No doubt, you’ve seen the ads with the cupped hands ready to cradle your life. With the accompanying slogan, “You’re in good hands with Allstate,” one would naturally assume that customer satisfaction is a high priority with this insurance company. When it comes to outsourcing, though, you can bet that Allstate is in the good hands of its supplier, EDS.
Larry Moser, Senior Marketing Manager at Allstate and Product Manager for its flood and mobile home lines, recalls that a decision was made in 1986 that Allstate would join the Write Your Own Flood Insurance Program. He says the company subsequently looked at its processing operation and realized that writing flood was a lot different from its other lines (auto, life, property) and decided to explore what opportunities there might be for the processing of the flood business.
From a number of vendor proposals, EDS was selected because of its size and reputation. The original flood contract began in 1986, has been renewed several times and is up for renewal again in Sept 2001. EDS is a complete processing center for Allstate’s flood line, processing all new, renewal, and endorsement business and handling the statistical reporting to the federal government for both the premium side and the claims side. The supplier is also responsible for reviewing and maintaining all non-catastrophe claims.
Building a Customer Raft
Moser says both companies win by focusing on growing. They are also focused on growing the Allstate flood business and increasing customer satisfaction to as high a level as possible.
Since outsourcing, Allstate has switched to an electronic application, which is submitted with a premium directly from the local agents to Allstate’s data center. From there, it is sent to EDS for processing on a daily basis. “Since we have gone to an electronic application,” says Moser, “the turnaround time for issuing business has gone from weeks to two days. And that amounts to about 85% – 88% of our new business.” Besides a speedy turnaround, the electronic application process eliminates an underwriter having to get involved because of illegible handwriting or missing information. EDS also improved the process flow so that the data goes from Allstate to EDS electronically instead of by mail.
One of Allstate’s top goals is premium growth. But right beside it is a goal of customer satisfaction from the agents. Writing flood insurance policies is very competitive, Moser explains. “It’s not just a matter of how much they pay. It’s also service to the agencies. So if you can provide outstanding service, as opposed to just paying more comp, most agencies would prefer to have reliable service.”
When a challenge comes to the top of the surface, both parties work together to brainstorm about a workable solution. He cites an example of their relationship in solving issues for Allstate’s customers, the local agencies. “In some cases, the agency is huge and needs some personal attention. EDS assigns an underwriter to handle that agency so that the agency only has to call one underwriter, as opposed to calling an 800 number and getting a rep who answers the phone.” Moser seeks feedback from agents about the quality of service that they receive from Allstate flood reps.
In another instance, they learned of an agency that was writing its flood business elsewhere, even though it wrote a lot of auto and property business for Allstate. “I sat down with the principal of that agency and asked him why the flood was sent somewhere else. He said they had certain issues that made them hesitant to give us the business. We worked out the issues, and the EDS Account Manager also had a conversation with the agency’s principal. As a result, we resolved all issues they had, and we are now getting the lion’s share of their business. It was a wonderful success story.”
In taking their partnership roles seriously, they make every effort to address issues before they become problems. They have a weekly teleconference to discuss brainstorming ideas. Allstate flood now uses a follow-up letter as a reminder that a policy has gone into lapse status. Moser says the letter was a result of a brainstorming session and has helped to save customers. As all of the EDS people are offsite in Maryland and Allstate is in Illinois, the weekly meetings serve the same purposes as an internal staff meetings.
Rowing the Boat Merrily Down the Stream
In addition to the revenue profit Allstate earns from the flood program, there is an impact that is even more far-reaching. “I am a firm believer that a customer that suffers a flood loss and doesn’t have flood insurance because no one told them they could have flood insurance didn’t get good service. What we stand to lose there is the other lines of insurance.” Thus, the role that EDS plays in processing on a timely basis and “doing it right” greatly affects Allstate’s growth.
EDS is supplying added value to Allstate — ideas for new projects, not just processing business. They are pursuing telemarketing as well as an Internet application. Another idea is to have reminders and helpful tips playing in the background instead of music when agents call and are placed on hold while a rep researches something for them. Tips will change periodically and include messages like: 40% of all flood losses occur in low-risk areas; a foot of water in a person’s home will destroy content; make sure you write contents coverage on every policy. “Those are things that improve customer satisfaction, policy retention, impact on other lines,” says Moser. “And they will generate more revenue for EDS and Allstate. Everybody wins.”
Moser says he has referred a number of companies to EDS and that Allstate is now in preliminary discussions regarding other opportunities for EDS and Allstate to work together on insurance matters outside of flood.
Lessons from the Outsourcing Primer:
- Both the supplier and buyer win by focusing on growing and increasing customer satisfaction to a high level.
- When challenges arise, both parties need to work together to identify the issues and then brainstorm about workable solutions.