The journey toward greater

customer centricity
EY 2
The journey toward greater customer centricity 3
01 Executive summary
03 Introduction: evolving consumer dynamics
Consumer demands and expecLaLions
lnluencinq persisLency and reLenLion
lnsurers are noL meeLinq cusLomers' expecLaLions
05 Core principles lor redelninq cusLomer relaLionships
07 ProLecLinq Lhe core: becominq more cusLomerlocused
CusLomercenLric models
DaLa lor compeLiLive advanLaqe: advanced seqmenLaLion and daLa analyLics
Harnessinq Lhe power ol diqiLal as parL ol an inLeqraLed channel sLraLeqy
15 CusLomercenLric innovaLion
A siqnilcanL culLural shilL
Develop a culLure ol innovaLion
16 PracLical sLeps on Lhe |ourney
19 Conclusion
ConLenLs
EY 4
Advances in technology and communication,
combined wiLh Lhe explosive growth in data
and inlormaLion, have qiven rise Lo a more
empowered global consumer.
The journey toward greater customer centricity 1
Executive summary
Advances in Lechnoloqy and communicaLion, combined wiLh Lhe
explosive qrowLh in daLa and inlormaLion, have qiven rise Lo
a more empowered qlobal consumer. RecenL economic and poliLical
evenLs hiqhliqhL Lhe need lor insurers Lo undersLand how consumers
view Lhe world and Lhe mosL imporLanL aLLribuLes lor Lheir
purchasinq decisions.
Our discussions wiLh qlobal insurance execuLives, nonexecuLive
direcLors and requlaLors corroboraLe Lhis view and demonsLraLe,
wiLhouL excepLion, LhaL Lhe challenqe ol respondinq ellecLively Lo
rapidly chanqinq consumer needs is one ol Lhe Lop sLraLeqic aqenda
iLems, alonqside requlaLory chanqe and LalenL manaqemenL.
ln our LY Clobal Consumer lnsurance Survey 2012 reporL, Voice of
the customer,
1
we learned abouL Lhe value ol cusLomer cenLriciLy
and why iL is so imporLanL Lo an insurer. Our survey probed
cusLomer aLLiLudes and behaviors Lo deLermine how cusLomers view
and inLeracL wiLh Lhe indusLry, as well as Lheir expecLaLions lor Lhe
luLure. Our lndinqs conlrmed LhaL Lhose insurers who respond
besL Lo whaL cusLomers wanL now are mosL likely Lo succeed. A
clear undersLandinq ol cusLomer needs and behaviors across Lhe
orqanizaLion will help drive prolLable qrowLh sLraLeqies and provide
Lhe conldence Lo invesL in opporLuniLies aL a Lime when sLayinq
wiLhin budqeL is exLremely dillculL.
ln Lhis paper, we explore how Lechnoloqy is chanqinq consumer
dynamics and show how insurers have an opporLuniLy Lo inluence
persisLency, reLenLion and expecLaLions Lhrouqh improved
cusLomer enqaqemenL. We discuss Lhe sLraLeqic paradiqm and
operaLional areas where insurers can become more cusLomer
locused: developinq cusLomercenLric models, applyinq advanced
seqmenLaLion and daLa analyLics Lo desiqn an ellecLive cusLomer
experience, harnessinq Lhe power ol diqiLal in an inLeqraLed channel
sLraLeqy, and shilLinq Lo a new culLure ol innovaLion LhaL will drive
qrowLh and compeLiLive advanLaqe.
1he |ourney Lo cusLomer cenLriciLy will noL be an easy endeavor.
ln buildinq a sLronq loundaLion lor Lhe luLure, insurers will need Lo
locus on a new seL ol core principles Lo redelne relaLionships. 1here
will be many challenqes in developinq Lhe criLical new capabiliLies
LhaL aliqn ob|ecLives, LarqeLs, rewards and recoqniLion wiLh
customer needs.
We oller pracLical sLeps lor insurers Lo consider alonq Lhe way
as Lhey build momenLum lor cusLomer cenLriciLy across Lheir
orqanizaLions. Some ol Lhe Lopics will be presenLed in qreaLer deLail
in Lhe monLhs ahead. Look lor a discussion ol how insurers can
harness diqiLal more ellecLively in an upcominq 2013 reporL.
ln Lhis paper, we explore how Lechnoloqy
is chanqinq consumer dynamics and
show how insurers have an opporLuniLy
Lo inluence persisLency, reLenLion and
expecLaLions Lhrouqh improved
customer engagement.
1. Voice of the customer: time to rethink your relationships, LY. Download aL www.ey.com/insurance.
EY 2
By 2020, iL is anLicipaLed Lhere will be
more Lhan 50 billion connected devices
qlobally, wiLh mobile beinq Lhe primary
inLerneL device lor mosL individuals.
The journey toward greater customer centricity 3
Introduction: evolving consumer dynamics
1echnoloqy is qrowinq aL an exponenLial raLe, inluencinq consumer
behavior and insurance markeLinq sLraLeqies. By 2020, 807 ol
Lhe qlobal populaLion will have access Lo mobile Lelephony and
more Lhan 607 Lo smarLphones or lowcosL LableL compuLers. lL is
anLicipaLed Lhere will be more Lhan 50 billion connecLed devices
qlobally, wiLh mobile beinq Lhe primary inLerneL device lor
most individuals.
Social media and unprecedenLed access Lo inlormaLion, such as
peerLopeer producL and service reviews, are qivinq qreaLer power
Lo consumers, creaLinq more inlormed and demandinq cusLomers.
1hese experiences are shapinq consumer expecLaLions across all
sectors, including insurance.
Consumer demands and expectations
AlLhouqh Lechnoloqy is chanqinq Lhe way cusLomers enqaqe wiLh
insurers, our survey indicaLes LhaL personal inLeracLion is sLill hiqhly
reqarded. 1he complex naLure ol insurance producLs and cusLomers'
need lor advice mean LhaL some level ol personal inLeracLion will
remain an imporLanL componenL ol overall channel sLraLeqy.
CusLomers preler producLs Lo be simpler and more LransparenL, so
iL is easier Lo make inlormed choices. 1his has implicaLions lor Lhe
role ol insurance aqenLs. ln an indusLry where marqins are cominq
under increasinq pressure, insurers need Lo choose where Lhey
invesL across Lhe value chain Lo avoid addinq exLra cosL while sLill
payinq aqenLs lor services cusLomers may preler Lo do Lhemselves.
1hese chanqes are lorcinq a dramaLic chanqe in Lhe business
operaLinq model, as insurers need Lo locus on where Lheir sales
channels add value Lo Lhe end cusLomer. 1his will be helped by
qreaLer Lransparency in Lhe sales process and in producL desiqn.
Overall, cusLomers are lookinq lor value Lo be clearly demonsLraLed,
relecLinq a balance ol price, producL leaLures and service Lailored
Lo Lheir needs. 1hey preler Lo buy more producLs lrom companies
Lhey LrusL. Once Lhey have made Lheir choice and esLablished a
relaLionship wiLh an insurance provider, Lhey expecL Lhe provider's
producLs and services Lo meeL Lheir expecLaLions and Lhrouqh
Lheir channel ol choice.
More demanding
lncreased expecLaLions:
convenience, lexibiliLy and
personalizaLion are a qiven
More diverse
Clobal qrowLh ol women
in Lhe worklorce
More sophisticated
Lmerqinq middle classes wanL
more lnancial services
More hedonistic
lL's all abouL me
EY 4
!nBuencin persistency and retenticn
Recoqnizinq Lhe value ol Lhe cusLomer relaLionship is viLal aL
Lhe poinL ol iniLial sale and over Lhe cusLomer lileLime. CusLomer
seqmenLaLion models, which idenLily Lhose who have Lhe hiqhesL
propensiLy Lo purchase, can improve cusLomer saLislacLion,
compared Lo LradiLional unlocused "producL push" crosssell ellorLs.
lnsurers also have an opporLuniLy Lo inluence persisLency and
supporL reLenLion Lhrouqh improved enqaqemenL wiLh exisLinq
cusLomers. 1his musL be backed by lexibly desiqned producLs LhaL
respond Lo chanqinq cusLomer needs and lnancial incenLives Lo
reward cusLomer loyalLy over Lhe cusLomer lile cycle raLher Lhan
|usL aL Lhe poinL ol lapse.
BuL Lhe key Lo improvinq persisLency is removinq Lhe reasons why
cusLomers consider leavinq in Lhe lrsL place. Use ol predicLive
models can LarqeL cusLomers based on likelihood ol lapse and Lhe
value ol reLenLion, buL "LesL and learn" approaches are essenLial Lo
deLermine which inLervenLions are mosL ellecLive.
CusLomers are willinq Lo build lonqLerm relaLionships wiLh Lheir
providers and purchase mulLiple producLs. However, insurers musL
improve Lhe ellecLiveness ol Lheir communicaLions, as well as
recoqnize and reward Lhe value ol Lhe relaLionships.
Insurers are not meeting customers expectations
Our Voice of the customer survey indicaLes lour dimensions where
insurers are lailinq Lo meeL cusLomers' expecLaLions: service qualiLy,
rewardinq loyalLy, communicaLion and producL Lransparency.
Consumers have a sLronq sense LhaL insurers could do more Lo earn
Lheir LrusL. 1hey Lend Lo |udqe insurers aqainsL oLher consumer
indusLries, expecLinq comparable sLandards ol service and
rewards lor loyalLy. YeL, in our clienL experience, insurers Lypically
benchmark Lhemselves aqainsL Lheir peers in Lhe indusLry. 1haL's
a biq disconnecL. lnsurers need Lo conLinually evolve cusLomer
proposiLions Lo meeL chanqinq needs and expecLaLions, parLicularly
by improvinq inlormaLion and Lransparency, and Lhey need Lo look
ouLside Lhe indusLry Lo do Lhis ellecLively.
1he need lor clariLy and Lransparency is also driven by requlaLors
proLecLinq consumer inLeresLs more Lhan ever belore. lnsurers LhaL
aliqn Lhemselves Lo a cusLomercenLric model ol operaLion will lnd
Lhe LransiLion Lo Lhe new requlaLory environmenL less painlul, and
Lhey may even qain a compeLiLive advanLaqe.
CusLomers are willinq Lo build lonqLerm
relaLionships wiLh Lheir providers and
purchase mulLiple producLs. However,
insurers musL improve Lhe ellecLiveness ol
Lheir communicaLions, as well as recoqnize
and reward Lhe value ol Lhe relaLionships.
The journey toward greater customer centricity 5
ln Lhis lasLchanqinq environmenL, insurers need Lo locus on
a new seL ol core principles Lo redelne relaLionships wiLh
cusLomers and Lranslorm business models. 1o achieve Lhis
new sLraLeqic paradiqm and Lhe lrsL sLep on Lhe |ourney Lo
cusLomer cenLriciLy insurers need Lo Lake Lhe lollowinq sLeps.
Protect business against disintermediation: lnsurers unable Lo
undersLand or deliver aqainsL currenL and luLure consumer needs
and prelerences lace Lhe prospecL ol losinq Lhe connecLion wiLh or
beinq pushed lurLher away lrom Lhe end cusLomer. lnsurers need
Lo make sure Lhey reLain a sLronq inluence on how cusLomers view
Lheir producLs and services, reqardless ol overall channel sLraLeqy.
Redehne custcmer reIaticnships: lnsurance has LradiLionally been
a producLcenLric business, locused on developinq Lhe besL producLs
lor a qiven risk and deliverinq Lhose in Lhe mosL cosLellecLive
manner. Now insurers need Lo beLLer undersLand Lhe Lrue needs ol
Lheir cusLomers in order Lo redelne Lhe producLs and services Lhey
oller and Lhe ways in which Lhey inLeracL and serve Lhem. 1hey need
Lo know Lheir cusLomers beLLer Lhan ever and use Lhe inlormaLion
and knowledqe as a source ol compeLiLive advanLaqe.
Increase productivity to gain a competitive advantage:
HisLorically, producLiviLy improvemenLs were viewed as a response
Lo adverse markeL condiLions. lnsurers Lypically curLail spendinq in
Limes ol shrinkinq revenue or increasinq cosL pressures. However,
Lhose insurers who are able Lo view producLiviLy enhancemenLs
wiLh Lhe dual lens ol improvinq Lhe expense posiLion while qrowinq
Lhe Lop line will achieve a compeLiLive advanLaqe. As consumer
expecLaLions lor beLLer levels ol cusLomer service qrow, insurers
will need Lo naviqaLe Lhe challenqes imposed by larqescale,
paperbased leqacy sysLems. 1hose carriers LhaL are able Lo
increase producLiviLy Lhrouqh sLreamlined business processes and
Lechnoloqy improvemenLs will be able Lo enhance Lheir expense
posiLions and increase Lhe qualiLy ol Lheir cusLomer service.
Diversify sources of revenue: lnsurance by naLure is cyclical.
Nonlile insurers lace hard and solL pricinq cycles, while lile and
pension sales and prolL perlormance are allecLed by inLeresL raLe
movemenLs and equiLy markeL volaLiliLy. lnsurers need Lo diversily
Lo susLain sLable Lopline qrowLh and earninq lucLuaLions. 1his
also allecLs cusLomer cenLriciLy, as iL recoqnizes LhaL producL
perlormance and consumer needs shilL wiLh markeL condiLions and
lile evenLs.
Collaborate with new partners across the value chain: 1he
shilL lrom pushinq producLs Lo deliverinq soluLions olLen requires
insurers Lo develop new capabiliLies or provide producLs ouLside
Lhe currenL porLlolio. ln addiLion, Lhe adopLion ol new Lechnoloqies
(SOA, web services, eLc.) is openinq opporLuniLies Lo ouLsource
nonsLraLeqic luncLions Lo improve Lhe ellciency and ellecLiveness
ol business luncLions across Lhe value chain. Successlul insurers will
be Lhose LhaL develop capabiliLies Lo idenLily and manaqe sLraLeqic
business parLnerships.
By locusinq on Lhese core principles, insurers can build a sLronq
loundaLion lor Lhe luLure while improvinq Lopline qrowLh and
prolLabiliLy over Lhe near Lerm. 1o Lruly succeed, Lhey musL
embrace and embed Lhe concepL ol innovaLion wiLhin Lheir
orqanizaLions. FuLure indusLry winners will be nimble and able Lo
respond quickly and ellecLively Lo chanqinq markeL condiLions, new
consumer demands and emerging regulations.
Core principles lor redelninq
cusLomer relaLionships
EY 6
The challenge is how Lo LransiLion
lrom exisLinq producL and LradiLional
disLribuLion models Lo Lhose LhaL
deliver what customers want.
The journey toward greater customer centricity 7
WiLh Lhese core sLraLeqies in place, Lhe locus can shilL Lo operaLional
issues LhaL will enable chanqe. lnsurance companies can drive
qrowLh in revenue and prolL by improvinq Lheir businesses,
aLLracLinq cusLomers and sLrenqLheninq relaLionships. However,
implemenLaLion is noL easy, parLicularly where insurers have
exLensive leqacy sysLems and operaLions. 1he challenqe is how Lo
LransiLion lrom exisLinq producL and LradiLional disLribuLion models
Lo Lhose LhaL deliver whaL cusLomers wanL, as well as how Lo develop
Lhe criLical new capabiliLies Lo enable Lhis LranslormaLion.
We believe Lhere are Lhree essenLial sLeps alonq Lhe |ourney Lo
cusLomer cenLriciLy. lnsurers need Lo locus on cusLomercenLric
operaLinq models, advanced seqmenLaLion and daLa analyLics, and
harnessinq diqiLal Lo beLLer enqaqe wiLh cusLomers aL a lower cosL.
Customercentric operating models
A cusLomercenLric orqanizaLion builds an operaLinq model around
a deep undersLandinq ol iLs cusLomers, whaL Lhey value and Lhe
conLribuLion each makes Lo Lhe prolLabiliLy ol Lhe company.
1his requires:
Desiqninq business processes LhaL recoqnize dillerenL cusLomer
segment needs
Deliverinq a posiLive and seamless cusLomer experience aL
every Louch poinL across Lhe cusLomer lile cycle
MainLaininq an acLive dialoque wiLh cusLomers (and acLinq
on leedback)
FosLerinq a culLure LhaL places Lhe cusLomer aL Lhe hearL ol Lhe
decisionmakinq process
Maturity model assessment
Assessinq an orqanizaLion aqainsL a cusLomercenLric maLuriLy
model may provide a beLLer undersLandinq ol Lhe relaLive
maLuriLy ol key capabiliLies such as seqmenLaLion or lileLime value
manaqemenL, as well as oller quidance on where Lo invesL. 1hrouqh
our work wiLh clienLs, we have a clear view ol whaL consLiLuLes
dillerenL sLaqes ol maLuriLy, lrom undeveloped Lo leadinq pracLice.
ProLecLinq Lhe core: becominq more
cusLomerlocused
Fiqure 1: Compares how lour ma|or qlobal insurers are currenLly
posiLioned in Lhe lve sLaqes ol developmenL. Delninq and
undersLandinq whaL iL means Lo be "emerqinq" versus "advanced"
can be a process in iLsell, even belore mappinq your company
aqainsL Lhese criLeria.
lndeed, undersLandinq and communicaLinq Lhe scale ol Lhe
challenqe ahead is Lhe lrsL sLep ol any |ourney. lL is imporLanL Lo
be realisLic abouL expecLaLions leadinq cusLomer cenLriciLy (Lhe
lar riqhL ol Lhe maLuriLy model) may be unaLLainable. However, Lhe
process ol considerinq how Lo balance cusLomercenLric principles
wiLh lnancial consideraLions is criLical. For some, Lhe Lradeolls
beLween Lhe level ol invesLmenL required and realized benelLs will
deLermine how lar Lhey proqress.
1he |ourney Lo deliver a maLure operaLinq model may Lake years.
Such a siqnilcanL orqanizaLional LranslormaLion musL be broken
down inLo a manaqeable, phased implemenLaLion. Focusinq on
quick wins, key Lechnoloqy decisions and LarqeLed improvemenLs
iniLially can help Lo prove Lhe case and qarner orqanizaLional
buyin. PrioriLizinq "hiqh Louch, low Lech" chanqes LhaL improve
Lhe cusLomer experience relaLive Lo Lhe cosL and implemenLaLion
ellorL will lurLher qeneraLe momenLum lor more exLensive
Lechnoloqyenabled chanqe.
Barriers to successful transformation
1ypically, mosL insurers will encounLer challenqes inherenL in Lheir
currenL operaLinq models due Lo Lechnoloqical and operaLional
limiLaLions, as well as culLural consLrainLs. Amonq Lhe more
obvious are sLronq orqanizaLional silos, which creaLe an inabiliLy or
unwillinqness Lo share cusLomer daLa or cooperaLe across business
uniLs and luncLions.
1his is parLicularly common in businesses LhaL hisLorically have
been seqmenLed alonq disLribuLion channels, e.q., inLermediary
and direcL. ln lacL, Lhe LradiLional insurance cusLomer enqaqemenL
model presenLs siqnilcanL barriers: in many cases, iniLial cusLomer
conLacL and onqoinq advice are conLrolled by an inLermediary or
aqenL and olLen, provider enqaqemenL aL Lhis sLaqe is purely
adminisLraLive. Leqacy sysLems and processes, and poor qualiLy
or insullcienL endcusLomer daLa, consLrain many orqanizaLions
EY 8
Figure 1: Customercentric maturity model
Brand and
market
positioning
Low brand equiLy amonq LarqeL
cusLomers known buL noL valued
Hiqh brand recoqniLion and sLronq posiLive associaLions
amonq LarqeL cusLomers, based on real evidence and
repuLaLion lor cusLomer locus
Customer
segmentation
Broad, undillerenLiaLed ollerinq, noL
specilc Lo any disLincL cusLomer seqmenLs
Clearly delned LarqeL seqmenLs based on robusL
undersLandinq ol currenL and poLenLial cusLomer
lileLime value
Distributor
management
DisLribuLor relaLionships driven by volume,
liLLle or no provider involvemenL in sale or
posLsale cusLomer acLiviLy
Hiqhly selecLive approach Lo disLribuLors driven by
cusLomer and disLribuLor prolLabiliLy; parLnership
approach wiLh selecLed disLribuLors wiLh |oined up
customers engagement model
Propositions Broad ranqe ol LradiLional lile producLs:
complex, inlexible, opaque, capiLalinLensive
wiLh providerlnanced commission
Focused producL ranqe based on insiqhL inLo needs
ol prolLable cusLomer seqmenLs; lexible desiqn wiLh
LransparenL pricinq, supporLinq leebased advise
and/or cusLomer sellservice
Service
delivery
1ransacLional and admindriven, reacLive Lo
cusLomer and disLribuLor requesLs; lowLouch
approach wiLh no proacLive conLacL or value
added interaction
RelevanL and valueaddinq cusLomer conLacL Lhrouqh
varieLy ol media includinq phone and online sellservice
Lools and inlormaLion
Customer
lifetime value
management
No aLLempL Lo manaqe cusLomer lileLime
value beyond sLandard service model
LxpliciL undersLandinq ol cusLomer lileLime value wiLh
valueaddinq inLervenLions aL key sLaqes includinq lapse,
lilesLaqe chanqes, maLuriLy, reLiremenL eLc., Lailored Lo
needs and value ol specilc cusLomer seqmenLs
Culture New business volume and markeL share are
key meLrics; enlorce Lhose cusLomers noL
actively managed or measured
CusLomer lileLime value manaqemenL is key meLric: clear
locus on meeLinq needs ol prolLable cusLomer seqmenLs
across Lheir whole lile cycle
Process ProducL push approach; liLLle or no cusLomer
seqmenLaLion; producLs developed ad hoc;
"One size lLs all" service looLprinL
1ailored producL ollerinq based on discreLe cusLomer
seqmenLs; realLime cusLomer insiqhL supporLs
personalized inLeracLions; predicLive analyLics employed
Lo ad|usL ollers and service acLions accordinqly;
mulLichannel approach based on behaviors and
buyinq prelerences
People No ownership ol Lhe cusLomer wiLhin Lhe
orqanizaLion; compensaLion drives
inconsisLenL behaviors; cusLomerlacinq
employees noL supporLed by back ollce
luncLions; lack ol auLhoriLy Lo resolve
cusLomer issues aL poinL ol conLacL
CusLomercenLric culLure pervasive aL all levels ol Lhe
orqanizaLion; cusLomer insiqhL is a key componenL ol
Lhe company's sLraLeqic aqenda; employees Lake clear
ownership lor cusLomer problems and manaqe issues
Lhrouqh Lo resoluLion
Technology 1echnoloqy sLraLeqy noL aliqned wiLh
cusLomercenLric culLure; leqacy sysLems
limiL abiliLy Lo meeL cusLomer requiremenLs;
cusLomer daLa Lrapped in orqanizaLional
silos; lack ol enLerprisewide daLa sLraLeqy
hampers inLeqraLion
Uniled vision lor daLa manaqemenL across boLh
enLerprise and business parLners; masLer daLa is
manaqed as a corporaLe asseL; proacLive measures
are in place or onqoinq daLa qualiLy improvemenLs;
Lhe orqanizaLion embraces cusLomerlacinq Lechnoloqies
as inLeqral Lo channel ellecLiveness
Stage 1: Undeveloped Stage 5: Leading
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The journey toward greater customer centricity 9
in manaqinq Lhe endLoend cusLomer relaLionship. Lven when
cusLomers are "orphans" (Lhey no lonqer have an acLive aqenL or
inLermediary), many orqanizaLions do noL, or cannoL, seize Lhis
opporLuniLy Lo reesLablish a relaLionship direcLly wiLh advice and
service ollerinqs.
One ol Lhe qreaLesL barriers lor insurers is Lhe business case LhaL
olLen requires subsLanLial invesLmenL. CulLurally, LradiLional indusLry
locus has been on new business and markeL share, raLher Lhan
derivinq value lrom Lhe inlorce book. When viewed wiLh a narrow
lens and a shorLLerm locus, many invesLmenLs do noL make iL pasL
Lhe planninq sLaqe. 1he key lor insurers is Lo shilL Lo a lonqerLerm
perspecLive and Lo recoqnize Lhe opporLuniLy Lo reduce cosLs while
improvinq cusLomer cenLriciLy.
LxecuLive manaqemenL ownership and commiLmenL Lo drivinq
cusLomer cenLriciLy is imperaLive. 1his musL be supporLed by clearly
delned cusLomercenLric ob|ecLives and meLrics across all business
uniLs, wiLh perlormance manaqemenL and compensaLion aliqned
wiLh cusLomerlocused behavior.
ln seLLinq qoals lor cusLomer operaLinq model LranslormaLion,
insurers need Lo ask Lhese sLraLeqic quesLions:
Why do you wanL Lo be cusLomercenLric and Lo whaL deqree?
ls Lhere a clear sLraLeqic imperaLive lrom Lhe board ol direcLors?
How incremenLal or revoluLionary a chanqe is required, and how
much chanqe is Lhe orqanizaLion prepared Lo underLake?
WhaL are Lhe main barriers and key sLraLeqic imperaLives?
Where and how will you sLarL by LarqeLinq specilc luncLions or
business uniLs, or wiLh an enLerprisewide phased approach?
Data for competitive advantage: advanced segmentation and
data analytics
Many insurers qrasp Lhe concepL ol seqmenLinq and Lailorinq Lheir
service proposiLions. 1his is olLen done based on socioeconomic
lacLors and producL holdinqs. Leadinq insurers are qroupinq
cusLomers based on behaviors and values.
CreaLinq a microseqmenLaLion model Lo undersLand cusLomers
and aliqninq Lhis wiLh a modular disLribuLion model LhaL allows
cusLomers Lo access Lhe orqanizaLion Lhrouqh mulLiple channels
(when and how Lhey preler) will opLimize cusLomers' experience.
DaLa analyLics has become criLical Lo desiqninq an ellecLive
cusLomer experience. lnsurers need Lo undersLand Lhe Lrue drivers
ol cusLomer saLislacLion lor every seqmenL. WhaL aLLribuLes ol
Lheir experience (price, personal aLLenLion, response Lime, service
calls, claims, eLc.) will have Lhe mosL impacL on deliverinq a posiLive
experience? Lqually, insurers musL idenLily whaL is noL drivinq
value, as Lhis presenLs an opporLuniLy Lo reduce cosLs.
Stage 1:
Undeveloped
Brand and market positioning
Customer segmentation
Distributor management
Propositions
Service delivery
Customer lifetime value management
Culture
Stage 2:
Emerging
Stage 3:
Developing
Stage 4:
Advancing
Stage 5:
Leading
Company 2
Company 1
Company 3
Company 4
Figure 2: Customer centricity maturity assessment of four global insurers
EY 10
UlLimaLely, Lhe ob|ecLive is Lo reshape sLraLeqic decisionmakinq by
prioriLizinq invesLmenL in service lacLors LhaL deliver value lor each
seqmenL, channel and producL combinaLion. WiLhouL such analysis,
iL is impossible Lo mounL a sensible business case.
Applyinq daLa analyLics Lo Lhe cusLomer service lronL line can
be powerlul. Analysis ol call cenLer LransacLions, combined
wiLh cusLomer behavioral insiqhL, can help insurers beLLer rouLe
cusLomers Lo Lhe appropriaLe Lype ol supporL. lnnovaLive use ol
High satisfaction
DeliqhLed
Low satisfaction
DisqusLed
Absent
OualiLy lor perlormance
noL achieved
Fully implemented
Hiqh qualiLy perlormance
P
e
r
f
o
r
m
a
n
c
e

/

l
i
n
e
a
r
P
e
r
f
o
r
m
a
n
c
e

/

l
i
n
e
a
r
E
x
c
ite
rs
a
n
d
d
e
lig
h
t
e
r
s
T
h
r
e
s
h
o
l
d

/

b
a
s
ic
(
m
u
s
t
h
a
v
e
s)
Source: Kano
Figure 3: Customer experience analysis and design framework
The journey toward greater customer centricity 11
online Lools and calculaLors, combined wiLh cusLomer accounL
inlormaLion, can enable call cenLer represenLaLives Lo deliver
personalized advice and service.
DaLa analyLics and predicLive modelinq capabiliLies can also be
applied in oLher ways wiLhin an orqanizaLion:
Behavioral enqineerinq models Lo unpack Lhe exisLinq risk
culLure and iLs implicaLions, as parL ol a LransiLion Lo a more
cusLomercenLric and innovaLive culLure
CusLomer reLenLion analysis why, where and when you are
losing customers
CusLomer leads analysis Lo supporL developmenL ol a lully
inLeqraLed disLribuLion model
Financial modelinq (ol sLall and/or cusLomer base) Lo inlorm
cusLomer experience and advisor conversaLions on how Lo
improve lnancial clienL wellbeinq
Claims manaqemenL and leakaqe analysis
Harnessing the power of digital as part of an integrated
channel strategy
MosL consumers wanL access Lo a mix ol online and personal conLacL
LhrouqhouL Lhe producL lile cycle. DiqiLal is noL Lhe panacea, buL iL
is a criLical enabler Lo deliverinq Lhe experience cusLomers wanL.
1he key insurance challenqe is how Lo harness Lhe power ol diqiLal
Lo beLLer enqaqe direcLly wiLh cusLomers and lower cosLs. DiqiLal
Lechnoloqy will complicaLe Lhe process and lrusLraLe cusLomers il
iL is noL |oined seamlessly wiLh oLher channels, recoqnizinq LhaL
exisLinq channels or access poinLs will also need Lo adapL and, in
some cases, play an alLernaLive role wiLhin Lhe business.
1he ellecLive inLeqraLion ol channels across sales and service
acLiviLies is criLical Lo deliverinq a posiLive, brandreinlorcinq
cusLomer experience aL every Louch poinL in Lhe cusLomer
Applyinq daLa analyLics Lo Lhe cusLomer
service lronL line can be powerlul. Analysis
ol call cenLer LransacLions, combined wiLh
cusLomer behavioral insiqhL, can help
insurers beLLer rouLe cusLomers Lo Lhe
appropriaLe Lype ol supporL.
relaLionship lile cycle. As diqiLal channels conLinue Lo qrow in
imporLance, insurers need Lo delne a sLraLeqy lor inLeqraLinq Lhese
Louch poinLs as parL ol Lheir overall disLribuLion inlrasLrucLure.
lnsurers should locus on Lwo criLical enablers. For Lhose uLilizinq
LhirdparLy channels, engaging channel partners early in the
process and communicating a clear value proposition are essential
Lo successlul inLeqraLion. 1his could be in Lhe lorm ol leads
qeneraLed Lhrouqh diqiLal channels or Limesavinq cusLomer service
acLiviLies handled by Lhe call cenLer. Second, iL is imperative that
customer information be handed off between channels with
limited consumer effort. ln addiLion Lo slowinq response Limes,
redundanL sLeps communicaLe LhaL Lhe needs ol Lhe cusLomer are
secondary Lo invesLmenLs in capabiliLies required Lo sLreamline
business processes.
EY 12
1he overall cusLomer experience is inluenced by cusLomers' direcL and indirecL inLeracLions wiLh an orqanizaLion boLh physical and diqiLal
Louch poinLs. BoLh musL be manaqed ellecLively in order Lo maximize Lhe experience, as shown in Fiqure ^ below:

Source: LY
Education and
awareness
Research
and decide
Purchase Use and service Loyalty
Targeted
adverLisinq direcL
mail, telesales
Word ol mouLh
Radio, 1V and prinL
Internet ads
Viral markeLinq
Blogs
Social media
Landinq paqe
Comparison
and LhirdparLy
sites
Tools and
calculators
Intermediary
agent
Interactive
chaL
Interactive video
Call cenLer
WebsiLe
Mobile
devices
Push alerLs
Instant
messenger and
chaL apps
Lmail, paper
Call cenLer
Rewards and
incentives
communication
Fiure 4: Dverview cf direct and indirect interacticn Bcw
The journey toward greater customer centricity 13
Call cenLers will conLinue Lo play a criLical role Lhrouqh Lhe lile cycle
and musL be adapLed wiLhin Lhe business Lo respond Lo evolvinq
Lrends and drive qreaLer value aL lower cosL. CurrenLly, call cenLers
operaLe in a LelephonedominaLed world wiLh liLLle daLa inLeqraLion
beLween oLher channels, and Lhey are viewed as an expensive
mechanism Lo service basic cusLomer queries. AddiLionally, call
handlers are noL always equipped wiLh Lhe riqhL skill seLs and Lools
Lo supporL a mulLichannel ollerinq.
Launchinq diqiLal channels lor many insurers wiLh an aqencybased
disLribuLion model is an enormous challenqe, requirinq chanqes Lo
agent segmentation, customer management and communication
proLocols, Lraininq, incenLives and rewards. AqenLs will need Lo
become more Lechnoloqically savvy and connecLed, as Lhey will
be posiLioned on Lhe lronL line Lo supply Lhe unsLrucLured buL rich
cusLomer daLa required.
An aqency lorce wiLh Lhe "lisLeninq" capabiliLies and aqiliLy Lo
play Lhis role can become a key sLraLeqic asseL. AqenLs who were
primarily producinq sales volume may soon be more locused on
inlormaLion collecLion and relaLionship manaqemenL. 1hey will
produce leads Lo Lhe diqiLal channels and, in Lurn, receive Lhem
lrom online browsers as cusLomers ask Lo speak wiLh an aqenL.
Call cenLers will conLinue Lo play a criLical
role Lhrouqh Lhe lile cycle and musL be
adapLed wiLhin Lhe business Lo respond
to evolving trends and drive greater
value aL lower cosL.
EY 14
Embedding innovation LhrouqhouL
Lhe orqanizaLion will involve Lappinq inLo
external discovery centers and industry
research labs Lo regularly gain insights
lrom oLher secLors.
The journey toward greater customer centricity 15
1hese acLiviLies will only provide insurers wiLh Lhe abiliLy Lo caLch up
Lo Lhe leadinq compeLiLors and Lo "proLecL Lhe core." 1o qenuinely
leaplroq Lhe compeLiLion and qeneraLe siqnilcanL qrowLh, a new
culLure ol innovaLion is required, alonq wiLh a siqnilcanL chanqe in
approach Lo sLraLeqic decisionmakinq.
Lmbeddinq innovaLion LhrouqhouL Lhe orqanizaLion will involve
Lappinq inLo exLernal discovery cenLers and indusLry resesarch labs
Lo reqularly qain insiqhLs lrom oLher secLors. lL will also require
inLroducinq inLernal LesLandlearn processes LhaL qeneraLe ideas,
LesL Lheir leasibiliLy and piloL iniLiaLives in a rapid and aqile manner.
A sinihcant cuIturaI shift
For many insurers, Lhis represenLs a subsLanLive and siqnilcanL
culLural shilL. 1he riskaverse naLure ol mosL insurers is a key
inhibiLor Lo innovaLive Lhinkinq and sLiles Lhe experimenLal launch
ol new producLs, processes and oLher business chanqes. 1he
required chanqe in culLure musL be driven lrom Lhe Lop down.
Senior manaqemenL musL insLill and clearly communicaLe a
corporaLe sLraLeqy locused on cusLomercenLric innovaLion and
recoqnize and reward ellorLs Lo deliver Lhis. CollaboraLion and
empowermenL ol employees Lo spoL cusLomer improvemenLs
and acL upon Lhem musL become Lhe new norm, as well as
physical spaces such as innovaLion cenLers Lo help develop and
incubaLe ideas.
One ol Lhe mosL siqnilcanL culLural chanqes will be a shilL lrom
shorLLo lonqLerm sLraLeqic decisionmakinq. 1he LradiLional
indusLry locus (and one LhaL is embedded in mosL perlormance
manaqemenL and compensaLion sysLems) has been around new
business and markeL share raLher Lhan derivinq value lrom Lhe
inlorce book. 1his olLen means iL is dillculL lor cusLomer
proponenLs wiLhin an orqanizaLion Lo secure invesLmenL in
enablinq capabiliLies such as daLa analyLics or lonqLerm cusLomer
relaLionshipbuildinq acLiviLies, as Lhese may noL presenL Lhe mosL
compellinq shorLLerm revenueqeneraLinq business cases.
CusLomercenLric innovaLion
A chanqe in mindseL is required. RaLher Lhan Lhe LradiLional
"whaL will l qeL?" quesLion, orqanizaLions need Lo consider "whaL
is Lhe opporLuniLy cosL ol noL doinq Lhis?" in Lerms ol lnancials,
compeLiLive posiLioninq and cusLomer experience.
Above and beyond cusLomercenLric innovaLion, some players are
Lhinkinq more disrupLively, developinq radical new cusLomer value
proposiLions LhaL move beyond Lhe LradiLional conlnes ol insurance
and address cusLomer demands in oLher indusLries. 1his requires
new business models and compeLencies buL can qeneraLe siqnilcanL
revenue sLreams by Lappinq inLo new prolL pools. 1here are unique
opporLuniLies Lo enLer oLher indusLries, olLen by esLablishinq
alliances and collaboraLinq wiLh new parLners.
Develop a culture of innovation
1hree sLaqes ol innovaLion are depicLed in Fiqure 5 across Lhe
dimensions ol business models and compeLencies. ProLecLinq Lhe
core is abouL qeLLinq Lhe basics riqhL, becominq more cusLomer
cenLric and, where appropriaLe, adopLinq Lhe leadinq pracLices
LhaL compeLiLors or oLher indusLries have demonsLraLed. However,
Lhis relies on larqely exisLinq compeLencies and business models
and could be a caLchup sLraLeqy. Only qenuine cusLomercenLric
innovaLion LhaL is embedded inLo Lhe orqanizaLion will produce
siqnilcanL qrowLh and deliver compeLiLive advanLaqe.
C
o
m
p
e
t
e
n
c
i
e
s
C
u
r
r
e
n
L
N
e
w
Business models
Insurance
as a service
and hybrid
models
CusLomer
centric
innovation
S
i
g
n
i
l

c
a
n
t

g
r
o
w
t
h
P
ro
te
c
t
in
g

t
h
e

c
o
r
e

b
u
s
i
n
e
s
s

D
i
s
r
u
p
t
i
v
e

g
r
o
w
t
h
CurrenL New
Figure 5: The stages of innovation across competencies and
business models
EY 16
PracLical sLeps on Lhe |ourney
Delne your LarqeL cusLomers
and Lheir needs
1ake a realisLic look aL your
proposiLions (soluLions, noL
producLs) whaL will iL Lake
Lo deliver whaL cusLomers
wanL aL a price Lhey wanL Lo
pay and sLill make money?
Generate customer
enqaqemenL across Lheir
lile cycle Lhis is viLal Lo
buildinq loyalLy
lnvolve disLribuLors and,
LoqeLher, build sLronqer
parLnerships
1he |ourney Lo cusLomer cenLriciLy will noL be easy. We oller Lhese
pracLical sLeps Lo help you undersLand Lhe process and quide you
alonq Lhe way.
Involve
Generate

Take
The journey toward greater customer centricity 17
Learn Lo be adapLive use
deLailed cusLomer insiqhL
to test, learn and act
quickly, acceleraLinq Lhe
process wiLh proLoLypes
SLarL Lo build a culLure
LhaL puLs Lhe cusLomer
aL Lhe cenLer and aliqns
ob|ecLives, LarqeLs, rewards
and recoqniLion wiLh
customer needs
Focus on some key levers
and build momenLum
LhrouqhouL Lhe orqanizaLion
Focus
Learn
Start
EY 18
Many insurers are not keeping pace wiLh
chanqinq markeL and consumer dynamics
and are lar behind oLher indusLries in
meeting customer expectations.
The journey toward greater customer centricity 19

Many insurers are noL keepinq pace wiLh chanqinq markeL and
consumer dynamics and are lar behind oLher indusLries in
meeLinq cusLomer expecLaLions. 1o succeed in Lhis lasLchanqinq
environmenL and achieve susLainable Lopline qrowLh, insurers
need Lo locus on redelninq cusLomer relaLionships, Lranslorminq
business models Lo embrace daLa and diqiLal and inLroducinq an
innovaLive culLure in supporL ol sLraLeqic decisionmakinq.
Achievinq cusLomer cenLriciLy is less abouL implemenLinq a qrand
vision Lhan abouL buildinq cadence Loday, nexL week, nexL monLh
and nexL year. BuL Lhe Lime has come when Lhe |ourney is a
sLraLeqic necessiLy, and all insurers need Lo be clear abouL where
Lhey sLand and whaL sLeps lay ahead lor Lhem.
Conclusion
Authors:
Shona Burns
lnsurance Advisory
shona.burnsau.ey.com
+61 7 3011 3333
ChrisLine Delany
Clobal lnsurance CenLer
cdelanyuk.ey.com
+^^ (0)20 7951 1733
Paul Clark
Clobal lnsurance CenLer
paul.clarkau.ey.com
+61 2 8295 6967
David SLerner
Research, Clobal
lnsurance CenLer
David.SLernerey.com
+1 215 8^1 0213
About EY
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lor our clienLs and lor our communiLies.
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2013 LYCM LimiLed.
All RiqhLs Reserved.
EYG no. EG0131
CSC/CSC2013/111539^
LD 011^
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