Insurance carriers today are in the midst of a fundamental transformation of their distribution channel. As younger consumers increasingly expect to deal with their insurance providers directly through the Web, more carriers are offering self-service capabilities in the personal insurance arena.
The promises of economic savings from self-service have been held out as the carrot of straight-through processing to insurance. Reductions of manual handling, improved decision-making through automated rules and improved data accuracy are some of the benefits.
In the world of personal insurance, consumers can research carriers, get multiple quotes, bind and issue policies, report claims and pay their bills. But in commercial lines, despite the potential economic benefits and the existing technical capability, fewer carriers have taken the step to expose account services directly to the policyholder.
A study of members of the Novarica Insurance Technology Research Council revealed some interesting results. Members, senior IT execs each representing a different insurer, participated in an online survey in December 2008.
Among the respondents, 35% are providing some level of self-service capabilities directly to commercial small business customers. Another 41% are evaluating an offering and likely to offer self-service capabilities by 2010.
The most ubiquitous services offered are billing, policy view and first notice of loss (FNOL). These are likely to be in progress or under evaluation for future projects. More than half of those who dont currently offer these capabilities are in the process of evaluating them for deployment. Thats not surprising given the high level of value these projects deliver, and the level of market maturity. Agents are accustomed to carriers offering these services, and consumers are more likely to expect these services.
Most likely to offer self-service capabilities are midsize carriersbetween $100 million and $1 billion. Carriers over $1 billion limit their offerings to those that are related to account servicing. No surveyed carriers over $1 billion currently offer quote, issue or endorsing capabilities. In fact, more than half say they dont plan to offer these capabilities in the future, although all of them believe they will be widely available by competitors in the next two years.
When it comes to actual online sales, only some are moving in that direction. While 44% of respondents are evaluating offering self-service quoting, fewer than 20% of them think they are likely to actually offer any sales capabilities by 2010. The surprising element is that they also believe that 85% of the competition will offer online sales by 2010. Carriers that normally expect to be technology leaders are holding back, and are willing to take a lagging position in this arena. And a remarkable number of carriers are not considering providing any type of customer self-service capabilities at all. Why not?
Few have concerns about having the technical ability to pull off customer self-service. This is not startling as many are already offering these service capabilities to their agents via agency portals. And few believe that the market is not ready. So why, given the significant financial benefits experienced by others from offering these capabilities, would carriers stay away? A primary reason is that most insurers utilize insurance agents, and so, face a very real issue of channel conflict. To avoid agency backlash, successful insurers involve their agents in the process. They also design and implement Web models and processes that complement their established processes using agency networks.
Secondarily, the ability to provide a process to deliver in-house fulfillment and customer support is a challenge for many. Rolling out a new app or system can wreak havoc if support is handled as an afterthought. Carriers should ensure the help desk is staffed sufficiently, and trained on both the application, and how to work with policyholders.
While some companies are taking a wait-and-see approach to small commercial self-service, those that have moved toward self-service are seeing a clear value.
For those carriers that are still reluctant to pursue online small business self service because of channel conflict, Novarica recommends starting first with those initiatives that are more widely accepted by the agent channel, and deliver high value. Billing, FNOL and policy view are good candidates. For those who are looking at expanding their capabilities, a modified business model, and processes to account for agent acceptance, will be required. And to ensure success, include agents in all steps of the process with clear, ongoing communication.
6 Guidelines and Checkpoints for Deploying Self-Service Capabilities to Small Businesses:
* Develop deployment performance goals
* Communicate openly with agents
* Conduct usability testing to be sure the functionality is intuitive
* Modify internal processes where necessary to ensure swift fulfillment
* Ensure policyholders will use the self-service capabilities
* Involve agents from the beginning in all aspects of the decision-making and implementation
Karlyn Carnahan is a principal in New York-based Novaricas insurance practice. She can be reached at kcarnahan
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