Outmoded insurance agency software gets customer-oriented upgrade

Insurance customers' demand for more personalized services results in an industry-wide movement to modernize outdated company software and systems.

Insurance companies hoping to innovate customer service, quickly bring new products to market and improve efficiency are looking to IT for help.

Channel companies -- cloud services firms and systems integrators -- report an uptick in interest among insurance agencies and carriers in the life and property and casualty sectors. IT firms provide a range of solutions, including integrated software suites, agency management technology and customer relationship management (CRM) systems. Executives report cloud-based offerings have become increasingly important as insurance agencies and carriers seek cost-effective solutions that they can rapidly deploy and configure to keep up with industry trends.

Legacy systems complicate the insurance sector. Some companies in this space use decades-old insurance agency software that struggles to keep up with the pace of change and locks customer data into isolated silos. The existing IT investments hinder some agencies and carriers from pursuing newer approaches. Channel companies, however, work to combine key back-office applications with more flexible front-end systems that improve the information available to insurance representatives and customers.

Overall, bolstering the customer experience, with an eye toward retention and future sales, influences much of the current market activity.

"It is difficult to try to compete on features," said Shay Alon, managing director of Life & Annuity Software at Accenture. "Customer service ... will bring the loyalty they are looking for in terms of retention and bringing recommendations and endorsements. That, I think, is the main driver right now."

Customer focus

For an industry dealing with highly personal aspects of risk mitigation, the insurance sector hasn't been particularly customer-focused over the years. Instead, insurance companies have emphasized transactions occurring along the timeline of selling, underwriting and administering policies. IT systems have followed suit: Insurance agency software tends to deal with the minutia of policies and claims but often fails to provide a comprehensive, big-picture view of the customer.

A lot of insurance companies are saying we need help migrating off of a policy-centric database in the background and moving into a more customer-focused system.

Toan Huynh,
Cloud Sherpas

Toan Huynh, vice president and global insurance sector lead for Cloud Sherpas US Inc., a cloud services broker based in Atlanta, said many large insurance providers have traditionally treated a customer as a policy. Insurance reps fielding client inquiries at a call center would have information on the customer's policy, premium amount and beneficiaries, but would lack detail on the customer and his or her circumstances.

In addition, insurers' systems frequently operate in isolation. A customer service agent would need to consult perhaps four to six systems to come up with a consolidated view of the customer, noted Brock Hubbard, financial services practice director for Bluewolf, a business consulting firm and cloud integrator. And as insurers begin to obtain better information on customers, customers want more information from their insurance providers, he added.

"Customers expect more information that is truly educational and informational, rather than transactional," Hubbard said.

Those customers, he said, want to understand what their policy covers and be able to compare it with other policies.

Against this backdrop, insurance companies are becoming less transactional and more customer-oriented. IT systems support that push, and CRM is one area of activity. Huynh said insurance companies want to move to an agile CRM platform as they transition from an account-centric to a customer-centric model of selling.

"A lot of insurance companies are saying, 'We need help migrating off of a policy-centric database in the background and moving into a more customer-focused system,'" she explained.

The idea, she said, is to let insurance companies leverage data housed in the backend systems, while collecting more information on customers so insurance reps can know them better.

In addition to CRM, video has also emerged as a tool for providing improved customer service. Accenture in May introduced its SmartVideo offering for the life insurance and annuity industry. SmartVideo lets insurance companies generate video messages using personalized customer and policy data. The video messages can be delivered to customers when they first come onboard with a new policy. Accenture views SmartVideo as a more advanced client engagement method compared with the conventional new-policy welcome pack.

Alon said SmartVideo is a white-label solution, noting that customers will perceive the videos as coming directly from the insurance company agent.

Accenture offers SmartVideo either as a standalone service or as a capability that can be integrated into the Accenture Life Insurance Platform's Policy Administration component. The platform is Accenture's integrated software suite for life insurance and annuity customers.

Cloud impact

Service providers are now targeting insurance customers with cloud-based solutions. Accenture's SmartVideo, for instance, is a software-as-a-service offering. Bluewolf and Cloud Sherpas, meanwhile, focus on Salesforce.com's CRM service. And Vertafore Inc., based in Bothell, Washington, provides cloud-based software to insurance brokers and carriers.

The industry's acceptance of cloud marks a significant shift, according to channel executives.

"A lot of insurance companies have been playing catch up," Huynh said, noting that firms in this sector are late to adopt cloud compared with other industries.

Channel executives cited the highly regulated nature of the insurance industry and the privacy rules that apply to financial services firms as two issues that have dampened cloud enthusiasm. While cloud providers have been addressing privacy and data security, concerns linger in some market segments.

Theo Beack, senior vice president of engineering and operations at Vertafore, said 85% of the company's agency management system clients run online in a multitenant environment. But he noted that the largest agencies still prefer to run agency management systems in-house. For that set of agencies, concerns regarding security, availability and sunk investment in data center infrastructure are the key obstacles to running agency management systems in the cloud, he noted.

Agency management systems handle an agency's key functions such as customer quotes, renewals, commissions, accounting and reporting. While the big agencies may not be ready to offload those functions, they have started to run other applications in the cloud, such as content management and workflow, according to Beack.

But even the larger agencies are beginning to look at agency management as a cloud candidate. The pace of innovation and new software releases are helping to win them over.

"The conversations with CIOs and executives at large agencies are starting to shift," Beack said.

Small agencies, meanwhile, have already gravitated toward cloud. Beack said 40% to 50% of independent insurance brokers are small businesses with five to 50 employees. Those firms, he said, want to keep costs low with respect to IT investment and seek to leverage the cloud to boost productivity.

"We want those agencies to focus on growing the business as opposed to IT," Beack said.

Other factors that favor cloud adoption include the account-centric to customer-centric shift among insurers. Huynh said account-centric database designs revolve around policy and account numbers. Such systems track policies and claims, but don't track personal or household information about a policy holder.

Cloud applications such as Salesforce.com, on the other hand, "are naturally customer-focused," said Huynh, because their design, database, user interface and business processes are focused on sales, marketing, customer retention and customer service.

The cloud also gives insurance companies the ability to pilot new products without investing too much time and money, she added. Some insurers, for example, are testing simplified term life products -- interim policies that expire in one to five years -- geared toward millennials. For one insurer, Cloud Sherpas created a pilot for such a product in about eight weeks. The test paved the way for a nationwide deployment and, eventually, a global rollout.

Cloud also serves to streamline and centralize the task of writing and selling insurance policies. Hubbard said the cloud helps break down the silos within insurers, allowing them to push quotes through the door faster and respond to customers in a timely manner. The time element is critical. If the process drags on, the customer may turn to another insurance agent or insurance company website.

"The people who get back first are the ones [customers] are going to move forward with," Hubbard said.

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