(Image credit: Dollar Photo Club.)
In my last two articles, I discussed reimagining customer engagement models and insurance business processes by effectively and efficiently using emerging ecosystems, digital technologies, data and insights. These areas are gaining visibility among top insurers and we see many of them initiating strategic initiatives.
However, there is a third leg of this stool that is equally important: simplification. Although invisible to the end consumer to a great extent, the impacts of simplification can create long-term business benefits and also greatly impact the customer experience. We all know that simplifying complex legacy business processes and IT systems is easier said than done, but to remain relevant in the digital era insurers must grow, adapt and streamline. The goal is to identify simplification ideas that don’t attempt to “boil the ocean,” have short implementation timelines, and deliver business results in six to nine months. When it comes to simplification, insurers must focus on product, underwriting, communications, and foundation.
Insurance products have always been complex. This was not by chance but by design, the result of conscious decisions by insurers to create competitive advantage and differentiation. In a recent blog post, Forrester’s Ellen Carney talked about the “worst-kept” and “most disruptive” secret of the insurance market – Google Compare. But, how do consumers compare and buy something that is really so hard to understand? How will alternate insurance product options influence consumer buying choices? For example, Friendsurance is a German insurance company built on the concept of peer-to-peer insurance, bringing a fresh perception to insurance and claims. Will consumers end up buying insurance products that are easier to understand and they can judge for themselves? While group, large commercial and specialty insurance products will continue to remain complex, mainstream insurers need to simplify their products for consumers and small businesses.
Today, underwriters spend most of their time collecting data and/or sifting through masses of data, documents and research notes to get to the core information they need to make underwriting decisions. However, data collection is not an underwriter’s job; the underwriter is paid to analyze the risk and decide whether it is appropriate to write the risk and how. This is a great opportunity for simplification. If we can simplify the tools and processes by which data is collected from multiple sources, analyzed and the right insights are made available to the underwriter on a case, they can be much more efficient and effective in their real job.
When was the last time you read the full policy document you received? How much of it did you fully understand? Simplifying the letters and forms insurers send out can go a long way in improving customer experience. The information that is presented, using hard-to-read and overly complex sentence structure, in legacy insurance forms can be redesigned and reformatted to be more presentable and easier to interpret. Rationalizing forms across states and products using a standardized template structure can deliver a 40-60 percent reduction in the number of forms. The use of interactive videos and the proper leveraging of social channels can also further improve customer engagement and experience.
Last but not least, insurers need to fast track their efforts in simplifying and consolidating core IT systems. Consolidation and modernization of core systems, websites, and the creation of next generation consoles for the contact center representative will be critical to the next generation of insurers and underwriters. From a technological perspective, insurers need to address technological debt created through long-ignored system upgrades and/or never-done sunset of legacy applications and technologies. Creating a multi-year plan to tackle technology debt is a much more achievable plan than one big bang modernization project.
Simplification is a critical piece of the puzzle that insurers will have to solve and solve quickly in the modern digital era. Without doing this, insurers and underwriters will not be agile enough to introduce new innovative products and customer engagement models in the emerging era of the digital and shared economy.
Previous articles by Arunashish Majumdar: