This is the first of a series of articles that will look at the theme of "Process Beats Product" from different angles. Insurers have decades of experience in process optimization. In organizational terms, this experience is often located in the so-called company organization.
In recent years, however, there has been a growing awareness of processes among those involved in insurers' sales channels, especially on the part of brokers and multiple agents. These brokers have a choice as to where they cover their business. As a result of regulation, the sales force has to meet increased requirements in terms of consulting, profiling and documentation. If good processes create active sales time for insurers or if poor processes steal time away from active sales, this has a direct impact on the remuneration of sales.
In addition, the broker also plays the role of trustee for the customer. This means that, in addition to justifying the product selection, justifying the choice of insurer also plays a role. In this context, not only do ratings and corporate key figures matter, but processes also matter. This is why the first part of the "Process Beats Product" series focuses on the customer perspective.
- What criteria do customers use to make their decisions?
In times of increasing transparency and the increasing comparability of insurance products, the following question arises:
"As qualitative and quantitative product features continue to converge, what do I, as the end customer, base my decision on?"
Examples include the life insurance market, in particular occupational disability insurance and annuity insurance for self-employed people. The drivers of this development are companies that award product seals and often also offer comparison calculators that can show both the quality of conditions and the absolute pension amount.
Of course, the answers can be very customer-specific. However, if you take a look at the following three topics,
- Customer experience,
- Customer benefits and
- Customer prioritization.
With regard to customer experience, the first fundamental question to ask is: "Who is adapting to whom? Does the customer adapt to the insurer or does the insurer adapt to the customer?" Depending on the answer, there is already a risk of losing potential new customers and also losing existing customers because the insurer's framework conditions do not match the reality of the lives or the expectations of customers.
However, customer experience can of course also be influenced by the speed of processing times. This applies to the processing of applications, contracts and claims. Behind the scenes, this requires a mix of manual and background processing and claims management that meets or exceeds customer expectations.
Another related issue is the amount of post-processing. Does the customer have to deal with his or her request only once, at the beginning, or perhaps repeatedly, even if he or she prefers not to? If a great amount of post-processing is required, the value of the service is reduced from the customer's point of view, since the customer has to make repeated efforts and is prevented from doing things that he or she considers to be more important. Particularly in the case of small claims, depending on the amount of post-processing, the customer's own estimated or actual hourly wage can exceed the amount of the insurance payment under the contract. This is a situation that should be avoided in the customer experience.
The number of transfer points should also be carefully considered. That is, how often will the customer be transferred to other departments within the company when they call, and how often will they need to state their concerns again? Alternatively, how many menu items in the telephone system need to be selected in order to get to the right place?
Customers of different age groups have their own preferences regarding their interaction with insurers. For example, certain customers may prefer to use a traditional insurance folder instead of online customer portals, or authentication requirements. This means signing a declaration of intent instead of using a smartphone to perform a finger scan or a facial scan.
The last point to mention regarding customer experience is accessibility. This can include service times as well as communication channels and, of course, whether customers can reach a friendly and competent employee just by dialing a general number / hotline or by dialing a direct extension.
All things being equal, the benefit experienced by the customer naturally plays an important role. If you could put yourself in the customer’s place, you might ask: "Does this save me time, money or stress? For example, does this process free me from having to fill out a lot of paperwork? Does it provide me more transparency about the status of my claim or my request?"
Experience shows that people tend to transfer the same expectations they have about mail order businesses to the world of insurance. In the case of parcel services, customers can easily track the current location of their parcel.
End customers have expectations. These are based, for example, on their value system. For example, in their processes, insurers can reward customer loyalty and their level of cross-selling, and penalize high loss ratios.
Insurers can therefore give their customers preferential or more accommodating treatment either through their employees or on the basis of specific rules. KPIs, such as cross-selling rates or customer profitability quotas can be applied in the background.
Performance managers are familiar with customer comments such as "I've been one of your customers for such a long time." This contains an unspoken expectation that customer loyalty should be rewarded and taken into account when processing of claims.
If, for example, product lines or individual product types or products with low complexity and no health questions generally allow for background processing, and if the essential information has already been recorded in previous plausibility-checked process steps and conversion systems, the opportunities offered by background processing should be utilized in the interests of customer satisfaction. Both profitable and unprofitable existing customers receive a positive customer experience. Unprofitable customers are processed so quickly that it does not create any additional costs or take any extra effort. It's a classic win-win situation.
With today's technical possibilities, insurers can promote a positive end-customer experience independent of product ratings and product scoring or with identical maturity benefits. There are interactions between product complexity and process complexity.
Keep it short and simple
Thus, low product complexity also results in low process complexity. This allows higher throughput speed and avoids opportunity costs for the mapping of multiple product options.
Intelligence by Design
However, the smart product architecture of core insurance systems means that product complexity, such as that already established as a market standard in biometrics, can still be efficiently managed. The key to achieving this lies in modular product design. The benefit for insurers lies in the high reusability of atomic components and the resulting fast time-to-market. New products and the corresponding business transactions can be "clicked together" by modeling instead of being programmed in code at great expense. Modern inventory and service systems already provide sample products in this regard. This already significantly reduces the initial outlay and also allows insurers to provide a positive customer experience.