Diving Deeper into Prioritizing Your Strategic Digital investments
Oliver Winkenbach | March 08, 2018
Digital disruption is becoming a key trend across the P&C insurance industry. For example, more and more customers/policyholders expect to be able to buy and modify their policies online without having to interact with a representative. In response, early-adopter P&C insurers are investing more heavily in new core platforms, adding digital capabilities and offering self-service capabilities online. According to a recent McKinsey report, these early adopters are reaping the rewards, growing twice as fast as their peers and spending less.
Spurred by the success of the early-adopter P&C insurers, more insurers are now interested in expanding their digital capabilities. But they struggle to determine where to start. We introduce a framework to help P&C insurers determine their most important strategic objective — automated operations, compelling journeys, data-driven decisions or agile businesses. These areas include an insurer’s current value proposition, new initiatives, digitizing internal operations or digitizing the experiences offered to external stakeholders (e.g., customers, vendors, agents/brokers).
In this article, we focus on the business objectives to automate operations and create compelling digital journeys for insurers’ customers.
Automating Operations and Creating Compelling Digital Journeys
Most insurers begin their digital transformation by automating operations. As part of this, they likely upgrade/modernize their core operating systems (aka, “legacy replacement” or “core transformation”). They utilize microservices/APIs, integration hubs and rules engines to drive paperless operations and straight-through processing.
For example, one of the largest auto and workers’ comp insurers in New Jersey started its digital business transformation initiative with an upgrade to its core systems. This upgrade allowed the company to standardize and streamline processes and system infrastructure. Today, this insurer is able to quickly make process and system changes to bring new products to market. Many transactions (e.g., policy quotes, rate comparisons, and purchasing transactions) can now be handled online. Policy administration and billing practices are standardized across the company for consistency and accuracy.
Insurers are increasingly looking to create compelling digital (customer) journeys
by focusing on omni-channel, mobile-first and personalization strategies. These enable more self-service, better agent/broker collaboration and increased agent productivity.
The next example illustrates how one large insurer focused on creating compelling digital (customer) journeys by embracing omni-channel to increase sales. Long committed to its independent agent channel, the insurer realized that it also needed to provide direct-to-consumer sales and services capabilities to retain and gain more market share. Today, the insurer offers consumers options to buy direct any time through a mix of channels, including web, mobile phone and call center.
While getting an online quote, shoppers can easily click to chat or call to talk with an agent, who has direct access to the insurer’s core systems, including all the data entered through any of its direct channels.
Key to a good customer experience — one that drives more business for the insurer — is making it all seamless. Ideally, the agent or customer service representative can see exactly where the buyer is in the quoting process and can move forward with the transaction without duplicating any questions or re-keying information. To avoid potential channel conflicts, the insurer assigns an agent to every direct-channel customer for future servicing. The agent still earns a commission, and additional opportunity to upsell or cross-sell the customer after the initial sale.
While automating operations and creating compelling (customer) journeys delivers significant benefits, insurers shouldn’t ignore other critical factors for the digital success. Expanding a new core platform installation with new digital capabilities (e.g., portal for policyholders/customers) can be achieved in a relatively short time without requiring large upfront investments.
Keep in mind that the most successful insurers will invest in all four areas — automating operations, creating compelling journeys, enabling data-driven decisions and enabling agile businesses. By doing so, they will position themselves as leaders today and in the future.
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