Little innovations lead to big change

When carriers think about innovation and achieving competitive advantage, most focus on big changes: introducing new products like Usage Based Insurance, redesigning business processes, deploying major technology initiatives like customer and agent portals or new policy administration systems. They think of trends like social media, predictive analytics, and big data.

But innovation and competitive advantage can be achieved by making smaller improvements in everyday processes. For example, understanding and keeping current with ISO changes is critical to most carriers. Consider ISO’s recent Commercial Lines updates. Per their October briefing, ISO CL Update, the Commercial Automobile Program alone included a new auto dealers program and 26 new optional endorsements.

datagrailFor most carriers, hearing that major updates are coming raises shudders. Carriers know that analyzing ISO updates, comparing them to the current version of rates and forms in use, and identifying changes is a challenge. It takes significant time and knowledge to pour through the various ISO materials and determine what has changed and how the changes impact the carrier’s book of business. Since so many carriers already have too much on their plate, they often let ISO updates slide, failing to adopt them in a timely manner. Thus they miss the small innovations that can improve their product offerings and improve their bottom line. When they do choose to catch-up, it is often a daunting effort to jump several versions in one leap, introducing massive change to their systems, processes, and books of business.

Applying automation to the comparison of ISO changes could improve the efficiency of the analysis process, allowing carriers to more quickly determine the impact of adopting or not adopting ISO changes. This targeted solution is not a major system implementation, but it is an innovation that would allow you to best leverage your investment in ISO content, and improve a cumbersome process. It is a small innovation that would allow a carrier to dramatically improve its ability to analyze and react to ISO changes. A small innovation with a big payoff in more efficient internal processes that can translate to improved products, product pricing, and the bottom line.

A solution already exists. Edgewater Consulting has leveraged its deep industry and technical knowledge and long-standing ISO relationship to develop a cloud-based solution to address this critical business need. The solution compares ISO rate books and quickly identifies what has changed, and presents results in Microsoft Excel, a familiar yet powerful analytical tool.

We will be hosting a webinar with ISO to demonstrate the tool, using it to analyze ISO’s commercial auto changes released on October 1. If you’re interested in attending, register here.

How did you find Nemo?

nemoThe blizzard of ’13 hit the northeast pretty hard this past week.  Communities still reeling from Sandy now have to deal with feet of snow too.  Power outages and downed communication lines make it extremely difficult for people to contact utility providers to report problems, as well as to receive information regarding service restoration.  Many providers are turning to social networks and to text messaging to help them get the word out and to keep their customers informed.  Others are leveraging mobile apps to assist customers, allowing them to report problems and follow repair progress.  Some utility companies are doing both.  Utility companies have to provide service 24/7; but, while insurance carriers will accept claim reports outside the regular work week, their work really begins on Monday.

Like the utility companies, many insurance organizations, carriers and agents, communicate via their social network accounts and some communicate with mobile apps.  Customers may have already reported the tree limbs falling on their cars, collisions from sliding on the roads, or restaurant food spoilage when refrigeration goes out, and now they need to know when they will hear from the claims representative or damage appraiser to move things along as quickly as possible.  If the power and phone lines are still out, your smartphone becomes your only window to the world.  This is where the carriers that have embraced and leveraged smartphone technology shine, and those that are still dependent solely upon on web sites and telephone communication fall behind, and lose customers.

Thousands of customers could be trying to contact you via your phone lines, and find the never ending phone tree wildly frustrating.  When that becomes exasperating, maybe there’s a mobile app to download, but all you can do with that is pay your premium.  Next, look at Facebook for updates, but that’s just a Hall of Fame for charitable acts and follower counts, nothing on the company’s efforts to reach out to customers about the storm.  How about Twitter?  Maybe the company is broadcasting where mobile claim centers are being set up, tips on how to minimize damage, or special phone numbers that have been arranged?  What about the agent?  They may be without power and communication as well, but they may still be able to provide support taking reports and providing information for claims – if they can get it.

This is the time when the rubber meets the road for insurance, and if you can’t keep in touch with your customers and help them when they need it most, they’ll solve the problem for you – they’ll find out about the companies that do, and they won’t be your customers for much longer.  Now is a good time to rethink and update strategy for carriers who aren’t where they should be.

Customer Intelligence – Analyzing and Acting on the Data

bubble cloudsPart one of this topic addressed leveraging social media to improve customer satisfaction.  This is the initial step towards a broader goal to create a robust Customer Intelligence framework that allows P/C insurers to listen, connect, analyze, respond and market to customers in a much more proactive and targeted way.

Customer Intelligence is the process of collecting relevant and timely information about customers and prospects, consolidating the data from all the different sources into a cohesive structure, and providing the sales, service and marketing functions with tools that can leverage this intelligence.  The sources of this data not only include the obvious ones such as a carrier’s Customer Service Center, and Policy or Claims Admin system, but should also originate from the Agent, Marketing Surveys, Telematics, and Social Media, including Twitter and Facebook – all mashed up to produce a Balanced Scorecard and Predictive Analytics.

Most CRM systems need to be updated to include new columns in their user profile for data in addition to email and phone number such as Facebook name, Twitter Handle, etc. With the social listening and response management connected to your CRM, a social inquiry can be viewed in context and the activity recorded for future interactions, available to Customer Service Reps or even Agency personnel. This level of social customer intelligence is going to differentiate companies that do it right, becoming a key element of a carrier’s business strategy.

A fully integrated Customer Intelligence platform provides benefits such as:

  • A single integrated interface to many social media outlets
  • The ability to manage multiple writing companies
  • Create and track cases, contacts, accounts, and leads from real-time conversations
  • Manage marketing campaigns and track social media marketing ROI
  • Cue CSR’s on upsell and cross sell opportunities

A carrier should determine the Key Performance Indicators (KPIs) that matter most to their business goals, then view the appropriate data in graphical dashboards to track effectiveness of their efforts.  It’s important to tie those KPIs to their influence on customer behaviors such as loyalty and increased sales.  But carriers must also be aware to not look at positive or negative changes in the wrong way and fully understand the reasons for success or failure.  Reacting to success by following up with more online advertising in certain media outlets, may not produce the desired results, when in fact the reason for an increase in sales is due to the upsell and cross sell efforts of CSRs.

Customer Intelligence – Leveraging Social Media to Improve Customer Satisfaction

LoyaltyCustomer satisfaction for Property and Casualty (P/C) insurers has been on the slide over the past few years for many reasons, but most notably due to increased premiums driven by natural catastrophes.  Carriers can work to offset these premium increases by improving upon the intangible values policyholders receive, such as customer satisfaction.  Improving customer satisfaction can be supported by improving upon Customer Intelligence.  Customer Intelligence is the process of collecting relevant and timely information about customers and prospects, consolidating the data from all the different sources into a cohesive structure and providing the sales, service and marketing with tools that can leverage this intelligence.

Insurers must begin to look at ways to respond to customer needs outside the old fashioned methods of phone and email, and embrace the social media outlets.  Most carriers look at social media as a marketing tool but used well, it is much more of a relationship, loyalty and service tool.  Many carriers already have a Facebook page and Twitter account to disseminate information and respond to complaints posted directly to them, but the most damaging words are those posted where the carrier does not respond because they do not even know they exist.  Integrating with social monitoring tools can help carriers avoid these situations, creating a competitive advantage.

Carriers need to be able to serve their customers in the channels they wish to be served in, and helping customer service representatives to address issues early, before they become a costly live call or a crisis, can decrease CSR expenses.

The first step to monitoring social media is actively listening, using tools that provide real time alerts on relevant mentions, questions and discussion topics that should be responded to, then route them to the appropriate responder.

Imagine how impressed a customer will be, when they are contacted in response to a tweet that was posted after a bad claims experience.  Carriers can capitalize on opportunities to turn negative feedback into positive, if they take advantage of the chance to make things right with the customer.

In addition to providing this service level response involving their own interests, carriers can extend this service to assist their top tier agencies as well, and educate them on the proper way to interact online.  While policyholders may jump carriers, they are generally loyal to their agency, and if carriers can help protect their agencies, they may find more, and better, risks on their books from those agencies. Conversely, it can also provide an opportunity for carriers to rethink some of the agencies they work with, if they consistently find negative feedback about them related to their support of their policyholders.

With carriers and agents working together, marketing executives can provide management with overall reports on social media sentiment, issues and the activity metrics for agents and their customer service organization.

This is the initial step of a broader goal to create a robust Customer Intelligence framework that allows P/C insurers to listen, connect, analyze, respond and market to customers in a much more proactive and targeted way, leveraging the new communication channels Social Media provides.

The next step becomes tracking this information within the carrier’s CRM and linking with customers’ Twitter names or Facebook accounts, to help CSR agents get a complete picture of the customer.  CRM projects are expected to be near the top of the list for many carriers in 2013 that look to get out ahead on this front and gain a better of understanding of their current customers, and the customers they are going after.

Does Claims BI Just Mean “Bodily Injury?”

Anyone in the insurance claims industry that works on BI is not talking about Business Intelligence. Rarely is BI ever applied in insurance claims to mean business intelligence because most carriers only use business intelligence generically to examine closure rates, expense payments, and contact rates. Business intelligence is most often used primarily to analyze data in other business units like agent performance, product profitability and policy discounts.

By properly applying business intelligence and measuring analytics in the claim handling process, carriers have the opportunity to review and grade adjusters for improvement and development of claim adjudication best practices. Monitoring and reviewing claim handling practices will ensure adjusters are performing quality investigations resulting in fair and proper claim settlements for the carrier and the insureds.

A claim is the core of why people purchase insurance products – to get reimbursed when they incur a loss. A claim becomes a personal touch point with the insured, as well as a prospective insured when third parties are involved. How many carriers have used claimants switching to them after a claim to advertise their service? Leveraging analytics to generate business intelligence on claims processes, insured retention, and claimant satisfaction, as well as measuring things like allocated loss expenses, the number of claimants with attorneys, and post closure actions, can be used more directly and efficiently to impact the success of claims handling.

Of course you may not want all of your insureds since there are those that are working to use insurance claims to make money. Properly applied analytics and techniques can detect patterns and trends in claim participation, injuries, supplemental repairs, etc. I know of one specific case where analytics found that a claimant was paid five times for a single leg amputation, and another where a doctor was treating an average of 1,600 patients per day. Business intelligence can also capture the effectiveness of independent medical exams on claim settlements, better understanding and control on reserves, back to work rates, and therapies to move claimants from total disability to partial disability.

The next logical step is moving into predictive modeling.  Properly applied claims analytics helped one western insurer realize their return on investment in a matter of months, when they could proactively augment and deploy needed field staff to respond to several catastrophic storms.

By improving best practices, identifying fraud early, and employing predictive modeling, not only will customer satisfaction be effected, but this will also trigger claims closing more quickly and at lower costs, increasing the number of claim files adjusters can handle and lowering loss ratios. In this tough economy, lowering loss ratios by even as little as 1% can have a big impact on a company’s bottom line.