With BPM, Insurance Companies Don’t Need to Outrun the Bear
It’s no secret that the business of insurance is getting more and more competitive. Thanks to numerous comparison sites on the internet, it’s easier than ever to quickly find just what you need. As consumers, we’re all benefiting from more options, easier selection, and lower prices. But for insurance companies, all of this transparency is another matter.
Some insurers, like GEICO, are doing great. Geico has found innovative ways to use the same technology that’s otherwise pushing towards commoditization to its advantage. Take for example what GEICO’s done with their mobile SNAP-Quote application where all a customer has to do to get insurance is take a picture of their driver’s license with their smart phone.
But for every GEICO who’s using technology to get ahead, there are fifty other insurance companies lagging behind. This is ironic because the insurance industry spends 15% more on information technology than other industries.
The reasons behind this paradox become clear when you look beneath the surface. Insurers have been technology pioneers because they had to be. Products in insurance have always been similar so companies differentiate on process and service. It takes good information systems to scale process and service advantages and make them stick. Most insurers invested heavily in custom designed applications to systematize their processes. This proved to be a good path, at first. But the high cost of maintenance has turned those custom applications into money pits. Worse yet, their lack of flexibility is stifling innovation, preventing insurance providers from rapidly adapting to market changes, and making them easy targets for competitors.
Most insurers know they are behind. They have traditionally addressed this through large scale “rip and replace” initiatives. But the high costs, long time horizons, and inevitable delays make such projects highly risky. However, forward thinking insurers like Crawford, TIO, and Vermont Mutual are taking a new approach, using business process management software (BPM) to fix challenges and grow new capabilities without “rip and replace.”
These companies are applying BPM to enhance the customer experience, reduce costs, get smarter about pricing risks, and become the top choice for independent agents. The ways they use BPM range from innovative and dramatic (such as mobile BPM and social BPM) to incremental and operations focused. And even a series of small incremental improvements can make a big difference in a world where insurers not using BPM are effectively strangled by their existing applications, unable to move ahead.
When I step back and look at this situation, it reminds me of an old joke with the punch line, “I don’t need to outrun the bear…”
Vice President of Solutions