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The Finish Line Keeps Moving

Much has been written, and much has been done in the past decade regarding the customer experience in P&C. Progress has been made in understanding customer needs and journeys, implementing digital solutions for mobile and self-service capabilities and improving interactions with agents and policyholders. However, anyone involved in strategies and improving the CX in P&C is likely to admit that the industry is still in the earlier stages of the journey. It is clearly a marathon, not a short term, once-and-done project. But now, as a result of the pandemic and the momentous events of the last year, the race has changed.

A new SMA research report, Customer Experience in P&C: Transformation in the Pandemic Era, assesses the journey of P&C insurers. Companies covering the personal lines, small commercial and mid/large commercial market segments are profiled based on a survey of executives and SMA’s analysis of customer experience projects with insurers.

About one-quarter to one-third of insurers are in broader rollouts of customer experience strategies, with the personal lines segment being the most mature. There is a correlation between the status and maturity of CX officers and the level of overall segment maturity. There are two categories of CX-related projects that are vital to track: those that are strategy/organizational in nature and those that are oriented around technology capabilities. For example, flipping the lens from a customer service to a customer experience orientation and establishing a customer-centric culture are the top two project areas, signaling a recognition that these are foundational elements of a good CX strategy.

See also: Lessons on Reaching Customers Remotely

The project plans recognize the change that is underway. While it may be hyperbole to say the pandemic changed everything, the pandemic and all that it has entailed altered customer expectations and caused insurers to rethink and reprioritize plans. The short-term focus has been on enabling and improving self-service, digital payments and digital intake for both sales and service. Improvements will continue, but, in the meantime, P&C insurers have been taking stock of their customer experience journey – and this is where they are running a marathon. What once was movement at a steady pace has now taken on steadily increasing momentum. Virtually every insurer is accelerating digital transformation, and customer experience is an important element.

However, now that the expectations of agents and policyholders have risen, the finish line for the marathon has been pushed out. It is not as if there was ever a firm finish line where a company could claim it was “done” with customer experience. But the race is now taking some new turns, will require adaptability and may require a longer sustained effort to remain competitive.

The Future of Underwriting

We recently conducted an industry survey, and 80% of industry executives expect underwriting to be significantly different in the next five years. 94% expect it to be significantly different by the end of the next decade. Essentially, we all agree that it’s changing. The question then becomes, what will different look and feel like? And how ready are we?

I was encouraged by the answers we got. Certainly, industry leaders are aware of the drivers of change and demands that must be satisfied – data, efficiency, profitability, automation. However, words emerged that evoke a different feeling for the underwriting organization of the future – dynamic, creative, innovative, intuitive and evolved. The words paint a picture of change – both the look and the feel that we can all get excited about. The key to effective transformation – bringing those words to life – is to embrace them through an intentional framework of both strategic planning and change readiness. 

When we think about 2030, the next years are full of possibilities. There will be opportunities to rethink and redefine underwriting to achieve organizational goals or corporate digital transformation strategies. But there will also be opportunities to fulfill the company mission internally and externally, satisfy employees and make a difference in the community. These goals can be achieved incrementally, starting wherever you are today. The first step is getting a clear vision of the future state. Paint your own picture, choose your words wisely and start with an outside-in view. Who are your customers, and what do they think, feel and desire? 

Starting from that goal, your organization can work backward to precisely select the digital enablers and strategic initiatives that will optimize your resources to deliver that vision. You’ll redesign the roles and processes in advance to ensure you capitalize on the new technologies to really transform your organization. And you can hire and upskill for them in advance. You will also be able to effectively lead the change by creating cultural readiness and bringing your people with you on the journey. 

See also: AI in Commercial Underwriting

Organizational culture underpins and supports the ability to address all of these critical areas in a cohesive and forward-looking way – so that leaders and team members throughout the organization are both contributing to the ideation and growth continuously and are ready and able to adopt change quickly and regularly. You’ll find your teams are collaborating across silos and developing solutions to customer or business challenges that create wins for all areas. This ideal state could be described as a culture of courage, in which the whole is greater than the sum of its parts. It forms an ecosystem that is self-sustaining in terms of both fulfilling the company vision and attracting and retaining the talent necessary to achieve that on a continuing basis. While culture inevitably starts at the very top, employees at all levels are engaged, empowered and contributing their unique and diverse ideas to solve business challenges or make good decisions on an individual basis. This engagement and risk-taking are rewarded, solutions are developed and employees have incentives to perform as they see their contributions clearly aligned with the company vision.

Each organization, using strategic focus and big thinking paired with tangible action steps – the “what” and “how” – can redefine their future and bring it to life. Both the look and the feel of underwriting will change. We believe the best way to get there is to flip the lens and let the business and people lead the effort, updating processes, with all of it enabled by technology. Creating a culture of change readiness and innovation today pays dividends immediately and is the best way to accelerate this journey toward the future.

SMA and Boundless Consulting have written a research paper on this topic and designed a framework to guide organizations on this journey. 

Digital Outbound Payments Heat Up

The heat of summer is kicking in around the U.S., and the temperature is rising, too, in the digital transformation in one area of the market: digital outbound payments in claims.

Since February, the pace has accelerated beyond what we even thought fathomable. COVID-19 has been horrific, but it has brought clarity about the areas that are urgently in need of digital transformation.

SMA recently published findings from our latest market pulse survey, titled P&C Tech Plans in the COVID-19 Era. The report reveals that fully 81% of personal lines insurers and 57% of commercial lines insurers are investing in digital payments. 

In January 2019, I wrote that this area was positioned to explode. The focus on enhancing the customer experience was pushing P&C insurers forward. The digital payment process possessed the potential to provide operational improvements, especially in efficiency. The flexibility around payments became the target of many critical initiatives.

See also: Cloud Computing Wins in COVID-19 World  

Fast forward to May 2020. When we went into lockdown, we quickly realized which activities required intervention – those that required people coming into the office to print paper checks to be sent to customers and third parties. It becomes obvious that this is low-hanging fruit, and a plethora of vendors have solutions in the market today.

Join SMA and TDI on July 15 for a first-of-its-kind industry event that showcases the capabilities of digital payments and how vendors are bringing these capabilities to life.

Retrenchment on Tech Plans? Not Yet

P&C insurers are staying the course when it comes to their original digital and technology plans and investments for 2020. Many insurers report no changes to their plans, with some reshaping and a few accelerating, but very few pausing or retrenching. These are the big themes in SMA’s new research report, P&C Tech Plans in the COVID-19 Era: SMA Market Pulse Insights. 2021 plans may paint an entirely different picture, but, for now, P&C insurers are moving full speed ahead.

As might be expected, the plans vary significantly by line of business. Commercial lines insurers are much more cautious than their personal lines counterparts, chiefly due to the larger negative impact of the pandemic. Still, our SMA market pulse survey of insurance executives confirmed what we have been hearing from our clients:

  • 95% of personal lines insurers are moving forward with their overall technology plans and investments, with only 5% retrenching.
  • 75% of commercial lines insurers are moving forward with their overall technology plans and investments, with 25% retrenching or pausing.

Our survey also showed that many of the insurers that are moving forward are reshaping and reprioritizing projects while keeping investment levels steady and striving to maintain momentum. Digital payments appear to be one of the hottest areas, as insurers have been obligated to send employees into physical offices to print and mail paper checks. Core systems also continue to move forward, although interestingly nuanced by line of business and with differences between policy, billing and claims plans.

Digital transformation plans are quite different for personal and commercial lines insurers. On the personal lines side, there is a trend toward accelerating plans, while commercial lines insurer plans are mixed. Only about one-third of commercial lines companies are continuing with digital transformation plans unchanged, while another third pause or retrench and the final third reshape or accelerate.

See also: Will COVID-19 Disrupt Insurtech?  

Overall, the response to the pandemic from P&C insurers has been remarkable as companies continue to support their distribution partners and policyholders. Plans are likely to morph even more as the pandemic continues. SMA intends to conduct the market pulse research on a regular basis throughout the remainder of 2020 and report on changes to insurer plans along the way.

For more details on how insurer plans are changing, read the new SMA Research report, P&C Tech Plans in the COVID-19 Era: SMA Market Pulse Insights, which can be purchased here. The report covers personal and commercial lines insurer plans for overall tech spending; digital transformation plans and investments; and plans for policy, billing, claims, and payments initiatives.

Standing Strong in the Moment of Truth

In a blink of an eye, the world – society and all of humanity – are being stressed at every level imaginable due to the rapid spread of COVID-19. No one could ever have imagined or planned what this could really be like … including our industry. But since the beginnings of insurance, we have had a history of weathering all storms, all types of disasters and even pandemics. And I am confident that we will weather this one, as well. Insurance is a financially strong, resilient industry. We serve as a safety net for society, mitigating risks for all types of disasters – man-made or natural. This is who we are and what we do. And this is our moment of truth.

In the midst of all of this upheaval, we have a unique opportunity to do what is right by being a strong, dependable force for good. Our world – our employees, customers, partners and everyone in our ecosystem and beyond – need our strength and resilience, right now, tomorrow and every day moving forward. 

On the other side of this pandemic wave, the core of who we are as an industry will remain the same, but every aspect of what and how could be altered by this experience. The rules of engagement are changing, even as I write this blog. And that is okay. Every disaster presents new clarity and new experiences that create opportunities. 

At SMA, we are confident that new ideas, new approaches and new ways to accelerate the connections with our employees, customers, partners and everyone in our ecosystem will happen by adjusting and advancing digital transformation strategies and plans. 

See also: The Best Tools for Disaster Preparation  

Just remember, we are all part of this amazing insurance industry, and we are all standing strong. We will continue to stay present in this moment of truth. And we will do our absolute best to help you, as well. Just stay safe and healthy.