Contrary to popular opinion held by some, many of us who work in the insurance industry are hungry for innovation. We research better ways to learn about prospective customers, we digitize our sales process and communication channels, and we find creative ways to attract millennials both as customers and employees.
Occasionally, we need to look at those areas that sometimes don’t look profitable and – let’s face it – are not considered ‘sexy’ topics. While top line premium growth from innovative new products and services garner executive focus and media headlines, many other aspects of insurance could greatly benefit from innovation by forward-thinking companies wishing to reduce their costs and improve profitability.
In this article we will discuss two topics of importance: improving user experience and improving back-end processing.
- Improve user experience – It’s not just about selling more
There is talk about improving the users’ experience and providing more value to the customer by the incumbents. Looking at the insurtech landscape, it seems there are a lot of startups providing a wide variety of new solutions. It seems simple – incumbents that wish to improve customer experiences are joining forces with startups that claim they can assist. Yet somehow, along the way, it doesn’t all add up. We don’t see the scale of improvement in the insurance industry to date that we expect given all the hype about insurtech.
The American Customer Satisfaction Index shows that customer satisfaction in 2018, compared to 2017, in the P&C space rose only by 1.3%. Even worse is health insurance, which did not show any improvement at all. (At least the life insurance space showed an increase of 2.6% in customer satisfaction.)
Although there is a lot of conversations about harnessing data to learn more about the customer to improve user experience, the bottom line is that insurers tend to focus on bringing new business rather than preserving their current book. If you look closely at solutions being offered out there, you notice more of them focus on increasing sales by offering better marketing segmentation or identification of potential leads for sales purposes. Even insurers who look at the in-force business primarily look at it from a cross-sell perspective.
Personally, we both have taken part in many conversations with insurers around the globe and seldom did anyone ask us how they could address their current customers to provide better service or value. The question most often asked around the table is “how can we sell more?”
Don’t get us wrong; you should always thrive to increase sales. However, when looking at the increasing lapse rate that insurance companies face when entering the new digital age, one might suggest that the answer is not by increasing your marketing and sales budget but having leveraging tools that will help you open new and better communication channels, increase availability and provide additional services and information. It’s not just about lead nurturing but also about customer nurturing.
2. Improve back office processing – it’s not just about reducing expenses
To the extent that carriers have invested in their current book of business, it is often with one eye towards improving the customer experience but the other one on reducing costs. The good news is that both are achievable! There is a common saying that to understand complex financial transactions, you must “follow the money trail”. In insurance, we can slightly amend that to “follow the paper trail”. Document management is a huge challenge for the insurance industry, and it is often intertwined with some of the largest pain points that customers have. Investments in core systems replacements as part of a broader digital transformation strategy are crucial. These efforts are often costly and time consuming, but they serve as a critical foundational step upon which other efforts to improve the customer experience are built.
While upgrades to legacy systems are ongoing, carriers aren’t entirely at the mercy of patiently waiting for these efforts to complete before looking to implement improvements to their customer experiences. Starting with a design thinking approach and internal innovation crowdsourced ideation efforts, it is important to listen – to your agents, claims adjusters, employees and policyholders. The more a particular pain point pops up in conversation, the higher the priority should be given to address the issue. Keep in mind that it does not always have to be a technology solution! Inefficient processes caused by outmoded thinking and “that’s the way we’ve always done it” mentality is often as much an inhibitor to progress as outdated technology.
Investments in upgrading billing systems, document management systems, and B2B integrations are all areas that may be decidedly ‘unsexy’, but unlock tremendous value. Some forward-thinking firms are actively looking to increase use of Robotic Process Automation (RPA) and initial steps towards incorporating blockchain technology, which is still maturing in its application outside cryptocurrencies, as possible solutions. Furthermore, by streamlining processes using technology such as optical character recognition (OCR), natural language processing (NLP), image recognition, machine learning and even deep learning to gain insights from unstructured data. This added information can all be used as part of process automation. As an added bonus, this data and additional external data that can be captured, from broad Census data to detailed health information, can also be used in predictive analytics to gain additional insights and further streamline processes.
While not as attention grabbing as innovative new products, slick new mobile apps or shiny new user interfaces, investments in your back-end processes can pay off handsomely. These are known pain points, identified by existing customers and employees, that are well defined problems worth the investment in solving. By spending time solving these issues, carriers can often unlock expense savings on multiple fronts while simultaneously incrementally improving the customer experience. Over time, these have a cumulative effect that make your company easier to do business with – and ease of doing business is a priority for most consumers in today’s modern world. Isn’t that what a true customer experience is all about?