How Insurance carriers must embrace insurtech to win on customer experience

Traditional insurance carriers have a customer experience (CX) problem. The industry faces a multitude of challenges, central among them being the fact that customers don’t feel connected to their carriers, have low brand loyalty, and in, effect, have created a highly competitive landscape. Meanwhile, insurtechs are continually entering the market with new products and services that intrinsically place CX at the heart of their strategies. Carriers that want to differentiate in the future will need to go beyond price and product, to compete on CX and keep up with these potential competitors. Learning some fundamentals from insurtechs, in combination with new thinking on operational and technology transformation, will help carriers get ahead in delivering differentiated CX.

Insurtechs are using fundamentally different strategies by prioritizing self-service, being mobile-first, and offering personalized insurance

HfS’ recent study found that nearly a third of businesses today (29%) have seen their top two competitors change in the last four years, a trend that enterprises expect to continue into 2020. The insurance industry is the perfect example of this shift. Insurtechs are fast becoming new competitors – startups that are using digital technologies to create new insurance products and services. These initiatives are focused on developing new paradigms for how different kinds of insurance can be designed, purchased, and serviced. For one of the world’s oldest verticals, it is unsurprising that there are a lot of old and established ways in the industry. While insurtechs are cropping up across several segments, technologies, and product types, what most of them have in common is their customer-centricity. Being unencumbered by legacy technology or processes, these new players are starting to create new horizons for insurance, with fundamentally different CX-focused strategies, including: 

• Prioritizing self-service and automated processes as the default.
• Being mobile-first, meeting customers where they are, being accessible, and flexible.
• Creating personalization, with insurance products and services tailored to a customer’s needs, including on-demand insurance and personalized risk management products.

The CIO at a global insurance and reinsurance provider highlighted this shift in customer expectations, when he said: “Our shift towards delivering on new customer expectations is a three-parter.”

• Technology play – “Investing in better platforms to help us deliver products and services more seamlessly.”
• Process changes – “Removing a lot of manual touchpoints, break-downs in the value chain. We are familiar with insurtechs, creating platforms that eliminate these [manual processes], and push the boundaries of what can be done. They are setting a high bar of expectations. We need to try to adapt to that.”
• Culture to deliver CX – “Adapt the culture to make sure everyone has a realization that there is a different way of doing things, make things speedier and more seamless… that comes from top-down and bottom-up. That’s a big challenge. Ultimately the cornerstone is technology. You need systems to support that agility.” 

Insurance carriers need to break out of their old habits to seize new opportunities for customer engagement, working towards “OneOffice”

As the HfS Insurance As-a-Service Blueprint 2017 notes, concepts like HfS’ OneOffice can help insurance carriers start to navigate the needed organizational changes to build customer-centricity. The OneOffice organization (see Exhibit 1) breaks down the silos of front-middle-back office processes and reorients to deliver better experiences and outcomes for all stakeholders, starting with the end customer.

The need for OneOffice couldn’t be more pronounced in insurance, as the industry grapples with insurtech startups that are revolutionizing distribution and customer experiences by creating streamlined processes, digitally enabled self-service, faster response times, and tailored offerings. Every carrier wants to differentiate, and the key lies in becoming customer-first (or agent or broker-first, as the case may be), while realigning the entire front-to-back to accommodate these monumental cultural, technological, and process changes.

Exhibit 1: Carriers need to use concepts like the digital OneOffice to reorient towards CX

Putting insurtech fundamentals into play, traditional carriers can extend their customer experience capabilities by focusing on:

• Front office modernization, as a priority. HfS sees a lot of experimentation and investments being driven by carriers on the front office, including new customer and agent portals, mobile interfaces, and self-reporting, self-servicing tools. Using current technologies, you can personalize messages, or provide services on multiple devices, or reply to customers instantaneously. However, there is a perception that only certain types of insurance can be sold and serviced on-line. Furthermore, some insurance decisions can be complex, with customers being emotionally invested and needing advisory support and guidance. Using principles like design thinking, user-experience centered design, and emerging communication technologies, carriers have an opportunity to reimagine how even complex insurance interactions can be executed in a hybrid, digital-physical world. A critical part of this journey is the level of flexibility and agility that can be built into core systems to enable a differentiated customer experience across different types of products. Modern systems providers, such as OneShield Software, are architected to facilitate digital supporting technologies like private portals or chatbots. Carriers need to build robust core systems that can handle these digital interventions across products, if they are to deliver on the promise of improved customer experience. 

  Doron Hai, CIO & Head of Operations at CapSpecialty, a U.S. specialty insurance provider for small and mid-sized businesses, outlined their investments in CX, with the launch of their commercial insurance platform. He elaborated: “Brokers are a critical part of our business. Our aim was to most efficiently build a platform that meets broker needs. We are developing efficient ways to book, bind, and issue a product. The platform is designed to improve experiences in areas like underwriting, empowering brokers to do as much as they can themselves, so they can manage the volumes of work in their queues. It has real-time pricing, faster delivery, self-service capability, 24/7 access, and an intuitive user interface, allowing brokers to be efficient in serving customers. They can even endorse something themselves, and don’t have to wait for us. CapSpecialty is enabling speed in every activity they do.”

• Developing foundational OneOffice capabilities to support customers across the enterprise. While front office investments are important, these improvements have sometimes come “in spite of” the back and middle offices. This leads to operational hiccups in the upstream and downstream processes and data exchange around customer interactions. Very often, carriers will use the same systems, infrastructure, and resources at the back, which waylays the modernization happening in the front. This is where the OneOffice concept really comes into play for insurance. Carriers need to address their underlying systems and processes, finding ways to write off legacy, or ring-fence it where needed, to be able to extract value from their modernized front ends. Examples include moving to cloud-based, As-a-Service platforms and embedding modern automation technologies to reduce turnaround time and improve straight-through processing across functions such as claims processing, billing, and customer inquiries.

Carriers need to build into their systems and processes a way to provide customers with simplicity, transparency, and control (see Exhibit 2). This will take a complete mind-shift for some carriers – moving away from pricing and product-based positioning, how do you create differentiation in your customers’ minds around the experience that you deliver to them? This applies to however you define your customer, be it the insured, the agent or broker, or internal customers such as underwriters and claims adjusters.

Exhibit 2: The three critical customer values that insurance carriers need to build

Source: HfS Research, 2018

With OneOffice alignment, you are reorienting all aspects of your technology and operations environments to focus on the customers. This means not just front-end staff and customer service representatives and agents that bring customers in the door but evaluating areas such as your billing systems – how quickly are they able to turn around, how proactively are you able to anticipate and push out relevant information, how your claims and settlement processes are less cumbersome and speedier. Overall, how easy can you make it for a customer to go from quote-to-settlement, without falling into what can feel like an abyss of information gaps and data capture failures?  Insurance customers need simplicity, transparency, and control over their destiny when they enter your world. If you can deliver that, that is truly differentiating.

The bottom Line: Insurtechs are changing the game by winning the hearts and minds of customers with new experiences.

The biggest shift is acknowledging that CX doesn’t start and end at the point-of-sale but extends across the insurance lifecycle. As the Insurance OneOffice takes hold, traditional carriers must find ways to introduce simplicity, transparency, and control across their customer lifecycle, so that they can stay relevant. With the right use of insurtech technologies along these values, and core applications systems that can support insurtech functionalities, carriers have the opportunity to create winning customer experience strategies.