The Market Is Stable For Insurance Call Centers

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Even in the best of times, some insurers resist making big new investments in call center technology, experts say.

Many smaller insurers “tend to deal with a lot of questions without having a formal call center,” says Larry Fortin, director of the insurance practice at Edgewater Technology Inc., Wakefield, Mass.

Insurers that do have call centers to make sales or handle customer service face a constant temptation to outsource these services, he notes.

When Baltimore Life Insurance Company, Baltimore, needed a call center a year ago, it outsourced. “There are very efficient call centers out there,” explains Gary Voith, an assistant vice president at Baltimore Life. “They do it for a living.”

Even many insurers that have call centers send some business to outside service centers.

“We staff to the valleys,” says Al Pratico, director of direct sales at Blue Cross and Blue Shield of Florida, Jacksonville, Fla. “We try to offload the peaks to service centers.”

Meanwhile, in 2003, “people are pausing to take a breath,” says Don Van Doren, president of Vanguard Communications Corp., Morris Plains, N.J., a consulting firm. “Theyre asking themselves, Are we achieving the results we want? How do we use this stuff that we have?”

“Its too expensive to run the operations the way they are,” says Kevin Kraft, a financial services consultant at Cap Gemini Ernst & Young L.L.P., New York.

But figures from the New York office of DataMonitor P.L.C. show that the insurance market has been reasonably stable.

U.S. and Canadian insurers spent about $2.7 billion on call center hardware and software, or an average of about $14,800 for each of their 180,500 call center seats in 2002, up from $2.6 billion, or an average of about $14,400 for each of 178,200 call center seats in 2001.

The purchases include products such as call distributors, predictive dialers, terminals for agents and managers, servers, system software and application software.

Two years ago, the DataMonitor growth figures might have looked drab. Today, “insurance is actually listed as one of the growth markets,” says Elizabeth Kennedy, a DataMonitor analyst. “Insurance is a stable marketplace for vendors.”

Despite the weak state of the economy, insurers “are still seeing contact centers as a competitive differentiator,” says Karen Hardy, product marketing director at Aspect Communications Corp., San Jose, Calif.

Many insurers are still willing to invest in the technology they need to assess callers on the fly.

Dan Plashkes, founder of eAssist Global Solutions Inc., San Diego, a company that develops customer contact management software, cites a commercial that says consumers can get auto insurance from one insurer after spending “only” 20 minutes on the telephone.

That call will cost the insurer about $20, and “thats really expensive for an inquiry,” Plashkes says. “The cost per call is too high for unqualified calls.”

In a downturn, Plashkes says, “I want to speak to the best customers first.”

Insurers are also willing to spend to make better use of the Web and consolidate the systems they already have.

In Jacksonville, Fla., for example, Florida Blue has used systems from Aspect and Connextions.net Inc., Orlando, Fla., and call centers obtained through Connextions, to add telephone support for Web-based health insurance sales. The new operation now accounts for more than 5% of sales, Pratico says.

Edgewater is helping other companies with retroactive integration efforts. Many larger insurer call centers “have a lot of disparate systems,” Fortin says. “Its difficult for them to get the information that they want.”

Experts interviewed estimate that a typical insurance company call center agent could be using as many as 20 different incompatible software applications. In many cases, an insurer will use a call routing system that asks customers for their account numbers, then fails to pass the account numbers on to the call center agents.

But some insurer technology executives admit that all they really want to add to their call center technology is reliability.

“Just make it more stable,” says Hugh Hale, director of technical services at Blue Cross and Blue Shield of Tennessee.

At Tennessee Blue, crashes are rare, but, when a crash does occur, “it brings the company to its knees,” Hale says. “Theres not enough fault-tolerance built in. If one bad thing happens, it brings the whole system down.”


Reproduced from National Underwriter Edition, March 3, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.