Insurance & Technology - 10/09/13
By Nathan Golia
Insurers have a problem: The product they're selling is complicated and requires discipline in the underwriting process so that risk is adequately priced for both parties to the transaction. Insurance agents traditionally have handled admirably the vetting process associated with customer acquisition, but as consumers have grown more accustomed to buying online using sites such as Amazon and iTunes, and have access to ubiquitous, well-stocked big-box stores such as Target and Wal-Mart, they have developed an expectation for buying any product — even insurance — in a quick, efficient manner.
"We have complex products, complex organizations, our buyers have sophisticated needs, what we sell is not necessarily exciting and entertaining, and we really need some high levels of expertise," Mark Breading, a partner at consulting firm Strategy Meets Action, said at the company's recent Innovate for Advantage event in Boston, kicking off a panel on customer experience. "We need to think about the distribution channel as well as the policyholders."
For life insurance carriers, the fallout from this shift has been especially difficult. No one is required by law or contract to buy life insurance as they are to buy auto or home insurance, and the process to be underwritten becomes increasingly consumer-unfriendly compared with each streamlined buying process in another industry.
"Life insurance is usually sold in a way that someone has to go through some medical underwriting at a home office, then depending on your age and the amount at risk, you might need to go through a physical exam," says Mike Plazony, senior VP for Erie Insurance, a multiline carrier that sells both P&C and life insurance. And that process only gets started after agents who sell the required P&C policies that bring customers in the door remember to ask about life insurance, he adds.
Erie wanted to dip into its expansive P&C book for potential new life insurance clients. But there were two customer experiences to manage in the process: policyholders who are wary of the invasive process, and agents who are used to writing a more transactional product in auto and home insurance. The solution was a new product, Erie LifeSense, which provides an entry-level term life policy of up to $90,000 that can be quoted and bound in a short time.
"We understand that our customers are busy, that the life insurance process can take quite a bit of time, and people don't want a large amount of coverage that requires them to go through full underwriting," says Rebecca Nurse, director of strategic initiatives for Erie Family Life. "It's going to be about 15 minutes for the person who's in relatively good health. Everything is click to sign, so there's no paperwork printed or passed back and forth, nor any blood or medical exams required. We also use auto-bank withdrawal for the premiums. It's very transactional, which the agents find really attractive."
Erie leveraged several existing technology partnerships to power the new product. Reinsurance partner RGA lent its underwriting engine to Erie, while iPipeline, which Erie was already using for agent processing, added its e-signature capabilities. An underwriting decision can be made after calling up only a motor vehicle report and prescription record.
Build A Connection
In addition to giving Erie some cash flow, LifeSense also helped demonstrate to customers the value of the life insurance product, as well as the agent channel. Plazony says that customers of LifeSense are likely to respond to upsell messaging and remain customers of Erie and its agents.
"It's really designed to get the conversation started," he explains. "Life insurance is more of an emotional connection with the customer than P&C, which you buy because you have to. It helps to deepen the relationship and helps keep them as a customer."
Learn From Direct Writers
In some P&C lines, finding solutions that help agents establish their value as a partner to the insured, while at the same time meeting their needs for speedy service, is a concern as well. PURE Insurance, which writes coverage for high-net-worth individuals with special insurance needs, faced a dilemma where its target customer was every bit as speed-conscious as the average midmarket P&C consumer. The company remained committed to its agent-based distribution and underwriting, and instead took other lessons from direct writers to change its customer experience.
"We have taken a lot of lessons from the direct writers. They've made quoting, which is considered by most people a hard process, very easy," says CIO Stu Tainsky. "But we're also inspired by companies that work with intermediaries. Our sales force is our agents, and we have to make sure it's as easy as possible for them to work within our systems and provide excellent service to their clients."
PURE recently completed a project in which it added capabilities to its agent quoting portal to help streamline the application process. New technology included prefill capability, to mitigate keying in vital details, and leveraging additional third-party data sources to reduce the amount of information-gathering. The result: a reduction in auto-quote time from 15 minutes to about three. (Editor's note: PURE's initiative won, and Erie's was nominated for, this year's Novarica Research Council Impact Awards.)
"The PURE membership consists of really successful and unusually busy people. We're committed to doing what we can to help them save time and eliminate hassle whenever possible," says PURE CMO Mark Galante. "That means asking for less information whenever we can, to the extent we don't compromise the underwriting. We also want to allow our agents to spend more time developing a greater understanding of customer needs and provide solutions to help them manage risk, and less time keying information into a system."
Offering choice to customers after the policy is purchased is key to PURE's strategy around customer experience, Galante continues. The company is committed to a certain kind of customer, and so it has to be cognizant of the behaviors endemic to that group instead of worrying about casting a wider net.
"We know a fair bit about our customers and there are certainly some similarities to the mass-market consumer. They are using tech more and more, and going online to evaluate all sorts of buying decisions, including financial instruments like insurance. With regards to insurance, we see much more shopping [research] online than buying online at this point" among that target, he says.
At the same time, "we also know that the market we serve places great value on alignment of interests and transparency, as validated by the shift wealthy families are making to fee-based wealth management firms whose success is tied to the growth of their clients' assets," Galante says. That means that when it comes to insurance agents and carriers, clients are looking for relationships that help them "clearly understand what options are available to them and doing everything possible to build customer trust and enthusiasm."
And PURE has robust online capabilities for bill payment and policy servicing, as well as carrier-side member advocates who reach out to customers in advance of major CAT events, for example.
"We're going to be communicating stuff that's transactional in nature -- things like keeping them up to date on their billing," Galante says. "We also seek to go beyond that, give them information that is intended to help them reduce risk. In advance of [Superstorm] Sandy, for example, we put together a series of communications ranging from a blast email containing storm-tracking tools and practical last-minute loss- prevention advice to personal outgoing phone calls to members that were in the path of the storm."
This kind of multichannel, multitouch approach is gaining popularity among insurers, says Peter Hughes, director of global industry programs at Teradata.
"Insurers are looking for multichannel more than they ever have before," he says. "They realize that any one customer may want to access the company for one thing or the agent for the other or the call center for a third thing. The more enlightened approach that some carriers are trying to embrace [is], how can we jointly service each customer with the agent?"