Generali Case Study: Every Insurer Needs a Solid Foundation for Digital

Each modern enterprise has a distinct set of challenges that inhibit their ability to embrace digital transformation. For the insurance industry, the myriad challenges stretch from changing customer expectations to legacy operating models that rely on traditional communication channels. However, in such a competitive and rapidly changing industry, insurance carriers are investigating opportunities that new operating models and digital technologies can offer.

All too often the focus of digital transformation rests on the front office and innovative new applications, communication channels, and technologies such as intuitive chatbots to improve touch-point interactions for current customers and entice new ones. While this is an important part of an enterprise’s move to embrace digital, it can often be powerless without digitalization in the middle and back office. For example, a beautifully designed new app may improve the customer experience by providing a more intuitive interface, but if the supporting services behind the application lack the speed and responsiveness to go with it, customers are likely to see through it.

It’s fundamental, therefore, for carriers to re-evaluate their entire business and operational structure when embracing digital models and technologies. For insurance companies, the need to prepare for digital involves a deep-dive into their back-office and middle office processes. Firms operating in this space tend to rely heavily on manual processes designed to manage the heavy industry dependence on paper documentation. Conventionally, inbound documents such as signed insurance contracts, and outbound documents such as insurance certificates have been handled manually as paper copies. This placed an enormous burden on insurance companies to manage and process vast volumes of paper documentation and, in many circumstances, halted a carrier’s ability to embrace digital technologies that other industries were able to explore.

This report investigates how insurance company Generali is preparing for digital transformation by streamlining and digitalizing back-office processes to support transformative activities across the business.

Journey to the Digital OneOffice: Insurance companies need strong digital foundations to drive customer-centricity

How often do we hear about companies that provide an attractive digital façade but the inability of the middle and back office to keep up with customers’ digital expectations hampers the overall experience? It is all too tempting to see transforming the customer-facing front office of an enterprise as the obvious choice when embarking on a digital transformation journey. This can create inflated expectations for customers, though – they get a new app or communication channel, but if their processes don’t change, neither will their outcomes. It also misses the key focus of customer centricity, which is what digital business is all about.

Placing the customer at the centre of the enterprise is, of course, easier said than done. It is, however, the guiding principle of HfS’ Digital OneOffice concept (see Exhibit 1), which tackles digital holistically, placing equal importance on the back office and the front with the understanding that unless all areas of the enterprise are aligned, customer outcomes are likely to fall short of expectations.

Exhibit 1: The HfS Digital OneOffice

Crucially, there are industries and enterprises out there that understand the importance of getting the back-office straightened out when aiming to meet the increasingly challenging expectations of their customers. For these enterprises, transforming legacy processes and technologies is not only essential to boost initial performance, but necessary if any further transformation is to take place elsewhere.

The focus on building a strong digital foundation is a concept well understood by some industries, most notably insurance, which has a history of governance and regulation placing traditional customer communication channels at the centre of operations. For example, in some geographies, insurance documentation must be received and sent out as paper copies – a requirement that makes shifting toward more digital channels challenging. However, HfS sees that innovative service providers and insurance carriers are developing a clear roadmap for how they will overcome this particular challenge and, consequently, build the solid foundations for digital needed to drive the company forward.

Market forces and rising customer expectations force insurance firms to transform

For many insurance carriers, the catalyst for transformative activity is simple; customer expectations are increasing dramatically in the modern marketplace. Fuelled by experiences in the wider economy with dynamic digital companies, the modern consumer expectations have developed considerably in the last few years alone, making topline growth challenging. On the flipside, carriers also struggle with bottom-line growth, including profitability and maintaining margins in one of the toughest years yet – investment returns have been low, price competition is severe in markets such as property and casualty (P&C), demand is tapering in markets such as life and annuities (L&A), risk profiles are changing, and, finally, an catastrophic events have increased, all adding to the pressure. As a result, speed, responsiveness, efficiency, and cost are all becoming key critical success factors to compete in insurance today.

These demands limit the feasibility of running a modern insurance enterprise using traditional operating models. In recent HfS research, it’s become increasingly apparent that insurance carriers are awakening to this shifting demand (see Exhibit 2), as the most critical directive identified by executives is the push for scalable and flexible services – no doubt to support the delivery of services that better meet changing customer demands. Yet perhaps the most interesting insight from this research is the emerging emphasis being placed on aligning the middle and back office to improve overall customer experiences, with 44% of executives – the highest proportion in this category – advising it is an emerging directive. It is becoming increasingly clear that insurance carriers are becoming more conscious of the disruptive market forces at play, which are leading them to reimagine their business and operational models to better meet customer demands.

Exhibit 2: How critical are the following C-Suite directives to your operations and technology strategy?

Source: HfS Research, 2018

Simply put, carriers that continue to work using labour-intensive and manual processes, serving their customers, agents, brokers, and other intermediaries through traditional channels, will not be able to keep up with startups and industry majors alike that are embracing digital processes and technologies to meet or reinforce customer expectations and set new standards across the customer lifecycle.

The good news is that several insurance carriers are aware of this and are working with innovative service companies to develop solutions that will help move their business into the digital age – across the front, middle, and back. Patrick Rolla, – Patrick Rolla, Director of Operation Efficiency Acceleration, Generali at Generali, is well aware of the impact that customer expectations have on his business.

He stresses that speed and efficiency are the goals of his current project, which seeks to digitalize the mountains of paper documentation that comes into Generali, with a keen eye on an improvement roadmap that their service provider, Swiss Post Solutions, has helped them build.

Digitization not only reduces cost and drives efficiency, but it also opens up the potential to embrace other opportunities

With new consumer expectations, there’s a real risk that the speed of processing transactions could limit an insurance carrier’s ability to retain current customers and attract new ones. The speed of response and processing may have been a differentiator for some new entrants to the market, particularly those that are better able to offer a distinct consumer group quick access to insurance products and services. However, as is often the case, this has set the pace for the wider market, which now demands quicker access and more responsive communication overall. Patrick touches upon this as well, stating that if insurance companies are unable to keep up with this new demand, they may find their customers moving to their rivals. He speculates, “We have to answer and process customers faster. If we don’t there is a real risk we could lose the customer to one of our competitors.”.

Unlike other industries, insurance is a particularly document-focused environment, with the majority of the paperwork coming into organizations in a physical form. The physical documents usually still exist either because of governance and regulations or legacy communication channels and processes that have largely stayed stagnant as manual workarounds and departments expanded around them. This makes the digitization of document management a tremendous area to explore to understand how transforming the back office enables a carrier to build on its digital readiness.

Coming from a carrier that’s well into this journey, Patrick Rolla argues that while currently the emphasis is on delivering the same level of service at a reduced cost, the future is made up of a step-by-step roadmap of incremental improvements across the business. Take for example the potential uses for modern automation technologies that businesses in other industries can implement. In a paper dominated environment, leveraging these is simply not possible. However, by digitizing document management, the doors to these opportunities are opened up. It’s this process that Patrick argues is where the real value for his business comes in. Without digitization in the back office, any other transformative work lays somewhat out of reach.

Without these back-office processes, carriers would simply not be able to function – claims or new business applications would not get processed, accounts would not get updated, insurance certificates would not be issued, and billing would not get executed. Modernizing these functions is the essential first step on the journey to pursuing other digital technologies at the front end, such as analytics and automation that will enable the firm to drive greater performance across the rest of the business.

It is here that Swiss Post Solutions endeavours to support insurance companies by providing them with the bandwidth necessary to concentrate on reaching their digital ambitions. According to Swiss Post Solutions, businesses operating in this space have an array of challenges from legacy infrastructure and processes to small IT teams and limited access to talent. The service provider tackles these challenges through its document management services, which integrate traditional labour arbitrage with the increased application of digital technologies, such as intelligent automation, to support clients in becoming digital ready. The result is a set of strong back- and middle-office processes that enable the client’s business to begin building innovative new layers across their operation as part of a structured roadmap and, critically, building the foundations to develop more customer-centric products and services. 

Building a digital underbelly supports customer-centric services

While we’ve discussed increased customer expectations and the work some firms are doing to meet them, we haven’t focused on how this all adds up. While different businesses and industries vary in how they deliver value to customers, in the insurance industry, the real tangible value comes from the back office and its transformation into what we at HfS call the “digital underbelly” (see Exhibit 1). Customers request insurance coverage for their home, business, or car, for example, and the insurance company processes that request, assigns a value to the insurance, and commences coverage. This process is dependent on the back office for the delivery of the product and service and also for the overall experience of the transaction.

To exemplify how central the digital underbelly is to success in the insurance market, Generali’s Patrick Rolla advised that for his firm it is supporting the achievement of three critical goals:f processing customer requests and other interactions takes an extended period of time because the mailroom and document management processes are inefficient or cumbersome, then this impacts the overall customer experience. Even with a slick and efficient front-office veneer, customers are unlikely to be satisfied for very long if inefficient processes in the background slow delivery or necessitate frequent inputs, such as providing the same information repeatedly at various touchpoints, to achieve the desired outcome. It’s with this understanding that insurance carriers are pulling their focus onto areas of their operating models that are essential to transforming their business to become digital ready. Once this “digital underbelly” is in place, insurance companies can leverage the newfound speed to open the doors to other opportunities that will enhance the customer experience, such as expanding communication channels.

1. Building a platform that not only boosts efficiency and drives down cost, but also has a clear roadmap for how other innovations and technologies can be implemented to continue driving improvements;

2. Transforming services so they can be more responsive to customers and deliver products and services with greater speed;

3. Preparing the business to open up new communication channels that will meet modern customer demands to engage with a business at a time and through a channel that is right for them.

According to Patrick, these improvements will help them remain competitive by better meeting customer expectations but, crucially, would not be possible without the work they are conducting to build a digital underbelly with Swiss Post Solutions.

For example, both firms have a clear roadmap of iterative steps they need to complete to reach the level of digital readiness required to move on to the more ambitious areas of transformative work. Swiss Post Solutions’ document management services support Generali by buffering demand with support services enabled by technology – such as intelligent automation – to take up increasing amounts of workload.

Once completed, this initial part of the roadmap will open up the potential to reinvent the front office – by leveraging the decreased processing times that Swiss Post Solutions can deliver, Generali is able to build a more responsive customer experience as an example, or free up staff and resources to enable the carrier to open new communication channels without additional expense. It is this final point that Patrick argues is a real strategic imperative for his business.

In Exhibit 3 we have constructed an example of typical insurance business processes, beside one which deploys many of the technologies described by forward-thinking insurance carriers like Generali. The example demonstrates that the application of technologies and innovative solutions enables enterprises to streamline processes and deliver faster and more agile products and services to customers.

Exhibit 3: Examples of traditional and digital processes  

Source: HfS Research, 2018

End-to-end communication channels drive efficiency and support oversight

In the modern world, we often take for granted the wealth of communication channels afforded to us. Modern digital companies now enable their customers to engage with them over social media, email, and live chat, alongside traditional channels such as phone and email. This allows customers to select a channel that makes sense or meets their personal preferences. However, this is not possible for every company as factors such as lack of resources, increased cost, and disjointed legacy processes form barriers to opening up new channels to offer great customer engagement and experience.

It may seem strange to jump from digitizing document management in the back office to shifting to omnichannel communication structures, but it follows a similar logic to many of the other areas discussed. In a multi-channel environment, a carrier can struggle to balance and integrate processes across all channels. For example, the response and processes between engagements handled through email or a web portal are likely to be handled differently than one sent through the mail. Moreover, they may even be handled by different teams, which can not only increase a carrier’s resource burden but can also impede the overall efficiency of a transaction – particularly if it crosses over multiple channels.

However, if insurance carriers are able to digitalize documents – physical copies uploaded through intelligent OCR solutions alongside web forms and emails – they can develop an integrated system that brings all documents and data into one place. It will help to drive a seamless and customer-centric approach that ensures both customers and insurance professionals have quick access to all the information they need. Ultimately, customer experience should remain consistent across communication channels, with each integrated into a single platform that supports customer preference. If a customer initially engages via post but follows up with a phone call or email, the experience should be seamless in terms of interactions, data, and context.

Digitization investments are the critical piece of the puzzle to achieve a new threshold of straight-through insurance processing. With this approach, digital transformation is not just about building shiny new customer interfaces; it’s also about developing processes and technologies across the business to drive a customer-centric approach. For many insurance carriers, this can be a daunting process; however, with the right services and technology providers to support them, by providing a much-needed blend of insight and access to expert resources, they can begin their journey to embrace digital business models.Patrick identifies this as a key strategic imperative for his organization as well, as it ties so tightly to the increased speed and agility required in the modern insurance market, and also the growing expectations modern consumers of insurance products have – meeting customer demand and driving down the time and costs of processing. Generali’s engagement with Swiss Post Solutions has allowed them the space to reimagine how they get work done. Swiss Post Solutions has been able to improve service delivery while keeping costs the same, which has freed up the time and resources for Generali to investigate the routes to digitization and, with the insight and involvement of Swiss Post Solutions, develop a clear roadmap for how Generali is to evolve across the business to meet the demands of the modern market.

HfS would like to extend a special thank you to Swiss Post Solutions for its support of this study.