Customer experience

Before the passage of the landmark Gramm-Leach-Bliley legislation in 1999, several insurers received clearance from the federal government to operate online thrift institutions. Executives with Principal Bank of Des Moines, which opened for business in February 1998, say the brand-name backing of its parent and a growing acceptance of online banking will help it grow to $5 billion of assets by 2005.Principal Bank, owned by Des Moines, Iowa-based Principal Financial Group, had $1.5 billion of assets at the end 2002-compared with $100 million in January 2000. "We had expected, when the initial strategic plan was put together, to be about $100 million at year four," says Barrie Christman, Principal Bank's president and CEO.

Business leaders at American National Insurance Co. checked under the sofa before sitting down to assemble the customer relationship management (CRM) jigsaw puzzle. Why? Because they wanted to make sure they had every piece.First, the business units of the Galveston, Texas-based ANICO defined their CRM vision as precisely as possible. Next, the company selected Pegasystems, a software provider they say has delivered the proper CRM technology for their specific needs. Third, the insurer formed a team of committed customer service employees who meet regularly to share knowledge and guide the CRM effort.

Speed is an important call center objective for American National Insurance Co. because "shaving a minute here or 30 seconds there makes a big difference in costs when you're running a call center," explains Gary Kirkham, vice president and director of planning and support for the Galveston, Texas-based insurer.Yet, flexibility is at the core of the steps that guide customer service representatives (CSRs) through conversations with callers. A key to managing call center conversations resides in workflow-helping the CSR pace the conservation and guide it in the desired direction.

Supporting its more than 12,000 exclusive agents is at the heart of Farmers Insurance Group's CRM initiatives. The centerpiece of this strategy is a branded program called Agency Dashboard, which enables agents to obtain ongoing insights on policyholders' needs.When Farmers agents log onto the secure intranet site, located at www.eagantfarmersinsurance.com, they must key in a user name and password and then are connected to a personalized Web portal that provides real-time data and policy activity of their entire book of business.

Many insurance e-business experts agree that establishing a single source of customer data is a key to making customer relationship management (CRM) succeed. A single source of data produces a unified customer view across the enterprise, in turn enabling insurers to generate a clear and concise profile of customers.Once established, insurers can confidently proceed to configure customer needs profiles, such as realizing specific and changing needs within a mutual fund portfolio. Using analytics, insurers can separate their customers into demographic "buckets" from which they can determine specific needs.

Weak carrier marketing is one reason agents have not flocked to real-time agency-carrier transactions, according to industry sources. "Only a handful of carriers have actually told their agencies these services are up and running," says one source who wishes to remain anonymous. "I get phone calls every day from agencies saying, 'A field rep was just at my office and he didn't know anything about this.'"Carriers haven't publicized their capabilities widely, in part, because they view them as a competitive advantage, says Rick Gilman, vice president for ACORD, Pearl River, N.Y. Although ACORD is making efforts to track carrier initiatives, a comprehensive list of all carriers and the types of real-time transactions they provide does not exist.

Outsouring isn't "news" to the insurance industry. Insurers have been using outsourcers for years for IT projects, such as application maintenance or development to help with legacy problems, small-scale business processes (such as using third-party administrators for claims processing or accounting) and out-tasking small parts but not an entire business process.However, the bulk of insurance outsourcing has tended to be within the IT outsourcing domain. Driven by aging legacy systems and limited resources (time, budget and staffing), insurers have turned to external services providers to help with a wide variety of IT initiatives, including infrastructure, networking, and application development and maintenance.

When GE Capital announced to the world that it had saved $400 million in 1999 by applying six sigma principles throughout its organization, Marla Friedman listened.Then, as senior vice president of operations at Allstate Financial, she shared this impressive news with her boss Tom Wilson, the firm's president at the time.

The term "insurance card" is often equated with health insurance coverage, but a small and growing legion of insurers are issuing plastic to policyholders for more than just a doctor visit.Property and casualty insurers are finding advantages in dispensing branded stored-value debit and credit cards to customers for bigger ticket claims, particularly catastrophic homeowners claims.

Insurance companies have a unique set of challenges to overcome in creating efficient operations. Because of increased competition, insurers are being forced to narrow their focus to the core competencies at which they excel. At the same time, carriers must offer greater product and service offerings and faster distribution to meet increasing customer demands.And, because service industries such as insurance are so dependent on information, the increasing digitization of data is forcing these companies to redefine how they operate. Therefore, to be successful-and to prosper-in this digital environment, organizations must reshape their business models.

Understanding how and when consumers want to receive financial advice is an important aspect in gaining the upper hand in the competitive field of financial planning.By implementing automated systems to expand advice delivery channels, life and annuity insurers can remain competitive with other financial services institutions.

Since buying Acordia Inc. in 2001 and creating the nation's largest bank-owned insurance agency, Wells Fargo & Co. has not been a big player on the agency acquisition scene-but that should change, thanks to the deal-minded focus of the agency's new head.Acordia intends to further tie itself to its San Francisco bank parent through continued cross-selling and acquisitions in the bank's West Coast stronghold, according to the agency's new chief executive officer, Kevin W. Conboy.

In the insurance industry, a great deal of emphasis is placed on customer relationship management, and rightly so. But as Matthew Piroch, chief information officer for Highmark Life & Casualty Co. sees it, CRM would be difficult to achieve without ERM-employee relationship management.Pittsburgh-based Highmark Life & Casualty is a provider of life, workers' compensation, stop-loss and disability insurance to 2.2 million individuals through group policies. The company was established in 1990, with Piroch coming on board in 1998 as manager of relationship management. He was appointed CIO last May.

When Blue Cross Blue Shield of South Carolina wanted to streamline its call center operations to improve productivity, it did not re-invent the technological wheel. Instead, the Columbia, South Carolina-based insurer implemented state-of-the-art software to leverage its existing IT systems.The intuitive, single browser-based interface simplifies data gathering and interpretation for its more than 350 customer service representatives.

It seems that everyone is jumping on the wireless bandwagon. From cell phones to PDAs to wireless pagers, both professionals and consumers are seeking new, more efficient means of communication. The fast-paced growth of wireless technology in other industries hints at the tremendous potential benefits these solutions may hold for insurance.With wireless technology, agents can have a continuous connection to their information resources, management staff can monitor business from any location, or instantly respond to time-sensitive communications, and clients can look forward to faster response times. That means support issues that once took 24 hours and two or three phone calls can now be resolved in a matter of minutes via wireless e-mail.

Recent outsourcing deals have caused a resounding buzz within the executive suites of many insurers. Prominent vendors are proposing seductive deals with no up-front cost, immediate and dramatic savings, and most recently, computing on demand. Some executives see it as a silver bullet that will drive substantial and sustainable cost reduction along with measurable improvements in performance.Far from a new idea, this is a rocky road that many companies have been traveling down for decades. History has shown that for every raging success, there is a bone-crushing failure and most deals fall in between these extremes.

As banking companies from coast to coast buy agencies to get into the property/casualty insurance business, Fifth Third Bancorp, for one, is getting out.In late December, the Cincinnati-based regional banking company announced it agreed to sell its property/casualty insurance operation to Hub International Ltd., an insurance agency based in Chicago, for an undisclosed amount of cash.

Back in the prehistoric 1990s, The Hartford Financial Services Group applied technology the old-fashioned way. It used a vertically oriented approach to solve problems in discreet business silos.Today, the $15-billion investment and insurance company is taking an enterprisewide viewpoint when it applies information technology. This new approach ties together disparate information technology offerings, simplifies some of the complexity of e-business and makes it easier for distributors to sell and service The Hartford's insurance products.

Over the past year, The Hartford Financial Services Group has launched several technology initiatives aimed at making life easier for distributors. Those efforts will continue this year as new features and functionality are added to The Hartford's eService and eSales programs.Last year, the company introduced the industry's first premium audit search tool available to agents through the Internet. This online tool augments the company's policy, billing and claims service capabilities available to agents through its Electronic Business Center (EBC), a secure Web extranet built exclusively for independent agents that represent The Hartford. Using this tool, agents can use the Internet to quickly determine the outcome of a commercial customer's audit and the reasons for any premium adjustment.

The insurance industry has made great strides in recent years in transacting insurance electronically. Yet there is no doubt that the barriers that still exist, whether real or perceived, must be toppled to allow insurers to join other industries in the pursuit of technological advances that provide greater choices and better service.State insurance regulators have taken the lead in addressing the barriers to electronic transactions. In the last few years, clarifications regarding electronic transactions were reviewed and guidelines issued with the release of a model bulletin by the National Association of Insurance Commissioners (NAIC). The NAIC model stated that electronic transactions should be treated no differently than paper transactions.