The New Customer Experience
The pressure to offer better customer experiences through technology-driven interactions is mounting. According to a multinational survey by Accenture, a management consulting company, 67 percent of insurance customers now are open to purchasing insurance products from companies other than insurers, and 23 percent would consider buying from online service providers, such as Google and Amazon. As much as $400 billion in insurance premiums could change hands within the industry over the next 12 months, and the top two reasons consumers would switch, Accenture said, are lower prices, cited by 87 percent, and more personalized service, cited by 80 percent.
Historically, insurers were not as focused on the customer experience. But that's changing as more insurers are selling direct to consumers or are competing against larger carriers for placements from independent agents. Plus, customers have higher expectations based on more, and more-sophisticated, Web and mobile interactions with banks, retailers and other service providers, says Jean Lassignardie, corporate VP, chief sales & marketing officer of Capgemini global financial services & Asia Pacific.
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"There is a discrepancy between customer expectation and the historical, traditional [technology] environments," Lassignardie says. "Digital transformation has to happen now, because it has already happened elsewhere in the customers' lives."
To satisfy these evolving expectations for excellent customer experiences, P&C insurers, including Imperial Fire & Casualty, Ohio Mutual and Philadelphia Insurance, are leveraging analytics, contemporary claims systems, measuring customer feedback and results, and constantly tweaking internal processes and communications methods to create better customer experiences for agents, customers and customer-facing employees.
Claims & Culture: Imperial Fire & Casualty
At Imperial Fire & Casualty, management makes a point of giving employees the technology they need, says Duane Heady, COO of holding company Imperial Management. "Traditionally, great customer service was defined as to the customer: the insured. But it's just as important that we consider our internal customers; we hope they see management cares enough to give them the tools to do the best job they can. Then we measure them."
Imperial sells direct to consumers as well as through independent agents, Heady explains. Several years ago, management realized it should be measuring the company's ability to offer positive customer experiences against the largest and most technologically advanced insurers, just as independent agents and consumers do, rather than gauging themselves against other mid-sized insurers. "We were matching up pretty well, but we were lacking that claims piece; it's the most important," Heady says.
In addition to offering direct sales and self-service options on the Web, Imperial has undertaken a revamp of claims processes and technologies to continuously improve the customer experience, and lower costs and premiums. Two years ago, Imperial implemented Mitchell Medical Claims Billing software.
"That made a profound impact on our PIP [personal injury protection] experience," including speedier decision-making about paying liability claims, Heady says. Since then, Imperial also has implemented Mitchell ClaimIQ, an application that systematically guides adjustors through liability assessments, and Mitchell Estimating, which helps users write more accurate and consistent vehicle repair estimates by systematizing parts look up, labor rates, automating calculations and building in auto prompts and inclusions, which helps to contain costs and limit addendums.
"These are tactical tools, but they help us realize our strategy, which is being consistent within our claims organization," Heady says. "In the past, it was all over the board. We are very metrics driven and this comes down to: how does 'adjustor A' compare to the peer group with the same type of loss. They should be very close," Heady says.
Imperial also has improved the customer experience by training recent graduates to become claims adjustors and live up to Imperial's "Guard Values," Heady explains, which include fair dealing, accessibility, reliability and dependability. "The goal is for customers to experience those values every time they interact with a representative. Not only have we tackled this from a technology standpoint, we've approached it from the human capital side. With that, we are getting higher marks from insureds and claimants as well," Heady says.
Imperial commits to contacting customers within four hours after a reported loss, Heady says, and all appraisals are done in-house, rather than through an independent agent. This has lowered its loss-adjustment expense through more accurate estimates. Severity declined 12 percent, Heady says, and the days-to-close has been reduced by more than 40 percent, substantially improving customers' satisfaction (See "Measurable Progress," below).
"We are smaller; we have to be better at something, so we are more agile than the big companies. We are large enough to matter and small enough to care," Heady says. "We are going to have to reinvent this insurance experience for the millennials and make it easier for them to do business with us."
Inside Out: Ohio Mutual
At Ohio Mutual Insurance Group, Dave Grove, VP of product management, says the P&C insurer has several initiatives for improving the customer experience for independent agents and insureds.
Beyond e-Quip'd, the company's online quoting, underwriting and policy issuance application for independent agents, and 360access, its Web portal for agents and policyholders, Ohio Mutual is using predictive analytics to manage rates, drive communications efforts to agents and improve the profitability of the business agents write.
Ohio is very crowded market, Grove explains, with some of the lowest auto insurance premiums in the nation. To make sure that rates are competitive, and that individuals are not subsidizing other drivers, Grove says the company is constantly rating and rerating policies using SAS Analytics.
"We can tell who's going to see what changes, and then roll that out and see how that impacts the agent," Grove says. "That doesn't sound that hard, but it becomes very hard when you're talking about multiple variables being changed, and who's really being impacted." With two, three, four variables or more, he explains, it was difficult in the past to see which drivers would be affected by premium increases, an issue that was compounded by the company's inability to discern which variables were responsible for the rate changes. Those complications disappeared with the implementation of SAS, he says. "Now I can tell exactly who those individuals are. So it's a much better, more intelligent approach."
The technology also has increased transparency with agents, Grove says. In addition to offering agency bulletins, the insurer now offers agents all of its insured listings, so agents can proactively manage their books of business, discuss rate changes or even propose other insurance options.
"In some cases that policyholder is going to leave us, but that doesn't necessarily mean they're going to leave the agency," Grove says. In addition to increasing the profitability of the business and offering proactive communications to the agents, Grove says the company is helping agents identify more profitable business.
"That allows us two opportunities: For the segment that's less profitable, to get an adequate rate; and two, for the group that's already profitable, an opportunity to write more. Maybe we're willing to decrease the margin a little bit, and still remain profitable, but write more of that particular segment."
More recently, Ohio Mutual began an elasticity study to determine how much of a rate increase customers can assume before they leave. "There are multiple characteristics that lead into that," Grove says. "It used to be we would just say the magic number is $50. That's not necessarily true. It depends on the person's circumstances. Certain individuals will assume more, others will assume less," and knowing that can help with retention, which has improved over the past year, Grove says.
"We've taken some very stiff action in the market in terms of wind/hail deductibles, and to only lose a point-and-a-half of retention, speaks to our ability to mitigate rate increases and adequately assign rate. The action we took could have warranted a much greater reduction in retention."
Next, Grove says the company will expand its use of predictive analytics to develop more 'what-if' scenarios, which he says helps the company keep rates low over the long term. "It definitely gives us an operational/competitive advantage," Grove says. "The technology allows us to compete with larger carriers. It helps us price the insured adequately, and by doing so it allows us to offer a competitive rate and product, not only to help the consumer, but also to help the agent retain that consumer."
Across & Through: Philadelphia Insurance
Commoditization and consumerization led Philadelphia Insurance, a commercial property/casualty insurer, to make customer experience a priority, explains Seth Hall, VP of customer service. "We realized people were replicating our products and margin was getting slimmer, so we needed to differentiate ourselves going forward. We started to ask what's next?"
The company always has gathered customer feedback, Hall says, but until the company bought and deployed Confirmit, an online survey application from Confirmit Inc., it was fragmented and largely unactionable. "We needed a better way to capture the sentiment of our customers," Hall says. "We want them to help guide us to what our strategic priorities ought to be."
With the Web-based surveys, Hall says customers can offer feedback from anywhere in the customer life cycle, whether at the beginning of the sales process, during the claims process or anywhere between. "We're typically asking for their thoughts on the transactions, but also: how are we doing as an organization; would you refer us; and are we doing all the right things: yes or no. And if no, why? What are the reasons or barriers to making this a better relationship?"
In addition to offering surveys to customers, Philadelphia extends Confirmit's internal-use dashboards to its employees to drive tactical and strategic decisions.
"We look at it in two ways," Hall says. "We have a well-oiled process that handles tactical items, such as break/fix; things we can jump on fairly quickly. We also have a team of people that responds if the customer sentiment is not positive. We respond to them within 24 hours, and we're doing that to find out what the issue is, apologize if we need to, own it, and then try to figure out and resolve whatever issue."
As a result of the surveys, Philadelphia has made major technology decisions as well. For example, Hall noticed that the company was getting a lot of complaints about bills. "In years past, we were trying to make the case that we needed a new billing system, but it was fairly anecdotal and internally based. We didn't really have anything from our customers specifically stating that. With this program, we were able to show that 32 percent of the negative customer responses were directly correlated to the billing system or billing issues. It was that statistic alone that allowed me to get the final approval on a new billing system, and we're actually in the throes of rolling that out right now."
Another internal change is that the customer now is represented at management meetings, right along with marketing, sales, claims and underwriting. "We brought the 'voice of the customer' in as separate unit. The rationale was to keep ourselves honest," Hall says. "The voice of the customer is there to either validate or expose issues or blind spots that we might have with our service experience."
One of the blind spots was the vertical structure of those various departments, which five years ago acted almost as separate business units, Hall explains. "Customer service should sort of transcend all those different verticals," he says, because customer issues typically spill across departments.
"We didn't have a mechanism, tool or a process to rid ourselves of that. So everyone was just doing what they needed to do within their own specific business units. What this did was try to look at the customer life cycle differently. Their experience is not just with the claims unit or a billing team. It really does run horizontally all the way through, hopefully not but sometimes, to claims."
Philadelphia used the Confirmit tools to create a foundation of data about customer experience, aggregate it and share it across business units, Hall says, which has had a measurable impact on the customer satisfaction. "Our Net Promoter Score went up 4 points from 2012 to 2013, from 51 to 55.2. It was a pretty sizable increase that we were able to correlate to the attention we placed on the service experience, the surveys and the actual results of that Net Promoter Score," Hall says.
Philadelphia's next steps for enhancing the customer experience could include creating multiple voices of the customer, based on data, demographics or profitability, that could be considered separately in management decisions, Hall says, offering customer retention studies as an example. "Typically we're informed when people leave the day they don't renew. Wouldn't it be better to have the leading indicators six months in advance, so that we can get our sales folks some indication that this is a group they might want to spend more time with? It can be incredibly powerful if we do it the right way. That's the next big thing on the horizon."