The Customer-Centric Insurance Company: Who is the Customer?

When we talk about Insurance companies moving to a “Customer-Centric” model, we often initiate a dialog around the topic: “Who is the Customer?”.

The point was driven home for me a few years ago in a conversation with my friend and industry veteran Bill Jenkins, co-founder of Agile Insurance Analytics and a former CIO of several insurance companies. Bill mentioned that for many insurance carriers who write business through Independent Agents, they are the Customer versus the Policyholder and the entire business revolves around making it easy for Independent Agents to do business with the carrier. In these insurance carriers, if you talk to any executive in the C-Suite and ask “Who is the Customer”, you’ll get a unanimous answer, “the Independent Agent.”

When we talk about Customer-Centric, however, we encourage a definition of “Customer” that is not absolutely literal. In fact, we recommend looking at any person who “touches” your business, internal or external, and to view them as if they were a Customer. That means expanding the definition of Customer to include, for instance: Independent Agents, Brokers, Producers, Claims Adjustors, Third-party Administrators, Appraisers, Customer Service Representatives, Underwriters, etc. At Return on Intelligence we use the term, Actors, for this expanded list of Customers. Actors is not a perfect term, but it helps to broaden the thinking beyond the traditional notion of Customer.

When businesses expand their definition of Customer, creating this broad list of Actors for their business, the discussion starts to move towards a) what is their expectation and experience of your business, b) how do you measure this, and c) how do you improve their experience over time. Leading edge technologies facilitate the interactions with these multiple Actors, and the result is that everyone who interacts with your business feels a level of personalization and operational efficiency, and over time their perception of your business as Customer-focused, increases. This leads to increased business, longer retention and lower acquisition costs. And that is why “the Customer-Centric Insurance Company” is just “good business”.

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The Customer-Centric Insurance Company: Rip & Replace?

Every insurance company has existing technologies that support the business functions of today, such as distribution, customer acquisition and servicing. These technologies may include websites, portals, mobile applications and web-based business applications. When moving towards a Customer-centric model, is it necessary to “rip & replace” existing technology, or is there an alternative approach to implement a solution?

In the majority of cases that we see, we strive to leverage existing infrastructure and to “surround” the existing technology with a platform, and incrementally migrate or retire systems and technologies that don’t fit into the “go forward” technology roadmap. Why? Because our objective is to minimize the disruption to the business, leverage existing technology expenditures, provide a clear migration path to a new Customer-centric architecture while minimizing implementation risk. Platforms are more flexible than custom development or specialized portal solutions because they provide the depth and breadth of functionality to execute a migration to a new Customer-centric environment without demanding that an insurance company “rip & replace” their existing investment.

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The Customer-Centric Insurance Company: Build versus Buy

As more and more insurance companies move from a Product-centric to a Customer-centric strategic focus, we’re often asked, is it better to build, i.e. custom develop front office solutions, or should the company buy, i.e. purchase a best of breed platform.

We typically recommend buying a best of breed platform because we see the benefits first hand: solutions tend to be more robust, can be deployed faster, are easier to maintain and scale.

Conversely, we have seen many insurance companies who develop their own applications end up with IT nightmares: data is inconsistent across applications, portals and point solution proliferate and the user experience suffers, IT cannot keep up with the demands of the business users and maintenance costs explode.

In our view, the choice is simple: for leading edge Customer-centric solutions, the choice is to Buy, not Build.

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