Category Archives: Insurance

Joseph Richard Serrano

By Joseph Richard Serrano
President, CX Insurance Services

The Next Battleground for Differentiation

The Insurance Industry – particularly P&C – harbors complexity not found in most others. Fragmented distribution models, supply chain hand-offs, and pervasive regulatory requirements collectively create a challenging environment for Agent & Policyholder experience. As product and price competition grow increasingly difficult for insurance companies, customer experience is becoming the next battleground for differentiation.

Some food for thought…

  • Nearly 2 out of 3 policyholders are at risk of non-renewal with only a neutral and/or negative customer experience
  • Among least satisfied policyholders, only 39% indicate they’re likely to renew and only 44% say they’re likely to recommend their insurer
  • Among highly satisfied policyholders, 86% say they “definitely will” or “probably will” renew their policy, while 96% say they “definitely will” or “probably will” recommend their insurer

Source: J.D. Power

Except for pieces of paper (for those who still want them), insurance companies don’t sell something people can touch, feel, or hold. They sell a promise. Because of this – and because technology continues to empower consumers with choice, convenience, and speed – customer experience has become table stakes for today’s insurance organizations.

Unfortunately, most don’t have the expertise or time to quantitatively measure their Agent & Policyholder experience – nor manage it as a continuous improvement program. They’re certainly not getting this from their BPO vendors.

Fluff? Not likely. A Forrester Research index of customer experience-leading companies has posted an average ten year stock return of 213% vs. the S&P 500 average of 75% from July 2004 – July 2014 (Source: Forrester Research). It’s not hard to envision the financial impacts of a strong customer experience when considering those that got it right: USAA, Southwest, Amazon, and so on. Although as a whole we’re playing catch-up, some in our industry are getting it right too. These and other P&C organizations that prioritize customer experience as a C-Level initiative will win the next battleground for differentiation.

Joseph Richard Serrano

By Joseph Richard Serrano
President, CX Insurance Services

A Best-Kept Secret, Perhaps Kept a Little TOO Well

There seem to be three “common truths” amongst those of us in the insurance industry:

  • Everyone gets into the insurance business “by accident”
  • For a huge industry, it’s an amazingly small world
  • Insurance is the best-kept secret in Financial Services: nice salaries, relatively sane work/life balance, but without the curb appeal of some of those banking gigs

With regards to this last point – given the alarming talent shortage that is growing across the P&C industry, I wonder if this has been a best-kept secret perhaps kept a little too well. Securing talent with the insurance expertise needed to “run the shop” is becoming an increasingly challenging proposition for today’s Carriers, MGAs and Program Administrators.

Some eye-opening data:

  • The average age of an insurance industry professional is 54
  • 60% of insurance industry professionals are older than 45
  • 70% of claims adjusters are older than 40

Source: Deloitte Research

This problem is growing worse on account of two trends: the retirement of Baby Boomers, and a growing skills gap. Over time, hopefully we’re able to transform a common perception of the insurance industry as outdated and stodgy amongst young job seekers. But in the meantime, insurance companies must think about the problem differently.

The global insurance BPO market has grown to US $2 billion, and continues to expand at 17% year-over-year growth (Source: Everett Research). However, BPO models are transforming from pure cost-saving “lift & shift” maneuvers to more strategic in nature – for both full enterprise operations and more surgical, function-specific approaches. Quality control and communication concerns with off-shore outsourcing are consequently driving demand for on-shore BPO partners. Those U.S. based BPO organizations that are able to package meaningful value-add services alongside traditional business processing will continue to differentiate across insurance companies as the talent gap widens.