Insurance Evolution: Achieving Competitive Web-based Product and Service Delivery

The Opportunity: Leverage technology to drive business transformation, streamline processes, reduce costs and improve services.

Part 1: Insurance Product and Service Delivery -- Overview

The Opportunity: Leverage technology to drive business transformation, streamline processes, reduce costs and improve services

The Reality: Existing business processes are manually intensive and time-consuming; current technologies are restrictive and inhibit real-time processing

In the past ten years, the World Wide Web has driven significant changes in the marketing and delivery of products and services in many industries. Consumers can "window shop" and transact business on the Web without external human interventions in the convenience and privacy of their own homes. This has created a new service level expectation currently being realized within the insurance industry.

Leading insurance companies are preparing to deliver changes to the marketplace that allow agents and consumers to directly, and in a real-time environment, transact the business of insurance. The resulting change is one of the most exciting business transformations in the history of the insurance industry. The Web significantly changes the way we offer, process, support and deliver insurance products and services. But, it is not the Web alone that makes this possibility a reality. It is the Web along with integrated technologies and a complex infrastructure that allows for a complete model. The transformation will have the following impact on the insurance marketplace:

• Major improvements in the service delivery process to agents and consumers
• Significant cost reduction in insurance companies, agencies and in the products offered
• Shifting of business/market share to companies offering the new capabilities
• Streamlined and improved operational efficiencies
• Increased influence of technology in the insurance marketplace

The focus to date is on less complex lines of business such as homeowners, personal auto, business owners policies, and some mono-lines with expectations that large account and package policies will follow. These transactions are presented to agents and consumers on a real-time basis directly via the Web. The resulting service improvements and cost savings opportunities will radically alter company competitiveness. Agents process business transactions without intervention and can complete the request in one sitting (real time). The lead companies will gain a compelling advantage with agents and consumers as companies that are "easy to do business with." The agent's administrative workload is being reduced or eliminated as Web access and views of documents and correspondences as well as "on demand" local print capabilities are at their disposal (paperless capabilities). These changes allow agents to focus on what they do best: market and consult with consumers on their insurance needs. The consumer benefits by receiving immediate acknowledgement of products available to him/her and the confirmed cost of that product or service. The opportunities to gain market share, reduce the cost of doing business and improve services has never been greater and is the key goal in the transformation.

The challenge:

The majority of companies are confronted with business processes that are not conducive to real-time, "hands-off" processing nor do they have adequate technology infrastructures and application portfolios to meet the new challenge. Change is needed and must be addressed with a sense of urgency as lead companies are already positioning themselves for the new era. Creating the appropriate vision and the aligned business and technology strategy is imperative to being a competitor in the new environment. With the new model, Insurance companies will leverage technology in such a way as to leap-frog competitors and meet the new, high expectations of their consumers and agents.

Part 2 of this series will explore the benefits, challenges and detailed logical view of the new model as it relates to the business of insurance.

About the Authors:

Glenn Coulter, CPCU, AIM, has worked in the insurance industry for 24 years, and has focused on helping companies maximize their use of technology, both domestically and internationally. His expertise is in the design and management of multiple infrastructures and in the design and development of enterprise application software ([email protected]).

Dan Laffey, CPCU, ARe, has 25 years of experience advising companies on building business applications to gain competitive advantages. He specializes in the development and management of business application portfolios, business process reengineering, company acquisitions, application migrations and business integrations ([email protected]).