giuliano altamuraFinancial services business unit manager, Fincons Group

giuliano altamuraFinancial services business unit manager, Fincons Group

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Consumer behavior has changed fundamentally over the last few years and it has redefined the criteria by which people judge their insurance producer. Today customers expect choice, transparency, an “experi-ence,” consistency across on and offline channels, customization, self-service (but with the option of human interaction when needed), simplicity and above all, flexibility. There is a widening gap between expectation and reality, and agents, brokers and carriers must work to close the gap by reinventing themselves as digitally minded businesses to fend off the competition.

It is important to note that the digital advantage should not be considered purely from the customer perspec-tive. Customer-centricity, building loyalty and retention are all key aspirations of digital transformation, yet it is equally vital to recognize that embracing digital can bring productivity and efficiency gains on a transformative scale to many other internal functions within the business, such as automating the claims process to reduce costs. A recent Gartner report about modernizing legacy core systems emphasizes the need for insurers to focus invest-ment as much on the back-end as on customer interfaces:

“Companies need agile back-office operations that will allow them to achieve digital initiatives, including faster time to market for new digital insurance products and the ability to support digital channels.”1

MobileWhich digital technologies should be the focus of atten-tion? First, mobile should be a priority. Investment banking firm Goldman Sachs predicted that overall spending via mobile, including smartphones and tablets, will reach $626 billion by the end of the year, up from $204 billion in 2014.2 This means that m-commerce represents almost half of all internet sales, illustrating how prevalent mobile has become to make transac-tions, not simply to conduct research. In fact, a study by an auto insurer showed that mobile consumers are 17 percent more likely to complete a full quote request form than those using desktop.3 Further, the average age of purchasers via mobile was revealed in the research as 29 (higher than often assumed).

It is clear that suppliers of goods and services across all industries will be penalized if they cannot provide apps

How mobile, AI and the omnichannel model will evolve

The digital imperative

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and mobile-optimized websites that are aligned with the contemporary demand for intuitive, user-friendly, intelligent interfaces. This is particularly the case when it comes to the younger generations for whom web and mobile are the default modes of communication. The millennial audience is likely to feel alienated if their supplier does not interact with them using the latest systems, ideas and business models, or if they are not offered a tailored service based on their personal preferences.

Apps not only tap into the digital consumer’s desire to research and buy policies on their mobile devices, but also present an ideal opportunity for the insurer to deliver other parts of the insurance lifecycle such as renewal reminders, claims reporting and even to offer value-added services that help to foster customer loyalty and engagement. These could include, a “find-my-nearest” directory of auto repair workshops.

Artificial intelligenceArtificial Intelligence tends to grab the headlines when it comes to digital technologies, probably because it does not feel so long ago that such devel-opments belonged to the realm of science fiction. When Gartner made the prediction back in 2011 that, “by 2020, customers will manage 85 percent of their relationship with the enterprise without interacting with a human,”4 it seemed hard to believe. However, our perspective has changed. Perhaps the most widely known application is chatbots, in which customer service queries are automated in a way that replicates real-life instant messaging—personalized and immediate. In the near future, chatbots’ capabilities to understand and mimic human conversation will likely reach higher degrees of sophistication. However, AI is being extended to areas other than customer query automation by the insurance pioneers; it is being harnessed at a stra-tegic level to analyze vast volumes of marketing data, mapping out customer behaviors, pinpointing needs and making suggestions as to how those needs can be met.

This unprecedented overview of the organization’s data provides a wealth of commercial insights, helping decision makers to spot where cross-selling or up-selling can best be applied, and delivering predictive analysis to reveal the most profitable client segments. It is clear that AI will reach beyond marketing; various industry commentators are predicting that large proportions of under-writing will be handled by AI in the future. A recent research report into the ways that America’s top five insurance companies are using machine learning notes that, “Data interpretation through machine learning will be an impor-tant application in the coming years for identifying business opportunities in an evolving market.”5

Omnichannel modelWithout a doubt, AI and the rise of mobile are part of the inexorable shift away from traditional channels, such as contact centers and face-to-face agent meet-ings toward digital. Carriers, agents and brokers must be geared up for these technologies. Yet, the fact remains that even the most tech-savvy policyholders do not want to interact with their insurers exclusively through digital chan-nels. In reality, we still want to connect with a real human being when it suits

us. This leads us to the importance of the omnichannel model. Typically, consumers initiate policy research via one channel, such as mobile, and then progress to purchase via other means, for instance reaching out to a contact center by phone. Simi-larly, a customer service conversation might start over social media or via a chatbot, and then be transferred to email or phone, as appropriate. Naturally, there is a reliance here on having the right technology (as well as mindset) to enable this smooth transition, providing a seamless, inte-grated customer experience regard-less of the channels they choose.

Of course, these radical shifts in communication styles and behaviors hold as true for agents and brokers as they do for direct customers, with younger agents expecting to engage with digital tools as a matter of course. Traditional carriers need to reflect this in their relationship with intermediaries, specifically by modernizing agent tools and portals, which are vital to appeal to consumers and to compete with digi-tally native e-brokers. At a practical level, many agents share screens with customers, so from this perspective it is imperative that they are able to offer a consumer-friendly digital experience. We can assume that the majority of agents are equipped with mobile devices by their carrier, but generally, fewer are given access to other digital technologies such as tablets and web chat.

The futureIn reality, take-up of digital has blurred the lines between the role of the agent and the carrier, at least from the policyholders’ points of view. Taking a real-life scenario, customers increasingly want to “self-serve” so they want to make changes to their

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policies directly with the carrier (e.g., using online means to update their address). They will be frustrated if they find out that this change is not accessible to their agent. This single view of the customer is often not possible, and all parties are the losers if the customer feels that the process is disjointed. In many cases, this failure takes place because the technology is not in place to enable data sharing and collaboration; but attitudes also have to change to avoid either party attempting to own the entire customer relationship, which is out of kilter with today’s self-service world. It is increasingly accepted that all stakeholders in the insurance ecosystem need to reassess their value proposition in the eyes of the customer and collaborate in new ways to deliver the multi-channel experience.

With the right underlying tech-nology that draws together data from back-end (often legacy) systems into one data repository, the “single customer view” is achievable, which is why the majority of insurers currently are investing in end-to-end customer relationship manage-ment. This infrastructure enables brokers to have immediate access to all policy purchasing informa-tion and behavioral data they need to help them make appropriate, timely offers—and provide a basis to upsell more widely to customers. Often this means that they can start to provide a greater range of custom-ized insurance services as opposed to standalone policies, which ulti-mately translates into more valuable and profitable customers. In many cases, experienced third-parties are brought in to manage the transi-tion to the modernized IT capa-bilities that underpin digitalization,

whether that is to guide implementation in-house or to outsource the process in its entirety.

Digitally underwritten insurance is the future, and insurers must take action now to bring systems, processes and strategies into the digital age. This is imperative not only to heighten their own operational efficiency, but to foster smarter, data-driven, omnichannel relationships with direct customers, agents and brokers.

Altamura is financial services business unit manager at Fincons Group. Before joining the company he worked at Accenture for almost a decade and gained a strong foundation in integration architecture, multichannel architecture and application development for the web and for call centers, mainly working on CRM projects in the banking and insurance sectors. He took responsibility for the Finan-cial Services Business Unit, to help develop the business in the fields of banking and insurance in 2011.1 Gartner, 2016 (http://gtnr.it/2t8UIdh)2 Digital Commerce 360, 2018 (http://bit.ly/2HUh05U)3 EverQuote, 2015 (http://bit.ly/2oBhndA)4 Gartner, 2011 (http://gtnr.it/28JUjCp)5 TechEmergence, 2017 (http://bit.ly/2jbmjWq)

—Reprinted with permission from PIA Management Services Inc.—