Next Generation Insurance: Leading from the front.

Organizations are seeing Web 2.0 as a technology enabler to achieve business objectives to deliver results. Key to success is “collaboration” between business & IT in leveraging web 2.0 to achieve business objectives.

Some key business objectives of Insurance companies are around enhancing customer experience, revenue growth, minimizing operational expenses, improving employee productivity and distribution effectiveness.  IT departments need to evaluate where Web 2.0 would be most effective to solve parts of the business problems once the business objectives are internalized.  These business problems can be broadly structured around 3 key stakeholders – Employees (for Internal Operational effectiveness & Employee productivity); Customers (Customer experience, product development & revenue growth); Partners - Distributors, Suppliers etc (For Channel productivity and efficiencies).

Once the key stakeholders / business objectives are identified, organizations could start working on three key dimensions of change management – Process, Technology & people. Focusing on technology without focusing on business process and people can be disastrous. There are several examples where blogs, wikis, discussion forums don’t attract enough interest in the user community because the key business problems or issues are not addressed

Insurers that are conservative have tried to use Web 2.0 initially for Operational effectiveness through Employee collaboration (internal blogs, Wikis, discussion forums, podcasts)  before venturing into investments towards Distribution & customers.  This could be a good starting point to improve confidence in the business stakeholders to show early signs of ROI.

Your comments are welcome..

Posted by Siva Nandiwada at 6:16 AM | Permalink | Comments (0) | TrackBacks (0)

For most of the 20th century, insurance companies have considered their distributor / agent as their actual customer- whether it was for gathering inputs & feedback for new products, driving sales or even for servicing needs during the policy lifecycle. The model has spanned both career (exclusive) agents and even independent agents (brokers) with the effect that insurers fearing channel conflict were a typical late comer to direct models like the Internet and have left customers to get the "one shop" experience mostly with their insurance agent.

With a significant trend in moving large chunks of the value chain directly to the policyowner- insurer interaction model, most companies are emphasizing "one company" customer experience in prioritizing their operational improvements. But they are only dealing with basic "lift and shift" tactics at this point- simply delivering basic operational capabilities directly between the policyowner and the insurance company (granted with some simplification to make that possible).

Going forward, insurers will need to consider key changes in the following areas as they move beyond implementing the simple & basic  capabilities to differentiate themselves in the marketplace

1. Marketing & Branding- ensuring a strong brand that the customer identifies and aligns with (several branding lessons can be leveraged from the Retail/ Consumer Products sectors)

2. Customer-driven Sales- call it upsell/ cross-sell or referrals, insurers will need to be in the forefront driving sales strategies by market segments, a lot more than in the current agent driven model as they take primary role in driving and influencing customer perception and behavior.

3. Operational innovation- given that most of the "product" experience felt by policyowners are driven by operational processes (besides contract specifics), insurers will need to innovate extensively in key business functions such as Sales, Servicing & Claims to enhance their positioning relative to competitors.

Of course, another big To-Do in this evolution to a customer driven business model is figuring out an appropriate new model for compensating the distribution force who will continue to drive quite a lot of sales for insurers. Most companies are today busy rebuilding their compensation capabilities as they strive to prepare for the coming re-configuration of compensation models.  

Posted by George Ignatius at 6:32 PM | Permalink | Comments (2) | TrackBacks (0)

 Mortgage crisis, Credit crisis, Job losses, Car sales plummet – Welcome to the new economy of the 21st Century global village.  For all businesses including insurance carriers, retention of existing customer is extremely important.  So what do we do?  Launch an elaborate customer data analysis, and create “n” more tiers of segmentation and focus on the top tier (the ones who contribute high volume of premium, no claim whatsoever) and shoo others?  Well, that is an approach for the short term.    What we need is a loyal customer base with a mix of the top tier, moderate and some average- to provide the right customer mix and size that can sustain the value for the long term.  It is another story some of the heavy hitters on the claim side swear loyalty to life!   Jill Griffin (author of "Customer Loyalty: How to Earn It, How to Keep It." ) mentions that  “customer loyalty lifecycle  comprises of six stages: suspect, prospect, first-time buyer, repeat customer, client and, finally, advocate. The goal of all relationship marketing is to continually move a customer to increasingly higher stages within the loyalty life cycle”  Focusing on research that helps you find which lifecycle stage the customer is, what will enhance the value and move them to the next stage will be of great help.

For example, how do we help those who are still with us but not in the top tier or moderate layer?  Here are some simple actions that can help.  A good first step is to review their  current needs through a proactive conversation and rework the coverage based on information.  May be longer / shorter driving due to job changes, reduced income level etc.  Does that rental service at additional premium is still a need?  Can a slightly higher deductible bring down the premium?  Can we move from 3-pay to 6–pay?   Can we speed up that bumper claim and settle it?  It is the same as any small town community does in hard times – helping one another.  Of course, we recognize that this is a business and we need to sustain revenue and profits.  But, any small step / action that we try to generate value above and beyond what the customer expects from us will go a long way.  For starters, helping our customers take their car for a job search out of town out with proper insurance instead of going uninsured.   And believe me, if only we knew our customer’s needs better and any action that we do today to help our customers remain afloat and sustain will go a long way in earning their loyalty forever.  
Do you agree? 
“We are all in the same boat in a stormy sea, and we owe each other a terrible loyalty. “- G.K. CHESTERTON

Posted by Baskar Sridharan at 6:00 AM | Permalink | Comments (0) | TrackBacks (0)

For coverage of my home and 2 cars, I have been with the same insurance company / agent for the last 6-7 years. My insurance agent (Agent A) is a business like person whom I have spoken to only the phone. She was referred to by my friend who told me that she can get me the best deal for car insurance. On the phone, she comes across non sense but very efficient and quickly helps me complete the transactions. She has called me to prompt me if I forgot a payment, ensured that I had all the possible discounts and been very responsive to any phone requests. Every once in a while, I have compared rates (mostly online) in response to a TV ad and found the alternatives to be far costlier than what I currently pay for the same coverage.

Two of my neighbors recently told me about the outstanding claims experience they had with another agent (Agent B)/ insurance company. One of them had a major water flooding in his home and the insurance agent was personally there with a day or two with a check that adequately covered the repairs .After some procrastination, I finally did reach this agent yesterday and the experience was dramatically different. When I mentioned who referred me, she spoke warmly about my neighbors and how they were second family to her (a little corny for my preference). She spent some time enquiring about me and my family, spoke about her family, tried to understand what I liked most about my current agent / insurance company and why I was with them for such a long time. She reviewed my cover ages and pointed out some opportunities to optimize it from a coverage / premium standpoint. She cited some examples of my current insurance company running into lawsuits with the state department of insurance and also about some misleading practices they sometimes engage in to get their customers really low prices (again did not like this part but appreciated the information that I  was not aware of). She also mentioned that insurance agents don’t always do the best for their customers because they are paid commissions on the premium and they are looking to maximize it for themselves (sometimes by adding coverages you don’t need).

I waiting for her to give me the quotes today so I can make my decision. I should mention that both of insurance companies are reputed insurance companies with strong credit rating and a national brand.
 
Some questions I would love to hear your opinions about:
1. Which agent is likely to be more successful going forward as insurance companies with dedicated agencies are looking to go direct ?
2. From an insurance company standpoint, which agent is likely to bring in a more profitable book of business?
3. At a more personal level, should I go with Agent B even if she comes back with a price that is 20% higher just because she said all the right things and I have proof of great claims experience

Posted by Srikanth Srinivasan at 11:30 AM | Permalink | Comments (2) | TrackBacks (0)