Modernizing customer correspondence systems and processes to increase efficiency and eliminate technical debt for Life Insurers

A recent report from McKinsey outlines the steps that traditional life insurers should be taking to combat the threat posed by increased competition and new market entrants such as private-equity-backed platforms. The report states that life insurers have experienced the steepest rise in operating cost ratios compared to other industries. According to their research, a key driver of this inefficiency is outdated technological infrastructure:

“Complex legacy-technology systems and platforms are the biggest bugbear for almost all life insurers. They create complexity, increase costs, and hinder insurers’ ability to launch new products and manage existing portfolios.”

In the past, life insurers have had to grapple with razor-thin margins which have stood in the way of forward-looking technology investments to address these inefficiencies.  Particularly for life insurers that want to own their client relationships, it is imperative that they invest to ensure all touchpoints along the customer journey are modernized and optimized – both for efficiency and an improved customer experience.

The outdated systems in place to manage personalized customer correspondence should be first in line for modernization. Not only are these legacy systems increasingly expensive to manage and maintain, but they are also preventing life insurers from meeting growing customer expectations for fast, personalized, and relevant digital customer experiences. Here are 5  things life insurers should doing right now to address the issues:

1 – Eliminate technical debt and reduce maintenance costs with a modern, cloud-based system

Celent Research examined the priorities for IT in life insurance and found that “maintaining current systems makes up the largest proportion of the CIO budget”. No doubt a significant contributor to this cost is the fact that many correspondence systems these companies have in place are homegrown, rely on outdated (often end-of-life technologies), and run on-premise. These systems require a tremendous amount of effort to update and are increasingly difficult to integrate into the modern technical infrastructure that surrounds them. Given that over 70% of life insurers have already migrated their core policy management systems to the cloud, it’s likely that many IT teams are now managing complex middleware layers to manage the flow of customer data between these two systems.

In addition, the highly specialized knowledge required to maintain the code in these decades-old systems may only be possessed by a handful of long-tenured employees who command increasingly high salaries for their unique expertise. As time goes on, the risk of these employees retiring or departing is only increasing, which means the continuity and functionality of these systems could be jeopardized, potentially leading to operational disruptions, increased costs for training or outsourcing, and a greater vulnerability to system failures or inefficiencies.

Modern cloud-based correspondence management systems lower the total cost of ownership by reducing infrastructure and maintenance costs. They also enable rapid updates and come with modern APIs that are easy to work with and enable seamless integration with other systems in your ecosystem. Some solutions offer hybrid, private, and public cloud options, so it’s important to understand your own organization’s policies and commitments around data privacy and operations so that you can choose the best option for your business. Look for solutions that comply with privacy regulations and protect your customer’s personally identifiable information (PII) while giving your employees the access and management benefits they are looking for from a cloud-hosted solution.

2 – Empower business users to create, update, and manage communications to reduce IT costs

For many life insurers, the way customer correspondence content and communication templates are managed is highly dependent on the use of high-cost technical resources. Business teams typically author communications in familiar tools like Microsoft® Word and define targeting rules in spreadsheets, but technical staff is needed to implement changes, as well as generate proofs and tests so that they can be reviewed by internal stakeholders. If additional changes are needed, the entire process must be repeated until final approval is secured. As a result, change cycles can last weeks or months depending on the availability and workload of IT teams. This unpredictability can become a source of risk if content teams are working to meet a specific regulatory deadline.

Life insurers need correspondence systems that enable non-technical personnel to design and update content, set targeting rules, and arrange layouts without having to write code. This enables business and communication teams to take control of much of the content, rules, and communications management processes which are key to reducing the burden of IT teams. This business process change also creates a better balance between teams – enabling the business to update and create new communications with speed and agility, while enabling IT to focus on maintaining technical architecture and digital delivery frameworks.

3 – Eliminate redundant content operations and duplicate templates to reduce administrative burden

One of the biggest sources of inefficiency for life insurers is the way they manage correspondence content and templates. Most correspondence management systems enforce a “document-centric” approach. This means that a unique template needs to be created for each individual communication. Every layer of complexity, whether it be different products, regions, or channels, demands that a new set of templates to be created and maintained over time. The result is correspondence teams having to manage libraries of hundreds, even thousands, of templates that contain large amounts of duplicate templates and content. This massively expands the scope of work and effort required for simple content changes and increases the opportunity for errors and non-compliance. Simple tasks like changing a phone number or URL can result in the need to open hundreds of templates and make hundreds of redundant changes.

A correspondence management system that embraces a more flexible and efficient modular approach to managing content and templates is key to solving these issues. This means that common content, such as product descriptions, logos, and regulatory disclosures, can be centrally managed as a shareable content object that is reused across communications to streamline content authoring, updates, and management cycles. This eliminates those hundreds of changes in the example above as a single change to the content object and the change is reflected everywhere. It also enables variations of communications to share a common template to eliminate redundant template management processes. Variations are dynamically generated using the right version of a content object based on targeting rules and attributes from the client record or identified by the agent working the file.  This enables targeted, personalized communications to be efficiently created, updated, and managed.

4 – Centralize content for all channels in a unified content hub to improve CX and efficiency

Life insurance continues to lag behind other sectors in insurance and financial services in terms of digital servicing experiences. The most recent JD power rankings of the Life Insurance industry found that “although mail is the most common form of client communication, it is the channel with the lowest level of overall satisfaction.”. The lack of investment in digital experiences is hurting life insurers’ ability to deliver great experiences. Legacy correspondence management systems that are built to service a print-only world are a barrier to making the shift. This is because adding new channels requires standing up an entirely separate system with its own process and unique library of templates and content to manage. This is not only costly, but it creates redundant content operations where communications need to be created and maintained in multiple systems.

Instead, choosing to adopt a modern correspondence management system that can act as a centralized hub for content and communications across channels can drive significant efficiencies and reduce costs. This means that content is managed independently from the communication templates that are used to lay out the message for a specific channel – such as the email template or the printed letter template, aka “presentation layer”. Embracing the modular content management approach outlined above is also key here as it enables content to be shared across individual communications, templates, and channels, thereby eliminating the need to maintain duplicate sets of content for every channel. Modern systems can also support both traditional composed communications like print and email, as well as dynamic digital experiences like websites, customer portals, mobile apps, and chatbots through high-performance “headless” APIs. This approach is not only more efficient, but it also provides life insurers with the agility required to quickly adopt new channels should customer preferences shift in the future.

5 – Support frontline workers to streamline communications processes

The human touch and empathy that frontline workers such as call center agents and claims adjustors provide is essential in building and maintaining positive customer experiences but equally important is the speed and accuracy of their responses. A key component of their job is sending communications in response to the interactions and conversations they have with customers. Typically, these communications are stored as Word documents on a shared server, or worse yet, locally on an individual PC. This increases the risk of outdated communications being sent to customers and slows frontline teams down as they waste time hunting for the communications they need.

Oftentimes these communications need to be edited to communicate information that is specific to the customer, such as adding a reason why a benefits claim is being rejected. Using the current approach, frontline teams need to make these customizations manually and have nothing to restrict which content they are changing, which is both inefficient and risky. In addition, the edited communication is typically channel-specific, making it hard to pivot and send via another channel according to the customer’s preference.

Life insurers need systems that enable the right balance between speed, efficiency, and personalization while enabling a high level of control over what is sent to customers. Having a centralized content hub, ideally one that’s directly integrated into your existing customer management system, makes it fast and easy for frontline teams to access up-to-date versions of communications without having to switch between tools. These systems make it efficient for frontline teams to personalize the content and graphics in a communication through a few quick selections on an interview screen, after which a purpose-built communication is assembled using the customer’s specific data. From there, content can be edited in pre-defined spots with a controlled editing experience to achieve true one-to-one personalization. Look for a solution that gives a WYSIWYG interface that shows you exactly what the final communication will look like as you are editing it. In addition, ensure approvals (if required) can be secured quickly using integrated workflows. Best of all, a modern system gives frontline workers the flexibility to choose between both print and digital channels for delivery.

The time to modernize is now

In order to adapt to a rapidly changing competitive landscape, life insurers need to implement new systems and processes that drive efficiency, speed, and cost savings they need to maintain profitability, while simultaneously equipping them with the operational agility to meet continuously evolving customer expectations. Modernizing outdated correspondence management systems enables both and should be a high priority for life insurers.