may also have many policy terms over time for the same policy.
The policyholder will also have many billing records. And, as
we said above, the policyholder may also have been or may
currently be a claimant.
The notion then of a client is central to being able to collect
(logically, not physically) everything we know about a policyholder over the lifespan of his or her relationship with the
insurance carrier. Consider also that many insurers have life
companies as well as P&C, and some also have banks. In these
instances, client-centricity has major additional dimensions, the
benefits of which are reflected in the energy that carriers put
into building and maintaining these views.
Client-centricity also creates powerful operational economies and increases data accuracy. Consider the humble
address. An insured may have a billing address, a home address
and an alternate (think winter snowbird) address. Each of these
should be entered and stored only once and maintained in
only one place. Addresses, because they are free-form text, are
difficult to validate and holding them in only one place makes
this task easier.
Carriers that have addresses other than risk addresses associated with policy records have a huge problem with consistency and accuracy. Now, getting even more reductive, consider the
policyholder’s name, which again is free-form text. For example,
my name is stored in various computer systems as “George
Grieve,” “Grieve, George,” “G. Grieve,” and “Grieve, G.” And I
have only two names.
With nothing obvious to validate against the chance of misspellings finding their way into the data records is high. Indeed,
while the analyst-class focuses on the necessity and advantages
of knowing your client the reality on the ground is that many
carriers still struggle with the creation of accurate “name and
address files.” How does a computer know, for example, that
“George Grieve” and “Grieve, George” are the same person, or
that “123 Amber Lane” is the same as “123 Amber Ln.”? True
there is address scrubbing software and the like, but ultimately
many of these judgement calls require human reasoning.
What does customer-centricity mean for third-party,
core-system vendors and their clients? Recall prior conversations about best-of-breed versus integrated suites? A well designed integrated suite should have the kind of client function
we outlined above, where policyholder data (for example) is
stored and maintained in only one place and is related to all its
associated policy, billing, and claim records to provide a complete historical view of their relationship with the carrier.
But what of the best-of-breed solution where the vendor has
written and sold different modules over time or where the carrier has purchased modular solutions from different vendors? If
you build and sell standalone policy, billing, and claim modules
then each has to solve the “name and address file” problem
independently, which means that there are probably three competing options for the client.
If this all sounds a bit “weedy” please understand it is not.
This is a high-level architectural issue for core systems implementations and is not trivial to solve. My point here, as always,
is to note that innovation is all fine and good if the carrier has a
robust platform on the basis of which to innovate.
If a carrier cannot identify its customers at this founda-
tional level then the industry is threatened by the Googles and
Amazons that are circling our campfires as we speak. I think the
industry attitude has been one of complacency toward outside
threats based on the knowledge of how complex and regulated
the insurance product is. The attitude seems to be, “They think
they can figure this out? Let them try.”
This view is dangerously wrong-headed in a couple of ways.
First, there are more smart and innovative people in technology
than in insurance and if they had to they would “figure this
out.” Second, being smart people the techies took one look at
our Byzantine world and decided to partner rather than get
ensnared. This partnering is a way of choosing winners and
losers, dictated from outside the industry. So now the tables are
turned. They don’t need to figure out insurance, but insurance
needs to figure out customer-centricity, at which, of course, the
Googles and Amazons are world class.
Let’s return to the core system arena for another part of the
story. Recently I wrote an article about portals (ITA Pro December 2015: Any Portal in a Storm) that outlined the importance of those systems to the bottom line of the carrier. In that
article the “customer” was the agent but the arguments apply. A
carrier deployed a customer-facing system, which was written
more for in-house users than customers. No time was spent
considering the world from the customers viewpoint—the language they use, the way they think, the things they want to do
(and don’t want to do)—and the result was entirely predictable.
The customers went elsewhere, where they could have it
more the way they wanted. I also noted in a prior article that my
older daughter bought her first auto policy last year and chose
a carrier because they “have a really cool app” (they also have
decent coverage; my contribution to the process).
So the analysts are right, the Age of the Customer is upon us
and it will prove difficult for many carriers to respond to, with
results that are entirely predictable. As implied by the title of
this article, we as an industry, have wrestled with this issue for
a long time, but usually in more parochial contexts such as how
to support cross-sell discounts or provide underwriters with
an “account view.” Today the stakes are much higher. Without
core-system customer-centricity there will be no portals or apps
to attract and retain future insurance buyers. ITA
George Grieve is a popular writer and speaker on the
subject of insurance technology solutions. He is the
author of the book “Shop Talk” and is CEO of the consulting firm CastleBay Consulting. The views and opinions in this column are those of the author and do not
necessarily reflect the views of the Insurance Technology