11 Emerging Technology Trends for 2013
Peter Drucker said the true business of every company is to make and keep customers. The insurance business is finally evolving from a product-centric to a customer-centric model, and the way it manages customer relationships will change to enable this fundamental shift.
In 2013, customer relationship management (CRM) will give way to customer experience management (CEM) systems.
While a universally accepted definition is still evolving, CEM is basically the redesign and refocus of the entire business process around the individual customer with the goal of creating loyal customers who are also advocates. It will enable up-to-the-second information, multi-channel access and immediate responses, such as quoting and the ability to purchase multiple products across lines of business, regardless of the back-end environment. Carriers adopting CEM strategies will integrate internal and external innovations to create end-to-end customer experiences to achieve the level of customer-centricity necessary to improve customer loyalty, churn and revenue.
Phone/tablet hybrid devices have been introduced by a number of technology providers in 2012. Some are calling these devices phablets. They come as a single integrated device in a mid-sized form factor, or are offered as a tablet with a docking station for a mobile phone. The devices on the market to date are primarily Android-based, and have not made it to the radar screens of insurers in 2012, but expect more of a buzz by the end of 2013.
Mobile technologies in general are really taking off in insurance, and these hybrid devices may prove to be worth investigating. SMA research reveals that one-third of North American insurers plan significant investments in mobile in 2013, up from one-quarter in 2012. The notion of a hybrid device that also provides mobile phone capability will be something many begin considering as more insurers provide agents, adjusters, field underwriters, loss-control specialists and others with tablet devices.
A new distribution channel is emerging for auto and dwelling insurance. The face of a ritual that U.S. employees know so well, the annual open enrollment process, is going to change dramatically under healthcare reform. U.S. health plans are heads-down in planning for private exchanges (public exchanges are another story) and are thinking beyond the technical decisions to the customer experience for the exchange and the fact that they could sell other products and/or services on their private exchanges.
What are they thinking of? How about voluntary benefits such as supplemental life insurance as well as auto and dwelling insurance. But this new distribution point comes with a risk: How effectively will a health plan market auto and homeowner insurance?
Underwriting desktops are poised to take a bigger role in P&C insurers application architectures. Few options exist in the vended solution marketplace, and several larger commercial carriers have built custom solutions.
Underwriter desktops deliver improved capabilities that range from new business and improved collaboration to automated rules application and simplified renewal entry and review. An underwriter desktop will often be integrated with a carriers rating engine, rating and predictive models, document repository, BI environment and other enterprise components, but ideally they provide an underwriter-specific view with the context that considers where they are in the underwriting process and the attributes of the submission they are working. Today, underwriters are typically too saddled with using many systems, websites, spreadsheets and manual processes to conduct business. Underwriting desktops offer a comprehensive platform to simplify the process and improve underwriting results.
Not all consumers are now prepared to buy insurance in the way most insurers sell; therefore, demand for multi-channel strategies will explode as focus shifts from selling to buying preferences. While some consumers will continue to be comfortable with local agent models, others will choose to buy through retail, banking or online channels.
MetLife is experimenting with distribution through Wal-Mart and Allstate with Overstock.com, so we must expect interest from Target, Amazon, Google or even Facebook. Some consumers will find it more convenient to have insurance included as part of a total package as with ZipCars.
In some countries, mortgage lenders include life insurance and travel insurance as part of a ticket cost. Insurers need to embrace commoditization, at least partially, and develop boxed products demanding better predictive analytics, automated underwriting, analysis of abundant social data and distributor-friendly sales support systems. Distribution channelspluralwill be the buzz in 2013.
One of the most overlooked technology investments is to support cybersecurity. During 2012, several insurers and organizations in other industries faced massive breaches and security risks, much of which was widely covered in the media. Immediately after an event such as these, attention rises, but often then falls as companies return to business as usual practices.
Securing corporate data and systems is essential, and becoming a greater risk to insurers as they shift to electronic business models, extend access to partners/customers, and adopt cloud and hosting, for instance. Investing in improved security methods and technologies is essential in operating in a digital or electronic world, and Gartner has found a total under-investment to date among life and P&C insurers in North America.
The momentum of technology advancements in insurance should continue to be strong. Prospects of the next game-changing technology schemes will challenge carriers to figure out how to harvest the growing amount of real-time structured and unstructured data to the long-term benefit of their businesses.
In short, in 2013, it will be less about a new technology and more likely about new combinations of newer capabilities.
Mobile technologies have become more sophisticated and available. Cloud computing offers breakout opportunities to migrate off legacy core systems, improve operational efficiency, and challenge existing business norms. Predictive modeling and advanced analytics can also be instrumental in a carriers quest to differentiate themselves through more efficient underwriting, enhanced customer experience and fraud control.
The coordinated use of technological capabilities like these to create competitive advantages will likely prompt more insurers to consider disruptive technology combinations as one way to gain an edge.
Would a consumer be willing to provide ongoing, more personal information to his or her insurance carrier for better rates and valuable information services in return (not marketing spam)? Maybe if the insurer provided real-time information to help proactively protect life, family and property.
In 2013, insurers have the opportunity to use a combination of big data, social media, real-time decisioning models, mobile and localization technologies to create an ongoing two-way channel for value dialogue with customers that reinforces the value of their products, i.e. life and property protection, especially for life insurers that struggle with the value of big data and social media. The big idea for 2013 is life and property preservation through converging technologies to use personalized, localized data to warn customers of accidents, high-crime areas, faulty products that the customer has a propensity to buy and natural disasters in real time.
By the end of 2013, digital mailbox services adoption will be on the short list for leading insurers. Consumers want to eliminate paper from their lives and insurers have employed various strategies to get there. However, compliance and security concerns have constrained ease-of-use and most solutions involve a good deal of customer effort.
Industries outside of insurance have adopted digital mailbox services so consumers expect insurers to do likewise.
Digital mailbox services meet insurer needs for cost savings and operational efficiency. The bigger gain, however, will be customer satisfaction resulting from a single log-on, self-service experience. Additionally, digital mailboxes will support insurer branding and marketing efforts. Leading customer communication and enterprise content management vendors have recognized that digital mailboxes are important and have already started to work toward partnerships. As insurers go into their 2013 planning and execution phase, digital mailboxes must also be a critical component of an overall mobility strategy.
In 2013, we will see a melding of technology and functionality around a powerful notiondata enlightenment. Just as Europe progressed from the Middle Ages to the Renaissance to the Enlightenment, the insurance industry is moving toward its own data enlightenment.
The technological, functional and operational drivers are in place. The industry needs to put them together the right way, using familiar and unfamiliar data sources to identify trends, opportunities and even catastrophes before they occur. The medieval era of proprietary data stores and feudal jousting over data ownership is ending. Data marts, advanced analytics, predictive modeling, and consumer-friendly UIs have emerged.
Now, break the chains of traditional ways of utilizing data. Rather than an inward-focused view of the carrier, data enlightenment will provide an outward-focused viewthe carrier as a reflection of its capabilities, performance and principles. It doesn't require any new technology, just a different way of thinking.
Some technologies that may see increased focus to exploit in 2013 range from mobile technology to SmartAgent technologies, which are small bot-type applications that communicate from some device in the field to the home base to gather information, make decisions or informe.g. the black box in cars that gathers information on driver activity that can be used to assist in underwriting or rating.
Lastly, analytics process maturity could be the answer for companies spending billions on analytics and BI tools and talent, but in too many cases, continue to struggle with capitalizing on the investment. Many of these companies are investing in process maturity assessments to better understand the changes that need to be made to gain the desired business value from BI and analytics.