KEY TAKEAWAYS:
--Insurance, like most industries, often sees a clash between the desire to be more efficient and the desire to provide a great experience for customers and employees. But there doesn't have to be a tradeoff.
--Rethinking how data is updated, for instance, can create great efficiencies for the insurer while providing a much better experience. Why make customers and employees update three policies with a single insurer when one update could flow into all three?
--The challenges to resolving the efficiency/experience paradox used to be technological but now boil down to having the right mindset.
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Broadly speaking, a paradox is a statement that leads to a self-contradictory or illogical conclusion despite valid reasoning from true premises.
For example, experience and efficiency should go hand-in-hand. In theory, greater efficiencies through automation free human capital to focus on creating better experiences. However, in most sectors, experience and efficiency can appear at odds. Improving one typically comes at the expense of the other.
Take self-service checkouts in retail. While they are aimed at creating efficiencies for the supermarket and the shopper, it’s questionable whether they improved the consumer experience, certainly consistently. Equally, the early use of chatbots may have introduced cost efficiencies and economies of scale, but they often hurt service.
This efficiency/experience paradox often occurs when focusing on the two independently. When you focus only on one, you miss the opportunity to derive value from the other.
Insurance, however, finds itself in an unusual position where experience and efficiency aren’t mutually exclusive but symbiotic.
Improving Efficiency and Experience in Insurance
Look at transformation of claims handling. The work is traditionally seen as isolated from the business, and the transformation conceived and run by a team. But the efficiencies that can be gained from a data-driven model that's centered on the customer can get missed when addressing claims efficiencies in isolation. For example, when all customer data is up to date and automatically integrated into the claims experience, it becomes a far more intelligent capability.
The data integration immediately creates a greater focus on how the experience can benefit the customer. Policy details and changes in circumstances appear in real time when the claim is raised. There’s no need for policy changes to be a “change request” for the claims team to act on. Manifesting a product change is much more efficient in every customer interaction or experience throughout the business.
This works both ways. Consider a protection business that ensures changes in its customers’ lives are tracked and acted upon. Those updates can highlight a need to address changes in coverage, while also delivering sought-after efficiencies. For example, a customer moving to a new house creates an opportunity to reassess their coverage, build a deeper relationship and demonstrate a keenness to be of service.
Rather than running data-driven communications as a project or change request, you have a continuous and adapting relationship. This relationship makes sure every change in a customer's life is understood in the product context.
From using open banking or employee records to identify changes in financial circumstances to reacting to a change of address, these aren't only new opportunities to create vastly better experiences, but they can also drive huge efficiencies.
Automating data integration is in stark opposition to current customer experiences. A colleague recently told me they had three policies with a provider who couldn’t see them collectively and recognize that relationship. This inability made a simple address change a triplicate exercise.
Putting the insurer by the side of the customer, and completely changing the paradigm for the product and how the business works, can turn large and often costly business processes into continuous and seamless customer experience outcomes.
See also: Claims Leaders Face a Paradox
Organizational Change Is Essential
This type of holistic view is essential for today’s insurers, whose enterprise designs are having to shift in parallel with a need to massively increase their knowledge of the customer. Further, with customer expectations changing, regulatory demands increasing and rapidly evolving macro-environments forcing this transformation at pace, organizational change is needed to drive an insurer's ability to act on this shift in customer insight.
This shift is about moving from the manufacturing era of efficiency and gaining administrative scale, to the ecosystem era of maximizing the value of a relationship. In this shift, there's a huge correlation between more efficient, automated and intelligent insurance businesses and those providing the best and differentiating experiences.
It’s about shifting the time taken to see a change in risk through underwriting to the time when this materially changes what’s offered to the customer. Which is when it really counts.
Take electric vehicles (EVs). Underwriters must adopt real-time changes in data regarding the risk to pricing models for these relatively new vehicles. The cost of repairs is only now being understood.
An ability to factor in these changes currently might only force a change in price. Instead, acquiring a better understanding of garages and repair networks' capability to fix the vehicle might significantly reduce the cost of a claim and remove the burden of raising prices -- while creating better, more seamless experiences for EV owners.
By bringing together often separate parts of the insurance offering and making sure the customer is never lost in the search for efficiency, and vice versa, this paradox can be turned into dramatically improved use cases for transformation.
Mindset Is Now the Biggest Obstacle to Change
At one time, not too long ago, making the shift was a technology challenge, but, with the right foundations, this is no longer the case. It is now a mindset challenge.
IT and the insurance business are still not interwoven. The idea that the working model overall is akin to an agile software development approach seems way off. An enterprise design change is needed that makes sure the symmetry between efficiency and experience is clear and sits at the heart of change.
It’s critical that things like fraud detection, decision making and any actions that need to be taken combine to deliver a seamless customer experience. No matter whether they are purchasing a policy, making a claim or exploring additional services. The result is a stress-free experience for “good actors” and makes sure “bad actors” are identified, exposed and dealt with.
See also: The Evolution of Frictionless Payments
Critical Factors for Success in Balancing Experience and Efficiency
Insurance is complex. However, that complexity isn’t predominantly in the product's core. It’s often in product-centric business architecture. As a result, policy-based business design becomes a constraining factor in building new connected experiences for employees and customers that are easy to change and configure.
The critical factors for transformation success must be predicated on a true sense of an enterprise design change. This is about transforming the business.
This new age of insurance needs more efficient insurers building fully customer-centric operations that make the most of every customer experience through data-driven customer knowledge.
Let’s have our cake and eat it!
