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Blazing a trail of innovation with Croatia Insurance

September 23, 2015

Croatia Insurance ­– innovating through IT

We bring you an interview with one of our award-winning CIOs, Filip Ujević, whose broad experience in implementing advanced information systems was gained on complex strategic business projects. We spoke to him about digital transformation in the insurance industry, and how to grow the insurance business by embracing associated changes and failures.

photo Filip Ujevic

How do you feel technology and business cooperation has changed the insurance business in the last eight years?

The borders of technology impact in our industry has changed significantly in the last decade. Traditionally, technology in the insurance business was focused to back-office processes. 10 years ago, the insurance agent on the field was typically using paper forms to collect the data and produce insurance quotes and offers. Returning from the field to the office, agent needed to submit produced offers and collectables to the insurance company. This is the step where information system typically began: entering the data on offers/policies and collectables from the paper to core insurance systems.
Since then, the frontier of information systems in insurance has extended dramatically: from being focused on back-office processes focus of digitalization almost completely shifted to the front-end systems, striving to support both insurance agents on the field, as well as the insurance customers. Front-end processes is where agent meets the customer - the differentiation and success is built there. Therefore, these processes became breeding ground for IT innovation in insurance in the last decade. Extending IT systems directly to insurance customers pushed for even more creative thinking, since there are not as many digital touchpoints with the customer as there is in the banking industry, for example. This is one challenge within our industry, but new trends in technology are enabling IT leaders to impose innovations in order to fulfill business needs.
In order to be a successful information leader or CIO in today’s world, it is not enough to have excellent understanding of IT technology, but one must also have a deep knowledge of business processes. Because technology doesn’t bring value by itself, the business value is created by innovatively applying technology to business processes in order to achieve business goals.

You have put this belief in action by starting and executing a number of innovative IT projects focused on delivering new business value. What are they?

The technologies enabling innovations emerged when transactional systems became omnipresent and focus of IT shifted to more advanced technologies. My favorite innovation enabler is big data and analytics.
On the innovation side, one has to cultivate personal innovation capabilities. But, that is just a beginning: the first thing is not to attempt all the innovation by yourself. No matter how deeply involved one man or a few dedicated people are in the technology and processes, they cannot come up with all the ideas. Look around – innovation patterns are happening all around us. It is not difficult to see a technological innovation applied to business processes in one industry and adapt and transform it so it can be applied to your own. For example, some of the ideas we’ve implemented came from the hotel industry, some from the retail industry… so you can adapt basic ideas in a way that suits your specific industry.
It’s good to lean on the shoulders of other digital leaders, but you must also encourage innovation within the organization. Sometimes the people in the field have the best insight into the business processes and things that could be done easier or better, or just without the limitations imposed by current business processes. Many times innovation can emerge just from discussing with a broad number of people in the organization and finding out how technology can make their day-to-day activities easier. Therefore, one should also encourage generating and evaluating innovative ideas throughout the organization.

Where do you draw your inspiration from?

Internally, inspiration comes from our business analysis competency center, which interacts directly with business owners. When business has a technological request, their first reaction shouldn’t be “Ok, let’s do it.”, but the questions like “Why do you really need that?” “What is the purpose of that?” and ask themselves “Is there another way it can be done?” So rather than just being a service center that implements IT, by asking questions and bringing alternatives to business users, this center helps ideas and innovations to emerge.
On the other hand, as a part of the organization that interacts horizontally with many different silos of the organization, we have much broader picture of the business and can often see aspects of the business that process owners in individual departments cannot see. When we are brainstorming within the competency center, we can therefore draw on input from people who talk to different parts of business, we can discover how to organize business processes across the organization and apply technology to achieve business goals in a more effective and innovative way.

How did you overcome the challenge of getting IT to understand the needs of business?

We have approached the challenge of business – IT alignment very systematically. We have developed, within the IT department, a competency center for business analysis with one of the goals being innovative digitalization of business processes. It serves as a sort of bridge from the IT to the business users. The members of this department are our ambassadors for IT in the organization, promoting the concept of working with business owners in order to bring new value to the organization.
On the other hand, there is IT support that acts as “down-to-the-earth” contact with the end users of our solutions. Therefore, through IT support, we also get direct feedback on the effects of changes, or even new ideas directly from end users.

What made you decide to develop your own CRM?

The first thing we did when starting the CRM initiative was to evaluate the CRM systems that are available on the market. The leading CRM systems all had very broad and advanced CRM functionalities, but our organization didn’t require all of the typical CRM functionalities. Therefore, some of the available solutions may have been good enough (or even more that we need), but in deeper analysis the business need of rather deep integration with core insurance system emerged. The majority of use-cases on using CRM functionality required also a heavy usage of core insurance system, posing many challenges in integration of CRM system with back-end core systems. Instead of burning resources in an extensive and deep CRM – core integration, we decided that we needed to focus more on the core insurance system and develop CRM solution (only the functionalities we need) as an add-on to the core insurance system.
I believe this is specific for our industry. For example, in a telecom company, the products catalog – with all the product features and prices – can all be implemented within the CRM system, which can then generate offers, produce contracts or even launch a contract fulfilment tasks. This is where our industries differ. In an insurance company, the calculations for quotes and offers are rather difficult to create; they are based on specific actuarial calculations typically incorporated in the core insurance system. This is very difficult, or even impossible to do in most CRM systems.

What are the main objectives of the new CRM?

Up until a year and half ago, Croatia Insurance was a government-owned company. After the government sold the company, the new owner’s strategy was to focus on the retail segment as a broader, more stable base. As the main instrument on achieving this goal, restructuring and rapid expansion of internal sales network was selected. In order to accommodate a number of new agents in the field, with limited knowledge of insurance products and processes, and to streamline their activities to be consistent with the targeted market segments and campaigns in the retail segment channel, a CRM approach and solution was required. This allows us to drive all the business processes on the field, and to push the right products to the right customers in the retail segment.

In that sense, how do you measure the success of the implementation?

We had a number of business key performance indicators that we measured before and after introducing the CRM system. For example, the number of leads that was processed by internal sales network almost tripled after setting up our CRM, which had a dramatic effect on our sales performance. Another KPI that is common in the industry is renewal ratio, keeping track of the number of contracts renewed by existing customers. Keeping track of key performance indicators not only on the company level but also at agent level allowed us to determine “sales champions” in the organization, and to promote and adopt their “way of doing things” as a form of best practices.

Most organizations are just beginning their digital transformation journey. IDC has something called The Digital Transformation Maturity Model Benchmark, according to which organizations are classified as either: Digital Resister, Digital Explorer, Digital Player, Digital Transformer and/or Digital Disruptor. Where on that scale do you see Croatia Insurance?

Just judging by the names you mentioned, I think we are at least a Digital Player. For example, last 12 months in our company can be denoted as fast-track post-privatization restructuring. As a part of that, we had to heavily digitalize and transform almost all back-office processes from the time when the company was publicly owned, in order to be conducted in centralized and more efficient manner. IT had a major role in business processes digitalization, and now those processes are done more easily and by a few people rather than before. This allowed us to reduce headcount in the back-office, among other things being one goal of the restructuring process.
On the other hand, the digital playground in the insurance industry should not be in the back-office, aimed at increasing efficiency of processes that are, in many cases, standardized. It should be in the front-office processes, because this is where the most change can be made, and it is where customer engagement takes place. The customer is not usually aware of digitalization and innovation made in back-office processes, and so doesn’t perceive the value of it.
Our company core values include customer focus and agility. Therefore we are focused on bringing innovations that matter in the front-office, where the true confirmation of success comes directly from the customer. Customer that perceives new value is the best way of ensuring the strong company brand in the long run.

How much time and effort do you invest in hiring and nurturing digital skills? How do you encourage your people to come up with new ideas?

IT is very well positioned in the insurance industry to be an innovation center. On one side, this is where the organization comes in touch with new technologies, and on the other side, IT is very much involved in all business processes in a horizontal sense. Unlike the manufacturing industry, for example, our products are essentially digital. Therefore, insurance industry (along with other industries whose primary resources are intangible, e.g. telecommunications, banking ...) is more inclined for digital innovations.
Within IT as an innovation competency center, I try to nurture two kinds of skills. One of them is being aware of technological trends and innovations and the other is being in deep contact with business processes. These two components are essential for bringing innovation that counts to the insurance company.

Croatia osiguranje, founded in 1884, is the largest and oldest insurance firm in Croatia.