Evaluating CRM: Many Hurdles Remain For Carriers

One did not return our request for comment by press time.

"CRM has failed at the carrier level," said Jack McMahan, president and chief executive officer of Baetis Inc., a consulting firm based in Oklahoma City, Okla. "They view it as technology, but it is not technology. Companies expected to implement the programs and that it would grow smart enough to link the data. It cant."

"Many players are ready to call CRM dead, but I believe it has not fully been born yet," said Michael J. Bernaski, partner with Accentures Insurance Industry Group based in New York. "I think we are in the very early days in really understanding CRM and the implications for insurance."

Last May, a study released by Conning & Company found that customer relationship management software for insurers was not universally effective and useful. (See NU Online News Service, May 6, 2001). Companies, the study said, needed to take the software for a test run before trying to implement it.

CRM systems are costly, up to $100 million, and experience a high rate of failure, the report said. The Hartford, Conn.-based firm characterized the results as "less than magical."

The report, entitled "CRM in Personal Lines Insurance," explained that a major cause for CRMs failure had less to do with the technology and more to do with the companys culture. The underlying problem is the reluctance of the carriers sales force to share information. Without the sharing of information, the system fails.

Mr. McMahan noted that a major problem for the technology is "dirty data." This is data that is input differently by individual agencies because there is no standard in place, making it difficult for the software systems to find information.

Until this hurdle is overcome, insurers will not be able to effectively collect data, Mr. McMahan declared. Agency clusters, direct writers and large agencies have been more effective in CRM applications, he added, because they have the standards in place to draw the information from.

Mr. Bernaski said carriers took a pass on the first wave of CRM technology. They learned a lot about it at the time, but did not see the value in the product. Now, he added, "companies see the magic of CRM, but it is clear to people that it is not a silver bullet but part of an overall strategy, and when properly integrated it can get the best results."

That practical implication means taking four parts of a puzzle and putting them together. He termed these four pieces customer experience, insight, offering, and measurement and refinement. How each company does this can vary, but many, he noted, are developing this technology in-house, going to outside vendors sometimes for components of the structure.

Two companies that did speak about their CRM technology were Seattle-based SAFECO and The St. Paul Companies, headquartered in St. Paul, Minn.

SAFECOs description of its CRM system supported some of Mr. Bernaskis observations–that there is more concentration by insurers on the life, health and financial services side because there is more information available.

Susan Davis, assistant vice president of the companys life and investment sales center, said SAFECOs CRM system is currently concentrated on life and financial investment products. The company is currently looking at this model for application to its p-c business.

SAFECOs view is that its customer is its agent base, and it has developed its CRM database around supporting them, explained Ms. Davis. Their system, purchased from Onyx in Bellevue, Wash., was launched in August of 2001.

With it, through its Web system, SAFECO said it has been able to provide product support and valuable information to agents and, at the same time, reduce calls to its call-in center.

However, there are enormous challenges to bringing this system to the p-c side, Ms. Davis said. There are more pieces of information that need to be assembled, both in terms of underwriting and claims information, and the company is now only beginning to discuss how to go about accomplishing this goal.

Carol A. Sjowall, vice president of information technology for The St. Paul, said the biggest hurdle the company had to overcome was integrating the disparate independent lines of business within the company into one data stream.

After looking at a number of CRM packages, The St. Paul decided it was necessary to build its product in-house.

After a year of effort, the company implemented, in April of 2002, what Ms. Sjowall says is the foundation of what it feels will eventually become its CRM system. Final configurations on the system were not completed until Sept. 2002.

Ms. Sjowall said the company uses the information to clarify its customer base, which in this case is the policyholders; give agents better access to the customers insurance business; give customers data about their accounts; and identify potential cross-selling opportunities.

With this technology in place now, Ms. Sjowall observed, the impact of the usefulness of the information that is produced is still being discovered.

"For us, we defined one goal and were able to build on it," said Ms. Sjowall. "We generally feel that it makes good sense that you know what you want before you start working on it."

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 27, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.