The world of commercial insurance has been very good to me during my almost 25 years in the industry. But this great field could be improved significantly by fixing the broken customer experience process. As an industry, we haven’t yet adopted a true customer-centric philosophy. We accept the status quo because the insurance business has been so good to so many of us for so long.
But times are changing. Customers who buy insurance today are looking for ease of use, simplicity and consistency in the wording of their insurance policies. They want assurance that their time matters. Customers will no longer accept a broken process that focuses on the risk-taker if they are presented with options that put them first.
A concept as fundamentally simple on the surface as putting customers first has been sorely lacking in our industry. First, we ask the customer to complete an application that often has complexity beyond their comprehension because we use terminology and verbiage that is familiar to our industry, not theirs. Most of the information requested in these applications isn’t even needed to properly underwrite an account, yet the requests remain on the forms nonetheless.
After a client’s applications and risk profiles are completed, their trusted insurance advisors are tasked with procuring quotes. This process might take days or even weeks to finalize. Our clients must then determine the best option, sifting among insurance carriers’ own distinctive quotes, each of which uses their own specific wording, since there is no standardized format for policy and endorsement wordings in many areas of the commercial insurance industry.
The carrier’s goal is to keep risk transfer at a comfortable and acceptable level, typically by adding exclusions or limitations to coverage in areas that go beyond their risk appetite. Policy wording is usually complex and often ambiguous. Since helping our clients decipher this language makes the client/broker relationship more secure, there is little motivation to address this issue.
Once we have helped decipher the different options for the customer, they select what they believe to be their best option, and they are issued a binder. This is further proof that our industry is broken. We typically can’t even issue them a policy at the time the coverage is secured; rather, we give them a temporary policy – or binder – until we can get our back offices to issue the formal policy 30, 60 or even 90 days later, depending on the efficiency of the carrier’s system. This simply isn’t good enough. I can think of no other industry that asks its customers to do so much work, color within such complex lines, pay so much money and then wait 60 days for the transaction to be completed.
Insurance carriers and brokers who can figure out how to put the client first by simplifying their process, giving their clients realtime products, and processing and paying their claims in an expedited fashion will win a disproportionate market share. We could figure this out much more quickly by gaining feedback and input directly from the insurance buyer via focus groups, surveys and collaborative discussions to get an accurate assessment of their needs.
Insurtechs are at the forefront of these efforts – they don’t have a legacy to protect or legacy systems to hold them back. Many insurtech leaders don’t come from insurance backgrounds, which allows them to be more open-minded to the needs and wants of the customer. But these insurtechs still need distribution networks. So the question becomes, will client-focused insurtechs be able to build a distribution network before the incumbents can introduce innovations that meet customer needs?
Billions have already been invested in this race between incumbents and insurtechs, by both established companies and newer entrants to the market. But much of this money will be wasted because this industry moves very cautiously, and some great ideas are likely to run out of runway before the industry fully understands what needs to be done.
What the insurance industry needs today are leaders who are capable of envisioning what can be, rather than focusing on what has been. With a growing customer focus on instant gratification, the traditionalists within our industry simply aren’t moving fast enough to meet this need. The time is ripe for leaders who will break the status quo and find new ways to put the customer first.
Ryan Collier has worked as both an underwriter and broker during his 25-year insurance career. In 1999, he founded Risk Placement Services’ executive liability division and now serves as the company’s chief digital officer.