Market Focus: Insurance — Pursuing a New Policy

Risk-averse. Conservative. Traditional. Three common descriptions of the insurance industry—and when it comes to embracing new technologies, insurers often get stuck with the same labels. 

Don’t tell that to the Gecko—the Geico spokesreptile has embraced social networking, with 7,500 fans on Facebook. Allstate’s all over viral marketing, with its FrienderBenders.com enabling visitors to create virtual pile-ups and share the results with friends. And numerous other insurers now have customer communities to foster conversation about products and coverage. 

Despite these projects, most of the industry is still behind the curve in its use of the social Web. Kevin Kraft, who covers the life insurance sector for consulting firm Accenture, says that insurance’s involvement in social media is just “in the first or second inning.” Corporate culture remains largely unchanged: Most insurers have little direct engagement or dialogue with each customer, whose primary source of information is the agent trying to upsell her.  

That’s likely to change—and soon, says Ellen Carney, a Forrester Research analyst. “There’s a huge amount of interest in social media,” she says, noting the irony that insurance is “a more-likely industry than others to block those sites for [its] employees.” 

Where a customer’s experience was once primarily bound up in interactions with her agent, she’s more likely now to deal with the carrier as an entity through Web sites, portals, and even community forums. In other words, customers are demanding the kind of multichannel experiences they’ve come to expect with online retailers. They want to be able to price and buy online, and they want to be able to comparison shop—without having to visit a million sites. “Geico and Progressive have really set a high bar in terms of customer experience,” Carney says. “Even if you’re a smaller carrier, you pretty much have to replicate that experience.” And it’s not stopping there. Kraft says that, along with a large client in the life insurance sector, Accenture has been working to develop a native iPhone application for customers. 

In addition to consumer demands for multichannel experiences, Carney says that insurers’ internal structure seems to be changing, too. “[Insurance is] getting kind of hip and sexy,” she says, partly due to the consumerization of enterprise technology. Employees—especially members of Generations X and Y joining the workforce—are expecting work tools to resemble the technologies they use in their personal lives. Also, Carney notes the shift among insurers’ upper management. “There’s an influx of people coming in saying, ‘We need to rethink how we’re doing things,’” she says. “You’re seeing that reflected in the new look of the insurance CIO.” Those new individuals, she adds, aren’t wedded to decades-old legacy software. Fresh faces could also explain the increased interest in software-as-a-service (SaaS). “When people first started talking to me about SaaS and insurance I said, ‘This is an industry that would never go for that.’” Carney says she’s had to eat her words somewhat, and that any vendor selling to the insurance vertical now has to have a SaaS offering to remain relevant. 

Some insurers are demanding more than just on-demand. Allstate, for example, adopted an entirely new methodology for its agents, according to Bob Pankauskas, the firm’s director of consumer insights. At a recent Forrester Research conference, Pankauskas described embracing innovation through activities such as experiential learning and internal communities—even bringing in the CEO of Starbucks to speak to employees. “The hunger…to develop ideas is enormous,” he said. 

Another big business shift is “from paper to portals,” Carney says. An ecofriendly and economical way to reach customers, portals also remove the latency in communication between carriers and their distributors and agents. “You, as a carrier, want to make sure you’re easy to do business with,” she says. 

For sales reps, the emphasis is still on “selling more plans.” Technology budgets, according to Carney, are flat, so reps are turning to low-cost tools to better target potential customers. 

“The insurance industry has been accused [of being] a product-push industry, not an engaging-customer-experience industry,” Kraft says, insisting it’s an unfair reputation. Social media can help engage customers, he adds, but can also help learn more about them, which helps salespeople sell. Social media can be used, for example, to identify the drivers that led to the purchase of a particular life insurance policy. Insurance could also follow other industries’ lead, he says, tapping into social communities to glean ideas for products and services. 

Automation can help organizations cut down on both time and costs, says Todd Young, the founder of ProspX, a provider of CRM solutions for commercial insurers. “Salespeople in the commercial-insurance space have an incredibly challenging job to do and it’s really because [of] how complicated the multiparty sales process is in commercial sales,” Young says. 

ProspX calls its technology “simple CRM” in that it doesn’t have campaign management, but rather focuses on the sharing of information and customer data through the organization. “An insurance salesperson is selling a complicated product and is responsible for knowing so much about so many specific industries,” Young says. Collaboration and automation tools enable salespeople to access information about areas they might be selling into—that not only saves time, but also makes the resulting interaction more relevant and meaningful for the customer.  

Top Vendors:

1. CSC
2. Guidewire
3. StoneRiver

Source: Forrester Research

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