Thoughts, real-world observations, and anonymous examples – good and bad – regarding the use of Web/Social/Mobile technology in the insurance industry. Follow Mike Wise, President WebWisedom LLC, for the latest in Social Technologies.
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I recently had the good fortune to fly with Roy Pratt, Enterprise Architect, EDS, on a commercial flight from Cleveland to Dallas. We got to talking a bit and found that we had some things in common — technology, insurance, and even photography!
Aerial photography – Roy found that he loved taking pictures and loved flying — a great combination, but sometimes dangerous as you listen to one of his stories!!
Roy with a nephew before a flight.
Professionally, Roy has a background in insurance and healthcare, manufacturing and engineering systems. He’s been with EDS for over 22 years and worked with over 25 corporations defining frameworks for the IT systems of large corporate environments — ERP, SOA, centralized or distributed, etc.. His role exposes him to the inner mechanics and operational metrics of organizations.
Here are some salient points from the talk:
Legacy environments must redesign their architecture to become more agile, quickly sense and respond to changes in customer needs, to product offerings and competitive threats in the market, regulatory requirements, and financial requirements.
The most important thing leadership needs is knowledge and that comes for the IT department.
An interesting personal story about Roy’s personal P&C insurance and moving his book of business because a simple use of technology compatible with his life-style.
Old-thinking — IT projects as cost-reduction or efficiency initiatives, they think of IT as a cost to be minimized.
New-thinking — Effectiveness, revenue generation, or competitive advantage, IT IS the competitve advantage. GEICO and Progressive use IT to reach OUT to the customers. Adobe, Apple, Dell, all are using IT to communicate effectively with their customers. E-mail updates re iPods. Click here. Do you know how to do this? These guys are leveraging IT right out to the edge. Barnes and Noble, Staples — hybrid models… They are the ones that are going to flourish.
Old-world manufacturing space and why some of the big players died out. Similar — IT investments focused on internal efficiencies, build large lots, stuffed them into wharehouses. They saw inventories as assets that provided competitive advantage. Sounded good but they failed to realize that the customers wants and desires changed at a faster rate than inventory turns. So the old-thinking led to deep discounts, new production, more inventory, deep discounts, etc. The asset is the ability to produce what the client wants when they want it, NOT static inventory.
KEY: Adapting to changing customer preferences using the IT infrastructure.
How this applies to insurance – IT infrastructure of insurnace companies are not equiped to help with Web development becasue they are focused on cost reduction. The knowledge capital is coming from the IT systems. (So if they are not positioned to support marketing and the agent/customer interface, who does it? Typically noone, right? That’s why H&L insurance companies are so far behind the times. But that’s where IdeaStar comes in…)
What’s at stake?
Thanks again, Roy! Great meeting you!
Interesting article: “Agents Take Center Stage in Individual Medical Market” in the February 19, 2007 issue of National Underwriter Life and Health. The article was written by Laura Hohing, CLU and senior vice president of sales at Assurant Health, Milwaukee. We’ve never met, but she sounds like someone I’d definitely classify as an insurance technology guru.
I read a print version of the article. But it will be online for another week or so at National Underwriter Life and Health. (You’ll have to register to get access — it’s free.)
She writes “There’s a revolution stirring in today’s medical insurance market, and it’s changing the playing field for consumers, carriers, and agents. Spiraling costs are driving millions of consumers toward the individual medical market, where flexible and cost-effective policies enable them to manage their risks and their costs.”
What better way to help meet that revolution than through technology. As more and more people look for individual medical policies, a high percentage of their searches are sure to be online. Carriers will come out ahead if they offer clear and concise Web pages, simple tools for quotes, competitive product pricing and benefits (side x side with other offerings), flexible products so people feel in charge, and the ease of online or call-center enrollment. It’s a lot to bite off all at once, but if you have experience, it shouldn’t take more than a few months to roll-out a solution like this.
As Laura writes, “Agents also benefit from tools that simplify and streamline the application process. When agents recommend a policy and carrier, they need fast answers about whether their client will qualify for coverage, and under what conditions. With some carriers, agents can now create customized quotes in real time and help their clients fill out and submit online applications.” I say Amen to that! Assurant (previously Fortis) has been doing this for some time, especially in the short-term medical space. They know it works and would NEVER go back to doing it the old way.
Although Laura’s main focus was the need for carriers to provide appropriate products and services, I see it as reinforcement of the critical role effective online services play. If I can toot our horn just for a second, IdeaStar insurance clients have proven time and time again the value of online quoting, enrollment, and other front end services. Our online systems have saved many companies, time, costs, and hassles, not to mention establishing the foundation for long-term competitive advantage.