February 15, 2012

In my previous blogs I've discussed the 10 primary business drivers behind a policy administration system (PAS) transformation and the significant operational efficiency improvements that can come from these transformation efforts. But now let's dig a little deeper into how a PAS transformation can create a foundation for improved market responsiveness.

Imran Ilyas
Imran Ilyas

Aging and inefficient policy administration systems are a significant challenge for carriers looking to respond to increasingly complex agent and customer demands. Many carriers are struggling with policy administration systems that are more than 30 years old. These aging systems were originally designed for individual products but often have become a patch-work of process and business rule enhancements, creating "silos" and unreliable data. For carriers, this has resulted in limited insight into customer characteristics and behavior, as well as limited ability to make informed decisions.

Facilitating the Shift from Policy- to Customer-Centricity

In order to meet the demands of customers and agents, carriers can benefit from moving from a policy-centric model and move to a customer-centric one. A modernized policy administration platform provides the necessary launch pad for carriers to offer a variety of highly differentiated customer experiences and better respond to complex market demands such as:

- Seamless multi-channel capabilities that are available to consumers anywhere, at any time, via any electronic device;

- Single view of customer transaction and interaction history across all touch points;

- Actionable customer segmentation and differentiated levels of service; and,

- Proactive and meaningful data- and intelligence-based interactions with customers.

How PAS transformation Can Lead You to a Customer-Centric and Market Responsive Model

1. Focus on the customer data: A modern platform can establish the core foundation for data sharing across user-facing systems, as well as support customer-facing business processes, both of which are critical for building a single view of the customer, integrating data across channels, and shifting towards a customer-centric business model. The specific benefits of this include:

- Establishing a "system of record" to streamline information access about a customer's agent, campaigns, quotes, policies, claims, etc.

- Capturing additional data to better understand who customers are via "scores" (e.g., segment, lifetime value), how they have historically interacted with the carrier, and what their preferences are in the context of those interactions.

- Enriching customer data to provide a more contextual understanding of the customer through data standardization, segmentation algorithms, etc.

- Integrating the policy platform to key sub-systems in order to manage other customer aspects, including data about them from third parties, policy documents, identity/security management, etc.

2. Enhance distribution channels: Because it provides a single view of the customer, a modern platform can promote higher quality and more efficient customer and agent interactions, and in turn lead to a more positive user experiences and increased sales and retention. More specifically, a modern platform can provide the foundation for business processes that are truly customer-centric and multi-channel; for example, a customer who gets only part of the way through obtaining a quote on a carrier's self-service site can later call an agent or a call center rep who can pick-up where the customer left off, thereby completing the quote process without needing the customer to submit duplicate information.

3. Create an information advantage: A policy admin transformation also can take carriers beyond a single view of the customer and, via advanced analytics, help them convert data into information and deliver real-time "information to the glass," regardless of channel or device. Carriers can improve their value proposition by having the right intelligence about each individual immediately available to their agents, call center, and consumer self-service web, and in a way that detects new information and adapts accordingly. For example, a carrier that knows why a customer is shopping for insurance (e.g. recently moved, poor claims experience with prior carrier, price) can leverage that intelligence, segment the customer in real-time, and tailor the quote/purchase experience appropriately.

[For more on the 10 primary drivers of policy administration system transformation read Imran Ilyas' Ready, Fire, Aim! Don't Miss the Point of a Policy Administration Transformation.]

Making the Case for Change

Building a business case for PAS transformation on market responsiveness alone can be a challenge. Executives often will demand verifiable benefits, complete with expense ratio and headcount reductions that justify the return on investment for what is a major initiative. While verifiable benefits are important, executives should realize that policy administration transformation also is a foundational investment that creates a launch pad for enabling new and innovative capabilities. With a modern platform, carriers can more efficiently and proactively respond to changing market demands instead of being passed by the competition.

About the Author: Imran Ilyas, a partner in PwC's Insurance Advisory Services Practice, specializes in P&C and focuses on policy administration systems transformations.

T. Josh Knipp and Matt Hurlbut, both directors in PwC's Insurance Advisory Services Practice, also contributed to this post.