Some golden anniversaries are better than others. I was reminded of that as we celebrated the 50th anniversary of the Beatles' first appearance on the Ed Sullivan Show. The British Invasion changed the world. Nice legacy.
Less inspiring, however, is that we're marking golden anniversaries for the policy administration systems still used by some American insurance carriers. While they certainly have been adapted over time, and the genius and creativity that allowed them to survive this long is noteworthy, there's a problem: their adverse impact on user experiences.
User expectations for insurance carriers are changing, and the pace of change is accelerating. Being risk averse and deciding not to keep up with the Joneses may have been prudent in previous eras, but some insurers now are flirting with irrelevance. And, just as you wouldn't build a new house on a crumbling foundation, carriers increasingly are confronted with the inherent limitations of legacy platforms as they redefine their go-to-market strategies.
For example, the prevailing trend in user expectations is that information will be open and transparently available. A lack of transparency creates some expectation that the customer isn't getting the whole story, which invites further scrutiny and could spur competitive research. Without easy access to information, it's hard for consumers to form trust. That can prove to be a fatal flaw, especially if they are shopping for an intangible, such as insurance, which is effectively a promise.
Beyond this, consumers and producers alike have been taught what good user experiences are by the likes of Amazon and Southwest Airlines. In fact, to be "Amazoned" - out done in terms of price, service, availability, delivery and ease of use - has become a verb. For many businesses, including big box electronics stores, the foundations of their business models have been melting beneath their feet. Some of that is about pricing and information access. A key point, however, is that banks and on-line retailers have created fluid, functional user experiences that offer near-instant gratification. Even if they never deploy delivery drones, Amazon's ability to deliver on that promise is outstanding.
Southwest Airlines started as a discount alternative. Like many, I'm now willing to pay a premium for the company's flexible, no-hassle service. They have created a great experience, none of which is riding on technology older than the people supporting it.
Contrast that with the typical life insurance purchase experience, which from start to finish can be measured in months and involves a discernible lack of available information at the inception. As a card-carrying baby boomer, I was willing to accept this as an appropriate business paradigm in the past. My millennial children simply will not. That's not to say my kids won't value insurance, they will, just like they value the Beatles. But they don't listen to LPs, cassette tapes, 8-track tapes or compact discs. They buy music in a far friendlier, faster way that is simpler, cheaper and better. So it will be with insurance too.
And while support for the sales process is a concern, customer service looms even larger. Many banks and investment companies have shown us what good user experiences and access look like. Feature-rich transactional capabilities, self service and real-time information, all now are considered table stakes. But I recently was told by a large American insurer I couldn't complete a transaction online, and that it would take two to three weeks to process. The time to completion ran to four weeks, given the mail delays and the processing issues on systems that date back to 1964. A service representative even lamented the challenge, noting that it was a known issue at the carrier, but that a resolution had been de-funded. While the story eventually had a happy ending, it certainly made me think twice about wanting to do more business with them.
And therein lies some of the root cause of these issues. Insurance companies all too frequently look at their world from the inside out rather than peering from the outside in. Without that external perspective, bad things can happen. An awareness of the impact that aging core systems can have on customer and producer experiences is the corporate equivalent of a 12-step program. Addressing problems requires an admission of the problem.
Attractive, intuitive, functional Web design is a given for most users, but most carriers simply don't have this expertise. No worries, of course. Professional help on Web design is a low-cost, high-return play. Also, mobile will be the technology of choice going forward. While some carriers understand and accept that, too many don't. At a recent round table discussion with bank CIOs, many said they now do mobile development first. If Web-based solutions come at all, they come later. Their customers have spoken, and this trend likely will make its way into insurance soon. These customers, after all, are the same people.
The Beatles changed our world back in the day; smartphones and tablets are changing it now. There's no time like the present to get change underway for the insurance industry.
INNSight is exclusive commentary from Novarica.
Robert McIsaac is a principal focusing on life insurance, annuities and wealth management at Novarica, a research and advisory firm focused on business and technology strategy for insurers.
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