Kevin Kraft

Meet Kevin Kraft

Kevin J. Kraft is a managing director responsible for the Distribution and Growth offerings for Accenture’s Life Insurance practice. Kraft has over 20 years of experience designing and executing revenue and growth strategies for leading Financial Services companies. He has expertise in all aspects of customer lifecycle management, including customer segmentation and profiling, market coverage (sales and service), and resulting profitability and behavior. Kraft has been a pioneer in leveraging the contact center as a strategic channel to improve customer profitability and improve the customer’s experience with a variety of brands. He has authored numerous articles and is a frequent speaker on insurance, banking, wealth management, and customer engagement topics. Kraft holds a M.B.A. in Finance from the University of Chicago and a B.S. in Computer Science from Purdue University.

Holism: Integrating and Coordinating Insurance Distribution

It used to be that insurance was sold in person, over cups of coffee at the kitchen table. Today, insurance is sold through agents, call centers, mobile apps, online aggregators, banks and myriad other channels. Furthermore, today’s insurance distribution is complicated by three market trends:

  • Higher customer expectations.
  • Limitations of the agent/broker channel.
  • Decreased customer uptake of insurance products.

Most insurers recognize these changes and are investing in their distribution models to better connect with consumers. In fact, in a recent Accenture study of insurance executives, 87 percent said it is “important or critical” to invest in distribution to achieve high performance. But consider this: 63 percent of insurers report that their current distribution model does not offer them a competitive advantage.

Disruptive technologies

Five new disruptive technologies offer an opportunity for insurers to innovate and transform their distribution strategies:

  • Mobile.
  • Analytics.
  • Social media.
  • Collaboration.
  • Digital marketing and gaming.

Carriers can leverage each of these technologies individually. However, integrating and coordinating all of them as a new enterprise capability—a concept we call Holism—can enable carriers to truly transform distribution and sales.

Building a Holism infrastructure

The first step to leveraging Holism is to develop robust capabilities with the five disruptive technologies listed above. Next, insurers must develop an architecture that supports Holism, based on five key components:

  • External monitoring of listening posts.
  • Interactive content and awareness.
  • An enhanced messaging layer.
  • Multi-channel CRM extensions.
  • An effective decision engine.

Far more than transforming insurance distribution, Holism offers the possibility of transforming the relationship between insurers and their customers—to drive profitable, long-term growth.

To learn more, download Holism: Enabling High Performance Insurance Distribution.

Affordable life insurance for the middle market

The Wall Street Journal recently published an article called “More Go without Life Insurance.” The article shares some fairly startling findings from research firm Limra.

  • In 2004, 22 percent of US households—roughly 24 million households—did not have life insurance coverage.
  • Today, nearly one-third of US households—roughly 35 million households—do not have life insurance coverage.

With these numbers, it should be fairly clear that, moving forward, there are some serious opportunities for insurers.

Causes of the decline in coverage

There are a number of reasons for the declining coverage of US households. The most obvious reason is the current economic situation, where debt reduction is a main priority and many families live paycheck to paycheck. Policy owners are struggling to make premium payments on existing policies.

Changes in employment are also responsible. Some employers are scaling back on benefits, with insurance being one of the first benefits to go. As employees are laid off or their hours are reduced, they no longer qualify for group term coverage.

The article also cites other reasons—ones that point the finger at the insurance industry itself.

Though life insurance premiums have dropped, other types of insurance have not. Some consumers may have had a poor experience with agents after bigger policies with bigger commissions. And, along the same lines, as agents go up market to target big income earners, they create a void in the middle market.

But, as Michael Costonis and Dave Shatto discussed a few months ago, there’s a big market for the underserved: those under the age of 40 with incomes below $100,000. I’ve also spoken at length about the idea of affordable life insurance.

Opportunities in the market

The opportunities to break into this underserved market are significant. Clearly, cost and value are of primary concern to the mid-market consumer. Equally important is better educating and connecting to that consumer in the right context.

The article also states that while the majority of those without coverage are interested in it, they don’t know where to begin. They don’t know an agent or broker. It goes further to break down the needs of baby boomers, who want face-to-face support, and younger buyers, who want to shop online.

This market is ripe for innovation, and for crafting coverage for affordable life insurance that brings better value to the consumer.

In my point of view, insurers have an amazing opportunity to more effectively cover and grow the middle market. Strategies to consider:

  • Using customer segmentation to define core attributes, preferences and key buyer values within the middle market.
  • Revisiting your sales process to consider the role different channels could play in better connecting with those customer segments while reducing overall sales costs.
  • Innovating to simplify the education, features and pricing of your products.
  • Leveraging social media, digital marketing, mobile, analytics, and collaboration technologies to create more emotional connections with key communities.

How will you address this middle market growth opportunity?

Social media and insurance (3 of 3)

Over the past two weeks, I’ve been discussing how insurers can leverage social media to achieve high performance. If you haven’t already, you may want to read the first two posts in this series:

Accenture has developed a Point of View on this topic. Download Achieving High Performance in Insurance through Social Media.

Social media’s benefit to insurance sales

The insurance industry is based on the relationship between agents and customers. Think back to the classic pictures of the agent sitting across from the customer at the kitchen table. Behind this is the idea that people only buy from agents they trust, and part of developing that trust is a face-to-face interaction. This used to mean that agents handled the entire sales cycle, from lead generation to qualifying leads and maintaining customer relationships over time.

As technology has evolved, so has this interaction. Agents are no longer limited to a defined geographic territory. And as people grow more trusting of interactions through video, audio and text, agents who excel will be those who can effectively build and foster relationships through the use of technology.

In order to support this kind of interaction, talent managers and customer experience managers must be able to match agents who connect this way with the customers who buy this way.

Social media’s benefit to recruitment

In a recent survey of 500 companies, the University of Massachusetts Dartmouth found that 53 percent of them use social media in their hiring processes. These connections start when a candidate mentions a brand or expresses desire in working for a company. In addition to be tech-savvy, these candidates tend to have done their homework: they know more about the company, and are more engaged with the company brand than candidates sourced through more traditional channels.

For recruiters, LinkedIn and other professional networking environments can complement an insurer’s own career portal.

Social media offers numerous benefits to insurers looking for competitive differentiation. And while challenges exist, they are manageable—and, one could argue, significantly outweighed by the potential benefits.

Prior to reading this blog series, did your business use social media? Have I convinced you to use it? And if not, what existing challenges do you see that prevent you from using social media?

Social media and insurance (2 of 3)

Last week, I started discussing the implications and opportunities for insurers using social media. In many other industries, social media has become hugely successful as a marketing and outreach tool. In insurance, however, regulations, security and privacy concerns present a few challenges. Today, I’ll address some of these challenges and suggest how insurers can meet regulatory requirements and leverage social media.

Unique challenges in insurance

The regulatory web that governs how insurers use social media can be quite complex. Regulators seeking to protect customers from fraud must also consider the propensity of younger generations to share significant amounts of personal information online. An astonishing 64 percent of adults between the ages of 18–24 have been a victim of identity theft, lost or stolen computing device, compromised email or social network account, or had personal information posted online without their consent.

Social media strategy, then, is a balance of regulatory compliance and brand management. Carriers are starting to set out policies and training for agents and brokers to use social media. Savvy insurers are using social media as a brand management tool, monitoring online conversations with customers and prospective customers, correcting misinformation and ensuring the integrity of their brand.

Tools and applications are emerging that allow insurers to provide social media access to employees with the capability to monitor and archive conversations for regulatory compliance.

Using social media wisely

While insurers must be aware of regulations, they should not be deterred from using social media. With its potential for marketing, sales, service, recruitment and agent development, this is a very useful enabling capability.

Before using social media, insurers must address some key elements:

  • Develop a social media policy that governs etiquette, use and expectations.
  • Develop processes and procedures for those using social media.
  • Provide content templates for social media users.
  • Have a monitoring capability for social media channels.

Accenture has developed a Point of View on this topic. Download Achieving High Performance in Insurance through Social Media.

Next week, I’ll discuss the benefits of social media to the sales and recruitment processes. Do you have a social media policy in place?

Social media and insurance (1 of 3)

In July 2010, Facebook announced that it had more than 500 million users. Far from being a passing fad, social media and social networking are here to stay. But what are the implications of social media on the insurance industry?

Implications of social media on the insurance industry

Even though insurance is a mature industry, it is a trust-driven industry. It is driven by the trust in a customer-advisor relationship. This is a natural fit with social media, where winning brands are those that develop a relationship with their customers. Not only do customers talk about these relationships publicly, but word of mouth reaches new customers—along with the original customer’s stamp of approval.

Social media also provides insurers with a way to stay top of mind with their customers. Most customers only think about insurance when they experience a significant change in their life, change their address or renew a policy. Social media provides a channel through which customers can be reminded of the value that insurers bring to everyday life.

Five ways that social media can benefit the insurance industry

Accenture sees five ways that social media can benefit the industry:

  • Dramatically decreasing the cost of establishing and developing a new brand.
  • Changing the customer experience to support channel integration and personalization.
  • Innovating product development.
  • Increasing effectiveness of recruitment, training and skills development.
  • Enhancing operating models with improvements to communication and collaboration.

Accenture has developed a Point of View on this topic. Download Achieving High Performance in Insurance through Social Media (pdf).

Join me over the next two weeks as I talk about this in more detail. Next week, I’ll address some of the unique challenges that the insurance industry faces with using social media.

Does your business use social media? What benefits have you realized as a result?

Web analytics and social networks provide insurers with valuable data

Earlier this year, I contributed a guest post to the Insurance & Technology Blog discussing how insurers can use web analytics and social networks to support a market segmentation strategy.

On the Accenture Blog for Insurance, Michael Costonis has already talked about the importance of market segmentation to an insurance marketing strategy. Certainly, traditional market research and feedback from the sales team can assist with these strategies, but insurers must also consider harnessing the proverbial power of the web. With social media gaining popularity as a communication tool, insurers can gather valuable data to create targeted products for specific channels.

Consumers research insurance online

First, consider that a growing demographic of consumers—particularly those under the age of 40—uses the Internet to do substantial research before purchasing insurance products. Most insurers use their websites as a way to direct consumers to offices or agents, as opposed to a distribution channel itself. Currently, the majority of insurance websites do not supply the details and information to satisfy the needs of the consumer who is doing online research. Insurers can leverage their websites as another distribution channel, or as part of a multi-channel strategy.

Social media benefits the insurance industry

Social media is another valuable channel that has largely been unexplored by the insurance industry. Social networking sites like Twitter and Facebook may seem frivolous, but consumers post an astonishing amount of information on these networks. This includes information about how old they are, what field they are employed in, and how educated they are. Even more valuable, users of these networks post updates about their lives and life changes: getting married, purchasing property, having children. By gathering and analyzing this data, insurers can create customized products for a very specific target audience, timed to coincide with significant life events.

Online tools benefit consumers and insurers

Taking that one step further, insurers can develop online tools for consumers. For instance, providing a place for consumers to set up a user profile with information about financial goals and data is an excellent way to engage potential customers and build an emotional connection. At the same time, the information supplied provides valuable data for the insurer. Again, this can be used to develop products targeted at a particular market segment.

As social media and social networking continue to grow, the opportunities for insurers follow accordingly. Savvy insurers will embrace, not fear, these technological tools. As we move forward, leveraging these tools will be critical to achieving competitive differentiation and high performance.

Are you using social media and online tools to improve customer engagement, distribution effectiveness or product offerings?