How relevant is the traditional Life insurance agent?

How relevant is the traditional Life insurance agent?
Our team spends a lot of time thinking about the role of the agent. Over the years, we have seen considerable change, particularly in the application of technology. What we have not seen change is the agent. By agent I mean the “transactional” life insurance agent. Their business is made up of selling life insurance, usually at the kitchen table of the proposed insured, and that is their primary focus. You can picture the agent: they arrive carrying a briefcase that contains paper applications. They will likely be in a suit, or at least a sport coat, sometimes with the logo of their carrier or agency in a nice crest. They consult with the proposed insured, or more likely the husband and wife, and then sell them a policy by filling out the application with their ballpoint pen. This very old school approach has not changed since our parents bought insurance. This is still a successful model for some, but we believe it will be less so as time marches forward. But if you are one of these agents and recognize the need to change, what do you do? Many have already transformed their practice into that of a financial advisor or wealth manager, and that’s a great direction, but it is not for everyone. One approach follows a slightly different path and acknowledges the changes in the marketplace being driven by exchanges. The agent could license private exchange technology from one of several vendors and build a brand. They would advertise and push this brand and steer potential customers to a website where they could sell major medical, both on and off the federal and state exchanges. They could sell supplementary products and, perhaps most importantly, they could sell transactional life insurance, focusing on term. Back in the office, the agent could have a small call center team. Their role would be to answer phone calls from people that either came through their website or were referrals. You see, if it is easy and transactional (can you say term?), then we would want one of our modestly salaried team to handle it over the phone. The agent’s energies would then be focused on a combination of marketing (establishing the brand) and sales (focusing on the big win), including large-face life and large annuities. This is one option, and one perspective, but one that we believe should generate discussion. Tom Scales Follow me on twitter @tjscales  

It’s The Little Things

It’s The Little Things
I bought my wife some flowers recently, and was shocked to discover that the florist—as of this minute, my ex-florist—no longer gives out those little cards you tuck in the arrangement. The person behind the counter said, “We have these new ones from Hallmark, for only 99 cents…” Huh? I’m spending $20 on cut flowers that cost you only $5, and you think it’s smart to eliminate the cards that cost you two cents each? That’s nonsense. The real story here is that service experiences cannot be disaggregated. As a customer, I don’t view the Buy Wife Flowers Exercise as 10 separate steps, each with its own decision tree and cost benefit. I want it all, end to end, seamlessly. A good selection of fresh flowers, nice vases, honest and helpful service, a fast checkout process, maybe some ribbon, and those little cards that make sure I get full credit for my thoughtfulness. For that, I’m willing to pay $20. Start messing with the formula, I assure you I will look elsewhere. It’s the same with all of my financial institutions. The basic product features and price are important. So, too, are how they sell to me, how they communicate routinely with me, what happens when things go wrong. And if I’m sitting across the desk from someone, how they treat my five-year-old when he interrupts a financial transaction with an explanation of his favorite Lego. It all matters. The institutions I am loyal to are the ones that understand this. For example, I got an honest-to-goodness email from someone in a local bank branch when she noticed something unusual about my account that was, in fact, my mistake. “It didn’t look right, so I thought I’d ask,” she said. Problem solved, customer won over. In the case of the Lego interruption (a different bank), the rep couldn’t have been more patient, which taught my son an important lesson about polite listening. The next time the bank calls me to offer a new service, I’ll return the favor. I’m still waiting for one of my insurers or my broker to do something small but meaningful to convince me that I’m something other than a random, periodic check for them. They’ve got the big pieces in place, which is why I have relationships with them. But until I experience the extra touches and perhaps an occasional nice surprise, I’ll keep my eyes open for other providers.

Four Ways to Grow Your Book

Four Ways to Grow Your Book
Coming off a year with record results, industry reports show that prices are starting a downward trend. That ‘hard-ish’ market was gone in a blink. With pressure on rates, carriers have to compete hard to keep their accounts and have to focus efforts on growth just to make up for the rate loss. When it comes to growing a book of business, there are several techniques to deploy.   Growth by Managing the Distribution Channel. Carriers can focus their growth efforts on superior management of the channel. Those who use independent agents can redouble their efforts to manage agents more effectively in order to extract more revenue from them. Realistically, this may require investments in technology as research has shown pretty conclusively that agents place business where it’s easiest to get the job done. Carriers can explore adding additional distribution channels. Options include a direct channel to the policyholder, working with wholesalers and MGAs, developing group and association business, banks, payroll processors – or a whole variety of other options. Carriers can expand their channel to other territories – entering other states or geographies. Carriers can focus on retaining more of the business they already write by providing superior customer service and targeting their efforts – especially on vulnerable accounts. Growth through channel management generally requires technology investments in portals, automated underwriting to permit straight through processing, distribution management systems to ease the on boarding, licensing and allowing compensation schemes to drive performance.   Growth Through Product Management Carriers can focus on cross selling additional lines of business and products to existing customers. New product development is an area we see a lot of carriers focusing on as well as modifying existing products. And of course, getting a better margin on the product by improving underwriting risk assessment and pricing is a key area that drives growth. Effective growth through product initiatives requires the ability to rapidly modify existing products, a heavier reliance on analytics to drive uw decisions, and automated workflow to assure customers are being handled consistently.   Growth Through Marketing and Brand Management The stronger a carriers brand the easier it is to improve their competitive positioning and generate new business. However, it’s hard for a midsize carrier to compete against a large carrier’s huge advertising budgets. There are areas midsize carriers can successfully focus on. We see midsize carriers focusing on social media, lead management, sales support and CRM as tools to drive brand.   Growth Through Acquisition Purchase of books of business or other carriers is a growth strategy that some have perfected. For those who haven’t, there are challenges in such a strategy. Whether it’s integrating the new systems, assuring the credentialing of the new distribution channel, or absorbing new staff, this strategy can present enormous efforts by an IT organization.   When I talk with carriers about their growth strategies, most say – “We do all of that”. Each of them however, requires different skill sets for carriers. When a company is fighting to grow a book of business, different initiatives may take priority. It becomes more difficult to keep focus and resources on longer term initiatives, or initiatives that are focused on non-revenue generating activities. Data, infrastructure, and back end support initiatives can get side tracked. CIOs have to be thoughtful about understanding the relationship between the work they do and the value they generate so they’re not seen as a pure cost center – an expense to be cut when combined ratios drop.

Customer segmentation, fad or future?

Customer segmentation, fad or future?
Traditionally insurers have been structured by line of business and some have grouped those around personal lines and commercial lines to differentiate businesses from people. With the opportunities of varied distribution channels and more sophisticated technologies insurers are starting to be much more granular in their view of the customers. Insurers have now the chance to move from their traditional top notch markets and be able to create an offering to attract the different segments. Some of these moves include Microinsurance targeting people in the base of the pyramid and Small and Medium Business (SMB) insurance products. Microinsurance products are being launched almost every month in different parts of Latin America. Most recently it was announced that Asomi and Redcamif will be launching an initiative in El Salvador with life insurance policies written by Pan American Life Insurance Group (Palig) with premiums as low as $0,68 per month. Some brokers, large ones, are moving into the SMB market but using its affinity platforms instead of their commercial platforms to support this business. While originally SMB should have fallen into commercial, they realize that it requires processes and the agility expected also in their affinity business. In another interesting move, Metlife Mexico announced yesterday the creation of a new division that will sell to socio economic segments C and D and to young people, those that are not the usual target of insurers. According to the classifications developed by AMAI, a Mexican association, the country’s population is divided into five segments: AB (people with high purchasing power and income), C+ (people with higher-than-average incomes, whose families are headed by someone with a college degree and have at least two cars), C (people with middle incomes, whose families are headed by someone with a high school degree and have both a car and the ability to take one trip per year), D+ (people with incomes slightly below average, some secondary education and no family vehicle), D (people with low income levels and a fairly austere way of existence, who have a primary school education and who lack access to traditional banking services). Metlife Mexico will be offering simple and flexible products while also developing better distribution channels, with emphasis in the use of technology. Software vendors are coming in also to provide solutions towards being more granular. Solutions around analytics to better understand your customer, digital to better serve them and master the points of contact, core processing and BPM to adjust your products and processes accordingly, just to mention a few. Last year Guidewire presented its vision on how a core system will be able to support customer segmentation already delivering some required functionality. Core systems are just another gear in the engine and it’s important that vendors acknowledge how they need to integrate into other solutions for the insurer to be able to deliver a customer segmented value proposition. While I believe customer segmentation is where the industry needs to go, it is not without huge challenges. Insurers need to address the differences and purchase attitudes of those different segments.  Omni-channel is one of the aspects, but also dealing with channel conflicts and regulation. Products need to be tailored in a way that can be flexible but capable of scaling massively, and this means looking into pricing, packaging, marketing, distribution and servicing. Processes need to be adjusted in order to provide the correct value to each segment. At the end of the day you don’t want to be perceived as under-performing and not providing the required value, but neither you want to over deliver if this means excess of cost and important cuts in your margins. My final thoughts for you. How will your structure look as you move into serving segments? How will this affect reporting and statistics by the way, which today is seen by line of business (even by regulators)? Are you ready? Are we ready?

Bending the Supply Chain Into a Supply Network

Bending the Supply Chain Into a Supply Network
The image of a supply chain is linear, stretching from one point to another, link-by-link, in an orderly procession. If each part does its part, success is realized. But, we all know that business does not really work like that.  Rather, activities are more random, concurrent and fluid. The case studies at the Celent innovation event, What’s Next: The Search for Disruptive Innovation, https://www.regonline.com/builder/site/Default.aspx?EventID=1237201 will explore how companies are making the transition from the step-by-step chain to the dynamic network that we increasingly experience. Over the next few weeks we will give you a preview of the program. This week we will preview cases of financial services firms that are using social networks to create new collaboration patterns with their customers, distributors, and employees. We have some fantastic examples of companies that are extending social technology in order to bend their supply chains into supply networks. The companies presenting on October 3 in San Francisco have applied social collaboration well beyond the Marketing function to use them to change traditional relationships between customers, distributors and employees. I’m not going to steal their thunder and give away all the valuable details in their cases but here’s a thumbnail sketch of what you’ll learn in the sessions:
  • How does an insurer reduce fraud, manage risk, decrease losses, minimize customer acquisition expense, and lower processing costs all at the same time? Join Sebastian Herfurth, founder and co-CEO of Friendsurance as he explains how his company is using social collaboration to turn the traditional insurance model on its ear and accomplish all these goals simultaneously.  His presentation details the mechanisms that allow their customers use social networks to agree to “cover” each other if there is a loss.
  • Don Montanaro, CEO of TradeKing Group, will describe how their focus on social networking immediately differentiated their firm from the 600-pound gorillas in the online brokerage industry by providing a safe, collaborative environment for investors to interact with peers and with the company itself. He will share examples of how TradeKing operationalizes social. Working closely with securities industry regulators to leverage social’s power beyond marketing, they have built industry leadership in key business functions like customer service.
  • With the increasing need to innovate and change the way business is being done, companies continue to struggle with tapping the skill and knowledge of their employees to identify ways to transform the business. Everyone recognizes what a valuable resource associates can be, but it is very difficult to collect and refine the “next great thing”. Chubb & Son uses social technology to build innovation as a part of the day-to-day, natural activity stream of all of their employees. Jon Bidwell, SVP and Chief Innovation Officer, will describe the social platform that reaches directly to front line support staff and interacts directly with agents and customers to engage them in the product development and feedback process. Their lessons learned are surprising and insightful.
The conference is a unique offering that will allow you to take a deep dive into what innovative leaders in financial services are doing to exceed market expectations.  If you haven’t already, join us in San Francisco on October 3 by registering today https://www.regonline.com/Register/Checkin.aspx?EventId=1237201 and stay tuned for more updates!

Self-Service or Self-Serving?

Self-Service or Self-Serving?
Ever since we discovered that the internet could be more than just a document repository or shop-front, we have been investing in smart ways to engage our customers better and improve the user experience.  Self-service via a laptop, tablet or mobile device clearly has huge benefits to both the customer who now has access to information at their fingertips and insurers who are able to strip out significant costs from their business through outsourcing process to the customer and redirecting inbound calls. So, when an insurer progresses down the path of implementing ‘self-service’, who benefits most?  Are propositions and solutions designed primarily around what the customer wants or are they skewed more towards reducing the insurer’s cost base? I’m sure that there may be people reading this who argue that this is clearly a pointless question as the answer is “Both. It’s a win-win for all”.       However, when reflecting on my personal experiences of being part of proposition development teams for both mass-market and HNW propositions, the starting assumption has often been how best to minimise touch for the mass-market via self-service in order to satisfy their needs at a minimum cost to the insurer (measured through call centre volume reduction and staff time), and then how to tailor the HNW propositions with the addition of personal services (such as personal account managers and claims handlers) on the assumption that wealthier customers demand a more personal relationship and are willing to pay for it. In a recent Celent survey into customer preferences for technology use at the point of service (both in the US and the UK), some interesting findings resulted when comparing customer service preference with household income.  To make it easier to see, I’ve created the following mini-chart which combines the findings from both US and UK consumers.   These findings suggest that there may be a correlation between household income and the desire for self-service.  The findings also appear to indicate that there is a reducing reliance on ‘human touch’ for wealthier consumers.  Simply put, the wealthier an individual is, the more likely that they are to use ‘self-service’ and the less likely they are to seek out ‘human touch’ in the form of additional personal services.   Conversely, for complex transactions, the less wealthy an individual is, the more likely they are to seek out either face-to-face or call centre interactions as opposed to ‘self-service’. So, what could this mean for proposition development and assumptions for “self-service”? If insurers are pursuing ‘self-service’ from a perspective of reducing their own costs on the assumption that this is what the consumer wants too, then maybe these insurers are missing a trick? (especially if they are targeting the mass market / less wealthy individuals who either lack the confidence or frequency of contact to maximise adoption).  Likewise, if insurers are pursuing HNW individuals through layering on personal services to their proposition, then maybe their design effort could be better invested in improving the user experience or access to on-line tools? Clearly, there is more research that insurers can do to either validate or challenge these initial findings, such as investigating the relationship between wealth and financial confidence, the different types of insurance products (clearly auto insurance is likely to have a different profile to annuities), differing personal experiences of “self-service”, the diffusion process, etc.  In the meantime, prior to finalising 2013 plans, maybe there’s just enough time to challenge assumptions around customer expectations for “self-service” and squeeze in any last minute adjustments.

Why Billing Matters

Why Billing Matters

I have a homeowners policy with the DoNotDisclose Insurance Company. DoNotDisclose is a large, primarily personal lines company.

 

My policy term ends on Oct 8 every year.  This past August, I received the dec page and invoice for the new year, and paid it in full online.  I mean, I thought I paid it in full. Today I discovered that whatever I did, did not result in a payment being made.

 

I’ve been away from home for a few days. Opening my mail today (October 21) I had a letter from DoNotDisclose telling me that my homeowners policy expired on October 8 due to non-payment of premium.  The letter was post-marked October 16.  Between my initial invoice in August and my Expiration Notice, I had received the following communications from DoNotDisclose: zilch, nada, and rien,

 

Looking at the letter telling me my largest single investment had been uninsured for the past two weeks literally made me queasy.

 

Does anyone know a good personal lines company that understands the relationship among billing technology, billing processes, communication, and customer experience?

Is It Just Me? #1: Insurance Commercials

Is It Just Me? #1: Insurance Commercials

Is it just me, or are most commercials for property/casualty insurance on American television really dumb, pointless, and worst of all ineffective?

I’ll assume that everyone reading this post knows something about insurance products and the process of selling those products. So take your own “Is It Just Me?” test.

After you watch the next five or ten insurance commercials on the tube, ask yourself a few questions.

· What are they selling? Does this commercial actually identify an insurance product?

· Have they given me some good reasons for buying that product?

· Do they show prospective buyers and customers as intelligent and sympathetic–or as stupid and/or overweight and/or ridiculous?

· And if the latter, why should I want to do business with a company that has such a low opinion of its customers?

There are exceptions of course. Some commercials are both entertaining and informative (think GECIO and AFLAC). But all too many, apparently have two goals:

· Demonstrating how clever (or worse edgy) the people who made the commercial are

· Making insurance as obscure and offensive as possible

Is it just me?

A holiday gift from Celent – Top 10 searched for terms and links to reports

A holiday gift from Celent – Top 10 searched for terms and links to reports
Last year we offered a Christmas Carol themed post summarising some thoughts on the past, present and future. This time around I figured I’d go for one of the end of year top ten style posts that pop up as folks take a moment to look back at the year. So here I present a view on the top 10 searches insurance folks made on the Celent web site. 10. Model Insurer (Click on the words to do the search) In at number 10 are explicit searches for the model insurer series of reports. We’re still working hard on this years but here’s some links to last years and the one the year before. This year we’ll be holding the Model Insurer event in Boston along with our insight and innovation day. The model insurer reports can’t be beaten for offering a view of successful investment in change and technology across the insurance industry. Also take a look at the Model Insurer Asia report and 2012 event. 9. Fraud Sadly as pressure increases on the financial system, on wallets everywhere then the propensity for fraud increases. 2011 has seen an unprecedented rise in ill-feeling towards the financial services sector as a whole so it’s no wonder that fraud is on everyone’s agenda. Look out for work by Donald Light and Nicolas Michellod in 2012 on modern fraud systems across the globe.   8. CRM or Customer Relationship Management Insurers have made great strides in moving from policy and agreement centric thinking to a more rounded view of the customer. With ever increasing ways of reaching customers and intermediaries, of simply transacting business this focus on technology to support the customer relationship is clearly still a focus. 7. Claims Clearly a key focus for any insurer, from the systems supporting claims to the latest trends in claims analysis. In 2011 Celent examined the impact social media was having on claims and how insurers are interacting with claimants. We also looked at location intelligence solutions and below are just some of the reports looking at various angles of this key function. Look out in 2012 for the XCelent reports on claims system vendors.   6. Outsourcing 2011 has seen a more pragmatic approach to outsourcing in the insurance industry globally. Strategic outsourcing is still a key tool for any large organisation and this is reflected in the term appearing in our top ten. The CIO survey series of reports (which will be refreshed in the new year) offer insight into CIO’s views on outsourcing globally.   5. Policy Administration Ah the big core system question. What was interesting to me was this wasn’t number one, still number 5 is pretty high up the list. Searches in this area were looking for advice on the core systems themselves, building a case for them as well as general trends. This year we published the 2011 reports on policy administration systems around the globe, each offering a different perspective on what’s available as well as what’s required.   4. IT Spending In at number 4 is IT Spending – how are folks splitting their hard earned currency between projects? A key question on the minds of CIOs and others. A key insight into this is offered in the CIO interview series of reports as well as our emerging technology report – aimed at identifying technology gaining interest and investment from the insurance industry – take a look.   3. Asia – or rather searches for India, China and Japan A significant number of searches were for specific countries, the three top countries were India, China and Japan. Asia is a very diverse market and there is a great deal of opportunity in the region, not only financially but also in learning how insurance problems are being solved in these very different markets. Personally, I find one of the great things about working for a global company like Celent is the breadth of view it affords.   2. Social Number two in our list is social, social media and social networks. Technology is helping people to interact and changing the way they communicate. Customers, agents and members of insurers staff all expect very different things from an organisation now in a Twitter and Facebook world than just 10 short years ago. In addition, the relationship between the insurance industry and the vendors and service providers supporting it is changing. In all this newly collected and aggregated information there lies privacy and brand-busting dragons but also great opportunity for those intrepid enough to sail the social seas.   1. Mobile I recently tried going around London for the day without my phone – it was hell! The debacle this year regarding the Blackberry outage created a wave of such feelings, although raised some counter blog posts as journalists recounted how they spent more quality time with their family without answer emails. Regardless of for better or worse, humankind has wed itself firmly to being constantly connected through mobile devices. This is a global phenomenon from geeks seeking the latest 4G android handset, executives and music lovers with their iphones or Kenyan farmers with simpler phones, mobile has changed the we communicate, interact with technology and each other and will continue to do so – the insurance industry is still feeling the impact and in many cases still leading the charge in changing peoples lives for the better through mobile technology.   So there it is, a top 10 for you. I haven’t included links to the webinars, peer networking events and other events through the year but the links to each of the search terms will provide you with those. It’s been a phenomenal year of challenges, change and interesting times. Have a Merry Christmas, a Happy New Year or indeed just a great season – depending on what you’re celebrating this Winter. We look forward to working with you in the new year and beyond. Oo, look, I wrote an end of 2011 post without mentioning the Euro crisis – oops…

The CIO perspective and adoption of social media by French insurers

The CIO perspective and adoption of social media by French insurers

On the 19th of May, Celent has organized an event in Paris whose objective was to discuss about the French insurers CIO perspectives for 2011 and adoption of social media. As the first speaker I presented the results of our 2011 French CIO report. Interestingly, almost one-third of French insurers are considering investment in social networks. Even though French insurers still need to sort out how they can leverage social networks, this is a clear sign demonstrating that value can be generated from data gathering from and customer interactions through social networks.

Generali France confirmed interests from French insurers in social media in the frame of a presentation underlining various initiatives launched recently. Among others, Generali France is tightly engaged in www.generation-responsable.com, an internet website based on the social network model to federate initiatives. In addition, Generali has created and been maintaining its own Twitter account for a while now and developed a very interesting social network concept called Kontsurnous. Finally, Generali France also explained how they’ve nurtured a culture of innovation within their company leveraging a LinkedIn group dedicated to Generali employees.

In the frame of the third presentation Google France explained their view on what they call the new consumer and its consequences for French insurers’ marketing strategy. Without surprise, mobility, participation, collaboration, openness represent important elements insurers need to consider when implementing new customer communication strategies.

The last part of the event was a panel discussion and a Q&A session around the different topics discussed. Plenty of ideas and interesting thoughts emerged from the panel discussion and I am already looking forward to discovering future initiatives from French insurance companies. If you want to know more about the event you can Craig Beattie’s Twitter account.