It was in 14th century Florence that an epic awakening happened. It was all-pervasive. It wasn’t just art that began to thrive. Philosophy, economics, culture and science began rapid change, too.
Education, technology and literature were thrown into a cauldron of modernization, and world-shaking disruption and advancements spread rapidly. Fast-forward to today, and the comparison is striking. As we enter a new era of disruption and change underpinned by new technologies, business models and more (see Future Trends: A Seismic Shift Underway), the past offers an opportunity to guide and inform our future. The insights may help us see opportunities from a new perspective.
We’ve identified dozens of parallels and lessons from the Renaissance that can give insurers and technology experts food for thought as they prepare for this journey. Over the coming months, we will be taking a look at the renaissance unfolding in insurance and reflecting on when the world was shifting from the “dark ages” to a future of opportunities, possibilities and enlightenment.
As a preview, consider the original Renaissance and these modern parallels to today’s:
Focus on People
In the dark ages, individuals didn’t matter on the level they did during the Renaissance, when individual thought was cultivated and education encouraged. People gained freedoms to act and create in ways they hadn’t thought of before.
Today, technology and connectivity have brought a new level of individualism to insurance. We are moving from mass standardization to hyper-personalization for everything from marketing to product pricing. The individual voice, rather than groups, matters more than ever.
The Renaissance changed communication. Moveable type and printing allowed communication to be more widely disseminated to the larger population.
In today’s world, we can reach nearly everyone, any time, anywhere and in any way. Transactions take place on mobile devices. Social media has made it so customer thoughts and decisions are not hampered by distance or hours of operation. The enlightened and prepared insurer has nothing standing between it and its customer. “Trade” has blossomed in the city of the internet.
Reality and Empiricism
Art and science in the Renaissance shared a trait — the drive for a “real view.” Artists approached painting and sculpture from the standpoint of realism, while science began to revisit the idea of research and empirical evidence.
In our era, at least for the last several decades, insurers have also attempted to operate from a standpoint of mathematical certainty — pricing products based on historical data trends. Yet the digital era is bringing with it an entirely new set of real-time data streams and, with those, real-time, personalized analysis, pricing and decision-making. Our new perspectives will soon allow us to see into individual lives and habits with striking clarity. (For more on this, see John Johansen’s blog series on Data Symmetry.) We will enjoy enhanced levels of insight to engage and service customers as never before. And all of this reality will be brought to us with dramatic speed. Insurers that are prepared with the agility to consume and analyze data in real time will have the advantage over their competitors to better serve their customers.
The Renaissance didn’t happen overnight. It was spurred by a convergence of factors, the greatest of which was increased wealth. Trade in Florence had produced a new class of financier who was willing to fund artistic and scientific endeavors. Wealth created ease; ease allowed time for thought and innovation.
Our modern businesses are also the beneficiaries of affluence. Population and economic growth have created a culture where even many of the economically disadvantaged have access to digital and mobile technologies. Those technologies provide online access to insurance to protect them against a growing array of risks.
Likewise, investments in the 20th century helped insurers become more efficient and more accessible, fueling an improved product and service landscape within the traditional insurance business model.
Today’s renaissance, however, is moving well beyond the traditional model. Significant capital investment in new insurance greenfield or start-up companies is fueling massive innovation in products, services and business models. For reference, simply consult the CB InsightsPeriodic Table of Insurance Tech. CB Insights has indicated that Q1 2016 has already topped the record for most early-stage insurance tech deal activity (Seed/Series A). This includes two start-ups: a peer-to-peer insurance company, Lemonade, and a small business insurance start-up, Next Insurance. Interest and investment is also expanding beyond venture investors to carriers and reinsurers such as Guardian Life’s GIS Strategic Ventures investment in health benefits startup, Maxwell Health and many more. For the 130-plus start-ups and private companies in the insurance tech space, CB Insights indicates that more than $3.5 billion in aggregate funding has been raised. Money is the seed and the fuel for the massive innovation taking hold in insurance.
In the coming weeks, we will dig deeper into the details of the insurance renaissance. We will uncover some of the philosophy behind modernization, while also thinking about the practical aspects of improved operations, digital capabilities and customer service. In each case, we’ll be keeping our focus on agility, innovation and speed so that we won’t just be learning about the renaissance, but we’ll be living out its lessons within our organizations.
In the not too distant past, consumers went to independent agents for all of their insurance needs – whether simple or complex – because insurance was often an elusive concept to the man on the street. At the same time, insurance coverage was considered something everyone must have, so when insurance-related questions came up, many consumers’ initial instinct was, “I have to talk to my agent.”
Over the past few years, this paradigm has shifted toward consumers being much more willing and able to build an understanding of their needs. This trend is broadly seen across nearly every industry and is accelerating in insurance. While the trusted relationship with an agent is often still crucial, insurance consumers today are researching, purchasing and interacting with the insurance industry in new ways, and increasingly on their own terms. In working with agencies and end consumers around the industry, we think the shifting behavior of consumers can be summarized in two key ways:
The Knowledgeable Consumer
This consumer actively researches insurance online and consults his peer network prior to purchasing policies – either online or in person. How can you quickly and effectively service these consumers before they research other options or take their business elsewhere?
The Always-On Consumer This consumer wants information anytime, anywhere via any device, be it smartphone, tablet or desktop computer. These consumers don’t want to stop by your office for an auto ID card or certificate of insurance. How can you give them access to their insurance information when and where they want it?
One thing these two types of consumers have in common is the expectation for instant access to information. From an agent’s perspective, providing a mechanism for online service allows for an improved experience by allowing consumers the flexibility to interact with your agency when and how they want. And while there may still be a window of opportunity for this to be considered as a differentiator for the agency, the day is approaching where nearly every consumer will expect and demand it of the agency. Consumers who don’t get this immediate accessibility and flexibility will take their business elsewhere. Further, by pushing common transactions online, agencies can free resources to focus on higher-value service interactions with consumers.
As seen across nearly every industry, advanced technology should be a key element of the agency strategy to meet these business objectives and the evolving expectations of insurance consumers. Agencies and brokerages are able to become more productive with relative ease thanks to enhanced data, mobility, better communication and increased adoption of third-party apps and other tools.
As an agency considers its business strategy, I’ll suggest there are three key considerations when it comes to the role technology solutions can play:
Standardize and Dissect Your Data
To the extent it makes sense for your business, workflow consistency can yield real productivity gains and help capture comprehensive and better customer risk and demographic information your agency can use to better market, account round and engage customers. By leveraging standardized workflows, agency owners are ensuring data entry is consistent across an agency – regardless of location. Additionally, standardized workflows reduce the number of workarounds conducted by staff – increasing productivity at the outset and reducing any potential time spent rectifying workarounds at the back-end. The result will be improved quality and completeness of the underlying data.
Over time, agencies and brokerages generate an immense amount of data – yet it can be difficult to access, analyze and understand that data in meaningful ways. Business intelligence (BI) solutions are one way to help turn all of that data into information. For example, principals can identify which producers are using their time most efficiently and driving the most revenue for the business. Principals can also evaluate how effectively their business is cross-selling and quickly identify new market opportunities. While traditional reporting can take hours if not days, BI solutions present your information in immediate and visual ways that drive new insights, enabling you to make more effective decisions to improve productivity and business growth.
Think Easy Access
New mobile technology affords producers all of the benefits associated with management system access within an office, without having producers tethered to a desk. This allows them to be more productive and to respond to clients and prospects more quickly and in the manner that current and prospective customers want and expect. For smaller agencies, where employees wear multiple hats within the organization, giving your employees access to tools when they’re away from the office is critical.
Consider how your business can leverage the cloud to drive productivity gains. The ability for service staff to work from home via the cloud, when needed, supports work-life balance and allows business to go on regardless of unexpected events.
Time Is Money
Paper No More
Evaluate ways to become an all-digital agency and eliminate paper. Agencies and brokerages should leverage electronic signature and delivery of client documents, which reduces the time and expense of mailing paper copies.
Carrier Information Exchange
Productivity gains have increased over the years as carriers improved their interface and as agencies better understood how and where to enter data in carrier systems. The vast majority of agencies use personal lines policy detail download to reduce rekeying of data, saving, on average, 81 minutes a day per employee. In addition to download, using real-time for service and rating saves agency employees as much as an hour per day. Policy download yields daily time-savings of nearly an hour and a half per department employee for personal lines and nearly an hour for commercial lines. Take the time to automate communications with your carrier on the front end to save more time over the long term.
Online Client Self-Service As mentioned, today’s insurance consumer increasingly expects information anytime, anywhere. Agencies need to provide clients the ability to access policy and billing information on their terms, which helps strengthen relationships, ensures high retention rates and drives revenue gains. Self-service capability can increase staff productivity and decrease costs in commercial lines, as well as personal.
Technology will allow you to work faster and, in turn, will redefine the products and services you offer to your clients. While working faster is one thing, using technology to provide mobile access, enhanced communication and streamlined procedures to more quickly serve clients will also drive new business and customer retention.
How long is it until my smart bowl tells my Apple Watch how many grams of Fruity Oat Puffs I consumed this morning? The watch could then contact my life or health insurer, which may notify me or my healthcare provider, sending a text to my smartphone reminding me that I’m on target to reach my life and wellness goals…if I can avoid eating a second bowl. The circuit will then be complete. Digitized automated processes flowing real-time through a channel into the insurance and healthcare value chain, beginning with behaviors and ending in better life and health outcomes. I’m all in!
This is reality today! Just look at John Hancock’s recent introduction of a health activities rewards program utilizing mobile apps and wearables to improve mortality and lower life insurance premiums for participants.
We are rapidly moving into a new age of digital delivery for every area of insurance, not just healthcare. The digital windows are opening faster than we can gather the information that is flooding in. The proliferation of sensors and the Internet of Things will forever change our business models and our system architectures. The Apple Watch, like my smartphone, is another window into my habits and preferences, and it will be a valued source of feedback for any insurer that becomes digitally ready to capitalize on it. The key to digital readiness, however, is to tackle preparations in the proper order.
Focusing on an individual channel and technologies should take a backseat to foundational tasks such as preparing the core data environment. In many cases, an organization needs to do a much larger enterprise-wide assessment to make sure certain digital initiatives are built upon a solid backbone of system and server readiness. These are not steps backward. They are surefooted steps forward to create new systems and rewrite processes in a manner that will serve the entire organization.
It’s important to remember that great benefits (cost savings, efficiencies) can be found when looking at technology threads across the value chain, whether you are looking at data storage or mobile integration. Who, inside and outside the organization, will benefit from digital transformation? Mobile technology is an excellent example because it touches a broad set of services — from telematics to “gamification,” customer service to agent service, billing to claims, marketing message delivery to weather and property alerts. Digital preparedness, from the bottom up, will include strategies that reach into every corner of carrier operations. With all of the digital possibilities, starting at the core becomes a clear necessity.
There is evidence that many organizations are laying the proper groundwork. For example, in a 2014 Celent survey of North American P&C CIOs, the top three digital priorities were:
Industrializing business processes,
Streamlining communications with customers in an online portal, and
Being able to sell insurance products online.
At first, these don’t seem to fit with 2015 smart watch and drone use headlines, but they do fit with a wise approach to establishing digital readiness. Any enterprise digital strategy aimed toward personal device technologies needs established online capabilities, mature automated business processes and modern data warehousing. Insurers can begin by consolidating siloed systems. This makes “one customer view” across systems and products possible. Transforming online quoting, underwriting and selling technologies is a logical next step, if it is still needed.
These base capabilities speak directly to insurance business objectives regarding growth, loyalty, retention, cost reduction and process optimization. If an insurer succeeds at these crucial first steps, it is a much shorter route from core digital readiness to capitalizing on Apple Watch data opportunities (and any other data opportunities).
If the Apple Watch can do one thing for the insurance organization, it can be a driver to accomplish digital readiness goals. Smart watch headlines should be a signal to the C-suite that the Internet of Things will be the fuel of real-time data and competitive analytics for years to come. Any technology promising a closer tie to customers is one in which we should all be interested.
“Can you hear me now?” The use of mobile technology is indeed maturing in the insurance industry!
Recent SMA research shows that, over the last year, insurers have increasingly invested in developing digital strategies. Most intend to migrate, over time, to a comprehensive digital insurer approach. Some others pick a specific area to work on, such as mobile agent/broker support or self-servicing capabilities for policyholders. Although both approaches are perfectly justifiable, we strongly recommend to tie all digital and mobile initiatives together under a “digital insurer” strategy. This approach will ensure consistency between business functions, market segments and customer experiences – and it is the approach that will help prioritize investments.
A big part of a digital strategy is a plan for implementing mobile technology. Most phones are not being used primarily to make calls anymore. (When I was overseas last week, and my phone didn’t work, I experienced first-handed how much we all rely on our smart phones for information and transactions, restaurant and hotel bookings, travel info, weather, banking and shopping.) Today, people expect to be able to transact on their mobile device as if it is a desktop or laptop. So how is our industry responding to these expectations?
Especially in the direct writing, personal lines space, mobile has become a mature and widely implemented technology. Direct writers support pretty much all informational and transactional interactions with their policyholders via mobile devices. In the last year or two, we have also seen carriers with agent/broker distribution channels invest heavily in mobile services. This investment tends to be triggered by one or more of three drivers: cost savings because of self-servicing; distribution channel experience (ease of doing business) and expectations; or competitive pressure. Almost all of these carriers start their mobile implementations with purely informational capabilities, followed by enabling transactions. In addition, some of the multi-channel carriers are now starting to expand their mobile capabilities beyond the distribution channels into the policyholder relations, carefully balancing what to communicate directly to policyholders and how to continue to fully engage the agent/broker.
On the commercial side of the business, we have seen a slightly different approach to mobile enablement. Carriers first built mobile capabilities around loss or risk management functions, including information on replacements materials and costs, uploading pictures of damaged assets, providing tools for risk assessments or location-specific information. In most cases, these capabilities were first rolled out to distributors; now we see some carriers that also offer them to their policyholders. Especially in the commercial segment, however, insurers are very cautious about reaching out directly to policyholders, and almost all communication is a three-way process among carrier, agent/broker and policyholder.
As both our research and our interactions with specific insurers have shown, mobile strategy and implementation have matured rapidly. Our industry is definitely past the “can you hear me now” days. The next focus area will be how to integrate mobile into a true digital strategy and how to capitalize on the information we are starting to gather on our policyholders and partners. That is the point where all investments made will truly start paying off.
The quote in the headline — “The customer’s perception is your reality” — is from the renowned business trainer Kate Zabriskie, and I hope you agree it is absolutely true. No matter how excellent you think you are, or your company is, at service delivery, your future success as an enterprise depends principally upon how good you are in your customers’ minds when responding to their ever-changing needs. Or, as John Mackey (CEO, Whole Foods) put it, “For us, our most important stakeholder is not our stockholders, it is our customers. We’re in business to serve the needs and desires of our core customer base.”
But what are those needs? Are they those that you may have already identified, based on your experience? Has your considerable operational expenditure, in people and systems, really met what your customers need? Or is our thinking unconsciously restricted by our knowledge of what we can and cannot easily achieve?
There are many publications, a plethora of business processes ideas and of course the Internet itself, all crammed with customer relationship management theories. I don’t suggest that these are wrong, but what I do believe is that most financial services customers want something better than the superficial contact often delivered regularly by mailshots or e-mails. The “relationship” they require is more like that of their general medical practitioner! Namely a service that is accessible, resulting in knowledgeable and courteous attention, one that is effective, on call always but available only when needed.
This article focuses on customer perception and service delivery for existing insurance customers and associated stakeholders. More specifically about how appropriately the enterprise responds to customers’ post-sales questions, claims and changes about personal lines policies.
It might first be helpful to consider, in general terms, the prime means of post-sales service delivery in the UK currently deployed by insurance companies, brokers, claims service companies, etc.
These channels are principally face-to-face in offices; via the Internet; over the telephone, including SMS texting; and, to an under-developed extent, through mobile service platforms.
Branch contact used to be normal, but face-to-face customer contact seems on the decline. No doubt the cost of staff, the use of alternative technologies and the need to drive down costs have all contributed to the demise of the branch office. The challenge then is how to achieve the goal that Sam Walton (founder of Wal-Mart) described as “customer service that is not just the best but legendary.”
Well, I imagine that the words “call center” do not spring immediately to your mind as “legendary.”
At their best, call centers provide a good and necessary service, but I do not believe that the sophisticated telephony statistics and in-house customer surveys yield an entirely accurate picture of customer perception.
In the main, customer perception is that call centers are a dismal fact of life. They often describe their experience as an endless series of numerical options and pre-recorded messages. These are followed by an interminable wait brought to an unsatisfactory climax by what they perceive as a “factory service,” so often a conversation with an underpowered and strictly timed operator, who seems in a hurry to deal with the next call.
Is this the sort of post-sales service your customers deserve? Does it really surprise and delight your customer with “legendary” service?
From an enterprise point of view, call centers are generally sub-optimal. Staff turnover can be high, recruitment and training costs significant, with onerous levels of supervisory oversight. Management often experiences prolonged stress, justifying service delays and fretting how to improve service without incurring more costs. Most call center staff cannot make significant changes to policy records, or handle customers’ resulting needs themselves; instructions have to be prepared for other processing technical staff.
Is there a better or additional way, other than a call center, in which the increasing expectations of existing insurance customers can be met and exceeded? Is it possible to achieve this and at the same time drive a huge chunk of operational costs out of the business?
The answer is emphatically yes! In fact these benefits can be achieved quickly and cheaply compared with traditional legacy and Internet technology. The solution is to deploy the latest and powerful mobile technology directly to customers, to empower them to access their own records and to make self-service changes, raise claims and initiate inquiries directly to a database or a secure copy.
Today’s customer is never far from a smartphone or tablet. The expectation from an enterprise is that of mobile technology being available to post-sales and post-renewal. Customers do not want to be pinned down to call center hours or a static location from which to call to make changes or to deal with claims.
Any company that offers a post-sales insurance service that suits the time and place of their choice must surely have a significant and differentiated product. If that same company, as a result, is able to eliminate a huge percentage of its operational costs, then it also will derive a massive commercial advantage. Let’s see how this can be achieved.
To explain and to avoid confusion with traditional legacy solutions, I will briefly describe the provenance of modern mobile technology platforms.
It was not long ago that mobile phones were used solely for voice calls and texts. Today’s smart phones and tablets are multifunctional devices that can insert themselves into the very DNA of the customer-enterprise relationship.
This is possible by means of developing intelligent mobile processes. Operating systems for smart phones such as Mac iOS, Android, Windows and RIM are now fully mature and open a window of opportunity for the development of third-party software.
But quality matters, too, and development needs to be easy and intuitive to use because mobile users demand more choice, more ways to use their phones more functionally.
The Internet just allowed us to connect with anyone in the whole world. But with mobile technology we will connect anytime and anywhere with everything through “the Internet of Things” (IoT). Manufacturers and retailers are investing immense amounts of money in intelligent appliances, and very soon your home will be as smart as your car. This technology offers a unique chance for insurance enterprises to integrate intelligent mobile devices in their post-sales service delivery.
How would this work in practice? Mobile and tablet applications are limited only by vision and imagination, and space in this article permits only a brief summary. There are two principal post-sales areas where advantage can be gained, namely policy changes/inquiries and claims reporting/progress.
Imagine your home and contents policyholder receiving a renewal notice and reviewing the cover. This might show that the sums assured need revision and that a newly acquired item of jewelry should be added; perhaps an optional extra such as legal expenses cover is to be considered. By means of an appropriate mobile phone or tablet, the policyholder “logs in” and views current policy details. No doubt this will include a reminder that renewal is almost due.
Using the form of graphic display the policyholder is used to (sliders and check boxes on smart phones for example) the cost of changes are modeled. More information about the legal expenses cover is requested, received and possibly some questions answered. Mid-term changes are frequent, too, so any relevant date and details of change may subsequently be selected once the policy records are accessed from the mobile. When the customer is satisfied with the modeled changes, the new risk profile is sent to the insurer and a new premium generated. If accepted (or remodeled), payment details are collected, and no doubt certain questions required by the insurer are “check-boxed,” instant confirmation is given and promptly afterward updated documents e-mailed to the policyholder.
All of these events take place at a time, day and location of the customer’s choice. Unless the customer chooses otherwise, no call center conversation is required; no staff are needed to manually process the changes. In this example, all the requested changes were within the insurer’s underwriting and rating rules; had they not been, then an appropriate message would be generated ensuring, that a call center contact is focused upon more specialized and justified issues, requiring a smaller number of trained and empowered people. In effect, the call center becomes a skill center, a quite different entity.
Reporting claims and dealing with claims progress issues can easily be imagined, and again the limit is process appetite and creativity. Mobile technology has the advantage of a camera, GPS and verifiable date and time. So this data can be assured and becomes invaluable within the claims oversight process.
Photographs can be taken, with assured dates/times/locations of loss-related events, damage, articles etc. These can be attached to a mobile claims notification, with appropriate inbuilt guidance, and sent to the claims department to initiate the process. The mobile can be used to receive calls, texts and e-mails. Even voice messages or videos from the customer can be attached. Adjusters can be appointed automatically subject to a “rules engine”; replacement goods can be selected and offered via the mobile connection; estimates and invoices can be generated or photographed for sending on to the claims department.
The effect of these customer processes upon service delivery is abundantly clear. But what of the opportunity to save costs? In my experience, between 25% and 50% of inbound customer calls are of a standard, non-exceptional nature. Conservatively, once fully operational, I would expect mobile technology for post-sales activities to drive out 30% of staff and call center costs of the enterprise. For those who also use call center or technical staff to actually manually process changes, as well, similar levels of savings could be achieved in that part of the operation.
At this stage it is reasonable to ask, if the technology is available now, the advantages so attractive and already being employed by other enterprises, why have insurers, generally, not yet filled this space?
I speculate that there are five reasons:
– The skills required to build mobile technology platforms are not generally available in most insurers’ computer departments.
Mobile process development is new and different, and simply importing legacy or internet systems on mobiles produces ugly, cumbersome customer applications. The solution is the careful selection of a third-party provider, working with staff, to introduce these new skills into the computer department.
– Core processes and enterprise data is jealously guarded by departments. Security is also of paramount importance.
They are right to be careful! These assets must not be put in harm’s way. Until complete confidence is established, the safe solution is to use replicated rules engines and validate changed data outside the core processes. The use of the latest and most secure encryption technology is paramount.
– Most IT departments have a tremendous backlog of legacy system updates. It’s essential but difficult to focus on a new mobile future when you are trapped in the technology of the past developments.
By using a third-party provider to quickly develop applications and train existing staff, an enterprise can begin to move forward and avoid being left behind by newer competitors.
– Development is seen as possibly expensive and probably protracted.
In fact, the opposite is true. It is surprisingly quick and relatively inexpensive to develop the latest generation of applications for mobile platforms compared with legacy systems. Payback can often be achieved within months of launch.
– There may be a lack of imagination or strategic understanding of what mobile applications can achieve.
It is, in my opinion, dismally true that some of the few mobile insurance “apps” available download little more than contact details, or a claim form. Recreating on a mobile what an enterprise already does on the Internet misses the point entirely and wastes a unique opportunity.
In conclusion, mobile technology has rendered the call center, in its current form, obsolete. The only question is how long the process will take. It will be fascinating to see the more agile and visionary insurance enterprises seize the opportunities presented by mobile technology.