Insurance has traditionally been known as a risk-averse industry, and thus, the last to employ new technologies. This characteristic is more a comment on the old culture and way of doing business than really being risk-averse. Customers are now forcing insurers to deal with change at a rate that is faster than they are comfortable. Customers have become a disruptive force in insurance.
When I was on an enterprise architecture team at a large insurer, the business drivers always included lower TCO (with respect to IT), improved ease of doing business and business agility. However, ease of doing business was primarily focused on independent agents, CSRs and underwriters. The actual policyholder was an afterthought to the policy process. Insurers created better UIs and in some cases enterprise portals to allow their agents, CSRs and underwriters easier access to their systems and better collaboration between these groups. While the policyholder was important, the agent was the insurance customer and the policyholder was the customer of the agent.
Then insurers opened up Pandora’s Box and enabled policyholders direct access to submissions, claims and, more recently, self-service. The problem is that their systems were not designed for policyholder access. In addition, these customers have a level of expectations most insurers are not ready for. Almost overnight, insurers realized that they had entered a world where the company no longer owned their brand, they could only manage it.
Customers own the brand.
Two examples show this change very dramatically. First is the well-known
A friend recently told me of a Moen faucet that they had bought. They didn’t get around to actually installing it until months later and it did not work. When he called, he was told that the warranty had expired and there was nothing that they could do. He tweeted his experience and within 10 minutes, received a tweet from Moen asking him to call them to allow them to fix the problem. Within hours, a service rep was at his door with a new faucet that was quickly installed. All Moen asked is that he tweet his satisfaction about the fix which he was happy to do. Moen obviously was monitoring the social network and acted quickly to manage their brand.
While neither of these experiences have anything to do with insurance, they show the power of the customer. The same customer that's now demanding the same level of service they get from other industries. They couldn't care less about legacy systems. They couldn't care less about integration issues and complex environments and systems. They know what they get from other places and expect nothing less from insurance.
CIOs now state that customer experience trumps features and functions when selecting vendor systems. They are willing to go with 80 percent of their desired features and functions if the vendor can deliver an excellent customer experience. These statements come from two CIO panels I have recently viewed, one in insurance and one outside of insurance. The customer is turning the insurance business model on its ear. While agents, CSRs and underwriters have put up with the old status quo with small improvements, insurers that do not quickly adapt will become extinct. It has been said that the problem with insurance is dinosaurs lay dinosaur eggs. The customer ice age hit quickly. Which insurers will evolve at this new break-neck pace being demanded by the true customers and which will slowly die off?
This blog has been reprinted with permission from
Benjamin Moreland is a senior analyst in Celent's insurance practice, and can be reached at bmoreland@celent.com.
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