INSURANCE Customer Relationship Management for Property and Casualty Insurers Improving operational efficiency and reducing the costs of the customer service experience
Overview The insurance industry is a people business, plain and simple. While price and coverage limits can t be discounted, policyholders are secured and retained based on the strength of their relationships with the insurance companies they do business with. It is no coincidence that insurers weight policyholder retention and satisfaction equally with top-line growth when evaluating their operating achievements. These long-term relationships are an essential component of a profitable growth strategy and a driver of an insurer s continued business success. Insurers compete aggressively on the strengths of their service experience, often highlighting customer service awards or service features prominently. As competition for policyholder wallet share intensifies, an insurer s service experience must go beyond promises to match or exceed policyholders service expectations. The same holds true for a policyholder s distribution channel of choice. Whether they go direct or use an agent or a broker, consumers of insurance products rely on valued advisors to direct them toward a strong insurer that offers maximum coverage limits at the best prices possible. Policyholders and their intermediaries select carriers based on the simplicity or completeness of their overall service experience. An insurer with a customer service experience scaled to match can improve the efficiency of the processes servicing these channel relationships while encouraging policyholder or intermediary loyalty. While a comprehensive service experience is a must have, many insurers are unable to effectively service their customers needs. Outdated CRM solutions, manual workarounds and legacy system driven environments inhibit their ability to deliver a consistent and comprehensive service experience. Add uncontrollable business processes, a lack of customer intelligence and an inability to adapt to change, and a cost-effective delivery model seems out of an insurer s reach. The trick for most insurers is to balance a responsive experience that delights with a price tag that doesn t bankrupt the organization. A service experience really pays dividends when it starts to pay for itself by improving key service metrics while reducing operating costs and improving operational efficiency. Pegasystems SmartBPM technology is ideally suited for insurers looking to build, maintain and improve their customer relationship management capabilities. Our leading technology provides an intelligent approach to customer service, optimizing the business processes that support policyholder and intermediary interactions. A BPM-enabled service experience equips insurers with the agility they need to adapt customer service to respond quickly to changes in their business or market conditions. And our intent-led approach to customer interactions enables an intelligent and cost-effective approach to managing the service needs of policyholders and intermediaries. 2
Differentiated Service A Strategic Imperative for P&C Insurers Watch a sporting event on the weekend, and it won t take long to get some perspective on how fierce the competitive landscape has become for property and casualty insurers. Established personal lines and commercial carriers must constantly defend their market share, fending off new market entrants or retrenched competitors. More and more, the value proposition of these carriers centers on the comparative strength of their customer service capabilities, with claimant satisfaction results, customer service awards and online purchase tools as powerful proof points in this competition. When a policyholder is in a car accident or the worst happens to a homeowner, an insurer can build customer affinity by being responsive and accessible. Conversely, a negative interaction can have a detrimental impact on the customer relationship and even drive a valued policyholder or intermediary away. And with competitors looking to capitalize on any missed opportunity, insurers can ill afford to drop the ball when their customers have need of their services. Furthermore, in today s turbulent environment, with investment returns severely eroded, property and casualty insurers must surmount a new set of customer and business challenges in areas many hadn t anticipated. Depending on their risk portfolios, some insurers will have no choice but to consider increasing rates for even their best customers or exiting lines of business altogether. And as insurers take a fresh look at acquiring or divesting assets, policyholder retention will become more important than ever. As these market changes cause policyholders to examine competitors offerings, the strength or weakness of the customer service experience can go a long way in determining whether the policyholder is retained or becomes lost business. Insurers are focusing on the service experience to improve customer loyalty, operational efficiency and profitable growth. 1
Changed Business Environment Means New Service Challenges Property and casualty insurers are challenged to change their traditional view of customer relationship management solutions with the market demanding a consistent and cohesive customer service experience. All too often an insurer s customer service experience is only as good as the agent or CSR answering the phone. Insurers rely heavily on the skills and knowledge of these workers to manage customer relationships with the efficiency and effectiveness needed to drive favorable business outcomes. In a distributed call center environment, manual workarounds are common, inhibiting the efficiency of customer service personnel and negatively impacting the quality of the work being performed. And with policyholder information dispersed amongst product-specific or legacy assets, it is difficult to determine, let alone understand, what a customer s needs might be. This approach lacks the consistency needed to deliver the differentiated service experience insurers are striving to achieve. A Responsive Policyholder Experience When a claimant calls to report a claim, the person is often not at his or her personal best. Similarly, if a policyholder needs to add a new vehicle holder or verify coverage in support of a home purchase, a timely and comprehensive service response is essential. Policyholders want to know that their needs will be addressed and any issues resolved quickly. And with many competitive alternatives and relatively low switching costs for customers, insurers can ill afford to miss the mark. One bad experience can change a loyal customer to a lost customer in short order. Effectively Managing an Array of Distribution Channels Insurers enjoy a symbiotic relationship with a diverse array of distribution channel partners a relationship that can drive revenue growth when managed effectively. Whether they go direct or use an agent or a broker, consumers of insurance products rely on valued advisors to direct them toward a strong insurer that offers maximum coverage limits at the best prices possible. An insurer s customer relationship management efforts must strike a successful balance between servicing the needs of end customers and their distribution channel partner of choice. In today s large organizations, this is easier said than done, with many insurers handling a mix of some or all of these channels simultaneously. Insurers must direct a service experience that suits the needs of these channel partners and their end customers. Whether an individual is looking to buy homeowners insurance directly from an insurer or through an independent agent, a consistent experience is essential to continued success. 2
New Business In order to drive growth, a streamlined and efficient new business process is a must in today s insurance world. More important, the ease with which new opportunities can be identified and processed quickly creates greater opportunity for customer penetration and revenue growth. With information dispersed across a host of homegrown or acquired legacy systems, it is difficult for insurers to paint the full picture they need to understand the value to their business of a customer or distribution partner. Even if a new opportunity can be identified quickly, many insurers lack the multi-channel tools needed to drive work efficiently and convert it into a new revenue win. Training Employees and Mitigating Turnover There are tangible operational issues that impede an insurer s ability to deliver an outstanding service experience. A customer service operation can be a difficult work environment, with a high level of staff turnover. Moreover, it can be several months before an employee is ready to start fielding calls without significant operational support. The process for training service employees is highly manual and requires constant updating, limiting the full effectiveness of an insurer s service delivery staff. Customer Retention Across lines of business, it can take an insurer several years to recoup the costs of acquiring a new policyholder, a number that can have a direct impact on revenue preservation and growth. When a negative service experience drives a good customer into to the arms of a waiting competitor, an insurer loses on both revenue and acquisition expenses. Over time, insurers stand to make more revenue from longer-term customers than they do newer customers. Consequently, retention is essential for insurers looking to grow and maintain their customer base. Furthermore, retained loyal customers can be a strong source of future revenue penetration. 3
Pegasystems Customer Process Manager for Insurance Delivering Customer Service Excellence Customer Process Manager for Insurance (CPMI) equips insurers with the tools they need to deliver service excellence across a diverse base of constituents. Whether dealing with a claimant, an agent or a long-time customer, CPMi helps insurers build consistent service experiences designed to support the unique needs of these customers. Pegasystems leverages industry-leading business process management technology to help life insurers increase the efficiency and effectiveness of their customer service operations. Pegasystems SmartBPM technology allows insurers to take control of the processes that control their customer service operations. Life insurers can leverage this technology to develop an intent-led approach to customer interactions, and build a 360-degree understanding of policyholders and respond effectively to their evolving needs. Intent-Led Processing Insurance organizations often wonder what the world of possibilities might be if they could capture and apply the knowledge of their best workers. More important, what could the service experience be like if they could consistently replicate that knowledge for every customer interaction? CPMi makes this possibility a reality. CPMi s intent-led processing dynamically matches the needs of the customer with the intent of the business, guiding service representatives through an interaction from start to finish. Unlike standard industry solutions, CPMi determines a policyholder s needs in an interaction to help insurers quickly bring calls to resolution or even repair the outcome of a prior interaction. Intent-led processes reduce agent training time and improve the consistency of customer service. Customer Process Manager for Insurance (CPMI) interaction drivers automatically suggests and queues customer-specific processes based on customer information or past interactions. 44
A Dynamic 360-Degree Customer View CPMi helps insurers effectively harvest and utilize the information that is distributed in back-end legacy systems across the organization. Insurers can create a dynamic assembly of enterprise customer information across interaction channels and lines of business. They can harness this information to create a consolidated view of customer business value, interpret the outcomes of prior interactions and intelligently direct possible courses of action. They can also leverage stores of information previously unavailable during a service interaction, with imaged forms, correspondence and data that was housed in manual files or in inaccessible legacy systems. Insurers can use a 360-degree view to tailor service levels based on unique customer needs, product interests or relative value to the organization. CPMi enables predictive servicing based on customer history, goalbased customer experience management and real-time interactive analytics. Tailored Marketing Campaigns Making the right offer at the right time can help insurers achieve revenue growth while simultaneously encouraging customer loyalty. CPMi s custom-engineered campaign management solutions feature real-time decisions to drive offers based on customer profile, history and business goals. These systems offer role-based, context-specific scripts and objection handling advice. Based on the customer s value or life needs at a certain point in time, an insurer can develop and configure marketing campaign offers, rules and scripts quickly and easily. Service and Performance Management Insurers can leverage CPMI s comprehensive 360 degree view to combine relevant customer information from multiple legacy situations.. CPMi provides a full set of capabilities for managing customer service interaction, from receipt to fulfillment, even when back-office processing is required. Pegasystems manages the routing, queuing, prioritization and automation of work that happens after the call, including adjustments to other systems, correspondence or hands-on decisioning. Managers can set service level agreements (SLAs) for all work types, and the system will handle SLAs for the customer across sub-tasks. This capability helps with the prioritization of work and provides reporting and alerting that ensures compliance with internal or regulatory guidelines. 55
Channel Interaction Pegasystems solutions for Web self-service deliver improved customer processes and reduced cost of services. Insurers can deliver service consistently across channels for seamless interaction by telephone, IVR, Web or mail. CPMi is a completely thin-client application that can be easily exposed on your public Web site using Web services or portlet integration tools. An insurer can leverage a channel aware program that allows a service representative to pick up and complete an online request at the point it may have been abandoned, to manage customer interactions that may have started on the Web for customers who reach out to the contact center. CPMi also features intelligent customer interaction management, one-and-done service process automation, an SOA architecture that enables deployment to multiple channels without modification and real-time interactive analytics. Pegasystems solutions rule specialization enables rapid channel customization as desired. In addition, the system has sophisticated role and privilege functions that control what customers can see and do. Business Agility Flexibility is essential in a business that needs to adapt its service to respond to natural catastrophes or changes in market conditions. A scalable solution is essential to ensure a rapid business response to situations where a large increase in call volume and users can cripple an organization that doesn t have tools scaled to match. Authorized users can rapidly model, test and change the rules and decisions that drive the system. Managers can provide individual users or user classes with access to specific rules, distributing the power to change the system throughout the organization. And while CPMi allows business users to make changes to the system, it also allows you to manage these changes and route them for approval prior to deployment in the entire user base. Servicing the Complete Needs of the Front and Back-Office As insurers continue to seek ways to improve service delivery, a blurring of the traditional front and back office roles is starting to occur. Traditionally, most of the processes initiated within a call center are powerless to do much beyond taking the request and providing information on the next steps that will occur once a policyholder is off the phone. Many insurance processes are initiated in front-office contact or service operations, and the ability to successfully service these customers is determined by how quickly these requests can be fulfilled by back-office operations. In most cases, service levels for transitioning work to the back office are nearly nonexistent, all but ensuring that insurers can expect to incur additional expenses from customer follow-up calls. More than ever, a strong service experience is tied to an insurer s ability to deliver a seamless experience across service operations. Nowhere is this more evident than when a claimant files a claim. The speed with which an insurer can process a notice of loss has a direct correlation with the severity and expense of that claim. As insurers look toward new ways to improve their customer service experience, the ability to manage and actually resolve work sooner in the process will be essential. 66
The SmartBPM Difference Pegasystems SmartBPM technology accelerates develop-ment, increases business agility and provides the flexibility organizations need to achieve a truly differentiated customer service experience. Insurance companies can leverage the following concepts and deploy BPM technology to maximum effect: Directly Capturing Objectives This game-changing approach to development ties business process and application development back to the stated objective of the business, ensuring that applications deliver their intended value. Directly Capturing Objectives (DCO) tears down the functional silos that exist between business and IT stakeholders by creating a collaborative environment that is responsive to the needs of the business and the customers it services. DCO encourages collaboration between business and IT resources, eliminating the inefficient back-and-forth requirements and development processes common to most insurers. Automating the Programming The SmartBPM platform simplifies the development process by empowering business users, eliminating the inefficient code-driven cycles that most organizations are used to. Business subject matter experts can use the Microsoft Visio tool to map out business processes that meet their specific needs and objectives. Pegasystems dynamically generates code from that Visio diagram, allowing a user to see and make changes to a test system in real time. SmartBPM is the only business process management technology tool that unifies a marketleading business process management platform and business rules management engine within a single architecture. Automating the Work Pegasystems technology is designed to build decision-intensive applications that process work efficiently and effectively. Pegasystems drives work to completion, intelligently routing work to the right service representative at the right time and automating processes or enabling the appropriate response to a unique interaction. Insurers can use the inherent power of the Six R s Receive, Route, Report, Research, Resolve and Respond to orchestrate customer service interactions efficiently and effectively. They can use this technology to rapidly develop, deploy and iterate new business processes, building organizational agility that can manage work at the front end or drive it quickly toward the appropriate back-end operations. Pegasystems customers have achieved dramatic improvements to their service in the following ways: Increased policyholder retention by five points Decreased average handling time by 44% Decreased agent training time by 28% Increased agent, broker and policyholder selfservice by 15% Improved new business conversion rates 100% Significantly reduced expense ratios by eliminating up to 75% of manual steps Grew agent and broker channel loyalty by 130% 77
Conclusion In these turbulent times, life insurers need a customer relationship management solution that enables a rapid response to changes in the competitive landscape. Successful insurers will deliver a tailored service experience across a customer base of policyholders, insurance agents and brokers. And as insurers are forced to do more with less, they must work harder than ever to improve their customer service experience in an efficient and cost-effective manner. Customer Process Manager for Insurance enables life insurers to interpret and anticipate customers wants and needs, allowing them to tailor an approach for each service interaction. CPMi assembles distributed legacy information into a comprehensive 360-degree view, equipping insurers with the tools to make informed and intelligent decisions about policyholders value or customer service needs. And insurers can optimize their ability to control customer interactions with an intent-led approach to interaction management that dynamically matches a customer s needs to the intent of the business. Pegasystems industry-leading SmartBPM technology provides insurers with unparalleled agility, enabling rapid business responses to changing customer needs and market conditions. Insurers can deliver a comprehensive, costeffective service experience that exceeds policyholders service expectations and reduces business costs. They can improve key operational metrics and deliver a customer service experience that encourages revenue growth and policyholder loyalty. 88
About Pegasystems Pegasystems (NASDAQ: PEGA), the leader in Business Process Management, provides software to drive revenue growth, productivity and agility for the world s most sophisticated organizations. Customers use our award-winning SmartBPM suite to improve customer service, reach new markets and boost operational effectiveness. Our patented SmartBPM technology makes enterprise applications easy to build and change by directly capturing business objectives and eliminating manual programming. SmartBPM unifies business rules and processes into composite applications that leverage existing systems empowering businesspeople and IT staff to Build for Change, deliver value quickly and outperform their competitors. Pegasystems suite is complemented by best-practice frameworks designed for leaders in financial services, insurance, healthcare, government, life sciences, communications, manufacturing and other industries. Headquartered in Cambridge, MA, Pegasystems has offices in North America, Europe and Asia. Visit us at www.pega.com. Copyright 2010 Pegasystems Inc. All rights reserved. PegaRULES, Process Commander, SmartBPM and the Pegasystems logo are trademarks or registered trademarks of Pegasystems Inc. All other product names, logos and symbols may be registered trademarks of their respective owners.