Rethinking Insurance Operations

"Technology is both an opportunity and a threat to the industry." - Jeff Brown, Senior Vice President - Head of Worldwide Operations at CNA Insurance

Jeff Brown, Senior Vice President - Head of Worldwide Operations at CNA Insurance & PEX Network Global Advisory Board Member has over 34 years experience in insurance. In PEX Network exclusive interview Jeff reveals his insights on operational excellence in the insurance industry, digital disruption and rethinking traditional operating models.

From your vast experience, how would you describe the current state of operational excellence in the insurance industry?

I believe that there is a lot of activity around operational excellence. Every insurance company is constantly looking at how they could improve the customer experience but, I think, there’s still a long way to go, in terms of wowing the customer or delivering consistent world-class service to our insurance customers.

What are some of the opportunities and threats that the industry is facing?

Technology is both an opportunity and a threat to the industry. It is an opportunity for those companies who are positioned to leverage analytical technology for the data that insurance companies typically obtain. Also the algorithmic sophistication with new technology that can perform underwriting tasks/analysis in a consistent, predictable way.

Technology can also be a threat, particularly when leveraged by “non-traditional” competitors or when companies are simply updating their technology but only with an eye toward continuing the “old fashioned” operating model instead of rethinking their whole approach to delivering quotes, policies and the nature of their regular customer interactions.

InsurTech, as an example of a “non-traditional” competitor could be a substantial threat.

I don't think that InsurTech type of companies have the burdens of legacy technology, or the expense associated with traditional bricks and mortar types of insurance company branches around the world. I believe that these new potential entrants into the insurance business have some distinct advantages over “name brand” insurance companies that have been in the business for a long time and have been sticking to the traditional way of doing insurance, selling insurance and marketing insurance.

How would you say that InsurTech is stimulating the industry?

I come back to data and the requirements, particularly in the commercial insurance world, which is the world that I’m in. The companies that do personal lines - homeowners, personal automobile, that kind of insurance, are making great strides in terms of simplifying their data requirements from customers or potential customers.

On the business insurance side, it is still very much of the traditional approach, whereby a lot of data is required from the customer or potential customer in order to assess the risk, issue quotes and insurance policies. This can be very frustrating, time-consuming and expensive for the typical business insurance buyer who may not employ a risk manager or do business through a large insurance agency who could do that work for them. InsurTech companies may have methods for acquiring the potential customers’ data without actually requiring the customer to gather it themselves, thereby saving the client money, time and making the whole transaction easier for them. While this can certainly be threatening to those insurance companies that follow the traditional operating model, it can be stimulating to the industry as a whole because it challenges traditional thinking and operating models and should spur the industry to respond more creatively than they otherwise would have.

I think potential commercial insurance clients are no different than we are, as consumers in our personal lives; we will tend to spend our dollars in those areas that we can get the greatest value for our dollar and do it as conveniently as possible

Do you think current global political and economic instability is impacting commercial insurance clients decision-making process when it comes to choosing their provider?

Yes, most definitely. In the old days, prior to technology, in the commercial insurance world, a carrier who came up with a new innovative product could expect to have, perhaps, years of a market advantage over their competitors. Today, with technology, a company can come up with a new innovative product and their competitors can literally copy it and load it up into their technology and be selling the exact same thing, so the length of time an innovative product can provide a competitive advantage is shrinking.

What carriers have to be looking at now as a sustainable differentiating factor is customer service and the customer experience. This is because no matter how much technology is thrown at operations and customer service, in the end, world-class customer service will still come down to people. Companies that invest in the best people, the best trained people, people with a customer service orientation, who are then enabled by world-class technology, will be the long-term winners in the insurance business.

Political and economic instability around the world can be to the advantage of a forward thinking insurance company that leverages global knowledge and data to actually assist customers with expertise about how the entry into certain countries, or economic instability, can affect the type and level of insurance coverage a given customer will need.

What do you think the insurer of 2030 will look like?

The insurer of 2030 is going to be smaller in terms of number of people required. I think, that’s largely due to their ability to leverage technology in a rapid and flexible fashion, meaning that most companies will need to move to the cloud for most of their applications, as opposed to owning them or hosting them. With technology which assists data acquisition and underwriting, this will reduce, not eliminate, the number of staff needed to perform those roles and expand the need for marketing and expertise focused roles – knowledge workers who can act as “trusted advisors” for the customer in partnership with agents.

Insurers will need technology that is a plug-and-play kind of approach, as opposed to hard-coded kinds of applications that are difficult to switch out as they struggle to keep pace with evolving technological advancements. If it takes you even two or three years to install a piece of technology into your environment, by the time you’re done, it has become your new legacy technology. Companies are going to have to search for new and rapid technology solutions. They will access data from all different sources, as opposed to requiring the client to wrangle all of that data for them.

In short, I think carriers generally will get smaller in terms of “traditional” roles/headcount and create a need for new types of roles. They will leverage the cloud; they will leverage technology that is more modular and flexible and will have closer connections to their clients on a real-time basis to be able to update their insurance coverages and provide clients with a faster, more efficient means of covering their exposures, and do it very cost-effectively for both parties.

What impact do you think blockchain will have on the insurance industry?

I think blockchain holds the promise of creating more transparency between client and carrier, which creates efficiency for both parties. Today, where a client has to inform their agent of changes needed to their insurance program, and the agent communicates this to the carrier, this could be done in a more real-time and automated way. This moves us in the direction of “consumption based insurance” which more personal lines companies are doing today. The traditional model that is typically in play today in the commercial insurance world, is such that it requires the client to remember, first of all, to advise their insurance agent that there is a change in the exposures that they’re being insured for. In a blockchain type of environment, when a client purchases a new piece of equipment or increases sales, or adds employees, theoretically those changes could be transmitted in real-time to their insurance company who could then update their coverage and issue the necessary changes.

As a PEX Network advisory board member, what is your PEX goal for 2017?

For myself, and I think for all PEX members, we need to focus more with an “outside-in” mentality. What changes can be made, and technology employed, which improves the customer’s experience. Many times we focus “inside-out” and assume that if we make our own internal colleagues’ experiences better, that this will translate into a better experience for our customers. That is not always true.

What is true for every company is the complexity that we build into our operating models ourselves, which adds cost and results in a lack of responsiveness to the customer’s needs. We have enough complexity in our industry just keeping pace with the level of regulation we must conform to, both at the national and state level. As a company grows larger, there is a tendency to start to put into place a lot of processes and procedures that add complexity and therefore cost to the whole end to end service delivery chain. This complexity in process and procedure then adds complexity and cost to whatever technological solutions you pursue.

So the PEX network can help by focusing on solutions for companies to help identify their complexities, and the value or lack thereof and change them, while also looking for more “plug and play” technology solutions and challenging the traditional methods for doing insurance generally. A focus on these things can help the industry evolve and compete with non-traditional entrants as well.

Interview conducted by Andrea Charles, Senior Editor, PEX Network

The Process Excellence Network is a global community for process professionals, business leaders and executives who want to improve their businesses through process and operational excellence. With a global membership of 130,000+, and a burgeoning global portfolio of live events, webinars, and networking opportunities, our mission is to inspire and inform our members with access to practical advice on business improvement tools, methodologies and technologies in order to achieve their business goals.

PEXNetwork.com provides expert commentary and learning resources developed by experienced process professionals and industry insiders. The focus is on peer to peer sharing of what it really takes to harness the power of people, process and technology and improve business operations. Coverage includes Business Process Management (BPM), Lean, Change Management, Operational Excellence, Six Sigma & Quality, Performance Management, Information Technology Trends and Customer Experience.

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