Insurance needs to consider its customer interface first when
designing e-business services, reports Hazel Ward. The present
emphasis on what suits the business is driving away customers,
surveys reveal.
Recent surveys investigating the uptake of e-business in the
insurance industry have painted a mixed picture. Figures published
in one report show that consumers have embraced online financial
services faster than any other. While a second survey revealed that
the industry is suffering from a serious case of navel-gazing,
focusing on its own needs rather than customers' and business
partners' priorities.
Positive news came in the shape of the Embracing Technology report
published earlier this month by Mori and Internet bank Egg, which
showed that consumer Internet usage had matured significantly,
particularly with regard to managing their finances online. It
found that of the 22 million Internet users in the UK, about 34%,
had either bought or applied for a financial product online. One of
the most popular products was insurance, which had been bought by
about 17% of Internet users.
But findings from a report published last week by IT consultancy
firm Cap Gemini Ernst & Young revealed that most insurance
companies are deeply disappointed with the take-up of online
services by both customers and business partners, known as
intermediaries.
The report showed that both customer and partner usage of online
channels fell well short of expectations. In the survey, which
looked at the use of technology in 120 financial services firms in
13 countries, 100% of UK respondents admitted that customer use of
online channels had been lower than anticipated. This had meant
that the anticipated cost savings from e-business initiatives had
not materialised.
According to Jonathan Charley, financial services analyst with Cap
Gemini Ernst & Young, although it was clear that expectations
had been set too high, a closer scrutiny of the research revealed
that initial online offerings had not appealed to either customers
or business partners.
With an increasing maturity of Internet users, complex Web sites
and sluggish response times for online queries were driving
customers away. Responses to the survey showed that about 40% of UK
insurers were taking more than eight hours to respond to an e-mail
query. "With many of these sites, it's a lot quicker to pick up the
phone rather than to go through numerous Web screens," Charley
said.
Kevin Paterson, head of transformation and e-business at management
consultancy Winchester White, said user convenience was central to
the success of an online initiative. "It's often easier to pick up
the phone.
"The investment has definitely gone in but a lot of expectations
were set at board level and the business case was generally based
on volume. People thought, 'If we spend this amount on technology,
we will reduce our per-unit cost.' But the volumes were just not
there because [these channels] weren't convenient," he said.
"Technology isn't a solution - it's an enabler. Companies have got
to start looking at it from a wider perspective, about how it can
change the way they interact with the customer."
According to Charley, having seamless links to back-office
processes is key to improving user experience. Integration with the
back-office and straight-through processing were critical but at
the moment, they were not happening, he added.
Phillip Bungey, chief technology officer of Lloyds.com, the
insurance portal launched by Lloyds of London, agreed that the main
challenge was achieving straight-through processing. "If you're
offering 'bit processing' people just won't do it. If you can't do
the whole interaction in one go, then there's much less of an
incentive to use these channels," he said.
Charley said one of the main problems was that insurers had created
electronic channels based on their own requirements rather than
their business partners' needs.
"At the moment, e-initiatives are more about making life easier for
the insurance companies than for their intermediaries," Charley
said. "The process is not aligned at all - it's geared towards
receiving application forms rather than considering the process
that the intermediaries are going through with the customer. The
issue is to get insurance companies to look at how they could help
their partners," he added.
Paterson holds a similar view. Until now, insurers have been taking
an "inside-out" approach to development when they should have been
looking outside, then developing inwards towards the business.
"Organisations are still thinking inside-out. Rather than
developing internally what they think is good for [their customers
and partners] then making it available to them, insurers should be
looking to their customers, and using that as a starting point for
developing systems," he said.
"That's quite a shift in mindset which is fairly significant. They
need to start with the people who use these systems, and develop
them in a way that benefits both customers and intermediaries,
rather than developing something internally then making it
available and hoping the customer will use it."
Despite the disappointment over the low take-up of online services,
respondents were still positive about driving up the number of
online transactions, which they saw rising from 1% in 2000 to 14%
in 2004.
Bungey believed a change in mindset is beginning to occur in
companies which have invested in e-commerce where it didn't do
exactly what they thought it would. "They have now got to the point
where they are trying to re-evaluate what they need to do to get
more of what they expect," he said.
Paterson agreed that a change is beginning to occur, but admitted
that the target of 14% of transactions online by 2004 is "quite
ambitious". Although some firms were doing usability tests and
getting both customers and partners involved, the majority of firms
still needed to think along the lines of convenience, he
said.
"It is achievable but e-commerce initiatives have to be designed
from a customer's perspective, and they have to be made far more
attractive than ringing a call centre," Paterson said. "The current
mindset has to undergo a radical change if this is to become a
reality."