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Claims Transformation 2.0 is like Consumer Electronics, 5 Tips to up your speed

August 19, 2013

Lots of complex notes, not particularly bubbly, but “nice” nonetheless. In 2009, a bottle of 1825 vintage champagne was opened (talk about money to burn), one of only 2 remaining in the world, and it was ‘drinkable’, the BBC reported at the time.  Claims Transformation 2.0 projects are not like a fine wine – they don’t do well unless they’re finished not long after opening and are not meant to live 184 years.

Often, when carriers perform a Claims Transformation 2.0 exercise, they leverage BI and Analytics to streamline the claims process, approaching it inside looking out, and not outside looking in, maximizing the customer experience.  We still think we’re implementing an internal system and process for our internal stakeholders, (thinking B2B), but in reality we’re implementing a new consumer electronics product, we’re B2C, and our existing operational and transactional data is probably more justifying what was, then what will be.  Claims processing is now a consumer mobile experience, requiring the convergence of hardware/chassis, content, and a user sense this is worth using in real-life, called the consumption experience.   Consumers identify their mobile device and their apps (including your Claims app) as a single experience, subject to the same B2C criteria. A business person filing a claim has the same technology expectations as any personal lines claimant.

Like it or not, Claims is no longer just about efficiently processing documents, or transactions, or managing cases.  That’s table stakes.  It’s now about doing all that in a manner satisfying the customer’s expectation of experience and outcome, and I’ll be surprised if much of your Big Data has that dataset, which is why so many claims transformation initiatives relying on that data for insights will aim to the B2B past.

Timing is everything in consumer electronics, and speed is cherished.  Apple, even with their upcoming Sept 10th new product announcement, is now seen competing feature to feature with Android, using their own proprietary technology, where they used to own the market and product category conversation.  Apple is a current example of the Success Driven Slowness syndrome, as is Blackberry.  Apple’s Board, it was recently reported, told Tim Cook to start driving in the HOV lane, and stop cruising along in the Local, a conversation which rarely ends nicely for an incumbent CEO in 3-6 months.  When you have too much to lose by being first to redefine a market, you lose even more when someone else does it for you thereafter.

Claims Transformation 2.0 initiatives fall into this rut as well, taking far too long and costing far too much for incremental gains, protecting the carrier’s bottom line while hurting the top-line when insureds believe the claims process works against them.  More often than not, the consultants propose a new technology solution, which, low and behold, they can then implement as part of “1 stop shopping”.  Choosing the right technology is essential, obviously, but timing is the critical success criteria. Since many consultants think B2B, their perception of allowable timing is off key, ignoring the B2C priority of Claims processing.

A recent study, issued by Aite Group, and recently mentioned in an article in ‘Insurance & Technology’, shows how ‘off’ many technology vendors in our vertical tend to be.  Per that article and they’re quoting the Aite study here,  ‘74% of vendors say that next-generation technology is likely to have “a lot” of impact on their business, only 41% offer solutions in the category. This means that carriers are turning to companies outside the pure-play insurance technology industry to meet needs for things like telematics and mobility.’  Insurance is risk averse, but technology dependent, and oddly, many of the most well-known technology vendors talk the talk, but in reality, their products do not use the latest technologies needed for their customers to innovate.  You could add many technology vendors have adopted a low-risk culture, having left the ‘hi-tech’ speedway.  Are insurers then being asked to take the equivalent of the last model year of a car needing a redesign or at the least, a major refresh?

How to avoid the me-too Claims Transformation 2.0 trap?

How do we think ahead, thinking in terms of B2C? We recommend using our adaptation of Facebook’s core values:

1 Commit to the market impacts, not internally facing project goals

Commitment is about getting things done while goals are intents. Before making a Claims Transformation commitment, think through the B2C impacts of taking this approach: new timing, new market driven technology expectations, faster and never ending releases of products and services and distribution channels.  Claims Transformation is a commitment.

Think in terms of how the consumer experience will be affected, not only in terms of how much better you’re going to handle transactions internally as everyone is doing the latter.  Why spend a lot of money just to be a ‘me too’?  Map every part of a Claims Transformation strategy to how it will increase your Net Promoter and other customer satisfaction scores.  Even Commercial Lines customers now think personal when it comes to service, no longer separating the way they’re treated at work by a carrier from how satisfied they are with their personal insurers.

Not ready for a full revamping of the claims process? Then go for a partial approach by stopping the bleeding in the short run and save Transformation 2.0 for later. Engage the CEO, CFO and Chief Revenue Officer, make the vision strategic as well as cost containing.

2 Move swiftly to address what genuinely matters

Many insurers waste time and money fixing things having little market impact or which represent the last way of doing things, often identified through ‘common knowledge’ or a point in time Value Stream Map. Consumer electronics companies use ongoing qualitative and qualitative market feedback to hone their products, focusing every dollar on a detailed and measurable strategic product target.

Claims Transformation requires forward looking insights and so collecting and analyzing the right data is essential.   We recommend implementing a set of data probes into your processes, both internal and customer facing, getting a real-word, functional view of escalation thresholds, timing, claims impacting reserves, etc., and then share this information with Underwriting to shape future claims flow.  Use this operational data to decide on what truly matters to the consumption experience and focus there.  This same data telemetry is then used for continuous front-line execution, monetizing the improvements.

Another factor leading to success is IT readiness.  Digital is relatively new to IT, and many groups have small skunk works or use outside developers.  We would encourage IT be given the resources and responsibility to truly support a strategic claims transformation initiative from the B2C point of view.

3 Be bold; be First

Claims Transformation should be called Claims Transcending, implying the necessary boldness, the willingness to take a risk based on insights and market driven inputs. A recent McKinsey Global Survey, ‘Bullish on Digital’ highlights how C-level executives are focusing on strategically using Digital means to engage customers, and are just starting to think about enhancing employee and vendor engagement via Digital tools.  A clear bold move is linking customers, employees and vendors in the claims process via a digital tool and supportive business process.

4 Be open

Organizational transparency is expected these days, and somewhat contradictory to the prevailing insurance historical culture, but openness in claims processing is about using technology and related processes to leverage pre-existing body shop, mechanic, medical and other relationships and letting the customer know where they are in the final resolution process through push notifications to your mobile app. If a claimant has a doubt or is unclear on their status, you’re not sufficiently open.   Remember – to us, a claim is a loss event subject to fraud analysis and cost control, to a consumer, it’s the undeniable experience with your company. Manage the end to end experience through market research to get into their heads and create new technology and processes reflecting this voice of the consumer.

5 Build consumer experience value

The end of the claims process is not closing the claim; it’s the consumer/insured feeling they had a decent experience during a difficult period of their business or personal life, often called the Customer Claims Journey.  It’s not all the individual touchpoints and interactions such as your mobile app and call center, or approved body shop, it’s how they are woven together into a seamless flow, tracked with appropriate, actionable data (note: gathering all data and then sifting it through a set of filters rarely provides real-time actionable, executable results).  We have been recommending this approach to our clients since 2009 and have seen significant improvements in customer satisfaction, in the range of 10-18 points, which is monumental in an industry where churn and customer acquisition costs are difficult cost/growth/profitability factors.

For example, with a properly designed self-service Customer Support Journey, Call Center costs can be reduced by, on average, 18-27%, from our experience. USAA, which has an EVP for Member Experience, once again ranked high in the recent Temkin Group’s Net Promoter Score Benchmark Study 2012, translating to USAA’s customers being more likely than nearly all other personal lines insurers to have their products recommended by insureds to their friends and family, requiring less advertising than lesser ranked carriers.

What’s my next step?

You have to commit to changing how you think, increasing the pace of product introductions as well as how they are distributed and supported, end to end.

Claims Transformation is about the future, about targeting the right customers to insure, about thinking on their terms where technology and services are intertwined and rapidly improved. Use the right data to draw the right conclusions, avoid going over the Data Mining Waterfall, being swept along by the flow of data.

Develop your Claims Journey Map alongside a multi-release Technology Product Roadmap, versus the familiar decade long Technology Roadmap not fully linked at the detail level to the Claims Journey. More than ever, IT and Ops are tightly linked. The claims systems and process improvements you put in today will be upgraded annually going forward.  If you’re thinking of implementing a new claims system, with a mobile app included, and then standing virtually still to collect the rewards, remember Blackberry had the leading smartphone market share as late as 2010 and then stood still. Ensure all vendors can react as quickly as you will going forward.

Decide if your company is ready to focus on its NPS and other customer satisfaction scores and if so, establish the Claims Transformation 2.0 Cross-Functional Team.

Welcome to B2C, welcome to consumer electronics. Yes, it’s faster paced, and at times blindly exciting, but wouldn’t it be gratifying to be in a business where your product defines a segment and even a fraction of a point of market share translates to hundreds of millions of dollars in new revenue?

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, 
http://www.growroe.com 
, focusing on companies, initiatives and products where technology is the primary means of delivery and revenue. He is one of their senior Turnaround, Transformation, Program Rescue and Process Rescue leaders.  As a Change Agent, Trusted Advisor, Program Leader and Interim Executive, Rich has over 25 years hands-on experience reshaping companies, Operations, IT/Systems Integration and strategic initiatives.  He can be reached at 
richard.eichen@growroe.com, and followed on Twitter, @RDEgrowroe.

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