Filed Under:Agent Broker, Agency Technology

Insurers face new challenges in the age of engagement

Three steps to wow customers

Many insurers remain reliant on paper-based business processes. (Photo: iStock)
Many insurers remain reliant on paper-based business processes. (Photo: iStock)

Today’s digitally savvy consumer has forced the insurance industry to take a hard look at traditional methods of customer engagement, risk mitigation and coverage. It’s the age of engagement, driven by improvements in operational processes, mobile access to products and services, and personalized customer experiences.

Achieving these advantages requires a smart plan, but as many as 70% of life and P&C insurers are struggling with the process, citing a lack of confidence and the absence of a clear vision of the critical elements.

At the same time, as many as 74 percent of insurers believe that some part of their business is at risk of disruption from InsurTech startups moving into their market.

In this environment, it’s important to recognize the path to digitization varies from one insurer to the next. However, there are a few consistently strategic steps that can unveil the right digital transformation for your organization.

Related: 5 hallmarks of insurance industry digital leaders

Digital transformation drivers

Less than one-third of life insurance carriers and about 40 percent of P&C carriers allow customers to start a transaction in one channel and complete it in another. This should provide significant inspiration to tackle digital transformation, as the competitive landscape is proving to favor insurers with digitally integrated channels and systems. These digital platforms provide stronger engagement, personalized customer experiences and faster response times that create a competitive edge when facing both traditional carriers as well as non-traditional distributors.

Related: 9 ways insurers can drive more value from technology investments

Cost savings and efficiency gains are tangible as well. Minimizing manual effort translates into error reduction, reduced customer fraud and false claims, and an overall reduced cost per claim.

Digital processing and automation also create visibility and an audit trail that supports compliance needs and prevents suspicious activity, incorporating business rules and using data sources effectively to ensure regulatory compliance.

Keep reading for three essential steps each insurance organiztion should take on the road to digital transformation.

The graphic below shows a continuum of insurance propositions that range from 'Not Digital' to 'Extreme Digital.' The Not Digital status was common for most insurers several decades ago, when everything was produced through a paper-based model. For many insurers, it is still a reality. (Graphic provided by Kofax)

The graphic below shows a continuum of insurance propositions that range from 'Not Digital' to 'Extreme Digital.' The Not Digital status was common for most insurers several decades ago, when everything was produced through a paper-based model. For many insurers, it is still a reality. (Graphic provided by Kofax)

A Process Maturity Model helps assess your organization’s current digital state, using four core business functions and five-step process within each function. (Graphic provided by Kofax)

A Process Maturity Model helps assess your organization’s current digital state, using four core business functions and five-step process within each function. (Graphic provided by Kofax)

Step 1: Assess digital maturity


This is a critical first step is to determine which areas need improvement, prioritize the areas you want to digitize first, and start developing an end-to-end digital transformation plan. A Process Maturity Model (pictured above) helps this exploration by assessing digital maturity across the organization.

Related: 6 steps to take to evaluate cyber risk

The Process Maturity Model is helpful for assessing your organization’s current digital state, using four core business functions, each with a five-step process. The boxes to the right of the five steps represent insurance tasks that can be measured against a continuum ranging from Not Digital to Extreme Digital. Moving from manual to full digital means:

— Eliminating paper

— Automating processes

— Adding and connecting digital channels (mobile, online, email, social media, etc.)

— Engaging the customer in self-service and proactive, personalized communications interchange

— Integrating data between insurance systems and external sources

— Automating regulatory compliance and audit trails

— Analyzing processes to determine "what happened," anticipate "what could happen," and "what should be done" 

Key takeaway:

Be sure to include both front- and back-office operations in your evaluation. Focusing solely on the front-office customer experience results in missed opportunities to enhance the customer journey, reduce costs, stave off the competition, and maintain compliance. Optimal transformation looks at the big picture, digitizing the entire process from initial customer engagement all the way through policy maintenance and claims processing.

This graphic represents the insurance policy lifecycle, supported by its core business functions of New Business, Underwriting, Policy Maintenance and Claims. Each core function lists the five common steps or phases of any business process: initiating processes collecting data; evaluating information; interacting with customers regarding the decisions made; and updating and closing the transaction as complete. (Graphic provided by Kofax)

This graphic represents the insurance policy lifecycle, supported by its core business functions of New Business, Underwriting, Policy Maintenance and Claims. Each core function lists the five common steps or phases of any business process: initiating processes collecting data; evaluating information; interacting with customers regarding the decisions made; and updating and closing the transaction as complete. (Graphic provided by Kofax) 

Step 2: Prioritize opportunities for digital engagement

The digitally-enabled insurer is poised to strengthen its established competitive advantage. These firms can better meet customer expectations for a seamless digital experience, while capitalizing on new business opportunities like usage-based and telematics-led insurance, real time quoting, comparative raters, and comparison sites. The shift empowers cost reductions across the enterprise, better customer service, and advances like loss mitigation even before an event occurs. Yet, there is not just one correct path to transformation, and the ideal steps depend on your firm’s digital maturity and readiness to strategically redesign business processes.

Related: Insurance 2017: Priorities for innovation, automation and transformation

Using a Business Process Matrix  can help you focus on core business functions within each stage of the insurance lifecycle. An ideal strategy is to move first on operations that offer the greatest potential impact on your results and/or your largest customer base. For example, look at five common steps that consistently occur within each business function: processes are initiated, data is collected, requests are evaluated, interaction occurs with the customer, and the process is ultimately completed and closed.  Use the matrix to define intersections where customers decide what type of company you are, competition defines the threat you pose, and you have the opportunity to influence these views.

Related: The future of insurance: A look at the risk landscape of 2025

When developing your transformation plan, start with the customer-facing processes (or intersections in the Business Process Matrix) across all channels and lines of business that:

—  Have the greatest impact on your organization’s results

— Impact the largest customer bases

— Help you keep pace with or outrun competitors; contribute to low Net Promoter Scores (NPS) 

Key takeaway:

Consider the general culture of your firm as well. For example, are you reluctant to implement full digital immersion, or have you embraced the idea of digital transformation as a go forward strategy? It’s hard to dive head-first into new technologies if company personality requires a different approach. Recognizing where your organization falls on this continuum will help you plan most comfortably. For example, small yet strategically important wins may be ideal, keeping deployment timelines in check and more easily countering resistance to change.

RPA is just one element of digital transformation, and it radically changes how customers, employees, partners, and others work together in critical business processes. RPA mimics the repetitive tasks handled by employees. For instance, collecting and integrating data among external websites, portals or various desktop applications. Any task where a human interacts with an application or data source can instead be handled by a software robot. (Photo: iStock)

RPA is just one element of digital transformation, and it radically changes how customers, employees, partners, and others work together in critical business processes. RPA mimics the repetitive tasks handled by employees. For instance, collecting and integrating data among external websites, portals or various desktop applications. Any task where a human interacts with an application or data source can instead be handled by a software robot. (Photo: iStock)

Step 3: Embrace the right tools


Assessing your digital maturity and prioritizing opportunities using the Business Process Matrix enables a clear, overall perspective on long-term automation. These are vital exercises to undertake before adding a digital solution to any business process. With a company-wide consensus of priorities for transformation, next up consider the best digital options for your particular needs. 

Mobile Capture enables value for both policyholders and insurance professionals. Customers can apply for insurance policies or initiate claims anytime, anywhere, while claims adjusters use the same technology to submit forms, reports and images for each claim. Application and claims processing is fast, with a sharp reduction in manual data entry errors and postal costs. Consider Progressive Casualty Insurance, a U.S. carrier that was one of the first to launch a mobile photo quotation function. By 2013, nearly one in five of Progressive’s customers had their first interaction with the firm through a mobile device. When Progressive launched mobile photo quoting in one state alone, the company saw an 8% uplift in overall quoting activity.

Process Intelligence offers a new take on analytics by helping insurers understand and remedy bottlenecks in business workflows in real time. Bymanaging and directing business processes from marketing, sales and distribution to the claims/policy process, insurers also benefit from a unique understanding of how the “way” processes flow impacts key business metrics.

Customer Communications Management (CCM) enables timely communications such as claims notifications, policy briefs and coverage descriptions, strengthening customer relationships by sharing relevant information fast and efficiently. Near-real time tracking and status updates, alerts and personalized communications are appealing to customers, while employees are enabled to instead focus on the most strategic business tasks.

Robotic Process Automation (RPA) creates a digital workforce, eliminating the manual, repetitive tasks that lower productivity and result in costly errors. These smart software robots enhance the customer experience by improving processes, for example automating the entry or retrieval of information from any system including application of sophisticated business logic to transform data, handle exceptions, and make decisions for competitive advantage. In an insurance setting, RPA facilitates price matching, coverage comparisons and customer call center experiences, as well as streamlining the claims process and ensuring regulatory compliance. Employees also benefit, and are typically happier in a work setting that allows them to focus on the more productive aspects of their jobs rather than repetitive, data gathering activities.

Case Management integrates with CCM functionality to increase efficiency and functionality of case management processes and customer engagements. Managing caseloads is more efficient and profitable with the help of systems such as Business Process Management (BPM) and Enterprise Content Management (ECM), for example converting paper documents to digital versions, tracking case status, assigning and re-directing workflow, and enabling collaboration in a seamless decision-making process.

Related: Still using paper? Here are the 5 pillars of a digital agency

Investing in the wow factor


Digital transformation should enable a personalized experience for policyholders — they enter less data and receive process confirmations and alerts from an automated platform. The customer experience should include near real-time communication that allows for self-service and support from any channel they choose. The insurance organization wins as well, leveraging business insight designed directly into process improvement and compliance initiatives. Business decisions are better-informed and regulatory compliance is ensured through streamlined yet consistent operations.

Related: Tackling automation challenges in the insurance industry

For example, a global insurer developed a mobile app allowing corporate plan members to submit insurance claims, find the nearest clinic and compare treatment costs anywhere, anytime. This increase in automation reduced claims processing time by 50 percent, and was positively received by nearly 4,000 members who registered for the app in its first 90 days.

These kinds of transformation technologies deliver valuable competitive advantage in a crowded insurance market, staving off new technology entrants looking to entice away your customer base. But successes like these aren’t possible without significant digital infrastructure, strategically customized to an organization’s priorities, culture and customer base. Today, 35 percent of insurers are heavily investing in digital technologies as part of their overall business strategy, while 29 percent are investing in selected business units only. It’s just the beginning of insuring a digital future – the unique path to your own digital vision requires a committed, coordinated change across the organization, including operations within governance, technology and data. Short-term wins and long term transformations are each part of the puzzle, and the approach depends entirely on your leadership and willingness to embrace a digital future. Just remember that today’s customers are looking for a real wow factor – which presents an opportunity for you to invest and deliver before your competitors beat you to it.

Chris Edgington is a senior solutions consultant in the Financial Services division of Kofax. He can be reached by sending email to chris.edgington@kofax.com.

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