The Insurance Customer Experience The Vital Role of Customer Communications and Document Management Author: Mark Breading, Partner Published Date: March, 2014 This perspective is based on SMA s ongoing research on customer communications and document management in insurance. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 1
Table of Contents About This Sponsored White Paper This sponsored white paper is based on a 4Q13 Customer Communications and Document Management survey conducted by SMA in partnership with INN. Interactive Intelligence, Iron Mountain, Xerox, and Xpertdoc have sponsored the study and paid for distribution rights, and have not influenced the results or analysis. The content is a synopsis of SMA s analysis and insights. The Customer Experience Evolution 3 Customer Experience Factors Evolving From Digitization to Interaction Insurer Priorities and Plans 4 Inbound Interactions: Image/Voice/Agent Digital Content Creation Outbound Interactions: Print and E-Delivery Document and Records Management Summary and Recommendations 8 Summary SMA Call to Action About Strategy Meets Action 9 About the White Paper Sponsors 10 Interactive Intelligence Iron Mountain Xerox Xpertdoc The content of this SMA White Paper is based on a study conducted in the fourth quarter of 2013 by SMA in partnership with Insurance Networking News. Initial survey findings were presented in a January 2014 INN webinar. This white paper provides additional insights and identifies key opportunities for insurers striving to capitalize on customer communications and document management. Interactive Intelligence, Iron Mountain, Xerox, and Xpertdoc sponsored the webinar and this white paper and have purchased full distribution rights. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 2
The Customer Experience Evolution This white paper is based on a survey of insurers conducted by SMA in 4Q13 and SMA s experience working with insurers and solution providers. The survey respondents were 112 insurance industry executives and professionals, with a representative mix of company sizes and lines of business. Customer Experience Factors Improving the customer experience is at the center of many insurers strategic plans. It is an exciting area that has a high potential to impact business results. Technology plays an essential role in the customer experience, and insurers are investing in new projects. But as basic as it sounds, it is important to start any discussion about the customer experience in insurance by asking, Who is the customer? Everyone would agree that the premium-paying policyholder or member is the ultimate customer. However, in the insurance world, the independent distribution partner can often be just as important a customer as the policyholder. For many insurers, improving the customer experience means considering both the policyholder and the producer. The term customer experience is often used, but seldom defined. The customer experience is reflected in the perception that the policyholder or agent has about their relationship with the insurer. There are four key factors that influence the experience, as illustrated in Figure 1: the brand, delivered value, relationship, and communications. Figure 1. Factors Influencing the Customer Experience Source: Strategy Meets Action 2014 Customer communications and document management make a major contribution to the customer experience. All factors influencing the customer experience are ultimately translated into a customer touch. The document, web page, or conversation is what the customer sees and hears it is the experience. These communications and documents support the brand, value, and relationship. Creating and delivering communications that are effective, efficient, accurate, and represent the brand well can strongly influence the overall perception that the customer has of the insurer. This is an area that SMA collectively calls 3CM Customer Communications and Content Management. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 3
Evolving From Digitization to Interaction The benefits of imaging documents and creating more digital content have been significant, and there are still many opportunities for further digitization. But a new primary driver for investment has risen to the top of the priority list. Enhancing interactions in order to improve the customer experience has taken top billing. Transitioning from paper to digital has been the focus of many insurers in the past. The benefits of imaging documents and creating more digital content have been significant, and there are still many opportunities for further digitization. SMA research has been tracking this paper-to-digital evolution, as more and more types of inbound and outbound communications become electronic and insurers continue to reduce paper, print, and postage costs. Digitization to reduce paper and costs is still considered to be important and delivers benefits. But a new primary driver for investment has risen to the top of the priority list. Enhancing interactions in order to improve the customer experience has taken top billing. In fact, insurers now say that improving customer service is by far the top driver of investment for communications/document management, with reducing costs a distant second. To investigate customer communications and document management through this new perspective of customer experience, SMA embarked on an extensive research study. This study evaluates customer interactions across the enterprise and throughout the full customer lifecycle. In order to gain new insights on how insurers are addressing these areas, it is instructive to assess the current state of the market and future plans for inbound communications (including digital capture), digital content and document creation, outbound communications (print and e-delivery), and document/records retention. Inbound and outbound voice communications are also covered in the study, since the contact center has a critical role to play in customer communications. Insurer Priorities and Plans Inbound Interactions: Image/Voice/Agent Today the primary channels for inbound interactions are agent related, including phone, face-to-face visits, e-mail conversations, and web chats. These interaction modes will remain important, but the focus for new investment is on digital interactions, especially web self-service, mobile apps, and social media. Contact centers remain important, although their role continues to evolve. Historically, the management attention was on the efficiency of phone calls, whereas modern contact centers are a communications hub handling all manner of voice and electronic communications with the emphasis on effectiveness. The question today is less often How long did the call take? and more often, Was the caller satisfied and did they purchase anything? The contact center agent s queue today often includes e-mails, text messages, and customer service inquiries from the web. About half of the insurers responding to the SMA survey plan upgrades for their centers over the next three years. Insurers plan to continue to invest in image capture to digitize more of the inbound paper documents, but there is not much change in the level of investment or the approaches taken. This is due to the fact that insurer focus on imaging and digital capture began first; the attention later shifted to the electronic outbound customer communications. Two-thirds of respondents still store digital inbound content in a 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 4
central content repository managed by an enterprise content management (ECM) system. Regarding specific types of inbound documents and communications, the focus continues to be on applications and the trailing docs related to the applications, as indicated in Figure 2. In fact, insurers see even more opportunity to enhance these communications digitally than they indicated in a similar survey two years ago. Figure 2. Inbound Communications with the Most Potential for Electronic Input Top 5 Communications, Percent of Insurers Citing Of the various types of inbound communications, the top three are all related to new business getting the application in the door and gathering up the information required to make an underwriting decision. Many premium payments are still mailed in using paper checks, so insurers see more opportunity to convert policyholders to ACH, credit card, and other types of electronic payments. Letters and correspondence coming into claim departments are areas of high opportunity for more digitization as well. Digital Content Creation Source: SMA Research, Paper to Digital 2012, n=210 and Insurance Documents, Correspondence, and Communications 2014, n=112 The move to personalize communications, optimize print, and offer more e-delivery means that modern solutions are required for document composition and assembly. Legacy core systems are set up primarily to create the main, high volume customer documents that are printed and mailed. Insurers seeking to move more rapidly into e- delivery need modern policy, billing, and claims systems, in conjunction with advanced customer communications management (CCM) solutions. Often, insurers implementing new core systems are naturally led to rethink how they might enhance their outbound customer documents and improve their customer s experience. About one-third of insurers actually cite implementing new core systems as 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 5
a key driver for investing in new CCM solutions. A relatively high percentage of insurers are planning major CCM projects in 2014 (new system or major enhancements), including 24% of personal lines, 11% of commercial lines, and 27% of life/annuity insurers. Many modern CCM solutions manage not only the e-delivery, but also the creation of the content in the appropriate format, the execution of the electronic delivery, and the tracking of the results of the e-delivered message or document (opens, click-throughs, bounce backs, etc.). Outbound Interactions: Print and E-Delivery In general, e-delivery is the most active area of technology investment for customer communications. More emphasis is being placed on outbound communications than the inbound interactions, at least in terms of new investment. The SMA research shows that the priorities for e-delivery are still centered on the major insurance transactions, including quotes, policies, bills, claims, and renewals. In an SMA survey from 2012, insurers stated that they planned to concentrate on these core areas for e-delivery and they have done just that. Still, the percentages in Figure 3 below reveal that there are additional opportunities to further increase e-delivery. Half of insurers also conduct marketing promotions via e-delivery, and this is expected to increase. Figure 3. Customer Documents Offered Via E-Delivery Today Percent of Insurers Offering Today Source: SMA Research, Insurance Documents, Correspondence, and Communications 2014, n=112 A look at top IT project areas for 3CM reinforces e-delivery as a high value area, since the top 2 projects are EBPP (electronic bill presentment and payment) and e-delivery. Many insurers have a unified output strategy that consists of optimizing print operations to fund investments in e-delivery. As print/mail gradually decreases and e-delivery gradually increases, part of the strategy for many is moving to a shared services model for print. Over half (53%) now utilize this approach, up from 43% just two years ago. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 6
Another important dimension of outbound communications is the increase of proactive notifications to policyholders. Real-time communications with customers for weather alerts, claims status, and safety advice is becoming an important and effective way to cement loyalty as well as reduce severities. In order for these communications to be effective, insurers must leverage the customer s channel(s) of choice, such as SMS text, e-mail, and/or voice. These types of proactive communications improve customer satisfaction and lower inbound interactions to contact centers. Document and Records Management A vital aspect of 3CM is the need to comply with regulations and internal policies for document retention. Many different types of documents are subject to rules regarding what to keep, where to keep it, and how long a specific document must be kept. Insurers take different approaches to document and records management. For physical records, half of the insurers let individual departments manage their documents, while 44% assign that responsibility to a records management unit, and IT has only a minor role to play. For digital records, the situation is reversed. For the majority of insurers (61%), IT departments have the primary responsibility for digital records. Figure 4 below indicates how long insurers store documents and what location they use for the documents that must be retained. Figure 4. Document Retention Plans Source: SMA Research, Insurance Documents, Correspondence, and Communications 2014, n=112 Not surprisingly, many insurers employ a variety of approaches for how long they store documents, based on the type of document. Some of these are driven by specific state or federal regulations, while others are based on internal policies and procedures. The location for document storage is roughly divided into thirds, with about a third of each outsourcing (24% with a single firm plus 9% with multiple firms), storing centrally, or distributing across the company. Insurer investments and approaches in this area are expected to remain about the same, with no dramatic changes planned. Finally, the business areas that archive the most documents are the core capability areas of underwriting, policy servicing, and claims. These results are similar to those of prior SMA surveys and are not expected to change significantly in the near term. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 7
Summary and Recommendations Summary Challenges will always exist, but those challenges are not stopping the leading insurers from moving forward to create competitive advantage based on the advanced capabilities to capture, create, deliver, and manage digital communications to their customers and agents. Customer communications and document management are vital elements of insurers plans to improve the customer experience. The industry has made great progress in converting from paper to digital communications, but there are still substantial opportunities in 2014 and the near-term horizon for improving the capture, creation, management, and delivery of customer communications materials and documents. Many insurers are now shifting their primary focus to the customer experience and recognize the important role that customer documents and communications will play. Initiatives and investments continue toward improving inbound communications; improvements still offer the potential to reduce costs and contribute to more sales. However, the heaviest emphasis and investment is on digital content creation and e- delivery. The demands coming from policyholders and agents for e-delivery and personalized communications are the drivers of investment for improved creation and delivery capabilities. Challenges will always exist. Insurers must deal with regulations, budget, resources, and integration issues, but those challenges are not stopping the leading insurers from moving forward to create competitive advantage based on the advanced capabilities to capture, create, deliver, and manage digital communications to their customers and agents. SMA Call to Action Tackling customer communications and document management may at first appear to be a daunting task. So many documents, so little time, some might say. The challenges cited above are not trivial. Yet many insurers have put together comprehensive strategies to improve the customer experience and have specific plans in place for improving inbound communications, digital content creation and delivery, print/mail optimization, and records management. A few guidelines are useful for those embarking on this journey and are also useful for those whose journey is underway. Start with the customer. It seems obvious, but understanding what the customer (and agent) value in communications should guide all plans. What types of personalization make a difference? How should specific types of documents be delivered (e-delivery, print)? What expectations are present when an agent or policyholder calls the contact center? These questions should be addressed by directly asking the customers and agents (not just by speculation). Think big, start small. Creating a comprehensive strategy and plan to cover all types of communications across the enterprise is a must. Map out your multi-year strategy. However, the key to success is identifying and starting the specific projects that will deliver value early and often. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 8
Choose your partners carefully. Don t go it alone. There are plenty of good IT solution and services providers in the market with the capabilities and experience to assist you. Do your evaluations carefully since you will rely on these partners to support you for many years. There are many terrific opportunities for insurers to positively influence the customer experience by improving customer communications and documents. The priorities and path will be different for every insurer, but successful insurers of the future will be those that are able to master their interactions with customers. About Strategy Meets Action Exclusively serving the insurance industry, Strategy Meets Action (SMA) blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. By leveraging best practices from both the management consulting and research advisory disciplines, SMA s services are actionable, business-driven, and research-based where strategy meets action enabling companies to achieve business success. This white paper is based on SMA s experience, research, and insights. Interactive Intelligence, Iron Mountain, Xerox, and Xpertdoc have paid for distribution rights and have not influenced the results or analysis. The content is a synopsis of SMA s analysis and insights. Additional information on SMA can be found at www.strategymeetsaction.com. The author Mark Breading, SMA Partner, can be reached at 614.562.8310 or mbreading@strategymeetsaction.com. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 9
About the White Paper Sponsors Interactive Intelligence Interactive Intelligence Group Inc. (Nasdaq: ININ) is a global provider of contact center, unified communications, and business process automation software and services designed to improve the customer experience. The company s solutions, which can be deployed in the cloud or on-premises, are in use by more than 6,000 customers worldwide including over 300 insurance organizations. The company was founded in 1994 and employs more than 1,800 people worldwide. Interactive Intelligence is headquartered in Indianapolis, Indiana and has offices throughout North America, Latin America, Europe, Middle East, Africa, and Asia Pacific. www.inin.com Iron Mountain Iron Mountain is a leader in records storage and information management, assisting more than 156,000 organizations in 36 countries on five continents with storing, protecting, and managing their information. We have been assisting insurance companies meet the challenges associated with safeguarding their vital records for more than 50 years. 45 of the 46 insurers listed on the 2012 Fortune 500 trust Iron Mountain to help them meet its information management needs. In addition to our records storage solutions, Iron Mountain works with insurers of all sizes and types to streamline, automate, and/or outsource paper-intensive workflows through digital imaging and data management. www.ironmountain.com Xerox Since the invention of Xerography more than 75 years ago, the people of Xerox have helped businesses simplify the way work gets done. Today, we are the global leader in business process and document management, helping organisations of any size be more efficient so they can focus on their real business. Headquartered in Norwalk, Conn., United States, more than 140,000 Xerox employees serve clients in 160 countries, providing business services, printing equipment and software for commercial and government organisations. Learn more at www.xerox.com. www.xerox.com Xpertdoc Xpertdoc is a Montreal-based company that provides innovative document output and customer communication solutions. Their unique products and services help insurers streamline the processes of document output and management, reducing risks, costs and time to market. Xpertdoc provides award-winning technologies for large-scale automation and centralized template management, advanced change control and collaboration workflows. A Microsoft Gold Certified Partner, they leverage the full power of the Microsoft business suite for personalized, professional and compliant customer communications. www.xpertdoc.com 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 10