What Omnichannel Really Means in Insurance

Is omnichannel just the latest buzzword in the insurance industry, or is there real substance behind the concept? You have to admit that it sounds pretty cool. Omni is a powerful prefix; it means all or every, and carries the connotation of being all-encompassing or unifying. A skeptic might insinuate that omnichannel means the same thing as multichannel. After all, insurers have been living in a multichannel environment for years, seeking ways to improve the integration between channels. However, to truly understand why omnichannel is different, we need to look backward.

First, let's look back to the 1990s, when the notion of multichannel became popular. Before that, the channel options for insurers were limited. The primary choice was between captive or independent agents, with a few companies offering contact center communications. The '90s saw the rise of two phenomena that reshaped the ways insurers communicated with the outside world: the Internet and more sophisticated market segmentation. Every insurer rushed to develop a web site to provide a new way to do business. At the same time, more insurers began to examine their customer segments in detail and develop a more varied approach to segmentation. As insurers understood more about the needs of new segments, they recognized that more channel options and flexibility were required. Then a third phenomenon took hold during this past decade that has further shaken up the channel picture – mobile technologies. Mobile devices overlap existing channels and provide new options for reaching both producers and customers.

Next, let's take a different kind of backward look, with the attention on the directional orientation of the channels. Traditionally insurers planned and managed channels from the inside-out perspective – the company view. Today, the focus is on becoming customer-centric, and more insurers are taking the outside-in view – the customer view.

Mark Breading, SMA

So what does all this have to do with omnichannel vs. multichannel? These trends have resulted in most insurers using a multichannel model. Channels were added one by one as the need and opportunity arose: a new contact center for a new line of business, a worksite channel to support group business, an Internet self-service channel, or portals for agents and insureds. Typically, these were implemented for specific purposes and resulted in channel silos. Soon, the rallying cry for many insurers became the call for multichannel integration – working to make the handoffs and interactions between channels more seamless.

[Previously from Breading: Does improving the customer experience matter?]

Today, the new imperative is the creation of an omnichannel environment. There are three primary differences with omnichannel.

1. Customer Experience: Insurers today are highly interested in improving the customer experience. Whereas the objective in the past was to improve transaction efficiency and reduce channel costs, today the concern is on understanding how channel interactions impact customer perceptions. Efficiency and cost will always be important, but the driver for investment in the omnichannel world is the customer experience and its implications for retention and profit.

2. Customer Journey/Lifecycle Planning: Multichannel integration strategies tended to focus on the individual transaction. Often, it was about the technology and process changes of transferring the information and context of one transaction to the next stage. An omnichannel approach considers the entire stream of interactions that the customer is likely to have with the insurer. Mapping out these interactions throughout the lifecycle of a policy and considering the customer's multiple products is vital. Understanding customer preferences enables insurers to design a channel environment that provides all the options, while keeping channel switching transparent for the customer. The customer never has to repeat or re-enter information, never has to wait too long for a response, and always interacts with a person or system that understands the relationship and the context of the customer's request.

3. Unified Digital Communications Platform: An omnichannel environment considers the customer view (outside-in) from the beginning. Rather than working to integrate channels that have been created in silos, an omnichannel approach leverages a unified digital platform to support all channels and connect to the core systems on the back end.

In 1888, Edward Bellamy published a novel, Looking Backward: 2000-1887, about a future utopian society set in Boston. Perhaps insurers, by looking backward, can actually move forward toward realizing the promise of the future omnichannel environment. I'm looking forward to seeing how the insurance industry adopts the omnichannel approach.

About the author: Mark Breading, SMA partner, is a recognized expert in advanced technologies and their implications for the insurance industry. He has exceptional knowledge of data and analytics, customer communications in insurance, enterprise content management, and advanced technologies including mobile communications. Follow him at @BreadingSMA on Twitter.