The more you look at the subject of technology, the more you realise that the ultimate focus needs to be on the customer. Lance Grant assesses some of the ways in which technology is helping insurers, and why the human element remains crucially important
The problem for many insurance businesses is that they start by thinking about what technology can do for them, and try to apply that to whatever the customer seems to want: they want to be able to insure anyone, anytime, anywhere, whatever they want to do, and then seek technology that can make this happen. Well, I won’t be putting any money on a successful outcome. Instead, where insurers need to start is with the customer: looking at how we, in our business, can respond to their demands by deploying the available technology as best we can.
If you start with the customer, you need to research where and how they travel. Having done this, if I were you, I wouldn’t concentrate on the thrill-seekers – who still only account for a tiny proportion of our market – but would rather centre my technology on older travellers and families. Besides, the more exciting, exotic and expensive the holiday, the less amenable it is to the application of advanced technologies.
So, where does technology come in and how important is it? First off, let’s consider the latest technology used by customers – apps. They are all well and good, and have their obvious advantages, as we saw in the last issue of ITIJ (ITIJ 140, Think Smart), but they rely on a good wi-fi connection or mobile phone signal, and if you’ve just been bitten by a tarantula, you’re likely to need a doctor rather than an iPhone app. My point is simply that this is not an industry that is about to be transformed by technology. Nonetheless, there are things you can do with technology that will give you a real chance of establishing competitive advantage.
The winners in this market are going to be those who make life easiest for their customers
The travel insurance market is a low-premium market, so cost is bound to be a consideration when talking about the application of technology. We’ve got a mass market, and the twin challenge of serving that market more quickly and more cheaply. Fortunately, there are plenty of opportunities to do just that.
Simplicity with benefits
Let’s start with the web, which is the channel that most of us use, whether we use it directly or indirectly, and whether we understand it fully or not. After all, even if an elderly traveller who may not have Internet access at home visits their travel agent or insurance broker, one of the first things that agent or broker is going to do is consult the web. Web traffic is increasing massively in the search for travel insurance, and not least because of companies like Ryanair that won’t let you complete a flight booking without at least considering whether you need travel insurance. Travel companies are going to make us all use the web one way or another.
Regarding younger customers, the opportunities provided by the Internet for travel insurers are obvious – for example, you can target students with adverts on their favourite websites. Busy professionals of all ages are increasingly inclined to conduct all their major transactions online. Retired people too. More and more people are going online for day-to-day banking, to fill in tax returns, renew licences and subscriptions, buy cinema or theatre tickets, rail tickets, plane tickets, holidays. Why wouldn’t they go online to buy travel insurance?
Because they might find they’ve got it already; which is what happened to me recently. In these times of austerity, rather than approach my regular insurer, I remembered that I had one of those ‘special’ bank accounts – you know, one where you pay a ‘special’ sum of money every month for extra services. I remembered that it gave me free worldwide travel cover. So I called them, and as the member of staff started to reel off the provisions of this insurance policy, I realised it gave me everything I wanted. What is more, all the detail I needed was on my debit card – the emergency phone number was there and my policy number was merely my bank account number. How brilliant! How easy! How simple!
If you can get all those things on a mobile app, so much the better. But this card impressed me. It’s the same principle with Ryanair. The O’Leary style doesn’t suit everybody, but if you do have a second home in France or Spain and habitually travel by their aeroplanes, I can’t think why you wouldn’t eventually succumb to their relentless sales gambits and buy a Ryanair card that gives you everything at once – your tickets, insurance, car hire and so forth, all at lower prices than you can find anywhere else. It’s what everybody wants – a one-stop shop.
The name of the game here is simplicity. Once you’ve got into the habit of banking online, you hate people giving you cheques, as having a cheque to pay in means you’ve got to visit your local branch. It’s got to be the same with travel insurance. The winners in this market are going to be those who make life easiest for their customers. The bonus for those who win this particular battle is that they soon build up customer loyalty – and can turn that to further advantage.
there are technological innovations that can speed up your internal processes – and end up by giving your customers better value in the process
It’s a fact of life that once you’ve signed up to a loyalty system, you become remarkably devoted to that service provider. You’re usually interested in getting more for your money. And gradually, you feel that your interests converge. They help you out in various ways, so when they ask you to fill in some kind of survey, you may well be ready to help – especially if there’s a prize or some extra financial incentive. This gives us, the insurance companies, a chance to gain an advantage. We can use the increasingly popular customer loyalty metric Net Promoter Score – or NPS. In essence, this is a new method of customer research that asks people questions like whether they would recommend your company. Based on their responses, measured on a zero to10 scale, you then judge whether they are a net promoter or detractor. Once you have identified net promoters, you can then ask them supplementary questions that will help you to find out what worked for them, and enable your marketing teams and service representatives to build on that.
Behind the scenes
Behind the scenes, there are technological innovations that can speed up insurers’ internal processes – and give their customers better value in the process. For instance, there’s a really clever tool developed by edge IPK that you can use to give customers the same information and enable them to take out the same policies whichever way they connect – whether they drop into one of your branches, call in through an agency, via a call centre, by mobile or by going online. The tool is called edgeConnect, and not only does it give you a versatile customer interface, you can also integrate the whole process with your own back office, so that you can complete every transaction swiftly and efficiently – even coping with legacy systems, or so it claims. Several big insurers in the UK are using edgeConnect, as a result of which, LV, for instance, now reckons to take more orders online than through its call centres.
There’s a lot you can do behind the scenes to be more efficient and save money, and much of it involves rationalising systems. Ours is an industry with a volatile history, in which mergers and acquisitions proceed at a pace that sometimes bewilders outsiders. One of the consequences of this ever-changing corporate landscape is that we are constantly faced with the challenge of integrating systems that may or may not be compatible. When running costs are such a crucial consideration, you just can’t afford to duplicate effort and resources. If you want your business to grow, you almost certainly want to work from a single technology platform – and if you have just bought out one of your rivals, that is more easily said than done. In most cases, you won’t be able to go out and buy a new platform – although several leading companies have found CSC’s GraphTalk A.I.A. to fit the bill, enabling them to apply common practice across their business units while also responding to local legislation and market practice.
But for many, there is no such quick fix, and there’s no technological innovation that can simply hoover up a collection of legacy systems and transform them into one easy-to-use platform that can cope with every internal or external demand. More likely, you have to come back to people, make sure that everyone shares the same goals, that at all levels and in all regions they are incentivised to work towards those goals, and that you have the right partners who can provide you with the systems, software and business processes you need. To stay on track, you will also need a strong governance model, one that has a management team overseeing your corporate strategy and assigning responsibilities between individual business units and the corporate centre. I’ve stressed already that it’s people who matter more than technology, and I still think that’s the case, but there’s no question that technology can play a crucial role in enabling people to do their jobs better. This is where systems like Magenta come in. Many of you will certainly be familiar with this name. Magenta is one of the few specialist suppliers of programmes and systems for the travel insurance industry. Magenta Direct, for instance, makes life much easier for call centre staff who need to be able to log callers, identify them rapidly if they are existing customers, and guide them through all the necessary processes, from medical screening right through to payment of premiums and activation of policies, making sure that they take advantage of every discount scheme and understand all the cover limits and important conditions affecting a policy. Magenta Agency does the same thing for agencies or intermediaries. Magenta Screening enables people to conduct their own screening exercises by responding to online prompts, while the same firm’s Connect programme enables users to connect to any other public website. There are separate programmes for underwriters, for those who need to compile reports and also for claims handlers and customers who want to process their own claims.
Finally, under this heading, if there’s one thing customers repeatedly tell us they want, it’s fast, accurate and hassle-free settling of claims. Here again, Magenta has an impressive system that records all the key details and dates, matches medical claims to screening results, manages payments to insurers, providers, and clients, and generates cheques or payment request documents – and much else besides. It really does synchronise all the various parts of the process. Above all, it settles claims more quickly, which ultimately can only mean more satisfied customers.
The personal touch
We’ve looked at some of the new technologies that can make life easier and speed up processes, but I want to come back to the human element – because across all age groups, it is the case that people still like some sort of personal interaction. Only last year, the Temkin Group, a US research organisation led by Bruce Temkin, who calls himself ‘a customer experience transformist’, did some research on consumer channel preferences. Its survey showed that when selecting life insurance, 41 per cent of respondents preferred to meet someone in person; and when selecting car insurance, 35 per cent opted for personal contact. In both cases, meeting someone in person was comfortably the favourite channel, followed by talking on the phone and self-service on the web. Annoyingly, the Temkin Group haven’t looked at travel insurance, but I don’t see why buying habits in this area should be very different from car insurance. People still like personal contact. In the travel industry, that is most likely to be via a travel agent or intermediary – which could be a bank or supermarket. Several travel insurers in the UK have tied up with well-known supermarkets, so depend to some extent on those smiling faces at the kiosks. The supermarket is an obvious opportunity to target young parents. It’s a chance also to collar older people, who find supermarket shopping so convenient.
it’s people who matter more than technology … but there’s no question that technology can play a crucial role in enabling people to do their jobs better
Whichever way you do it, you have a brief and precious moment in which to capture your client and present them with the most convincing and easiest option available. Your entire organisation needs to be geared to making the most of that moment. One way or another, we’re going to keep coming back to the personal touch, and that means keeping your options open with brokers, independent financial advisers, supermarket staff or whatever kind of intermediary you typically work with. So let’s not get carried away with the idea that smartphones and tablet computers are the future both for consumers and intermediaries. Plenty of them just aren’t ready to embrace technology in that way – and won’t be
ready for quite a while.
At the end of the day, the customer is where we need to start and where we ultimately come back to. For all the great things we can do with technology, I’m afraid the CIO just doesn’t get a look in here. We need to focus first on how technology can fit into making for a better customer experience, not just how technology can work for us. Why do we need to concentrate on the web? Because that’s where so many customers go. Why do we need more one-stop shops? Because that’s what the customer wants. Why do we need to be able to do more things at once, as we can do with some of those back-office systems I mentioned? Because that’s going to keep the customer satisfied. In the end, it’s customer experience and customer demand that prompts technological innovation – almost always with the simple aim of speeding up processes, and boosting customer satisfaction. And that’s what we all want.