INSURERS MUST BALANCE CUSTOMER SERVICE AND ROI

"The technology and consumer-experience intersection is happening in all industries and if the insurance industry doesn't find a way to deal with it, the industry will look bad" when compared to others that do, warned John Ounjian, senior vice president and CIO at Blue Cross Blue Shield of Minnesota, at this week's Insurance & Technology's Executive Summit 2002, "The New ROI: Balancing Vision and Value," in Phoenix.

For instance, explained Ounjian, insurance companies have traditionally taken a "one-size-fits-all approach to customer service" and have not taken into account differing customer-agent, policyholder-needs.

"Insurance companies have to change that thinking immediately," he said. "We have to ask ourselves, 'What are the customer's needs?' Customers simply want resolution of inquiries, claims quickly and the solutions that provide the resolution should be passive," or easy to use. Insurers should "shift toward creating value for internal and external customers by developing a new delivery model that embraces service, innovation and simplicity."

Carefully analyzing a customer's needs should also play a part in the return-on-investment equation, Ounjian said, "and ROI should not be thought of in the short term," pointing to the classic ATM adoption-rate analogy as an example of technology that did not show strong ROI in the short term but pays off today.

To achieve quality customer service that meets ROI requirements, insurance companies should "move forward with solutions with the lowest cost and the highest impact," such as automated response systems and self-service applications that can leverage Internet technologies, Ounjian added.

In fact, leveraging the Internet to provide customers with superior customer service is just what Nationwide Insurance is in the process of doing, according to Tracy Smith, chief technology officer, Nationwide Insurance. "Our strategy is called Customer Choice," where Nationwide's agents or policyholders can interact with the carrier though traditional intermediaries, call centers or the Internet, Smith explained.

However, pointed out Smith, the benefits of giving customers more points of contact is something that is hard to quantify when it comes to doing ROI analysis. "The softer costs are harder to estimate and that is a real challenge for IT," he says. "But when you implement technology to reduce cycle time so we can rapidly respond to a catastrophe, the hard benefit is difficult to quantify" and the soft benefits—increased customer satisfaction—actually becomes the driving force for many initiatives.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio