Posted on 20 Oct 10
In May I attended a session at the 2010 ACORD/LOMA Conference given by Karen Furtado and Mark Breading, both of Strategy Meets Action (SMA), on the changing landscape of insurance distribution strategies. I recently followed up with Karen, a partner at SMA, to discuss how the demands and expectations of consumers are changing the way information is disseminated, accessed and shared, and what the insurance industry is doing to meet this shift in the landscape.
Karen has more than 25 years of technical and business experience within the insurance industry. Her specific areas of expertise include application development, complex system implementations, vendor selection processes, project management, and business process outsourcing and technical outsourcing, as well as focusing on delivering high-value solutions for core issues facing insurance carriers.
Annie George (AG): What types of changes are you seeing in the industry as a result of new technology and what people expect?
Karen Furtado (KF): "The shift taking place in our industry is not as a result of any pre-planned activities but driven by the consumer and by other industries. Ease of doing business, access to information 24/7, and the ability to have data available in real time in other industries has raised the bar in terms of what consumers expect from us, from everyone. People want and expect to access information online instantly, whether it has to do with their insurance or any other types of services and products. We conduct online banking and manage our financial portfolio online, for example. Can you imagine if we weren't able to access our portfolio on the web? We would begin to distrust the very person in whom we have built trust. The same applies to insurance.
"I wanted to check my auto insurance policy the other day. I didn't go looking for a hard copy in a filing cabinet or call the company. I did so by accessing my carrier's website. This expectation is not just limited to personal lines clients; it's the expectation of risk managers at companies as well; it's everyone who is looking for information in real time. If information is not available when we want it, in a sharable format, people will begin to start questioning why. It can't possibly be true that the insurance sector is that far behind other industries in providing this type of technology."
Karen emphasizes that the change in behavior by consumers when it comes to getting information is not limited to a specific demographic. "The Baby Boomers are just as much a part of this behavioral change as any another generational group, including Gen X and Gen Y. It's a universal shift," says Karen. "Everyone expects to be serviced and have access to information because of this new paradigm shift."
AG: How is the direct channel affecting the shift taking place?
KF: "There was a concern before that the direct channel was looking to disinter mediate the agent, but we don't really see that happening. It's more of an enablement to get the information to the insured, a partnership between the agent and insurers to provide real-time data access to consumers.
"We aren't going to get to the point where all new business is done online. If we look at the breath and scope of the business of insurance, the difference between personal and commercial lines or even within personal lines, we see that there are complex transactions that could require an agent's advice and involvement. For example, homeowners insurance, which is still a complex transaction with the number of data fields required, is a cumbersome process on the Internet. Agents will always be required for some insurance transactions, but there is a need to make it easier for their insureds to do business. Some agents have portals for their clients to access information, while others white label under a particular carrier that can provide this service aspect. Most agents don't have the investment capital to adopt the technology so they're relying on the carriers to provide these portals."
AG: "How has/will the influx of apps affect the way in which we do business?"
KF: "It's the world of apps. If you go back just five years, we were mostly talking about websites. Now the conversation is the app. 'What app can you give me that can provide me with the information I'm looking for?'
"Websites are important but they're almost running behind the scene as a data store for apps. As we start to look at technology and insurers there are certain priorities that begin to unfold. Insurers need modern architectures that allow data to be distributed in a number of different ways without being tied to a particular device. It doesn't matter whether I have an iphone, a Droid, an ipad or whatever new device coming out in six months. It's the transport and availability of the data that is key. So insurers are investing in apps.
"An example that resonates with many is when the consumer begins a transaction online and then is referred to an agent. The consumer calls the agent but that agent doesn't have the data yet, the very data the insured keyed in online. The information has to be provided again and the insured becomes frustrated. Everyone in the chain needs the data to be available as soon as it is known and becomes a piece of information."
AG: From the agency side, I had one agent tell me, 'I want more apps from the insurers'. Are you hearing this?
KF: "Yes, if I'm an agent I'm looking at ease of doing business. I may be out in the community often, visiting worksites, so I need a portable solution for underwriting, for prospecting. Some insurers are using the ipad for claims adjusting and marketing.
"It's all about time and access. People are pressed for time and there is a demand to do more faster and for less. How quickly we as an industry can address this need for immediacy will depend on how fast everyone will adopt to the technologies, which goes back to the insurers' architecture…how they're using technology and how portable their info is."
AG: What other trends are you seeing in the way we communicate?
KF: "Social media and social networking is playing a role in how we communicate. Agents and insurers need to provide notification to a large base, and social media is perfect for this. The Tennessee flood earlier this year is an example of how effective social media is in getting information out to as many people as possible in real time. An agent or carrier can send out a tweet on Twitter and provide a large number of people information about shelters, claims handling, etc. It's an excellent mass communication tool during emergencies, a great vehicle for push communication, and can serve as valuable resource for the community.
"Some in the industry may still think these networking platforms are just for idle chit-chat. But they are really maturing. One has to be wise in how you use social media, and have a plan, but you can't ignore it. For example, if you're an agent with a number of producers working for you, look at how you can get them communicating with the community in a more effective way. Look at social networking tools, so that you have information flowing between two sources (you and the consumer) that's more collaborative, more synchronized. Come up with a social networking plan from a marketing and servicing standpoint. Develop a policy for employees so they understand what information you're looking to disseminate, how you're promoting and protecting the brand. Social media can touch every aspect of your business – HR, IT, servicing, marketing and business development."
AG: Is the industry moving forward in these areas – getting info out in real time on-line, coming up with apps to facilitate doing business and servicing, using social media to communicate and engage?
KF: "There are a number of Main Street companies setting up portals to distribute information on-line. Are they totally integrated with data available to everyone at the point of transaction? Not all of them. It's more the movers that are heading in that direction. Many are silent with their information but they do have an online presence and are presenting some information.
"Leading insurers, such as Progressive and Nationwide, are coming out with new innovative products, apps, and use social media effectively. We're also seeing innovation in the area of Workers Comp underwriting where companies are adopting new collaboration tools between the underwriters and agents.
"Slowly, as insurers are adopting new technologies they're able to provide information through different channels. They're trying to work their way through some of their legacy issues while addressing any reluctance on the part of the agent to get on board. Many agents are using very dated agency management systems that are incapable of collaboration, new feature and functions including real-time rating, which impedes the process. What's more, the soft market during these past several years and a struggling economy has been a challenge for many agencies with investment dollars being tight. But we do see some agents emerging and positioning themselves for growth and transformation. They're looking to technology as a game changer, not as something they have to do. The more they begin to look at technology as a tool to help them grow the business, the more adoption we will see taking place."
Strategy Meets Action (SMA) offers a new breed of strategic advisory services that provides analyst and consulting services to both insurance companies and solution providers. Its goal is to provide flexible, adaptable, business-driven, research-driven advisory services focused specifically on helping clients tap into the infinite possibilities for success. SMA's packaging of services and pricing models are based on the need and budget of its clients. For more information, please visit: https://strategymeetsaction.com/.