As a direct writer of homeowners and automobile insurance, Electric Insurance Co. doesn't rely on a network of independent agents to regularly interact with policyholders.Instead, Electric's call center agents interact with customers for everything from delinquent premium payments to claims-related inquiries. While this arrangement often suffices, CSRs typically lack the customer relationship skills that local agents have.
With 125,000 policyholders in its network, Beverly, Mass.-based Electric Insurance saw an urgency to attain a higher level of customer communication competency. In mid-2001, it implemented an automated real-time notification service-EnvoyXpress-that enables the insurer to establish interactive voice and text communications with customers and, in turn, to keep them abreast of all matters pertinent to their policies.
Moreover, Electric Insurance's call center agents can now concentrate on more complex in-bound customer inquiries.
Eighteen months after implementing EnvoyXpress, Electric Insurance officials are so pleased with real-time notification that they continue to incorporate new modules across many aspects of its operation, including new business, policy management, marketing and claims management.
Concept has potential
"Because we are a direct writer, all of our customer communication is done by phone, fax or online," explains Jack Schumaker, customer service manager, Electric Insurance. "Because of this direct relationship, it's vital that we have a system in place to alert policyholders on a myriad of both important and mundane policy issues."
EnvoyXpress was developed by Bedford, Mass.-based EnvoyWorldWide, a provider of real-time notification services. The focal point of these services is interactive voice and text communications to landline phones, faxes, e-mail, pagers, WAP (wireless application protocol) phones, PDAs (personal digital assistants) and other wireless devices.
The company developed the solution around a marketing concept that mirrors what insurance carriers routinely face in their day-to-day operations. EnvoyWorldWide bills it as P3R2-proactive, personalized and predictive, routine and recurring communications, says Nancy Liberman, vice president of marketing for EnvoyworldWide.
Real-time notification solutions such as EnvoyXpress are just beginning to make an impact in the insurance industry as it pertains to electronic priorities, industry observers say. "The solution reminds me of what retail banks have been doing for the past several years, such as transmitting alerts to accountholders-perhaps informing them that they are in danger of an insufficient fund situation," says Brad Adrian, research analyst with Stamford, Conn.-based Gartner Inc.
"I see this same concept having traction in the insurance industry over the next 18 months and beyond. The key to customers embracing real-time notification is that insurers will have to make it as customized as possible, and also make it private and non-intrusive."
At Electric Insurance, the initial emphasis was on improving the recurring and routine functions that call center agents face every day. One of the more cumbersome responsibilities that agents face is contacting customers about delinquent premiums.
"We have strict guidelines in place about reinstating a policy after it has lapsed," says Schumaker. "That makes it critical that we alert customers in advance about a potential delinquency. That's because unless it's our mistake, we don't re-instate lapsed policies. The way we look at it, customers whose policies lapse are probably not our best customers anyway."
Using EnvoyXpress, Electric Insurance starts by making "courtesy calls" to late-paying policyholders, either by e-mail or telephone. Delivering approximately 1,000 premium-lapse notifications per month, Electric Insurance gives policyholders an option to pay the premium immediately. Activating the integrated voice-response (IVR) system, customers can be routed to a CSR to pay via credit card.
Thus far, the system has worked well to stem policy lapses: Electronic Insurance has been able to reduce its policy-lapse rate by 29% in a year's time via automated notification.
And by automating customer alerts, Electric Insurance can now reach twice as many customers that it could manually. Put another way, Electric Insurance-without real-time notification-would have had to hire six additional call center agents just to handle the number of notifications that are now transmitted via EnvoyXpress.
The success of the first phase of the EnvoyXpress initiative-using it to reduce policy obsolescence-convinced Electric Insurance to explore additional applications across multiple departments within the organization.
"Based on the success we experienced internally, we identified several other business processes across departments that stood to achieve similar results through automated communications," says Dominick Cipolla, vice president of call center operations and quality, Electric Insurance.
"The expansion of our utilization of EnvoyWorldWide services speaks to the reliability, enhanced service and measurable ROI that can be generated through real-time notification services," he adds.
Electric Insurance, for instance, crafts alerts to welcome new customers. It has also developed a message during the application process that alerts applicants that a signature is required or that a form is missing.
On the claims side, Electric sends out alerts prior to mailing out a claims reimbursement check. Cipolla views this as a pre-emptive strike against a higher volume of in-bound calls-calls that would be placed by customers inquiring about the status of their claims check.
Perhaps the most intriguing alert that Electric has crafted is one that is intended for weather emergencies. The insurer transmits storm-warning notifications to customers when a bad thunderstorm, tornado or hurricane threatens their geographic area. The message features storm preparedness tips to take and also includes carrier contact information in the event a claim would have to be filed.
By the end of 2003, Electric Insurance, Cipolla says, will have increased its aggregate monthly outbound message volume by more than 600% over the current rate using real-time automated notification.
The success or failure of real-time alerts, says Gartner's Adrian, hinges on customer acceptance. And thus far, most of Electric Insurance's customers overwhelmingly approve of the concept.
Insurers that are contemplating such a move may be won over once they examine the ROI schedule that EnvoyWorldWide boasts. The cost for a carrier-partner to activate EnvoyXpress typically ranges between $50,000 to $75,000, with users garnering ROI in about 30 days, says Liberman.
Although he would not reveal how much Electric Insurance spent on the technology, Cipolla confirms that it took about one month for Electric Insurance to receive its payback. The upfront costs of the solution primarily consist of software licenses obtained for EnvoyXpress.
Within the service agreement, Electric Insurance is able to access various pre-recorded or pre-written alerts-produced by EnvoyWorld-Wide-that the carrier intends to target to existing and potential customers. "We craft the verbiage we want to use for our individual messages and then transmit them to EnvoyWorldWide," Schumaker says.
Once an alert has been customized for Electric's purposes, EnvoyWorld-Wide takes that alert and sends it out to customers in whatever format the carrier deems necessary.
At Electric Insurance, 85% of all alerts sent to customers are transmitted either by phone or e-mail. An XML data layer ensures that messages transmitted to customers can be both received and understood regardless of whether that message is being delivered to a PDA or an e-mail address.
Electric Insurance is careful to avoid bombarding customers with multiple messages. "If we have access to a customer's e-mail address, we will send the message by e-mail as a rule," Schumaker explains.
"If not, we'll send it out via phone. We never send a single message to both phone and e-mail because we feel that would be bombarding customers with notifications."
But as Gartner's Adrian points out, there's a fine line between bombarding customers and making sure that an alert is received.
"I agree that you can't send a customer the same alert five different ways, but if someone doesn't check their e-mail every day-particularly if it's a home e-mail system that's used sparingly-it would be in a carrier's best interest to cover its bases and send an alert out via the phone too."
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