The Life-Blood of Insurance Customer Service Is …

The life-blood of insurance customer service is people.

I’ll say it again: People.

Let me repeat it…….

People. Not an app, algorithm, AI, or a VA

The life-blood of customer service is not an app, not an algorithm, not an AI initiative (inclusive of machine learning, cognitive computing, and/or neural nets), and not virtual assistants (or chatbots which I think are exactly the same as VAs).

Customer service, whether administrative policy service or claim service, should be provided by caring, empathetic (and authorized) people working in the insurance agency/broker firm and/or the insurance company knowledgeable about the:

  • insurance products that the customer:
    • has purchased from the insurance firm and still has active
    • has purchased from the insurance firm but the customer terminated (and the reasons the customer terminated the products)
    • has purchased from the insurance firm but the insurance firm has terminated (and the reasons for the insurer terminating the products)
  • agents / brokers:
    • that sold the insurance product(s) to the customer
    • who are now the servicing agent/broker (if applicable)
  • service the customer has requested in the past, including the:
    • reasons for the service request(s)
    • dates of the service request(s)
    • method(s) the customer used to contact the insurance agency/broker or insurance company with each service request
    • length of time of each customer interaction for each service request
    • names, titles, and departments of every person in the insurance company involved with the service request
    • disposition (resolved, not resolved) of each of the service request(s)
  • claim(s) the:
    • customer (or his/her beneficiary) has notified the insurance agency/broker firm or insurance company about
    • method(s) the claimant used to notify the agency/broker or insurer about the claim
    • questions the claimant had about the progress of resolving the claim and receiving their check
    • length of time of each interaction the claimant had about the claim (whether notification or about the progress to resolving the claim and receiving their check)
    • final resolution of each of the claim(s)
  • name(s) of the customer’s beneficiary / beneficiaries
  • names / dates / actions of every person (and their titles and departments) in the insurance agency/broker firm, insurance company, and third-party contractors involved that led to whatever resolution of the claim(s) occurred
  • name(s) of the bank or other financial institution that the claimant asked the claim settlement check to be sent
  • name(s) of the claimant’s lawyers, if applicable.

Why are people the life-blood of insurance customer service?

When insurance professionals talk about the purpose of insurance, phrases like “risk management” and “risk mitigation” are commonly used. Those phrases do capture the value-add of insurance for people, families, businesses, and society more generally.

However, insurance clients usually don’t use those phrases. Their discussion of why they purchase insurance involve terms that are significantly more practical to them. People and families purchase insurance to protect their lives, income streams, homes, automobiles, and other possessions. More knowledgeable insurance customers might realize and say that they purchased insurance to also protect their behaviors and actions.

The point is that people and families purchase insurance to sleep better at night because they know, or hope, that their insurance purchases represent a safer and more secure future.

When an event – whether caused by human or natural incidents – occurs that threatens their future, insurance customers want to connect with another person. It is a moment of trauma. Most claimants want someone who knows, understands, and cares about what has happened to them. Someone who helps them through the processes to remediate, repair, and/or rehabilitate their losses (and themselves if bodily injury is involved) in a manner that restores their lives to as close to what they had before the loss event occurred as quickly and easily as possible.

Human interaction for insurance customer service: even for the ‘learning customer’

I think it is reasonable at this point in the post to reinforce the reality that the insurance industry is not homogenous. Each major insurance line of business has its own market dynamics, competitive dynamics, and spectrum of ‘simple to complex’ issues (whether we are talking about short-tail or long-tail lines of business).

Concomitant with the above remarks is the fact that customer service, either administrative or claims, will differ for each line of insurance business. Add to this mix the notion of the ‘learning customer’ (i.e. an insurance customer who has requested similar administrative service requests or claim requests over time [hopefully, not too many claim requests – we need to keep the loss ratios and combined ratios to minimum or preferably below minimum] and the result could be an insurance customer who is a target for interacting with digital channels rather than with humans.

However, I continue to believe that even the ‘experienced’ learning insurance customers will want to reach a human if for some obscure reason the insurer’s FAQ or chatbot script can’t provide the answers the customer wants. (Those rascally customers – some of them just don’t want to interact above the water line of the saucer that some insurers equate with customer service. They have more probing questions that require more than getting their fingers somewhat wet in the thin saucer.)

Obviously, the ‘learning customer’ will continue to learn more (we hope) and the insurer will continue to improve its FAQ and/or chatbot scripts (again, we hope).

But insurers will (we hope yet again) continue to introduce new insurance products; new terms, conditions, and restrictions; new methods of reaching, distribution, and sales … all of which will potentially introduce new administrative service requests and/or new claim notices of loss (and new processes to adjudicate the claim).

And we’re back to square one or at least the starting point where even customers who learned prior procedures for administrative or claim service will probably need to or want to reach a human for assistance sooner than later.

To replace or augment people in customer service with digital artifacts?

I am not saying that humans need to be, or even should be, involved with every activity in every administrative or every claim notification and management / adjudication service request.

I am saying that people who are responsible for fulfilling customer service or claim management service should be knowledgeable about every activity in each of the service request processes. However, simultaneously (and continually) insurance firms (whether insurance companies or agency/broker firms) need to determine the best activities in the service request processes to use digital artifacts to enable people to accomplish their responsibilities more efficiently and more effectively for the benefit of customers.

At times, that will mean:

  • replacing people with digital artifacts (i.e. information and/or telecommunications solutions) for some, but not all, of the activities of the service process
  • augmenting people, but not replacing people, with digital artifacts, for some, and perhaps all, of the activities of the service process.

There might be opportunities for an insurance firm to replace people entirely with digital artifacts to accomplish all the activities of the requested administrative or claim service processes.

A person must be available to jump in

However, I believe that wherever in the administrative or claims processes an insurance firm augments or replaces people who are tasked with the responsibility of fulfilling service requests, the insurance firm must have a person able to jump into the process (regardless of what activities have been done or not yet done).

This person should have the requisite knowledge (and empathy) to interact with the customer to resolve the particular process activity in question by the customer or to resolve the entire process to the satisfaction of the customer.

Four phases of providing insurance customer service

My concern is that insurance firms will proceed through the four phases of providing insurance customer service (see visual below) without any regard for meeting the needs of the customer / claimant. As I note in the visual, most, if not all, insurance firms are currently in Phase 2: having a mix of people plus physical artifacts plus digital artifacts.

Insurance firms in Phase 2 continue to be challenged determining, at a minimum:

  • the overall mix of physical and digital artifacts that seems ‘right’ for their firm (i.e. fits into the annual budget, can be ‘easily’ integrated into existing workflows; is ‘quickly’ understood by customer service professionals; requires customers to use only their current ‘learning’ or minimizes any new customer ‘learning’).
  • which existing digital artifacts supporting quoting/rating systems, underwriting systems, core administration systems (i.e. policy administration, billing administration, claims administration) to eliminate, rationalize, or replace.
  • which digital artifacts to use that capture and deliver the requisite customer information to and in a manner and form (i.e. text, visualization, video) that is quickly and easily understood by the customer service professional.
  • how best to optimize existing workflows, or more preferably determine which existing workflows to eliminate.
  • how best to clean and standardize existing data (generated and used by the digital artifacts) and inflowing data streams used by the digital artifacts
  • which activities in the customer service processes represent the best opportunities to deploy (current, new, enhanced) digital artifacts to assist the customer service professionals and/or provide the levels of ‘caring and knowledgeable’ response that insurance customers expect.

I believe that almost all, if not all, insurers will be operating in Phase 2 for many years to come. However, I think insurers should begin planning, and implementing in experimental manners (i.e. certain lines of business, certain geographies), how they would operate in Phase 3.

I recently wrote a post about the nature of the ‘digital’ insurer to help insurance firms realize the magnitude of the challenge to become a ‘digital’ insurer: https://rabkinsopinions.com/2019/10/21/the-digital-insurer-capabilities-reality/

Even with all the challenges that insurance firms currently have in Phase 2, will have getting to Phase 3, and will have operating in Phase 3, I believe Phase 4 represents a trap for insurance firms and more specifically for customers of insurance firms.

Put another way, my concern is that Phase 4 will usher in an era similar to the outsourcing era when insurance firms (particularly carriers and large broker firms) hollowed their companies out much like a maniac wanting to have ‘fun’ with a very sharp knife hollows out a Halloween pumpkin.

The ugly era of outsourcing

When ITO (information technology outsourcing) and BPO (business process outsourcing) initiatives were in their ‘salad days’, regardless of whether the initiates were off-shoring, near-shoring, or domestic outsourcing in nature, insurance firms took to ITO and/or BPO with the same glee as young children gathering Halloween candy.

I didn’t believe insurance firms undertook ITO and/or BPO initiatives for efficiency: I believed then, and still believe now, that insurance firms pursued ITO and/or BPO initiatives for economic arbitrage: very fancy words for firing thousands of people to save money.

These ITO and/or BPO initiatives obviously cost the fired employees their income (many of whom were forced to teach their jobs to their lower-paid replacements in the outsourcing firms – which was and is an extremely ugly behavior on the part of the insurance firms).

But the lost work experience and skills (actually, not lost but shoved out) these fired employees had accumulated over the decades of working for the insurance firms cost the insurance firms implementing ITO and/BPO initiatives the ability to provide better service to their insurance customers.

Why?

Because providing quality customer service depends, in part, on experience. Experience interacting with different types of customers, with different service requests, with different insurance policies, and in different contextual circumstances. Whether service professionals are new to the responsibility or have been in the role for many years, there is always something new to learn.

Insurers who used outsourcing initiatives to toss out experienced service professionals purposely placed their insurance firms several (many?) years back in their ability to provide quality customer service. Augmenting new service professionals with digital artifacts (VRUs, chatbots and/or AI initiatives deployed from machine learning based on decades-long of service conversations) will not create the same experience for a customer would have with an experienced insurance service professional.

Yes, outsourcing saves the insurance firm money. But the ‘savings’ come at the expense of truly caring about the insurance customer.

Empathy, Experience, and Knowledge

I don’t believe that many insurance firms pursuing an extended use of digital artifacts (whether in Phase 2, Phase 3, or Phase 4) to deploy for service will employ a sufficient number of “knowledgeable and caring people” to jump in to help customers when and as needed.

Replacing service people with digital artifacts will have a similar result as the outsourcing era generated: fewer people (with years of experience and knowledge) will be available to provide administrative or claim service to insurance customers / claimants.

Not to turn the blade too much but it’s not like the insurance industry is known to be a ‘center of excellence’ of service in the first place.

Insurers can turn around their poor reputation for delivering service by ensuring they always (throughout all four phases) have service people available who have the optimal mix – the ability to empathize with customers, the experience working with the various processes used to deliver service, and the knowledge of what customers need – to resolve customer administrative / claim service requests.

Empathetic, experienced, knowledgeable insurance service people: the life-blood of insurance customer service.

My working assumption throughout this post is that insurance customers expect a ‘humanized’ knowledgeable, caring, and personalized interaction when they request administrative or claim service.

3 thoughts on “The Life-Blood of Insurance Customer Service Is …”

  1. While I agree with the premise of your article, including that insurance companies are not known for being “centers of excellence” – I also believe digital artifacts will play a greater role in allowing insurance companies to scale their operations in a manner that help them serve the underserved consumer. Scaling will (should) allow them to share their efficiency gains into pricing and be able to serve this new consumer profitably. Nevertheless, people will not be replaced, however, they will play a different role in delivering true customer service.

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  2. 1. Absolutely agree with you, that insurance is largely about what happens after the unexpected happens, and that part should be handled by a human.

    2. Having said that, probably 90% of the daily work of an insurance office is very repetitive processes. Ripe for digitization.

    Improving customer service, via offshoring, chatbots, etc., is not new, in the corporate world as a whole. I would think the opportunities are even greater in insurance, because of the repetitive processes.

    I know of a few “insurance disruptor” companies. But I assume you know more. Is there anyone that you think is clearly standing out from the rest, as far as reaching that nirvana of balancing automation and human connection?

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    1. Unfortunately I don’t know of any insurance firm that has reached nirvana. Personally, I’m happy with USAA’s mix of service reps and technology but I’m not sure it’s nirvana. Not sure any insurance firm (or firm from any industry, including Disney) would ever think they had reached nirvana.

      I agree that there is a very large % of daily work activities that are repetitive. I imagine that working relationships – that is, the relationships between the agency/broker firm owner, the principals, and others acts as a cultural barrier to firing colleagues who do those repetitive activities. (I would agree that insurance carriers usually don’t have those same qualms.)

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