Tag Archives: post-digital

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.

The End of an Age in Insurance

Hundreds of millions of years ago, Pangaea was a supercontinent formation now commonly explained in terms of plate tectonics.  It began to break apart in three major phases, but at different times.  During this breakup, some species survived, and others struggled. This breakup reset the world.  It reorganized the continents, oceans and seaways that subsequently altered the cooling and heating of land and ocean. And it influenced five major mass extinction events, which resulted in significant loss of marine and terrestrial species. It disrupted the world, while creating a new one that would ultimately shape the future. We recognize this as pre- and post continental split.

How does this history lesson relate to insurance?  We are exiting the pre-digital age and entering a post-digital environment where survival will be measured by rapid adaptability. The digital age represents a seismic shift in the insurance industry, due to the converging “tectonic plates” of people, technology and market boundary changes that are disrupting and redefining the world, industries and businesses including insurance. As we outlined in our report, Future Trends 2017:  The Shift Gains Momentum, the shift is realigning fundamental elements of business that would take more than minor adjustments to survive, let alone succeed.

See also: 3 Ways to Leverage Digital Innovation  

Just like the tectonic shift millions of years ago that separated the two great continents, we are seeing a similar shift due to the digital age that is pushing a sometimes slow-to-adapt industry by challenging the traditional business assumptions, operations, processes and products. The shift is separating the continents of insurance into two distinctively different business models. The business models of the past 50-plus years (based on the business assumptions, products, processes and channels of the Silent and Baby Boomer generations) will soon be an ocean away from the business models of the next generation (including the Millennials and Gen Z, as well as many in Gen X). To avoid extinction on a pre-digital island, the business models of the past will need to quickly chart a course toward next-generation expectations.

It requires a new business paradigm. We must redefine and re-envision insurance, embracing business components that work in the new context of people, technology and market boundaries and discarding the pieces that are outmoded or irrelevant. Most organizations can’t simply flip off their pre-digital switch (traditional business model and products administered on traditional systems) and flip on their digital age model (new services and products on modern, flexible systems that will handle digital integration and better data acquisition and analysis). So, the shift will require steps. Those steps will operate as both a bridge and a proving ground, while the traditional system is still operational as a firm foundation and the new foundation is being constructed. The steps are active and continuing, and they overlap.

  1. Keep and grow the existing business, while transforming and building the new business.

This is crucial. Marketing and distribution should not pull back from traditional business in anticipation of the launch of new business models, new products or new channels. Insurers cannot stop pushing for more business of a particular type until or unless new products clearly nudge them out of existence. The current business is funding the future and needs to be kept running efficiently and effectively as the market shifts.

  1. Optimize the existing business while building the new business.

A customer engagement improvement is ALWAYS an improvement. If an organization’s teams have been working toward placing digital front ends on the traditional business to engage customers, they shouldn’t stop in the middle of the bridge. Any process that can be optimized on the traditional side will help to maximize the existing business, reduce the cost of doing business and provide a bridge from the past to the future while beginning to enable realignment of resources and investment into the new business. These are very often the incremental changes that will also gently shift the customer base through new ways of doing business.

  1. Develop a new business model for a new generation of buyers.

Some insurers have made the mistake of envisioning their digital front end as their big leap into the future, not realizing that they have only just touched the new landscape. They need a strategy for a new business model that supports simultaneous leaps forward that will create new customer engagement experiences underpinned by innovative products and services. This will create growth, competitive differentiation and success in a fast-changing market dynamic.

Speeding Into the Digital Age

Over the past year, the renaissance of insurance gained momentum due to the convergence of multiple factors or “tectonic plates” that are redefining insurance. The interaction between people, technology and market boundary changes are disrupting the world, industries and businesses that insurance serves. We have seen the introduction of new products, the establishment of new channels, the offering of new services, the launching of new business models and much more. These events have created disruption and opportunity for insurers.

See also: The Key to Digital Innovation Success  

It is a new age of insurance — a digital age. Each and every day, insurers must recommit to their business strategies and their renaissance journeys. They must avoid falling into an operational trap or resorting to traditional thinking. The appetite for traditional multi-year, multimillion-dollar, on-premise custom configurations has waned, all while new competitors, new business models and new products are being launched to the market in a fraction of the time and cost. In this new age of insurance, the focus is on speed to value including:

  • Speed to implementation – get up and running in weeks or a few months versus years
  • Speed to market – rapidly develop and launch new products with ready to use rules and tools
  • Speed to revenue – rapidly enable business growth with minimal upfront cost

Building these new business models will continue to intensify.  Majesco is increasingly working with existing insurers and reinsurers who are taking new paths to capture the next generation of customers and position themselves for growth and sustainable agility across the new insurance landscape. Because new competitors don’t play by the traditional rules of the past, insurers need to be a part of rewriting the rules for the future. There is less risk in a game where you write the rules.

Will you be stranded on pre-digital island in a sea of change?  Or will you join the game?