Customer experience focusing on human-centered design – using data beyond pricing

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Interview Notes

I was introduced to Toby Alfred by our mutual friend – Meryl Golden, COO at Kingstone Insurance, Meryl worked with Toby at Progressive and with me at Earnix.

Toby’s name was familiar to me in the insurance industry, but I never had a chance to speak with her before preparing for this interview. I was blown away by Toby’s data-driven customer-centric vision and proven track record of turning this vision into reality at Progressive and Goldman-Sachs.

The conversation with Toby was a true inspiration on how to improve customer experience in the “customer-experience challenged” world of P&C insurance. I trust you will enjoy reading the interview as much as I enjoyed speaking with Toby.

A Quote from Toby Alfred

Toby Alfred headshot

“There are some basic inefficiencies in the insurance customer journey, many of which can be solved through better use of data across functions.”


Interview

David Schapiro (DS): Tell us a bit about yourself and how you got into the insurance industry?

Toby Alfred (TA): 

I got into insurance as a new opportunity; it wasn’t intentional. After leaving BP where I was known for operational analysis to understand current and improve future operations in the downstream oil business, I transferred my analytic skill set to insurance. It was an opportunity to take my analytic skills and use them in a different industry that is driven by analytics. I joined a non-standard auto insurer as a product manager, managing our product in a few states. Luck happened and my career accelerated when I was recruited to join Progressive Insurance. From then on my focus has always been on digital experiences and transformation of the insurance business with a passion for providing exceptional consumer experiences that strengthen growth and improve retention.

DS: What are some of the key customer interaction challenges facing insurers today?

TA: Purchasing insurance or opening a claim is not viewed as an enjoyable experience, so interactions with insurance companies are viewed as bearable at best. This low level of customer satisfaction comes from comparing insurance to other industries where the customer experience has much less friction and is related to buying a product that we enjoy, not one that we wish to never use. Compare buying insurance for your new car to buying your favorite watch on Amazon delivered the next day. 

There is an inherent challenge in the insurance customer journey as the customer meets the insurer only when purchasing or renewing the insurance policy, and if required at the time of servicing a claim. There is no joy in using this new insurance product – like there is joy in driving a new car, we spend lots of money on car insurance and hope to never use it…

We cannot do much about the challenging starting point that insurance has, but we can use the abundance of data we have in insurance to improve the customer experience. 

There are some basic inefficiencies in the insurance customer journey, many of which can be solved through better use of data across functions. Examples include – quicker and relevant responses, not repeating questions when passed between customer service representatives, establishing an ongoing positive customer interaction throughout our insurance journey – not just at point of sale and claim. And certainly not taking the customer on a “long journey” in the customer acquisition process only to end with the insurer saying “No” to their application and not offering an insurance product that meets the customer needs. Improving the underwriting process is much needed to meet consumer and commercial expectations.

DS: Where do you see data being used in insurance companies and to what degree is this data used across different functions?

TA: There is an abundance of customer data in insurance companies and data vendors, used to different degrees and ways across the insurance functions – Pricing, Marketing and Distribution, Operations and Underwriting, and Claims.

The use of data differs across companies and lines of business, but overall, I would see the following as a sort of average across US P&C insurers:

  • Pricing – extensively
  • Marketing/distribution – extensively, but different data than used in pricing. Highly dependent on a direct or agent/broker distribution model where more data is used in the direct model.
  • Operations and underwriting – to different degrees
  • Claims – primarily on fraud

It is important to note that this data is not used coherently across the company’s functions and is often “just” focused on pricing, and different data sets are used across different departments and functions. And when there is cross-functional data collaboration across there is usually no data feedback loop across the departments.

There is a robust use of data in claims to reduce fraud, which is very beneficial to the industry, but we should also analyze claims data to help define better experiences for customers and claimants.

DS: What are some of the challenges of using data in a more customer-centered way across insurance functions?

TA: At the core, an insurance carrier or underwriter is a data-driven organization that uses data to predict the probability of loss from risks that are being insured. Therefore, the insurance pricing departments are very data-driven and have been for decades, even centuries. But this is a loss prediction statistical effort that views the customer solely from their risk potential.

Expanding the core insurance viewpoint as underwriters to a customer-experience use of data can be a challenge as it requires us to view the customer differently than their inherent risk or loss potential.

At the other extreme, the marketing and sales functions in insurance companies (and brokers or agents) use data from a customer-as-buyer viewpoint and excel at marketing the insurance product to the customer-buyer. But this is usually based on different data and granularity than the core pricing and underwriting.

Coupling this with the fact that insurance IT systems tend to be older and less integrated across functions, products, and books of business makes this challenge even harder.

On top of this is the fact that insurance is a regulated industry specifically around which data and parameters are used for pricing and underwriting. Therefore – there is data that can potentially be used in one function – e.g., marketing, but not in another function e.g., pricing.

DS: How can insurers improve customer interaction and satisfaction by using data differently and more extensively?

TA: I believe there are quite a few possible ways, here are some key points to start with. Of course, all needs to be done within the relevant regulatory guidelines.

  • Tying the customer journey to customer satisfaction and lifetime value. In the customer journey data is based on viewing the customer as a buyer and closing a sale; in customer satisfaction data is based on servicing the customer needs in a timely and efficient manner; the lifetime value of an insurance customer uses data based on viewing the customer as a potential risk/loss. Combining these data points can vastly improve the customer experience with our insurance products, but it is a challenge as it cannot ignore the potentially contradictory viewpoints – customer satisfaction and the risk of insuring the customer.
  • Focus on marketing to the customers that you want to write – if we could identify the “right” customers from a risk/underwriting perspective in our marketing campaigns; we would therefore be saying “Yes” to more customers as their risk profiles would match the types of risks that we underwrite. Again – this needs to be used within the regulatory guidelines. 
  • Provide more efficient and timely service to the customer needs in a way that is beneficial for the company. Although this sounds like a “motherhood and apple pie” statement, by extensive data use in some cases it can be achieved. One example is analyzing the cost of paying a claim and the cost of handling a claim across different claim types and based on this developing data-driven digital processes for handling different claim types, with only some specific claims being handled manually as they are more complex and of higher potential severity. 

It could be that the “holy grail” of data for improving customer experience already exists in the pricing departments of insurance companies, this is only a hunch and needs to be scrutinized from a regulatory aspect. But by opening the use of pricing data for our customer journey and experience, could enable us to identify the customer’s core need, not only their core risk or probability for loss, and reduce the friction in the customer experience and appropriately address the next best action in the customer journey.

DS: Do you see this beginning to happen – or is it still a dream or vision in most places?

TA: Data-driven companies are using this approach and making this a reality though many companies are both data challenged and not yet recognizing the opportunity and need in front of them.

DS:  Any final thoughts would like to share with other insurance executives in these interesting times?

TA: Focus on providing what consumers want to create a great customer experience. Be prepared to use digital interactions in ways that continue to make the customer journey easier and what consumers expect from providers.

Toby Alfred – Bio

As an executive leader, Toby drives optimal, delightful customer experiences through e-commerce innovation and strategy. She has a track record of taking efforts from idea through execution and delivery with consistently measurable results in revenue growth and profitability.

As the head of customer acquisition at Marcus by Goldman Sachs, she led her team to over $2 Billion in personal loans booked in the first year of operations, the fastest in the industry.

During her time with multi-billion dollar major auto insurance company Progressive, she led key initiatives and priorities that have proven vital to differentiate the company’s brand and online customer experience. She is the patent inventor for Progressive’s “Name Your Price” tool, which has significantly improved customer conversion since its inception. She also drove strategic, content, and design initiatives that positioned progressive.com as a pioneer in the industry, including being ranked as the #1 site in the industry for 10+ years.

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