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A Quick Guide to Implementing a Customer Experience Transformation

, | March 17, 2023 | By
Silhouettes of people interacting with a digital concept overlay

by Candice Abante & Charles Sybert – 

Consumers are constantly connected using app-native technology and expect an easy experience in doing business. The ease of changing an insurance carrier means every customer experience impacts the company’s perception. With the cost of customer acquisition dramatically outweighing the cost of maintaining a customer, insurance companies are actively engaged in the digital experience to create improved relationships with the insured. Insurance companies strive to anticipate the needs of the prospect and insured before they even realize they need the interaction.

So why does customer experience matter for Digital Transformation?

According to Forrester, “to succeed in today’s digital environment, firms must deliver smarter, more-customer-centric interactions that feel like they were tailored for each user and his or her specific set of circumstances.”

What are the challenges for the insurance industry in the Digital World?

One of the insurance industry’s most significant challenges is the historical growth of the IT landscape with a multitude of applications, data separation, and the inability to create an enterprise view. Breaking the perception of being an old out-of-date dinosaur, Insurance companies have been quick to discover new technologies that push the automation limits. Still, the change is not always adequately architected or successfully implemented. And it is no paradox that this is precisely where the problem lies today.

Though a significant amount of complex modernization effort has been invested over the past decade, the structure and organization of many of these so-called “back-end” systems still reflect complex corporate organizations. Data remains in silos and cannot be combined across business units even for the same insured. Product development becomes challenging due to legacy system technical debt.

The IT systems from the first phase of digitization are still posing problems for providers today:

  1. The digital interface for the policyholders often has to deal with complex solutions, to support back-end processes instead of focusing exclusively on their own needs.
  2. Technology projects can be large, complex, and require years to implement, requiring maintenance of legacy systems. Once the systems come online, the new challenge is being able to sort out the data and customer experience between systems. With technology improving daily, the newly implemented system is sometimes out of date before it goes live.

As a result, according to avenga.com1, many customers perceive their insurance policies as inflexible and not customer-oriented. This, despite all the investments.

What strategy to use for a successful digital transformation?

Stefan Butzlaff from Finanzdienstleistungen AG, a Swiss Life Insurance Company, says he connects the two innovation drivers of “efficiency” and “customers” in the overarching digital strategy.

Our central focus is on knowing the needs of our user groups. Every technology, every project, starts from the user. A detailed analysis of the current pain points is the basis of every newly developed digital solution. A cultural change of perspective, i.e., anchoring a positive assessment of change, is also indispensable for constant progress. Another critical success factor for sales in the future is to consolidate and radically simplify complex work steps through digitization. This requires an agile and pragmatic approach. In a rapidly growing FinTech market, speed is necessary to remain competitive in the long term.1

How to implement a successful digital transformation?

It is not sufficient to understand the immense benefits of digital transformation. Insurance companies should realize that the challenge will be choosing how to structure the organization and rollout and deciding where and how to get started.

Customer expectations are primarily driving innovation and the digital transformation of insurance. Today, digitizing and upgrading the insurance value chain is more critical than ever.

Before we continue, let’s define the value chain. The insurance value chain includes all the significant interactions driving insurance company value:

  • Product management
  • Sales and distribution
  • New business underwriting
  • Payments
  • Claims
  • Customer Service

Digital Transformation has been sparked by the newly available tools and technologies such as AI, IoT, machine learning, predictive analytics, big data, and cloud-based services. While these tools are the foundation of evolution, the organization must properly harness the capabilities to truly harness the change.

For carriers that have a complex mix of legacy IT systems, the concept of tackling the digital updates and implementing new systems can seem daunting, expensive, and highly risky. Efforts like roadmaps to frame the future, using tools such as cloud-based infrastructure, enabling an agile, multi-phased approach to your digital transformation at your own pace, are used to mitigate some of the risks.

No matter where you start, one critically vital feature to consider throughout your digital transformation is your technology’s ability to update and remain current continuously. Here are a few tried-and-true steps you should take to make this process as smooth as possible.

Stage 1: Automate Current Processes

The first stage on the journey to digital insurance transformation is the automation of current processes. Consumers today expect immediate responses and personalized attention, which would be nearly impossible without automated functions. There are real gains to be realized, and many operations in the insurance industry can be made more efficient and effective with digital technologies and techniques such as:

  • Automating underwriting rules and driving referrals through more efficient workflow processes
  • Automatically opening claims coverage and setting reserves based on pre-defined rule sets
  • Implementing live chat functions and automatically answering customer questions and concerns in real-time
  • Automating billing and communications

Stage 2: Optimize for Strategic Focus

The second stage of an insurer’s digital maturity is optimizing for strategic focus. A step beyond automation of tasks, this stage focuses on identifying critical elements that differentiate carriers in the marketplace, leveraging digital technologies and strategies to optimize processes that support those market goals.

Like the automation stage, the strategic focus stage has inherent value and is not necessarily just a stepping stone to another step in a carrier’s journey. Indeed, market differentiation alone can make or break a business.

Stage 3: True Digital Transformation

The third, most developed, digital maturity stage is the complete, end-to-end transformation of a business into an open, connected “platform” model.

Sometimes referred to as “ecosystems,” platform companies, like Amazon and eBay, are organized to meet evolving market needs by orchestrating connections between buyers, sellers, products, data, and service providers — all in an open, informed, iterative, and dynamic cycle of supply and demand.

While this level of development requires extensive digital underpinnings to operate, the model requires more than technology alone. It requires a new way of thinking and acting and represents the complete transformation of an insurer’s organization and go-to-market strategy. True digital transformation:

  • Puts customer needs and expectations at the center of every decision and process
  • Shifts an organization from discrete internal and external business units — each with its own sets of data and processes — to ongoing, real-time communication and data sharing
  • Facilitates dynamic connections among shifting market participants
  • Radically changes relationships between partners, competitors, suppliers, etc.

For most organizations, the first signs of positive change from digital transformation include:

  • Standardized processes
  • Cost reduction
  • Sales productivity
  • Speed to market
  • Omni-channel integration

But the most positive change that indicates a successful digitalization is when the customer gets to experience the convenience and efficiency of the insurer’s service through the transformation.2

RCG has developed a proven roadmap methodology to make technology investment decisions considering business objectives, existing technology stacks, trends in technology, and strategic goals. We would like to show you how this can bring clarity to the difficult decision of where  to go next.


Works Cited

1. Avenga

2. Duck Creek Technologies