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Is Insurance CRM Dead, or Does It Just Smell Funny?

Customer Relationship Management (CRM) has had a chequered history in the insurance industry.  There is significant potential value, but precious little that has been realized.  The question is, can this change?

Here’s my experience …

The second IT project I worked on in the insurance industry was developing and deploying a CRM solution for multi-line (Life and P&C)  insurance agents.  I was a managing a small, cross-functional group which include IT and business people.  The overall project had senior executive support, and was well funded.  We were using a package, so no ‘programming’ would be required and we had access to mainframe data and resources which would seed base information for the agents, avoiding re-keying (a major agent requirement).

What could go wrong?

Life and data happen ….

We met the time frames for configuration, field tested it with several agents (to rave reviews) and launched.  And the final uptake was… less than 10% utilization after six months.  A few keeners pressed on, but the project was quietly sunset.  Here’s a short list of objections the agents gave us (stop me if you’ve heard these before):

  • “You gave us billings by policy, we need billings by customer”
  • “I need to know who the last servicing agent was, it’s not in the system”
  • “I need information for all the policies the customer has, not just our company’s policies”
  • “We need special coding when a child turns 16 but doesn’t get a driver’s license”
  • “My client has a cousin that had a problem with a claim, but that’s not in the system”

These represent how business is done in the real world of insurance sales.  My team and I missed that.  Data that we defined and were available from policy and claims systems were an inadequate subset.   In spite of technology improvements since then, the issues surrounding data remain.  We learned that  rigourous application of rules improves data quality, but reduces its utility in practice.

This is why CRM in insurance can seem like a conundrum wrapped in an enigma.

Is this changing?

The short answer is yes, but it requires a disciplined, flexible approach.  Contradiction in terms? Yes, but is the reality that some new thinking is supporting.

In the past, CRM has focused on what is (she is a doctor, he is 48, the house is less than 10 years old).  Now, these are supplemented by what the customer does (he just downloaded a telematics driving app, she has installed  a camera for the nursery, the teenage son is driving slower since the car feedback system has been enabled).

These behavioural and preferential factors don’t replace other data that need to be collected, but they can significantly enhance them.  They can also introduce probabilities into the equation.   This is how Amazon can tell me that ‘People like you have also bought…’

What’s next?

I recently watched a webinar led by Scott Nelson, Managing VP at Gartner, who contends that we are just at the forefront of a new generation of CRM.  Nelson believes that most firms are reactive, still deploying solutions to 1990 problems (the ‘is’ data I mentioned above).  Innovators are planning solutions to future issues. Nelson makes some specific suggestions that I see fitting the insurance industry.

First, Nelson says that most CRM solutions are meant to be win-lose; the company uses data to beat the customer.   He recommends taking a win-win approach; e.g., by making special offers when the customer is considering a product.

Nelson also suggests using social media effectively to determine what is of real interest to the customer.  If a customer is tweeting about new cars, that might be an opportune time to provide the customer  differences in insurance costs based on the models the customer has been referencing.

Nelson’s final point is that changes are continuing to happen, with increased speed.  The message here is to look at the horizon, not at the road immediately in front of your feet.

Is this the future for CRM?

CRM has always seemed important, but it has come with serious limitations.  With the advent of new forms of data, new attitudes, and new consumer expectations (I expect to trade a portion of my privacy for more relevant offers), this could portend the real advent of CRM for insurance.

Editor’s Note:  Patrick Vice is a Partner in Insurance-Canada.ca and serves as its Director-Products & Services.  He can be reached on Twitter @patrickvice

 

2 Comments

Kevin Rall

Great comments Patrick. While we say this is a “relationship” business, the traditional systems in the industry do not reflect it. They often do a wonderful job of processing transactions, but fail to meet the “relationship” opportunities that are reshaping the distribution and servicing models of today.

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Martin Eising

Our biggest challenge was mapping in-house processes that differed by carrier and insurance type to actionable opportunity and policy stages. Very time consuming!

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