Solution Partner Views
Pace of Change and the Distributed Insurance Enterprise
It was at least 10 years ago when industry insiders started to talk about the “new world of work” and ways insurers would need to adapt in order to stay competitive for the future. The perception of the pace of change at the time was that things were moving more rapidly than ever before, but little did anyone know how much faster we could go.
Traditional insurance companies, legacy businesses that have operated almost unchanged for decades, are today being asked to provide round-the-clock service, flexible products and billing options, and better accessibility to information and service, all without increasing costs. So, just how does a traditional insurance business transition to operating successfully and efficiently in this new world of work?
First and foremost, each insurance organization must make individual, company-specific decisions about things as fundamental as allowing employees to work from home and the proper utilization of distribution channels. The “Mad Men” days of the 9-to-5, centralized insurance office are over, and in order to grow an existing business, launch a new company or line of business, or simply increase efficiency in the interest of improving the bottom line, insurance organizations must consider a more distributed working environment which includes a mix of full-time, part-time, mobile, and contract employees. The question then becomes, “Which functions can best be handled in a distributed insurance environment?”
Mobilizing Insurance Employees
The graying of the insurance industry has been an issue for some time. As the Baby Boomers retire and younger workers come into the industry, knowledge exchange and transfer must take place, and new expectations for the way we behave and work must take the place of old traditions. Just as a new generation of consumers has different expectations for product options, billing flexibility and service standards, the new generation of employees has different expectations for technology and training, benefit options, and working hours and conditions.
By allowing employees to work from home, insurers can begin to reduce an expensive physical footprint and measurably decrease operational costs. No doubt the flexibility benefits offered will be attractive to younger workers with social lives and growing families, but the trend toward a more mobile workforce comes with its downsides as well, such as increased data security and privacy risks which must be considered.
Creating Self-Service Opportunities
Consumers, conditioned by experiences offered in other industries, are demanding more accessibility and increased self-service options, and insurers are struggling to adapt legacy systems to meet immediate needs. Many insurers today are choosing to implement direct-to-consumer capabilities, such as portals, as a kind of quick fix in lieu of replacing or upgrading existing legacy systems. However, such initiatives can be controversial depending on an insurer`s mix of captive and independent agents, call center capabilities, and additional supporting infrastructure. The important thing to consider in any new initiative is what it may add to the bottom line, or how it impacts the company`s ability to be more customer-centric.
Externalizing Back Office Operations
For existing insurance organizations and start-ups alike, this trend toward building or evolving into a more distributed insurance enterprise often means turning to a third-party provider for at least some functions, such as policy servicing, accounting/finance or claims. While outsourcing has always been something of a dirty word in the insurance industry, when done in a responsible, measured way, it can further enable an organization`s ability to scale rapidly, such as in an instance of catastrophe or natural disaster.
Additionally, externalizing back office operations can allow insurers to better allocate full-time employees to tasks more focused on the company`s core competencies, such as developing insurance products, providing coverage and protection for policyholders, and servicing in-force policies in both good times and bad. For commercial lines insurance companies especially, strategic use of the right outsourcing partner can significantly enhance core functions, like underwriting and pricing, as well.
With organic growth more difficult to achieve in an unsettled economy, existing insurers are looking to launch new lines of business and new companies are being formed to serve the ever-growing non-admitted space. However, speed is of the essence in such endeavors, and much time could be wasted locating, purchasing or leasing facilities; hiring employees; acquiring systems; and meeting the proper licensing requirements.
Adapting traditional insurance businesses to the new world and the new world of work will not be easy, and it will take time for new technologies, processes and change management techniques to take hold. It`s an ongoing problem for the industry, and in the meantime, perhaps the answer lies in an insurer`s willingness to break with tradition in order to gain a better ability to take the business forward.