Whos the Customer?

Complicating the implementation of CRM technology in insurance is the fact carriers still havent come to grips with exactly whom the customer is: policyholder or agent? I maintain the customer is the policyholder, but insurers are part of a value chain, and they need to take good care of their intermediaries, says Johnston. That is, focusing too heavily on the end consumer risks carriers frustrating their agents and confusing their policyholderswho often dont distinguish between carrier and broker.

Taking care of the producer has led to interest in partner relationship management (PRM) technology, a sub-discipline of CRM offered by PRM-vertical vendors such as Webridge (www.webridge.com), Channelwave (www.channelwave.com), and Allegis (www.allegis.com). There are also component systems offered by CRM vendors such as Siebel (www.siebel.com), Pivotal (www.pivotal.com), and Onyx (www.onyx.com). Johnston cautions, however, Where you can go astray with focusing on the intermediary as the client is insurers still need to determine what market they want to target.

Also, it has been difficult for carriers to provide CRM tools to agents, particularly independent agents who are understandably reluctant to install proprietary systems or deal with multiple company interfaces. Whether agents are career or independent, the fact is theyre independent-minded, says Scott McConnell, vice president in Cap Gemini Ernst & Youngs insurance practice. For you to come in and say, This is the process we want you to use, is difficult. You have to carefully plan how youre going to introduce these new tools and processes.

And simply throwing the results of an insurers own CRM project over the transom of an agents office door might not work, either. Carriers get frustrated with marketing campaigns because they set one up, send out an Excel file, and say, Here are a bunch of leads. Maybe it cost them $20,000 to produce that campaign, and they dont have a clue whether it worked or not. There is no feedback mechanism in place to understand the ROI, says McConnell.

Therefore, insurers that have succeeded at their definition of CRM have often done so by being both a facilitator in the agent-insured-carrier relationship and a provider of live leads to producers. PacifiCare Health Systems (Santa Ana, Calif.), for example, recently rolled out Insure Connect, a customer and broker portal hosted by Connecture (www.connecture.net) and linked from the carriers Web site (www.pacificare.com). When prospects apply for health coverage, one of the questions asked is whether they already have a PacifiCare agent.

If they answer no, we ask them if they want a broker at no additional cost, says Beatriz Saavedra, PacifiCares director of technology solutions for small and individual markets. The portal will then send an e-mail to the account executive assignedto that zip code for special handling. Our agents were pleased with that; they wanted to know we werent cutting them out of the equation. PacifiCares strategy also encourages agents use of the tool. We tell producers we will triage business to them, but they need to be signed up to the portal for us to do so, Saavedra explains.

Some carriers have taken on more responsibility in the policyholder relationship with the blessing of their agents. Were handling some of the policyholder service to give our agents more time to sell, says Lukas. The companys Web site offers personal lines customers the capabilities to report claims and pay bills, request ID cards, find repair shops, and make certain policy changes. We work closely with our agents to get agreements as to what things we can do directly with the consumer or the insured. We may do an endorsement or provide a quote, but writing business definitely stays with the front-line agent, Lukas explains.

Success Strategies

Success has come most readily in point solutions versus enterprisewide CRM initiatives. Insurers are saying, Dont tell us all the wonders of CRM across the enterprise; tell us what we need to do to move this metric of penetration in the household from one percent to two percent. Thats very quantifiable; if the metric moves, you know what the return will be, Johnston says.

Insurers looking for an easier run at CRM can focus on what Conning Corporations Insurance Research & Publications Group (Hartford, Conn.), in its report CRM in Personal Lines Insurance, calls adaptive versus dedicated technology approaches. Dedicated systems are those designed and purchased exclusively for CRM, whereas an adaptive approach uses existing technologies to support CRM efforts, such as linking a customer information system and a policy administration system.

Pantaleano, for example, calls Nationwides customer information file the center of the universe that all the insurers other systems interface to try to understand the different relationships those customers have with the company. Representing key categories of information about customers (policy and claim numbers, billing information, customer contact data), the customer file is a point of reference to Nationwides back-end systems.

The idea is that [the customer file] is a touch point; its a very thin kind of pointer, if you will, to all of the relationships. Most of the data is contained within the systems [that feed the customer file] themselves, he says.

As Nationwide further develops its customer file, it also plans for the file to support efficiency initiatives and create a single unified point of customer contact. If policyholders pay their bill via the Web, they dont want to receive a bill in the mail 10 days later. From there, well look more toward cross-selling and up-selling, Pantaleano says.

PacifiCare has simplified the implementation of its portal by not currently performing any back-office integration, which reduced cost and sped installation time. Were positioning ourselves to build new back-office systems, and by 2004 well have a brand-new administration system across the enterprise, says Saavedra.

Essentially, weve automated the quoting process for now, Saavedra says. Consumers and brokers can go into the site, select a plan, and the system can automatically reply to them with a quote. Integration will eventually eliminate the rekeying that is currently needed when a quote turns into a policy.

AmeritasAcacia Companies currently uses several different CRM technologies, including Pivotal, Siebel, SalesLogix, and homegrown systems in conjunction with its administrative systems, to help build and service customer relationships within its diverse line of insurance, retirement, banking, and financial businesses.

We have CRM strategies that are based on the needs of each of our businesses, says Huebner. In some of our businesses we run internally developed systems, and in others we run core systems that are outsourced. Those core systems present different interfaces that reflect the different business processes in each of those businesses. These systems also present different opportunities for developing customer and partner relationships.

A Question of Connectivity

One potential problem with deploying point systems is a possible lack of connectivity, either from a technological or business standpoint. What we sometimes run into is, for example, a project to Web-enable the submission of applications, says McConnell. But [the insurer] might not realize this is just pushing work from its ops center to its producer, and the producer isnt aware of it until the project is well under way. There has to be some kind of alignment to ensure the end-to-end process is managed.

Complicating the question of connectivity, however, is that insurers with multiple subsidiaries or complex partner affiliations also have to contend with just how much they can leverage customer information and still stay within the boundaries of various regulations affecting that data (see The Letter of the Law, September 2001).

There are legitimate and important instances where we want to maintain distinct separations between the systems, says Huebner. Everyone is always looking for the cross-sell opportunities, and we hope to take advantage of them, but we need to adhere to the federal and state regulations for protecting personal health and financial information, for example. Those are mandatory, not optional.

How to deploy for the present and plan for the future? Focus on consistent technology and consistent data models around things like customer artifacts. Ultimately, youll have to spend some time and money in the back end making connections, but if you keep data models and processes consistent and manage the portfolios of technologies you use, you dont necessarily have to create an integrated project up front, says Johnston.

And like it or not, an enterprisewide view might be a necessity as consumers become more sophisticated. People buy multiple products and solutions from us, so why would they want to reintroduce themselves to the company from different points of entry? asks Lukas. The notion of CRM based on what customers asked for is difficult to do, but nobody asked for easy stuff. Were not going to let technology stand in the way of that requirement, and were not backing down from the enterprise objective.

Goal Oriented

As with any business-driven system, CRM works best when companies identify what its goals should be. We can overcomplicate it, but historically CRM has simply been a set of tools designed to help companies make money and save money, says Denis Pombriant, vice president and managing director of CRM at Aberdeen Group, a Boston, Mass.-based research firm.

Connings report points to two means to those goals: operational and analytical CRM. It defines operational CRM strategies as those that affect sales, marketing, and service, including sales force and marketing automation and customer service applications. Analytical CRM allows insurers to analyze operational data from call centers, billing, claims, policy, and other systems to allow them to learn more about customers and make better business decisions.

When you look at all the touch points insurers have with their agents and insureds, you find out that all of those touch points dont talk to each other. You send a bill, you have a claims contact, you have a service center contact, those all need to be integrated into a customer profile that an insured has with the company. And within that single profile, the opportunity for cost savings jumps out: whether its frequency of mailings; combining five or six bills into one bill; understanding that if youre paying a claim and the insured is past due on a bill, thats taken into account in the settlement, says Pantaleano.

CRM can also lead to tiering of customer service. Theres a truism among banks that 120 percent of the profitability comes from 40 percent of their clients, so they tier service. If you have $500 in your checking account, you dont get the same level of service as if you have $50,000. Insurers never worried about that in the past. They thought of servicing policies, not customers, says Johnston.

Now insurers want to start gold-carding clients; they want priority queues, he continues. That requires more detailed knowledge about customers. But whats promising is that these are the things you can tie to hard ROI in a short period of time.

Another criticalyet often overlookedcomponent of an effective CRM initiative is an alert strategy. Some carriers implement self service for the policyholder without capturing and alerting the producers of the actions. For example, a customer can come in and request the surrender value of a policy through the Web. The carrier provides the answer, and thats the end of the process. The problem is, the carrier may be losing the business. It should view that as a material event that could be a signal that assets are at risk, says McConnell. He identifies three different types of alerts: when theres a chance that assets are leaving the company; when theres a chance for proactive customer service or up-selling; or when the customer deviates from an established financial plan.

Alerts can be done manually, automatically, or by some combination thereof. AmeritasAcacia, for example, developed an alert system in-house that communicates messages via the Internet from its service center to the field agent.

An automated approach would use a rules-based approach to trigger workflow based on transactional data or even voice recognition combined with call center monitoring. You need integration between CRM, policy administration systems, and in some cases your financial system. And you need workflow management software to capture these events and route the information to the appropriate person to take action, McConnell says.

If this approach sounds somewhere beyond your IT budget or appetite, take heart. You can still achieve good results by combining sound business strategy with available technology tools.

In insurance, retention rules, no different than any other business. Its much less expensive to keep an existing customer, says Pantaleano. So first and foremost is to really work closely with our agents to understand what the expectations are of them and our insureds. We see the CRM space as being commonsense, back-to-basics kinds of business ideas that revolve around providing the kind of service our customers expect on a going-forward basis.

Or, as Conning states, CRM can be supported by tools as simple as a Rolodex.

CRM Software Vendor Guide

Acxiom Corporation
Little Rock, Ark.
888-322-9466
www.acxiom.com

AscendantOne
Nashua, N.H.
603-598-5427
www.ascendantone.com

Aspect Communications
San Jose, Calif.
877-621-3692
www.htmect.com

Astea International Inc.
Horsham, Pa.
800-347-7334
www.astea.com

Benefits Technology Group, LLC
Hopedale, Mass.
508-478-7100
www.bentechusa.com

Connecture
Atlanta, Ga.
866-274-6759
www.connecture.net

Connextions
Orlando, Fla.
877-772-6868
www.connextions.com

CSC Financial Services
Austin, Texas
800-345-7672
www.csc.com

Decision Support Inc.
Matthews, N.C.
704-845-1000
www.decisionsupport.com

Document Sciences Corporation
Carlsbad, Calif.
760-602-1400
www.docscience.com

DWL
Atlanta, Ga.
877-864-3946
www.dwl.com

eAgency Systems
Newport Beach, Calif.
949-253-9131
www.eagency.com

eAssist Global Solutions
San Diego, Calif.
972-735-0401
www.eassist.com

Effisoft USA
Boston, Mass.
617-437-9600
www.effisoft.com

Evoke Software Corp.
San Francisco, Calif.
877-386-5379
www.evokesoft.com

Exstream Software
Lexington, Ky.
859-296-0600
www.exstream.com

E-Z Data
Pasadena, Calif.
800-777-9188
www.ez-data.com

FileNET
Costa Mesa, Calif.
714-327-3400
www.filenet.com

Firepond Inc.
Minneapolis, Minn.
952-229-2300
www.firepond.com

FirstApex
Flower Mound, Texas
404-626-4679
www.firstapex.com

Fiserv
Brookfield, Wisc.
262-879-5000
www.fiserv.com

Gryphon Networks
Norwood, Mass.
781-255-0444
www.gryphonnetworks.com

ILOG, Inc.
Mountain View, Calif.
650-567-8000
www.ilog.com

Insurity
Hartford, Conn.
860-616-7452
www.insurity.com

interlinkONE, Inc.
Wilmington, Mass.
978-694-9992
www.interlinkone.com

Lawson Software
St. Paul, Minn.
800-477-1357
www.lawson.com

London Bridge Group
Norcross, Ga.
770-810-8000
www.london-bridge.com

National Service Group, Inc.
Charlotte, N.C.
800-527-4401
www.go-nsg.com

NaviSys, Inc.
Edison, N.J.
888-775-3912
www.navisys.com

NCR/Teradata
Dayton, Ohio
937-445-5000
www.teradata.com

Norkom Technologies, Inc.
Boston, Mass.
617-973-6410
www.norkom.com

Onyx Software Corporation
Bellevue, Wash.
425-451-8060
www.onyx.com

Oracle
Redwood City, Calif.
605-506-7000
www.oracle.com

PeopleSoft Inc.
Pleasanton, Calif.
800-380-7638
www.peoplesoft.com

Pivotal
North Vancouver, B.C., Canada
877-748-6825
www.pivotal.com

S1 Corporation
Atlanta, Ga.
404-923-7637
www.s1.com

Siebel Systems, Inc.
San Mateo, Calif.
650-295-5000
www.siebel.com

Sun Microsystems
Santa Clara, Calif.
650-786-0662
www.sun.com/finance

Webridge, Inc.
Beaverton, Ore.
800-590-5400
www.webridge.com

Whos Calling, Inc.
Irvine, Calif.
866-712-1111
www.whoscalling.com

Wipro Technologies
Piscataway, N.J.
732-465-0413
www.wipro.com