Act with lightening speed, access the best information availablethis sums up the advice customer service and distribution system vendors are giving insurance companies. The pressure is on to become more customer-centric, to provide anywhere, anytime service and to capture the information generated by these kinds of encounters.
With IT budgets free from Y2K projects, and with a greater understanding of where e-commerce fits into a business strategy, insurers are in a position to make significant investments in customer service and distribution-relatedtechnologies, including call centers, CRM suites, sales-force automation tools, agency and new business systems, and integration technologies. Gartner-Group/Dataquest projects that of the $35 billion the US insurance industry is expected to spend on IT in 2001, about $7 billion will go towards CRM, up from an estimated $5.5 billion this year.
"In 1999, the emphasis was getting to market with an e-presence, a Web page," says Jeffrey Schwalk, director of business transformation, Computer Sciences Corp. (CSC, El Segundo, CA). "Choices were made in the last 18 months just to get out there without looking at the big picture.
"This year people took a step back, looking at where they were, against their goals of where they want to be," Schwalk says. "This is a hard assessment, a decision that some things need to be replaced and 'rejiggered.' There are some tough issues they still need to deal with."
Dianne Parker, senior vice president, property/casualty outsourcing, sales and marketing at Mynd Corp. (Columbia, SC), agrees. "Companies want to Web-enable their systems, and that requires more than just having a Web presence," says Parker. "Insurers want to empower the consumers, to create a consumer-centric environment. They've got a Web presence and the question has been, 'What do I do next?' They're addressing that."
But to go beyond the buzzwords of customer-focus and customized-delivery, insurers will need to invest in technology to help them address several specific challenges, customer service and distribution systems vendors agree. Perhaps most important, companies have to be able to determine a picture of individual customer profitabilityboth an immediate snapshot as well as what a longer-term, cradle-to-grave snapshot may look like.
"For both customer service and distribution purposes, analyzing customer profitability is critical," says Patricia Saporito, senior property/casualty insurance industry consultant, National Accounts Division, NCR Corp. (Dayton, OH). "They need to know how they're approaching the carriers for sales, and that includes evaluating interactions, as well as transactions, whether it involves requesting a quote, making a payment or having a policy issued."
Furthermore, insurers need systemswhether they are Web-based, or facilitated through a live sales agentthat facilitate placing information immediately into a customer's hands through whatever channel a consumer wants. "Imagine sitting at a home PC and being able to have an insurance policy bound within minutes over the Internet," says Mynd's Parker. "Or being able to store policy information electronically and make it available to anyone with the right authorization who needs it. We've offered both to customers for a year or more."
Parker wants to see the ability to close and bind transactions not simply on a carrier's Web site or other proprietary channel, but through third partiesthe Web sites of other financial services providers. This should be possible, she says, without someone at an insurer having to re-key data.
So far that technological wherewithal isn't available-but Parker anticipates it will be within the coming year. "You'd like someone to be able to go to e-Schwab and press a button indicating that he or she is interested in insurance," she says. "The technology to do that existsbut not the infrastructure that would pass that information to the insurer's computer without it being re-entered before a policy is issued and bound. You may be able to file data electronically, but the ability to act upon it immediately isn't in place."
Along these lines, insurers will have to build both infrastructure and links among channels to help cut down on response time on claims and other requests, reducing costs in the process.
George Snook, national account executive at First Notice Systems, Inc. (Boston), a provider of claim intake and cost center reporting, says clients that channel their transactions through First Noticeeither directly by outsourcing or by licensing a browser-based systemcan reduce cost-per-claim and turnaround time. "In 1998 we spent $4 million to upgrade our claim intake software to a Web-based technology, and clients are benefiting," he says. "We had a customer come aboard, transitioning all of their calls from an internal system to us. Once the transition was made, the client's indemnity servicing per claim was $150, resulting in a $1,500 savings per claim."
Even with smoother, faster, more integrated processes, many insurers still will be grappling with questions about how the agent channel operates. But rather than getting bogged down over philosophical questions about disintermediation, savvy firms will find ways to get their agents more involved in efforts to share data about their customers without fear that they're giving up a client in the process. "The agents continue to be protective of their data," says Christine Ingold, vice president, global financial services industry strategy, PeopleSoft (Pleasanton, CA). "I know of one of our customers who went to an agency list and found that for each person on it, the contact data was the agent's name and address." Carriers can break down those barriers by sharing their analytics and forecasting with them, showing them which customers are most profitable, Ingold suggests.
In fact, agency performanceproductivity and profitabilitywill be an essential focus of coming investments in distribution and customer service technologies, suggests NCR's Saporito. This means measuring not simply the volume of business agents produce, but also the quality of that volumethat is, whether it's business the insurer really wants. Carriers might give agents cash or equipment or handle more of their claims as incentive, suggests Saporito. "You might give them access to additional lists, or give them access to the most profitable prospects. Or you could give the agent access to the 360-degree view of the client sharing everythinginteraction as well as transaction data, anything that would build knowledge. That's the nirvana."
But, while it's relatively easy to describe what nirvana could be, getting there is another story, especially with the costs and complexity of implementing distribution/CRM technologies. That's why many insurers will be investigating outsourcing to handle data management, claims servicing and other services. At issue is the quality of service customers will receive and whether the third party is using so-called best-of-breed technology.
One company that positions itself as a best-of-breed applications service provider (ASP) is Atlanta-based Net Commerce Co.. According to Sam Wilkes, chairman and CEO, Net Commerce can help carriers avoid the issues legacy systems poiseand vastly reduce their costsby hiring his company to do everything from policy administration to billing, accounting and claims processing, leaving carriers and agents to develop product and sell.
"The big challenge for the carriers is to take the functionality they have in their legacy systems and move it to the Net," Wilkes says. "We provide that capability while taking care of any necessary outsourcing service."
KEY TRENDS & CHALLENGES
--Insurer demand for platforms that support anywhere, anytime service and support.
--Need for ability to capture information generated by client encounters.
--Web-enable systems with the ability to empower consumers.
--Companies have to be able to determine a picture of individual customer profitabilityboth near-term and long-range.
--Build infrastructure and links among channels that enable insurers to reduce response time.
--Agents must share customer data-systems need to facilitate this without reducing agent effectiveness.
--Consider outsourcing support, processing functions.
CUSTOMER SERVICE/DISTRIBUTION: SOLUTIONS PROVIDERS
Allenbrook, Lowell, MA
AMS Services, Windsor, CT
Applied Systems, University Park, IL
Broadvision, Redwood City, CA
CSC, El Segundo, CA
ClientSoft, Hawthorne, NY
Computer Network Technology, Minneapolis
DocuCorp International, Dallas
FDP Corp., Miami
Firepond, Waltham, MA
Genelco, St. Louis
Group 1, Lanham, MD
IBM, Armonk, NY
Insurance Technologies, Colorado Springs, CO
InSystems, Markham, ON
Janna Systems, Toronto
Lucent, Murray Hill, NJ
Mynd, Columbia, SC
NCR, Dayton, OH
Navisys, Edison, NJ
Onyx Software, Belleview, WA
Oracle, Redwood Shores, CA
PeopleSoft, Pleasanton, CA
Pegasystems, Cambridge, MA
Quintus, Fremont, CA
SAP, Waldorff, Germany
ServiceEngine.com, Shelton, CT
Sherwood International, London
Siebel Systems, San Mateo, CA
Sybase, Emeryville, CA
Thazar, Kansas City