E-Commerce with an emphasis on Social Technologies
I had an industry colleague in to visit IdeaStar last week. We got to talking about Web-enabled insurance technology. He made the interesting comment. He said:
“When it comes to Web enabling various processes, yes, there are costs involved. But more importantly, there is a cost of NOT doing it.”
That comment struck me as something I hadn’t talked about. But if you think about it, the cost of not Web-enabling your insurance processes – especially marketing, quoting and enrollment processes – can be very steep.
More and more agents and customers that prefer to use the Internet to learn and to buy will be put off by an insurance offering that lacks effort in the Web technologies area.
In other words, if you just throw something together and put it out on the Web without any promotion or updating, you are not meeting the needs of a significant and growing market. I’ll take it one step further then that. The cost of doing it wrong might be the highest cost of all. In that scenario, you spent the money – probably big money – and your efforts failed. And you’ve alienated the users you were trying to serve. You then face a huge delay in getting to the right solution, and your reputation in the marketplace was damaged.
The point of all this is:
There is no doubt there is a cost to Web-enable insurance processes. But there is an even bigger cost in not taking that step, and the highest cost of all in doing it wrong.
The week before last, I was out in Oakland; this week in Philly — same client, same project. Why? Read on…
I met a potential client at PIMA’s MarkeTTech conference last November in Pittsburgh. The CMO for this particular carrier is tech-savvy and is finally getting buy-in at the top. So now he needs a Web development partner that can help him get where he wants to go better, faster, cheaper. Fortunately, he has a Web-savvy marketing veteran working for him at one of his subsidiaries. She can convert his terrific ideas into tangible deliverables.
So we met out in Cal. and walked through everything that was “possible” and then prioritized the results based on needed baseline functionality and product ROI. Like most insurance companies, 80% of the revenue is being generated by 20% of the products. So we will tackle those products first in Phase One, spending about $75 to $100k on Web development over about 10 to 12 weeks — a lot of experienced horsepower focused on developing a few well-defined and inter-connected Web sites.
So in contrast to my previous post on another in-house IT debacle, this savvy company is taking on the competition using a strategic partnership with IdeaStar. In fact, based on my research, it looks to be another Spanish Armada taking on the British Navy. My client could very well over-take its larger competitors within just a couple months.
I happen to know that the competitors’ internal IT departments are hyper-focusing on making sure the Web sites they build have triple-protection firewalls and encryption (even though the data captured is immediately transferred off-line to the back-end and ‘wiped’ from the site). GEESH! So while the competition is sweating the small stuff, my client will be engineering an end-run.
Watch out, big boys. You will wake up one morning next Summer and wonder why it seems like you’re the only one left standing when all the music has stopped!
“IT departments spend 25% of their time planning and 75% doing. That’s why their projects invariably go over budget and miss the mark.”
This said yesterday by a Cleveland-based CIO sitting next to me on a plane from Dallas to Cleveland. “And because they didn’t plan ruthlessly and get buy-in, they can’t say ‘No.’ when the guy upstairs comes at them with a great idea to add to the project. Then they blame budget over-runs on scope-creep. But if they had planned effectively, they could then stick to the plan, and put new items in the next Phase. Simple stuff…”
Boy, if that doesn’t say it all. I think of the project we started last Summer. At the time an MGA, sitting on top of a huge agent-distribution network for MedSupp, asked his primary carrier to Web-enable his agent-enrollment, quoting, and application process. So they hired us to spearhead the effort. Fast-forward to two weeks ago. I heard through the industry grapevine that the same MGA had recently called up another client of ours asking if they could sell their MedSupp product through their site which we built for the other client two years ago because, “We hate the site — xyz — set up for us.” So what happened between last summer and two weeks ago? Let me tell you…
Unfortunately, the IT department of the parent company of our new client found out about our project a few weeks after we started design and development. Within a few days, the CIO flew down and literally threatened the president of our client company with his job — either turn over the reins of the project to us or else. Why? The CIO was on a mission to “cut costs” and “standardize” all Web development for multiple insurance brands into a single platform developed and administered by corporate IT. The CIO then called me in and said, “We’ve been bugging them for two years to let us develop this kind of functionality.” I spoke plainly, “I gotta tell you. We were told, ‘Corporate built an agent portal for us. It’s klunky, slow, and difficult to find anything.’” No wonder the client didn’t want to use corporate IT. The CIO brushed off the comments. He was a man on a mission.
So IdeaStar was moved from the mound to right-field on the project. The original scope involved agent enrollment, agent portal, MedSupp quoting and enrollment, and senior life quoting and enrollment. IdeaStar was to use existing software, proven/award-winning stuff, and customize the end-product using the client’s forms and ratings.
In comes corporate IT. “We already have the agent portal (but users say it stinks) and we built an agent enrollment solution for another product line. So all we have to do is the quote engine and you guys can to the e-app workflow.” Like I said, platooning in right-field…
So why is the high-profile MGA looking for another carrier now?
Here’s the thing: Everyone knows in-house IT departments CAN build Web sites. But can they hit the mark? Can they stay on budget? Can they make the deadline? As I said before, the rare exception is Yes on all 3 counts. I’ll admit — IdeaStar isn’t perfect. But at least we’ve proven many times we can finish on-time, on-budget, and on-target.
Today I want to talk about the future of, not just online quoting and enrollments, but online administration.
Yesterday I met with a dental products third-party administrator (TPA) who markets dental products through brokers. This company handles all the administration, including policy administration, issuing cards, settling claims, and dealing with dentists.
The TPA has been implementing Phase One of a new browser-based back-end administration system that’s to be launched next month. Their goal is to use technology to differentiate themselves in a “commodity market”. His terms, his buzzwords, were faster, better, cheaper. Now he’s speaking my language! I often say “better, faster, cheaper” to describe the integration of Web-based technology into insurance systems.
He said there are three things you can compete on – speed, quality and price. However, you can only pick two. So you can do it cheap and fast, but it won’t be good, etc. etc.. In the dental market, you can’t compete on price. You can only compete on speed and quality. So they’re using the technology to move administrative processes forward. What that means is broker self-service, consumer self-service, and provider (dentists) self-service. All of these people are more than happy to do their own data entry (faster, cheaper), including who they are, what they are interested in, and so forth. They are also more than happy to do electronic billing, claims, etc. (faster, cheaper).
So the TPA is positioning itself to dramatically reduce labor costs and postage – two of their biggest costs. That’s not to say they are planning to lay people off. They are positioning themselves to handle more business. It’s also going to position themselves for great competitive advantage in serving their main client, the broker, who will be able to tell their customers, “You don’t have to fill out paper. The work can be done online, employees can enroll online, and so the service level with the TPA is enhanced.” “It’s all very high security, very flexible, and it provides an integrated solution for all sections of the business,” the TPA said.
As far as the underlying infrastructure, Phase Two will deal replacing the back end. Right now, they are focused on Web-enabling customer-facing front-end functions with hooks into the back-end.
So what does all this mean? It’s using technology to increase competitive advantage to add value, reduce costs, do more with the same people, and thus be more profitable and competitive. And it’s flexible to meet the needs of any insurance product in any variety of distribution. Very cool.
The guy finished with a haunting comment: “Insurance execs need to ask themselves this, ‘What’s going to happen if I don’t do this? Are we going to be able to compete when price is no longer an option? Or will we just sell out and do something else?’”
Browser-based operating systems for insurers are NOW!