I was surprised to learn I was named one of the 50 most influential people in the United States/Western Europe for Insurtech. The fact that I was the only person, I believe, listed who makes their living on their own name (not working for some large organization) and who works with traditional insurance companies and traditional agencies was an honor, but eye opening. I can understand why traditional companies and agencies feel like they are being written off because few other people on that list focus on the traditional insurance world.
Being the person working in both venues, traditional and insurtech, gives me more hope. The key element for thriving success in this new world has little to do with technology. Technology is simply the means to the end. Technology is simply the tool, but without the right plan and thought process, that technology is meaningless. Technology is not even the only solution for thriving success. Therefore, Luddites do not have to plan their funerals, necessarily. Older generations don’t have to take a sabbatical and get a degree in IT to thrive going forward, or even necessarily hire a chief information officer (CIO). These solutions are useless until the base issue that makes technology so sexy is proactively addressed.
The fundamental issue is customer focus. Insurtech, at least a large portion, is about placing the customer at the center focus of the relationship, and insurtech organizations use technology to do so (maybe as some “insurtech” has considerable behind the scenes manual work, meaning its promise really has little to do with fancy technology and almost everything to do with a customer-centric focus). All the insurtech in the world will not save a distributor who fails to put customers first.
Every agency/broker/producer I have ever met claims to put customers first, so I know intentions are good. Although, few distributors actually do so. Here is factual, damning evidence.
Renew as Is
Most agencies and brokers have a strong “Renew as Is” program. How can an agency claim to be customer-centric when 25 percent, 50 percent or maybe 75 percent of its policies are renewed as is because the rate did not increase more than X-percent and the customer did not call the agency to report changes? That is passive-to-lazy, but it is absolutely not customer-centric. Customer-centric is reaching out to the clients, at least annually, inquiring about changes, new needs, improvements, successes in their families and businesses. It is about proactive communication to engage the client.
Absolutely nothing is engaging with a ‘renew as is’ philosophy, and going forward, customers and carriers really do not need to pay renewal commissions to agencies that use this methodology.
Terminology Power Play
More subtly but importantly, agencies use insurance terminology to explain coverages. We talk about “blanket” coverage (really, do you think people do not think you are talking about their blankets?), DIC (difference in condition), or one of the best, owned/non-owned auto. Seriously, if anyone thinks insureds understand intuitively what owned/non-owned auto means and why this is not a 100 percent oxymoronic term, have your head examined.
One reason staff and producers use these terms is they want to be accurate, but they do not understand the coverages themselves. So, they figure that if they just use the technical terms, they are safe. The better solution, of course, is to learn the coverages and then explain the coverages in normal English rather than insurance language. Using industry terminology is a power play. Power plays are not customer-centric.
Tracking Customer Claims
Not tracking claims is another spotlight example of not being customer-focused. Customers buy insurance because insurance’s purpose is to restore policyholder’s wealth to what it was immediately prior to the claim. But if agencies, and even many insurance companies, do not even track how quickly claims are paid, which is an extremely true statement, then how customer-centric is the industry, really?
Every agency and carrier should report how quickly the average claim is paid, or at least how quickly the average property claim is paid. It is not, like all of these points, rocket science. The systems exist, and the only reason these numbers are not available is because agencies – and often companies – do not use their systems well. New technology does not solve this problem because this is a people and leadership problem.
Loss Prevention Tools
Few loss prevention tools, including advice, are employed. Here is another simple fact: 99.9 percent of people prefer never having a claim to having a claim. So, does it not make sense to help customers avoid claims on a proactive basis? Customer-centric firms do this, and so much of insurtech is focused on this point. Again, a customer-centric focus is required first and foremost. Technology is just a means for delivering the service.
The very best example of being customer-centric is selling clients the coverages they actually need (which is not the same as selling them the coverages you think they will buy or the coverages they request, because they are likely not experts, so absolutely zero reason exists to believe they know which coverages to request). The only tool that exists to ensure customers are offered the coverages they actually need is a coverage checklist. Absolutely nothing could be more not technology based than a paper coverage checklist. Technology is not required. A customer-centric approach is required.
Last week at a conference, the audience advised me that insurtech automated approaches could not provide customers the coverages they truly need. That point is debatable because some programs can. But that is a moot point. Assume insurtech can’t provide adequate coverage options. So what? I’ve only completed hundreds of E&O audits and 90 percent of producers do not offer adequate coverages either. The only difference is – arguably, let’s say – insurtech can’t and humans won’t.
As Mark Twain wrote, “What is the difference between a man who can read but does not and a man who can’t read? The former is lazy.” What is the difference when a human can offer the right coverages but doesn’t? He/she is lazy. Lazy is not a characteristic of a customer-centric approach.
That last statement is strong but 100 percent accurate, and it is key to thriving success. Customers do not need and now will not have to pay (nor will companies need to pay) agencies that are too lazy to offer correct coverages, renew as is, hide behind insurance terms and not help clients avoid losses. I am positive this angers some readers because they are scared. They have never really been customer-centric, and they do not know how to become customer-centric. Some readers will claim these points are invalid, but after all the valuation due diligence, E&O audits and serving in positions where I get to see how little so many agents know, no other conclusions are possible.
Conversely, my clients and others I see in the industry that are customer-centric, within and outside of insurtech, are achieving phenomenal organic growth and profit. This makes complete sense too because customers tend to like to do business with entities that make them the center of attention. This really is not rocket science. Put customers first using these five points, and then add the icing – the insurtech – to polish your services.
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