.
Rick Huckstep, industry influencer and chairman of the Digital Insurer, sees a problem with this approach. Core systems are expensive, take years to implement and are difficult to adapt to a changing environment.
“Often, by the time these large IT implementations are finished, they are already a legacy system,” Huckstep said.
Instead of investing in core systems replacements, Huckstep recommends a two-speed approach. Employing insurtech platforms, insurers can capitalize on investments made in IT legacy systems by building the agility and responsiveness necessary for online distribution into the digital front end.
“Insurtech’s core systems are like the latest generation of robotic armed patrol boats — they are agile, automated and cheaper, have a shorter cycle time to commission and are task-specific,” Huckstep said.
By breaking insurer operations into simplified layers, we can gain a better understanding for the role of Insurtech digital distribution platforms. The top layer is customer-facing. This is where agents reside as well as the online storefront offering digital engagement. On the bottom layer are the core systems that make it possible for the insurer to buy and sell policies and manage customer or agent relationships. In between, we have the digital distribution platform.
As customers enter the online storefront and provide personal information, it’s the platform capabilities that enable application prefill by pulling data from third-party resources, depositing it automatically into policy administration, agency management and CRM systems. Because the platform has a single, cross-system view, appetite is determined and quotes are provided in seconds. Platform analytics even use carrier data in conjunction with customer information to provide real-time product recommendations.
It’s a similar situation when consumers phone the call center during an online transaction. Because the platform provides a single vantage point to all customer and system information, the agent can see not only the customer data that has been entered into the policy admin system, but where the consumer is in the application process.
Agents are able to pick up exactly where the consumer left off and realize the same benefits of automation when determining policy eligibility, providing quotes and binding and issuing coverage. Transaction speed and efficiency are maximized, giving consumers a seamless cross-channel experience.
Agency management takes a step forward in the platform economy as well, flagging consumers who fail to make it through the quote-to-issue lifecycle, prioritizing work flows and supporting more frequent customer communications by tracking activity across product and operational silos.
Entering the Era of “Platformification”
Accenture says that 76% of executives see partnerships as critical to their competitive advantage. Platform-based business models are the goal of 94%, creating ecosystems where insurers and outside digital resources join forces in synergistic relationships that promote asymmetric growth.
“The ‘Platformification’ trend is about leveraging the power of platforms and APIs in open environments, to create new marketplaces and new ecosystems,” said Sebastien Meunier, insurance industry influencer.
Platformification is a growing part of insurance. As insurers embrace relationships with insurtech providers on digital distribution platforms that unite back-end systems and provide a single vantage point to the information contained therein, a more customer-centric environment is rapidly created.
A top 10 insurer that offers products direct-to-consumer through digital and agent channels recently partnered with an insurtech digital distribution platform provider. The platform united silos and allowed internal agents to quote, bind and issue home and auto products from a single application.
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Three years into the agreement, the platform was managing as many as 4,000 quotes a day, and the number of policies sold had more than tripled through agency channels. Considering the success, the insurer made the decision to start a pilot program, offering the same advantages of seamless product bundling directly to consumers in select states.
Within the first three months, the insurer recognized 50% growth in bundled business over the same quarter the prior year. The insurer could have continued the trial, but given the benefits to consumers and the bottom-line, moved quickly to a full rollout, offering the advantages to customers nationwide.
Uniting back-end systems to provide a single view of the customer is critical to revenue growth and customer retention in the digital age. How is your organization tackling the challenge of siloed operations?