Connectivity to optimize the commercial and operational efficiency of insurers in 2010
Connectivity has invaded every aspect of our private and professional life. There is no escaping it and the insurance industry is no exception to the rule. Overlooking connectivity would certainly have a negative impact on both the commercial and operational efficiency of insurance companies.
Connectivity and a new generation
The arrival of the « generation Y » on the job market is a fact that cannot be ignored. Moreover, this generation, formed by people born after 1985, has new and different expectations that can’t be disregarded.
Generation Y, also called the internet generation, wants to be connected anywhere, anytime. In their private time, at the university or at work, … these young people cannot longer do without.
So it is not surprising at all that this generation feels attracted to state of the art companies and products that provide a high level of connectivity : access 24 hours a day, possibility to act in an autonomous way, …
One could think that his phenomenon is restricted to the generation Y and that companies still have all the time in the world to adapt themselves to its needs, considering the fact that a majority of these people is still quite young. But this would be a wrong presumption as generation Y has a huge influence on other generations. Just think about all the parents who have discovered « facebook » through their children and are now active users.
Moreover, for a lot of industries, connectivity has become a day to day reality : reservations for flights, business trips, hotels, … are made online; banks and brokers provide transactional websites.
Connectivity and commercial efficiency
Of course, the insurance industry cannot escape the impact of connectivity. According to market analysts such as « Gartner » or « Forrester », more and more people are basing the choice of their insurance company on the possibilities it offers in terms of connectivity and ‘self service’.
So an insurance company without a website could lose a significant number of clients as connectivity has become an essential topic that contributes in defining the general service level of an insurance company.
But how does connectivity fit within the framework of an insurance company ? In our opinion, the online selling of insurance products would be rather difficult due to the lack of personalized advice. However, once the product has been bought, it becomes very interesting for the client to be able to consult his products online and to make online modifications to them within the context of an ‘after-sales’ service. The user-friendliness, the « design » and the high quality and technology level of a website are very important elements to transmit a positive « corporate » image of the insurance company.
Certain brokers consider this after-sales service on the internet as direct competition coming from the insurance companies. Afraid to lose their clients, many brokers prefer that their clients don’t have direct access to the insurance company from which they bought products through their intermediary.
If the brokers don’t want the insurers to offer their clients a direct access to their corporate websites, they will be obliged to provide themselves this kind of web connectivity. However, this solution is a very expensive and complicated one if to be supported by one single broker, especially with generation Y In mind who requires not only web connectivity but also wants it to be based on the latest technology. Brokers could also join their forces in order to have the adequate size to offer this kind of service to all of their clients.
By their size and their investment capacity, insurance companies are « naturally » well placed to offer this kind of internet sites to their clients. We think that brokers shouldn’t consider this after-sales service as direct competition but rather as a « tool » they can use. This tool could reduce their administrative procedures (as the client can make himself minor modifications) and allow them to realize additional sales (through a « button » on the website enabling the client to ask his broker advice via email when buying an additional product).
Connectivity and operational efficiency
Connectivity can not only be established between an insurance company and the clients but also between an insurance company and its brokers.
Internet connectivity with the brokers via « web services » allows to improve all the « business » processes. Thanks to connectivity, each broker can have automatic remote access to the most recent client data, realize sales transactions, optimize the client service, make changes at the client’s request, … and all this in real time ! In this way, connectivity reinforces the reliability of the data and will save the brokers a lot of time.
But insurance companies can also benefit from connectivity as it allows the creation of central pan-european entities dedicated to the management and distribution of a specific product across Europe. One single back office will be installed within this central unit. The local entities and the intermediaries will access this central tool via a web portal (front office) and web services in order to ensure the sales activities and client service.
The web portal does not only allow an increased specialization, but also makes the organization more flexible. Indeed, each local actor will be able to determine his own work method: advice only, contract and/or claim management.
With the arrival of generation Y on the job market, connectivity is « booming ». If insurance companies, including their brokers, want to maintain a high level of commercial efficiency, connectivity is a must. The operational efficiency of insurers is also based on connectivity and regards both their relation with their brokers and their in-house organization. In practice, this connectivity is reflected in the availability of a direct website and the creation of web services.
Every insurer that is currently reengineering its in-house systems or optimizing its in-house processes must take into account the requirements with regard to connectivity. Indeed, it is clear to see that connectivity will be modeling in the future the distribution models and the « go to market » of the insurance companies.