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This position paper highlights how insurers can drive superior business results by deploying a digital network of service providers delivering add-on services to policyholders. Muneer Akhtar, senior business analyst at Xceedance, offers insights into prevailing challenges, a viable solution framework, and expected

benefits of implementing a service provider network.

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Jason works at the 24/7 dispatch center of ABC Insurance Company. His primary responsibility is to help ABC’s policyholders connect with towing services when they have claims.

During a typical call, Jason asks for the policy number, vehicle location, and incident details. From that information, he selects an appropriate provider from ABC’s contracted towing partners.

Once Jason has the towing partner’s commitment, he asks for an ETA, which is typically five minutes, and calls to tell the policyholder. Next, communication between the policyholder and towing service is moderated by Jason or an associate in the dispatch center. In stressful situations, inefficiencies within that process often create anxiety for policyholders trying to get information and help.

After providing its service, the towing partner emails an invoice to Jason. Jason manages and pays monthly towing partner invoices at the end of each month.

While the volume of towing requests can fluctuate on a seasonal basis (increasing exponentially in summer months, for example), the number of towing partners contracted by ABC Insurance Company is fixed. Towing services may expand their fleets seasonally; nevertheless, during peak seasons, there is an increase in average times to assign a towing service and for getting vehicles towed. (In one of my own experiences, a towing request I made early one summer morning was fulfilled in the evening.)

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Services such as roadside assistance and home repair are add-ons orendorsements to insurance policies, historically requiring policyholders tocontact dispatching or service centers to get help. But with modernizationand digitalization, insurers areimproving policyholder experiences. From websites and portals, to smart phones, tablets and mobile apps, insurers are providing policyholders with more interactivity, more ways to submit direct service requests, and more opportunities for self-service.

Telematics also play a role in theinsurance industry’s modernization. Systems like OnStar and TeleAid track everything from driving history todriving habits and let users report

accidents and request help. But telematics services are not yet offered as part of insurance coverages. They are either included in a vehicle’s warranty or policyholders must purchase them separately.

This approach to modernization,however, is not as effective as insurers might hope. Especially as insurancebecomes more commoditized,comparisons mount to companies such as Amazon, Google, and Uber — who are earning the trust and satisfaction of consumers by employing models focusing on the consumer experience,rather than on legacy processes and systems. Once the insuranceindustry adopts a similar approach, meaningful modernization will follow.

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Research shows value is not createdthrough isolated efforts of sellers and buyers. Rather, interactions drive value, with greater interactivity producing higher value. So, followingthe examples of Amazon, Google, and Uber, insurers need to createnetworks of service providers. Those networks must be fully accessibleto policyholders by whatever means of interaction policyholders choose or prefer. And if the networks are also digitally connected to, and monitored by, insurers, the customer experience will be improved; as will insurers’ operations — because policyholders will determine the experience, or the interactions that create the delivery of exemplary service and real value.

Beyond networks and digitalinteraction, this model works because it empowers everyone in the chain of interactions. The focus shifts from product to service, from the

supply chain to the experience. Real-time transparency is ensured. Pivot points such as dispatch centers are eliminated, along with their associated processes and pressures. All parties have control of the parts of the process that are most important to them, including service providers who can increase staffing levels for seasonal peaks.

All listed benefits can be achieved by uniting the networked parties on a single, digital platform with interfaces for each party, optimized to provide personalized functionality. Those interfaces might include mobile or web-based access for policyholders and service providers. Interfaces for insurers might include status screens to track the status of policyholder service requests and provider fulfillment, including the capability to intervene as required.

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To unite networked parties on a single platform — and to create the appropriate ecosystem — insurers need the following capabilities:

ǡ Enterprise Analysis After identifying the requisite parties for each network and defining their respective requirements, interests, responsibilities, and activities, insurers require an architecture on which to achieve their business objectives, and a centralized repository of stakeholder information.

ǡ Application Services Insurers will likely require custom applications to support the necessary network interaction of policyholders and providers — and to enable insurers to monitor and facilitate those interactions. Those applications will have to be maintained and enhanced, including QA and system integrations, to ensure they continue to meet the expectations of all parties.

ǡ Change Management Given potential changes to the activities of networked parties, insurers need to mediate inter-party communication — helping all participants adapt, and providing training and knowledge-transfer as needed.

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The success of such efforts will be measurable by several criteria, including but not limited to:

The time it takes to assign service providers to requests for service

The time it takes service providers to reach

policyholders

The ability to accommodate peak seasonal demands

The ability to efficiently manage communication

and invoicing

The ability of insurers to locate service providers and the status of service

requests in real-time

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While telematics has already decreased service wait times by 25 to 40 percent, networks unified on a single, digital platform will be revolutionary. Who could have imagined app-enabled ride-ordering services would displace age-old taxi-cab services, managed through equally old dispatch centers?

The insurance industry can achieve similar successes by displacing its old service methods — as well as its procedures for issuing and renewing policies, accepting and adjudicating claims, and myriad other activities. Adopting its own versions

of connected networks that enable Amazon, Google, and Uber to succeed is already well underway. As McKinsey’s Insurance 360° Benchmarking indicates, marketing and sales support account for close to 16 percent of the costs in the insurance value chain. Those costs are largely saved in renewals. Further, policy service accounts for nearly 10 percent of value chain costs. The efficiency of connected networks could reduce those expenses.

The bottom line is connected networks are good for insurers’ bottom lines.

About Xceedance

Xceedance is a global provider of strategic consulting and managed services, technology, and data sciences to insurance organizations. Domiciled in Bermuda, with offices in the United States, United Kingdom, Germany, Poland, India, and Australia, Xceedance helps insurers launch new products, drive operations, implement intelligent technology and blockchain solutions, deploy advanced analytic capabilities, and achieve business process optimization. The experienced insurance professionals at Xceedance enable re/insurers, brokers, and program administrators worldwide to enhance policyholder service, enter new markets, boost workflow productivity, and improve profitability.

For more information, visit www.xceedance.com or write to us at contact@xceedance.com.

About the AuthorMUNEER AKHTARSenior Business Analyst,Xceedance

As a core member of the consulting team at Xceedance, Muneer collaborates with client partners and stakeholder groups within insurance companies to solve complex business problems through technology-centric guidance. His expertise lies in driving large-scale digital transformation and process reengineering programs for re/insurers worldwide. Muneer has proven experience in ideating and executing strategic IT projects across the operations of prominent insurers.

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