Editor’s note: this is the seventh in our Solving For Tomorrow series, in which we offer our thoughts on the state of the insurance industry, the challenges carriers face now, and the opportunities they must take advantage of to remain competitive in an ever-changing future. Stay tuned in the coming months, as this will be a regularly published series. We hope you enjoy and learn, and we’re always happy to receive your questions and feedback. In case you missed it, you can read our last installment here.
In our last installment, we discussed implications for how carriers need to respond to forces shaping the P&C insurance industry, with a focus on sales. In this installment, we delve into how carriers need to rethink their approaches to services.
Scaling up is a slow process that requires months of building and rebuilding systems to handle new volume across the entire product, sales/distribution and service cycle. Today, scale is inelastic. The high fixed costs required to build out systems that can accommodate peaks of traffic eat into profitability.
Internal processes, systems and people must be prepared to accommodate new launches, geographies, and policyholders (and their evolving requests). This means carriers either need to make heavy upfront investments to expand overall platform capability, or move into flexible, pay-as-you-use contract models (SaaS) with their technology partners.
Optimizing for efficiency
There is enormous pressure on carriers to do something about the 12%/12%/12% (G&A/ Loss Adjustment/ Sales Channel) cost equation. This structure has grown in part from carriers operating from a patchwork of legacy platforms. Many of these outdated and/or internally built systems require scores of FTEs to support and maintain. Lack of functionality has created operational constraints that are often solved for by manual workarounds. This has led carriers to be overly reliant on human-to-human interaction.
We are a half-century into carriers modernizing their systems. This shift has driven leadership to be more creative in the use of technology, and thoughtful about how to use employees where they are most valuable. It also means that carriers’ employees need to rethink how they see their own role – from one of an operator/processor to one that’s more of a creator/innovator.
Meeting them where they are
Within the P&C industry, interactions are still mostly happening person-to-person. However, customer norms around experience and delivery have been shaped by outside players. Due to the disjointed, documentation-heavy, and adversarial nature of the claims process, long lags between information capture, processing, and payout are common. Of the carriers who do offer self-service, back-end tie-in/functionality is limited. For example, customers can submit an FNOL on the front end, but carriers still need to print out and manually key in the information for the claim to be processed on the back end. Not surprisingly, customer satisfaction, particularly across the claims process, is low.
The ability of carriers to reach and service policyholders across all channels is an existing expectation that will quickly become the standard way of operating. The carrier who is able to get there first will not only create an efficiency, sales and experience advantage, but also an insights-related one. These digital interactions with policyholders and partners will give carriers a wealth of new data that can be used to create better products and deepen engagement.
In our next installment, we will delve into new imperatives in data. If you can't wait to read more, download The Future Playbook today.