A new dawn of opportunity for Insurers straight-through processing at first point of customer contact

Straight Through Processing - A New Dawn of Opportunity

Nearly every business today is digital. The rate of digitization of customer interactions in 2020 far outpaced that of prior years as firms began to go digital in response to the pandemic—a phenomenon McKinsey has called the “technology tipping point” (McKinsey, 2020).

What’s next? With other areas of the customer journey fully or partially digitized, now is the time to make a move to straight-through processing (STP) fueled by a cloud-based, digital journey. This means taking what’s been done in many other industries and doing it in the insurance industry: processing transactions automatically from a digital engagement perspective.

What does successful STP look like? Imagine a more thoughtful, efficient use of data, disseminated across systems through application programming interfaces (APIs). Your customers will enjoy a personalized, seamless experience, and your business will not only grow but also virtually eliminate pitfalls from legacy processes that drive the infamous “Not In Good Order” (NIGO) cost and pain point.

Of course, there are challenges when it comes to digitizing the journey as it relates to STP. The businesses that have leaned digital – but not yet “tipped” – face traditional barriers, chief of which is legacy infrastructure, a common constraint for many insurers. Instead of operating cloud-first, many established enterprises risk being cloud-last due to legacy infrastructure. If your firm has a history of business thinking that involves tirelessly tracking and managing logic—with spreadsheets, paper, and manual processing littering the path to automation—then you may be in the cloud-last camp. The question: Clear the course of its obstacles or keep doing business as usual while paving a parallel path?

The answer may be easier than you think now that the circumstances have changed. Today’s combination of the evolving customer as identified by the McKinsey research, plus a competitive marketplace and new technology, presents a unique opportunity to move forward to complete digitization. You’d be amazed at what you can do in 2022, even in some complex scenarios where a digital experience was thought to be unattainable in the past.

What are the keys to successful STP?

I’ve found five keys to success when making the shift to STP. So here they are, summarized in five points or less, although I’d love to discuss this at length with insurance leaders who are interested in detailing these concepts further.

  1. Think cloud-first

    • Moving to the cloud gives you the flexibility to change technology faster and easier than ever before, so your approach can be as nimble and agile as it needs to be.

    • Generally, the cloud-first approach saves time and money over legacy “cloud-last” thinking.

    • Saving your business logic to the cloud ensures greater security and stability than any available alternatives, especially if those alternatives may include your employees’ desktops.

  2. Instead of a Big Bang, try an incremental transformation

    • When it comes to business systems and standard operating procedures, don’t expect to flip a switch. Incremental improvements are not only more practical but also more likely to stick.

    • Start with the weakest link in the chain, and build from there.

    • The incremental approach balances the short-term and long-term. The change to STP may be a part of a multi-year roadmap and plan.

    • STP also grows on itself, with each point of efficiency creating more opportunities to cascade downstream.

  3. Understand new technology in the space

    • If you know where to look, or which partners are best suited to guide you, you can accelerate progress along with your roadmap with a range of solutions from fintech and insurances.

    • Technology speeds innovation where you may not have the intellectual capacity to deploy needed changes organically.

    • Software as a service (SaaS) models makes it easy to construct solutions.

    • Build off the technology offered in ways that work for your firm—such that you create your unique value as stewards in the space.

    • Look for time-savers. Technology helps you to sidestep bottlenecks.
     
  4. Control what you can predict, and predict what you can’t control

    • Improve controls from a commitment to a digital onboarding and STP process. These models have proven time and time again to create greater efficiency and controls than legacy techniques like paper and phone calls with notes and data entry.

    • Additionally, in many cases firms have been successful at building basic automation and/or algorithms to assist with key repeatable process steps in the process. Can you make that new application a smart document that includes data already obtained in other areas to avoid repeated duplicate entries?

    • Think forward—whether that’s to the next challenge, such as a changing risk profile or a shifting regulatory landscape, or opportunity, such as an innovative product built around new consumer behavior. When the next technology (or other) tipping point happens, what solutions will help you be most ready to adapt and thrive? How well—and how fast—can you simulate different scenarios?

  5. Build the customer experience around the customer’s definition of success

    • Whether B2B or B2C, many consumers want to buy online. Consider how STP enables digital proposal presentation, either connected online or offline with multi-channel reach.

    • Often the best experiences are interactive and build upon customer input. Build an intelligent journey that simplifies the complex and adds options and “what ifs” at the correct times along the way.

    • With a cloud-based, API-enabled experience, you’ll capture customer insights, save them for the future, and demonstrate that your business knows who they are and what they want.

    • Put your point of distribution in a position to shine, as that can be a customer delighter in the early stages of the experience that will set the tone for the rest of the journey.

One last thought: All along the way, be aggressive and break up the logjams. Don’t accept slow process or systems as “necessary evils.” Everyone wants to save time and cut the nonsense, whether that’s internally with your employees or externally for your customers. There’s no gift more precious than time, and it’s a gift that can improve your culture and your brand reputation.

More benefits from STP that help you gain momentum

In addition to the obvious benefits of the move to STP there are some additional side effects that can cascade throughout the organization and help improve speed to market, lower costs, and drive customer satisfaction.

  • A cleaner process around STP will help accelerate the product development process for new products, cutting back on multiple cycles of business requirements documents (BRDs) in the new product development process.

  • Additionally, and in a similar way, the commitment to STP will generally apply relief to often overworked development teams who are coding solutions from requirements that may not be as clear as with a commitment to STP.

  • A third enterprise benefit will be more confidence in the areas of audit and version control of work items and process. These challenges are exacerbated when the business leader can’t guide the entire process directly, especially in the coding phase. The need for handoffs opens the door to errors and “loops” to adjust, re-code, re-test, etc. Sometimes the best way to close the loop is with no loop at all. In other words, look to create straight lines of sight and ownership for as many steps in the process as possible.

In closing, the shift to STP represents a dawn of opportunity for insurers; it’s a change that can yield quick wins if you focus on the keys to success and mind the obstacles to innovation. Remember: While insurance is unique, what defines a great customer experience doesn’t change from industry to industry. Transactions that happen automatically will save your customers time and make for a smoother, more seamless preview of what it will be like to keep doing business with you. Successful STP is good business and good for business.

May the year 2022 bring you a new dawn of opportunity.

Bruce Corcoran

Head of Life and Retirement

Bruce Corcoran is Head of Life and Retirement at Coherent Global, USA, and has over 25 years of executive leadership in diversified financial services firms. He is a noted expert and commentator on emerging trends in the Retirement, Wealth Management, Insurance, and Asset Management space featured in The Wall Street Journal, Pensions and Investments, the New York Times, and other key publications. Bruce’s background is a cross-functional blend of distribution, marketing, and product leadership and the transformation of complex systems and emerging trends in the space.

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