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Transformational Thinking in Insurance Customer Service

Sam Medina
Insurance Experts' Forum, April 24, 2014

Insurers know that growth in revenues, profits and market share is dependent on their ability to attract and retain customers. In a highly competitive arena this means taking customers from competitors in the mature markets, and getting on top of the hill first in the emerging markets. They know that consumers are more informed, have access to more powerful devices, are more connected and can make formal and informal comparisons of products and services. They are therefore more demanding than consumers of the past. Insurers also know that customers will pay for value. Leading global insurers know how to create differentiating, lifetime value-adding propositions. In most cases, what separates the leaders from the rest of insurers is that the leaders have already shifted from being inwardly-focused to being customer-focused. They have engaged in some form of transformational thinking. (For a good definition of transformational thinking vs. legacy thinking, see my first blog.)

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Most insurers’ organizations are structured to be product and operations focused. The key performance measures are by functional area, and so are the processes, information and data, and underlying systems. Communications from one department to another, and information exchanges are for the most part linear. Work makes its way across the company in factory-like fashion. This is not necessarily wrong, but it does pose challenges with respect to creating a truly customer-focused culture and organization. For example, a breakdown in the linear information exchange or in the systems utilized by a department can be considered as having a small impact with respect to departmental efficiency targets. That is inward focus, in action. The same breakdown can, however, cause a significant delay overall in delivering a service to customers.

Insurers that have perpetuated product-focused and operations-focused organizational structures find it difficult to compete in emerging markets, and to compete globally. The quality of customer service, or quality of the customer experience vary by geography and often by distance from the home office. Product-focused and operations-focused structures aren’t well-suited for locations where the focus is sales, distribution and customer service.

Transformational Thinking

Insurers need to shift towards transformation thinking with respect to customer service. The initial steps are as follows:

Reject these ideas:

Once again, don’t consider small enhancements, or step-by-step refinement to existing customer service processes, information exchange and systems as viable options leading to successfully competing in a customer-centric, highly competitive, global arena. Also, it would be unwise to imagine that better processes and systems will change your corporate culture into being a customer-focused culture. It is going to take more than that.

Accept these ideas:

Creating a customer-focused culture requires a major transformation program and is inevitably, a strategic initiative. Industry leaders who excel at customer service have best practices that include developing a company-wide customer engagement strategy, and a transformation initiative with a senior executive overseeing it. They have segmented their markets and their clients; rated clients by the total amount of business they conduct with the insurer and by customer satisfaction. Most of them have also engaged a strategic partner to help develop a closed-loop process for customer service including the mapping of all the customer touchpoints from the initial sale, to policy contracting, claims, renewals and on-going communications. Their strategic partner assists in change management, stakeholder management (to balance the wants and needs of each functional area), and most importantly to manage the major transformation program. The partner also provides value by recommending and implementing customer engagement systems and tools, and leveraging new technologies including mobile, data management and analytics to gain customer and products insight.

Insurers that want to achieve real transformation also seek to change their rewards and incentives, and how they compensate associates who are in customer-facing roles to better align with customer service goals.

Lead with these ideas:

Insurers can begin by leading an effort in launching a customer service transformation program in your company. In addition to the best practices mentioned above, build a customer journey map from decision-making to judging the experience. We showed an example of this map several weeks ago in our blog on Transformational Thinking in Insurance Marketing. You can view that map here. Leverage today’s technologies in assisting the customer in every step of the journey. These include mobile devices and social media, predictive and prescriptive analytics, on-line education and customer self-service, customer engagement systems. Include solutions to create a digitally-connected enterprise, and to create an enterprise-wide information and data management plan.

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About the Author
Sam Medina is a global business transformation executive at TCS, who specializes in advising insurance and healthcare executives on transformational thinking and leadership.

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