future-proofing insurance processesareas throughout the insurance industry in recent years....

FUTURE-PROOFING INSURANCE PROCESSES

The innovations of today are the best practices of tomorrow

Contents

Introduction 3

Customer experience 4

• Zurich 5

• Avanti 6

Mobile technology 7

• Examples 8

Big Data and analytics 9

• The promise of Big Data 10

• Big Data and Privacy Regulation 11

Conclusion 13

Future-proofing Insurance: The innovations of today are the best practices of tomorrow

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Introduction

The importance of customer experience, data connectivity and ease of access continue to drive innovation across all industries. There have been a number of projects and efforts invested in these areas throughout the insurance industry in recent years. Insurance companies have long understood the importance of stakeholder experience, a move towards mobile platforms, and analytics. Add to these today’s exploding interest in ‘big data’ and widespread concerns over privacy, and it simply heaps more pressure on companies to formulate comprehensive strategies in each of these key areas.

‘Disruptive Innovation’ is the word of the day for many embracing this new digital future, and for those not yet on board, as more and more companies make the leap to mobility, and multi-platform offerings, a word of warning: what you consider innovative today, will be expected of you tomorrow.

This white paper will offer a snapshot of some of the current projects and trends within customer experience and mobile technology, and will look at the potential benefits and risks of big data and privacy regulation.


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Customer experience

Customer experience is a broad term, and one that has become a focus for every service industry today. Many elements make up the customer experience, from the obvious (customer service, call handling, complaints) to the perhaps less obvious (how accessible are you? Does your website work? Can the customer reach you on their own terms?). In short, the customer experience is a tapestry, made up of the many, many threads of interaction your customer will have with you over the lifetime of their policy. Get one element of this experience wrong and the relationship can quickly sour.

It seems that in recent times, Insurance companies have found it challenging to address these stakeholder needs and expectations. According to market research body, Consumer Intelligence, “The circle of trust between insurers and consumers is broken,” so what have some insurers been doing to try and fix this?


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Zurich

One big player in both personal and business insurance, Zurich, has been paying particular attention to the current disparity between customer expectation and industry deliverables. Following extensive market research, the company have adopted the ethos “delivering help when it matters so that customers feel valued and taken care of.” They summarize this as ‘customer centricity’ which, as you know, is the practice of putting the customer at the center of your business processes. In Zurich’s case the customer wasn’t just the end user but also the shareholder.

Using a measure known as the TRI*M index, Zurich set out to realign their business practices with the wants and needs of their customers. Ensuring resources were redistributed with a focus on the areas most needed by their customers. This included making sure their products and services were available when and where the customer wanted them, retraining staff and enhancing performance. Following this, the company also set up new incentives programs focusing on the measures and expectations identified during their market research.


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Avanti

Travel insurance group, Avanti, pride themselves on the high level of service they provide their customers, so much so that they host an annual customer service awards ceremony for staff across the group. The company specializes in offering travel insurance to elderly and infirm customers, and recognizes that each customer deserves to be valued and treated with dignity.

Before call center staff are able to begin taking calls from customers, they undergo a rigorous 2 week training course, followed by an examination. Only if staff is able to achieve 90% in the exam are they then able to speak to customers. The company summarizes their approach thusly:

• Treat customers with the dignity and respect they deserve

• Be polite and kind at all times, treating confidential information with utmost consideration

• Refrain from using insurance jargon or slang and explain fully anything that the customer does not understand

• Taking their time with each and every call: meeting all insurance needs is more important than the duration of the call

• Making the sales journey straightforward, comfortable and transparent for the customer, keeping in mind their demographic


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Mobile technology

Why is mobile so important? Because it’s where the customers are. There are currently more than 1 billion smartphones in circulation today and that’s expected to double by 2015. According to research from SDL's 'Five Truths for Future Marketers' survey, 58% of Millennials expect to engage with a company whenever they choose, via whichever channel they want.

There are already a number of well documented innovations in this space, particularly in the application of mobile technology. While the words ‘cool’ and ‘insurance’ don’t usually go hand in hand, many of the implementations are genius and yet pure simplicity in their concepts.

The key is to look beyond the obvious – registration and purchase of your product – and cast the net wider, looking towards the ancillary tasks involved in maintaining and utilizing an insurance policy.


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Examples include:

Policy/Service management: There are numerous examples of these mobile apps on the web. The idea is simple, purchase a new policy or manage your existing policy wherever you are. This is particularly useful in certain scenarios – as a driver you may want to use your policy on the road, calling roadside assistance for example if you break down. Examples include GEICO, USAA and Humana.

Home galleries: Anyone with home insurance will know that you’re advised to keep a documented, pictorial inventory of your belongings in case a future claim should arise. With camera having made the jump to mobile over a decade ago, it only makes sense that your home inventory should do the same. A good example of this technology put to use would be the Liberty Mutual Home Gallery. And if your business had already made or is considering making a move to mobile, including similar functionality could make the painful process of taking inventory much easier for your customers to manage.

Toolkits: MoveTools, a mobile app by insurance provider State Farm, is a simple example of the ‘extras’ an insurance company can provide the customer to generate further goodwill and loyalty. The app, available on iPhone and Android, is a move planner, designed to inventory and organize your personal items ahead of a house move. With tools that allow you to sort items by room, and generate printed labels for boxes, it aims to simplify the process for the end user. The labels also make use of QR codes – adding another mobile flavor to the service it provides.


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Big Data & Analytics

Eric Schmidt famously explained at Google’s 2010 Atmosphere Convention, “There were 5 exabytes of information created between the dawn of civilization through 2003, but that much information is now created every 2 days.” Whether or not you believe the accuracy of Schmidt’s oft-quoted statement, it’s a clear indicator that big data is big news. People are generating more information today than at any other point in human history.

Some industries have already begun to capitalize on this information; naturally media companies lead the way: Facebook target their ads, Netflix are able to provide accurate recommendations and Google can modify their search results based on your own views and user history. Other industries that are traditionally less tech-savvy have also been minding and commoditizing this data for a number of years, we’ve all heard the story about Target being able to tell you your daughter is pregnant before she does, right?


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The promise of Big Data

The promise of Big Data for the insurance industry lies in its scope, accuracy and accessibility. A unified analytics system can give your company a global overview of your market and population models the size of which has never been seen before.

With this birds eye view, insurance companies are able to accurately monitor the financial implications of any number of actions or events including floods, earthquakes and other natural disasters.

At a micro level, insurance companies will more accurately be able to assess business and clients based on their history and as a result shield themselves from potentially toxic clients and market events.

A PricewaterhouseCoopers report, predicts that Big Data can irreversibly change the commercial insurance model:

“Carriers may no longer need to compete on price; they instead may be able to assess the risk of individual customers based on their actual behaviors. […] Additionally, commercial insurance increasingly will be able to focus on providing customized, flexible products and value-added services that involve working with the clients to proactively avoid or reduce losses and manage risks.”


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Big Data & Privacy Regulation

The volume and variety of data now openly available opens industry up to an unprecedented number of opportunities, and while the idea of analyzing customer data is anything but alien to insurers, there is still a mass of untapped potential in this rich crop. Naturally the conversation around Big Data veers into a conversation on privacy, and in the wake of the Edward Snowden NSA revelation last year, never have people been more mindful about their online data and privacy. This is something the insurance industry needs to be aware of; add to that the fact that privacy regulations, while still horribly outdated, are slowly pushing forwards, and the arena is filled with potential traps.

In 2012 the Obama administration released a blueprint to protect our rights to privacy. The Consumer Privacy Bill of Rights outlined comprehensively the importance of data ownership, and that a person would hold ultimate control over any data that made them personally identifiable. Currently the document serves as a recommendation; it would need to pass through Congress to become law and timeframes and predictions on the likelihood of this occurring are sketchy at best. However the White House continues to hold consultations on the framework and the impact big data may have on it.

Aside from home-grown regulation, it should be mentioned that European legislation can also have an impact. For example Solvency II, incoming regulation designed to ensure the financial security of insurance companies in the wake of the financial crisis, create something of a legal obligation for firms to invest in data.


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Solvency II will affect U.S.-based insurance companies that are subsidiaries of European insurance companies and American insurers who may have subsidiaries on the continent. Beyond this, Solvency II is also expected to influence any upcoming U.S. industry regulation. Solvency II has three core components. The first specifies quantative requirements for solvency capital, the second outlines qualitative assessments such as Own Risk and Solvency Assessment (ORSA), and the third established a regulatory requirement for reporting and public disclosure.

The potential risk to U.S. companies lies in the accuracy and reliability of data. The accuracy of the required risk calculations relies on the accurate input of data, necessitating a strong focus on the processes and procedures to ensure the data is sound and of high quality. If the quality and processes are lacking, businesses run the risk of ring-fencing too much of their capital, which in turn will negatively affect profitability. The flipside is that and underestimate could leave them with inadequate reserves.


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Conclusion

For insurers to positively improve their image with customers and shareholders and thrive in our digitally connected, data driven world, there are still a multitude of challenges and for those, a multitude of possible solutions. The worst possible decision a company can make in this landscape is not to pursue change, in favor of the safety and comfort of the status quo.

However change for change’s sake can be equally as damaging. The current mood seems to be one of discovery – research what your customers and shareholders want and expect, and then look to what tools are available to you to meet this expectation.


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Hear from over 20 business leaders who will teach you how to:

• Ensure your executive peers engage with process opportunities – and move OPEX from cost to value driven

performance

• Identify exactly which of your business processes actually add value for your customers

• Use process as an enabler for change in the business

• Implement real-time claim segmentation and model outputs to optimally assign resources and standardize processes

• Use BPM tools to deepen customer relationships while achieving greater visibility across complex processes and operations

• Measure process and combine process intelligence with business analytics

• Using Voice of the Customer to enhance the customer experience

• Develop a more self sufficient operational excellence infrastructure through training, new systems and ongoing management

• Increase the visibility and accuracy of data for improved decision making across the organisation

• Sustain business process excellence in complex risk environments

www.operationalexcellenceinsurance.com/

Execution excellence is no longer optional. Your customers demand it. The insurance industry is currently facing unprecedented operational, regulatory and economic pressures. The challenge for process professionals? How to have a measurable impact on business performance and the customer experience while keeping up with the speed of innovation, technological advances, unprecedented regulatory pressures and data proliferation. So the timing for PEX Network’s Operational Excellence in Insurance forum could not be better. Join us October 27th- 29th in New Jersey for two days of innovative and inspiring keynotes and case studies that will help you build a framework that includes the tools, methodologies and organisational structures to help you achieve execution excellence.

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http://www.operationalexcellenceinsurance.com/

http://www.operationalexcellenceinsurance.com/

About PEX Network

Join 95,000 + customer experience and process

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PEX Network is a free to join online network, with a library of multimedia resources from top executives on BPM, Operational Excellence, Lean Six Sigma, Continuous Improvement and other process excellence related topics. Becoming a member is easy and lets you instantly tap into insight and information from your peers from around the world!

In addition to online resources, PEX Network organises 30+ targeted face-to-face events globally per year with industry specific focuses on Financial Services, Telecoms & Utilities, and Energy. We also hold major cross industry summits on process excellence in Orlando, FL (PEX Week) and in London, England (Process Transformation Week) every January and May.

What are you waiting for? Join your peers and get networking!

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future-proofing insurance processesareas throughout the insurance industry in recent years....

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