Each month, we will be featuring an “Ask the SMA Expert” article from Strategy Meets Action. This month’s featured question is answered below by Mark Breading, SMA Partner.
Q: “Is it better for us to just use our core systems for our main customer documents (they have a document production module) and just use MSWord for the rest? What are the pros/cons?
As is often the case in insurance, the answer is “it depends.” There can be thousands of forms and customer documents requiring development and maintenance, with differing degrees of complexity, depending on the lines of business offered and the number of states where business is written. Most insurers have two options for creating and managing policy-related documents:
- Core systems (policy, billing, claims)
- Customer communications management systems (CCM)
Both technology options can be used to generate and deliver the documents and forms associated with policy services and claims.
Most insurers today use their core systems to generate quotes, policy dec sets, renewal letters, bills, and endorsement documentation. Many insurers use CCM systems to produce correspondence for underwriting, claims, and other areas of the business. The strength of core systems is in their awareness of insurance forms, rules, and content. They are the systems of record and have the primary data that will populate most of the main customer documents.
The main argument against using core systems for customer documents is that they often do not produce documents that are easy to personalize or that have a modern, appealing design and layout. The converse tends to be true for CCM solutions.
Modern CCM solutions are intended to enable personalization, brand consistency, and flexibility in the layout and design of the documents, but the CCM solutions often do not have the full awareness of insurance specific forms and data. Even where CCM solutions are used, they still need to access much of the basic information about customers and policies from the core systems.
There are a number of considerations for insurers trying to determine the best approach for their company.
1. Company size: Smaller insurers, especially those under $100M in premium, may find it difficult to justify the cost and effort involved in implementing a CCM solution for this purpose. In many cases, the core systems produce the required documents and meet the basic needs. While insurers might desire more personalization or flexibility in document production, there may be higher priority projects demanding their dollars and resources.
2. Customer orientation: Many insurers are on a journey to become more customer-centric. Those just starting to move away from a pure product-centric view may find the case for a CCM solution less compelling. Those farther along in the journey may conclude that they cannot accomplish their goals without a CCM solution. This may become an overriding issue, even for companies that are smaller. If customer-centricity is at the heart of the business, a CCM solution should be strongly considered.
3. Line of business: The requirements for documents, statements, letters, and other communications differ widely by line of business. Generally the more complex the business, the more the likely it is that the core systems plus MS word are adequate. For example, large commercial accounts producing manuscript policies may find it difficult to justify a CCM solution. On the other hand, insurers writing P&C personal lines, small commercial, or life are more likely to seek the flexibility, design features, and direct interaction by business users that support a customer-focused orientation.
4. Print and e-delivery requirements: A CCM solution would greatly aid in the management and delivery of customer documents in situations where customers and agents are demanding more e-delivery. Where the requirements are more oriented toward high-volume batch production with limited personalization, the core systems would be adequate in many cases.
Both core systems and CCM solutions provide valuable operational capabilities for insurers. When it comes to the production of the main customer documents, either choice may be right depending on the goals of the individual insurer. Many insurers have integrated these solutions and are leveraging the strengths of both approaches.
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