In fact, in a recent survey of North American insurance IT spending conducted by Forrester, 21 percent listed implementing or expanding Internet and e-commerce initiatives as critical with another 31 percent listing it as a high priority.

The reason insurers need to know their customers better than they currently do, suggests Karen Pauli, research director for TowerGroup, is because of a lack of consolidated data. Siloed administration capabilities don't give a 360-degree view of the consumer.

“Some personal lines carriers do a better job of it because there's so much more automation around the personal lines,” she says. “You can get better data.”

But it is not an investment only in customer relationship management solutions that will benefit insurers. Pauli believes an upside of the push for risk management and for data for regulatory reporting purposes is, if those data initiatives are structured correctly, companies can acquire more data on their customers. “You leverage spending in those areas, and while you are at it, you get the 360-degree view of your customer,” she says. “You have to structure it right and get your data in order with robust data tools and data warehouses.”

KNOWING CUSTOMERS

Steve Peyton, a vice president with Insurance.com, indicates his company has learned a great deal about the insurance-buying public in the Internet age. “We've been collecting data since we began in business [in the year 2000], and we've been able to slice out customer behavior in many ways–by product, by marketing channel, by state, by demographic, and by profitability,” he says. “We understand a great deal about our customers. But the one thing we still are searching for–and everyone is–is not necessarily who they are or what they are doing; the Holy Grail is why they are doing it. Why are they shopping?”

What insurers have done to expand on this idea is to study the data and find ways to use what they have learned to their advantage.

“We have identified roughly 150 touch points throughout [the customer] life cycle with us,” says Peyton. “We have put these behavioral metrics in place to understand how consumers are interacting with us by segment, and we are creating a concept that is basically the voice of the customer. We will be able to have an end-to-end look at customers and how we are treating them differently based on the segmentation and the behavioral data we have in place.”

Insurance.com also values feedback from customers. “We recently rebranded the company with a new Web site,” says Peyton. “A lot of that was done through focus groups. We talked to our customers to find the unique proposition Insur-
ance.com can bring to the marketplace and how we can tailor that experience so customers feel we are bringing that proposition forward, making sure customer experience resonates with what they were telling us.”

The decisioning logic for the customers is based on the input, explains Peyton. “Coverage is an area where consumers can tell us what they want,” he says. “Based on those variables, we can give [customers] the lowest rates. Shopping for insurance isn't something everyone wants to do. Most people view it as a burden. The fact we can bring all that to one place is powerful. They don't have to call GEICO; they don't have to call Progressive. They can come to us, and we can do the work for them. We make that experience as simple as possible.”

AGENCIES INVEST

Agencies themselves are investing a great deal in customer service, often without support from carriers, points out Mitchell. “Local independent agents have almost identical functionality of what a direct writer would have,” he says. “They are doing 24/7 service, so you have that familiar human assistance, and they are outsourcing after-hours service for e-mail, click to chat, and even click to call and extending their business hours into a 24/7 capacity.”

Mainly, it is larger agencies making these investments, according to Mitchell, but smaller agencies are buying into a consortium based on state or region.

Another trend for carriers and agents is investment in free social networking services or some form of Web 2.0 to improve service.

During the Georgia floods earlier this year, Mitchell reports agents and carriers were using Twitter to spread the word on road closings, weather updates, and traffic and road updates during that two- to three-week period. They also were providing links to get people in touch with Red Cross and other emergency assistance.

The key, points out Peyton, is for the customer experience to continue to evolve. That can be done by taking the data that is already known about a potential customer and improving the collection metrics from a customer perspective.

“We also need to get the customer feedback,” he says. “I get e-mail all the time from our call center. We have a top-down look, which is what we are able to derive by drilling into all these data points. With our 150 touch points, we set up our marketing programs and our application process to meet that.”

Part of the loop also is receiving feedback through agents and e-mail. “One thing we are doing with our new Web site is to continue to add those types of feedback, forms, and focus areas within our Web site so customers can give us feedback on their experience shopping in real time,” says Peyton.

Having the online technology the company uses from Chordiant gives Insur-ance.com an advantage, remarks Peyton. “Based on feedback from customers or basic marketing practices, we are able to ensure we have the most optimal experience in place,” he says. “It's never going to be one static application or process. The code for us to crack is to make sure we are creating a superior shopping experience and a superior shopping destination for consumers. That's continually changing.”

THE LITTLE THINGS

Mitchell acknowledges insurers have struggled with some areas of customer service, but he blames that on the business models used by individual companies. He notes the direct writers often build applications based on open architecture and have invested in customer data integration with a single platform to integrate customer data and identify customers by a permanent unique identifier.

“[Direct writers] always have been a step ahead when you think of cross-channel customer service,” he says.

Agent-based carriers often are saddled with legacy systems, and fixing those systems simply to improve customer service frequently involves a complete disruption.

“You would have to blow up the way things are currently done,” says Mitchell. “You try to get a quote online or submit a claim, but you get frustrated and get on a phone and basically start from scratch. [Carriers] don't have a true customer-level ID. It's one of those broken records. We've been talking a long while about integrating data and integrating channels and reducing the customers' pain.”

Mitchell has seen investment this year in customer information hubs, an open architecture platform for the internal call center rep or the licensed agent. These hubs are middleware-type applications that sit on top of old legacy applications and pull together customer data to give the reps a workable platform and the ability to serve customers better and reduce the amount of internal application processing that is needed.

A second area of investment involves call-center desktop solutions, which Mitchell explains, are similar but not identical.

“[Desktop solutions] don't have as broad a CRM functionality as the customer information hub, but they allow you to repair what's wrong with the major issues such as channel integration, siloed data, and poor customer experience,” he says. “If you see brands such as Nationwide and MetLife investing in those types of solutions, others will follow, and I think we'll see that in 2010.”

DRIVING MORE BUSINESS

There is a huge imbalance in how insurers invest in a technology that improves the prospect acquisition experience vs. retention and service for existing customers, Mitchell contends. “The spending data and investment we've seen indicate the acquisition area continues to be the higher priority because it still is a market-share battle,” he says. “When we look at marketing and customer service surveys, acquisition remains at the top.”