Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Safeco's Alignment Strategist
Senegor's goal in leaving Accenture was to practice what he had previously only preachedthe alignment of IT with business strategy. "I think that at many companies, IT plays the 'other department' role, sitting there on the side doing its own thing, a cost center that does not make any money," Senegor says. "The strategy is done by othersbusiness-unit heads who then make unrealistic demands on IT without really understanding what IT actually is or does. Because IT has no voice at the strategy table, there is no choice but to listen and try to please."
With Senegor's help, McGavick set out to target more customer segments with more products sold through more agents and channels. Safeco's products "are not properly priced," Senegor says. "That is where technology will play an extremely critical role."
Today, Safeco is concentrating its product energies on automobile and small commercial lines insurance (the insurance policies purchased by Main Street businesses), though it continues to offer homeowners insurance, as well as life insurance and investments. "Auto insurance and small commercial lines are low-margin businesses for which the cost structureunderwriting, sales, claims, customer service, etc.is a critical competitive variant," McGavick says. "They're the kinds of businesses that are very much dependent upon a relationship between strategy and technology."
Using technology, Safeco hopes to match premiums more closely to risk by better identifying just how risky a driver is, and then pricing its policies accordingly. Auto insurance segments Safeco previously avoided, such as drivers with spotty records who buy insurance from state assigned-risk pools, are now being segmented, courted and offered policies with premiums higher than that of a driver with a spotless record. Safeco plans to use technology to obtain credit histories of policy applicants, motor vehicle records and past-claims history so that its independent agents can write more business at the right price for the risk. "You gain an edge by knowing which drivers are the better risks because you're not paying out as much on claims," says Bijan Moazami, an insurance analyst at Friedman Billings Ramsey, an Arlington, Va.-based investment bank. "If Safeco invests in technology to do this, that should definitely give them an advantage."
A second goal: improve customer service. Safeco wants to develop technology that will help it and its independent agents field customer inquiries, complete policy changes (such as adding a teenager to an auto policy), address complaints and process everything having to do with claimsfrom filing to review and paymentmore efficiently. "Safeco has enjoyed a reputation for quality claims handling," says Williams Capital's Paisan, "and the more technology you add to that, the better and more streamlined the claims handling will become. While other insurers are investing in this technology, Safeco is ahead of the game, which should give it a competitive advantage, at least in the short term."
Safeco's Web-based customer contact strategy also seeks to cut costs. It costs the company 10 to 20 times more for each customer service call answered by a human versus going online. If it can induce customers to inquire online about a claim status or an invoice or any other matter, Safeco can reduce the number of people needed to answer the phones. And the savings can be reflected in lower premiums.
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