Blog Archives - Page 8 of 10 - Silicon Valley Insurance Accelerator

Digital Claims: Is It More Than Just a Payout?

04/19/2019 Jay Sarzen, P&C Consulting and Research Lead, Aite Group 2019 SVIA Contributors, Blog, Digital Claims

For the most part, insurance carriers haven’t really viewed the claims process in a positive light, as it is complex (especially with a multiparty property and casualty claim), tedious (lots of data and fact gathering), and filled with suspicion (carriers thinking that policyholders could be trying to defraud them and policyholders thinking that carriers could be trying to pay less than what they are entitled to). Because of these factors, carriers have often viewed the claims process as more of a necessary evil than an opportunity to deliver a better experience to policyholders.

Well, it’s safe to say that carriers’ mindset on the claims process has shifted in recent years as a wide range of InsurTech vendors has emerged to enable a better claims experience. These vendors offer solutions that can minimize the tedium, lessen the complexity, and lower suspicion for both parties, all of which ultimately contribute to a better claims process for policyholders (and carriers as well).

Carriers can access InsurTech solutions that allow automated first notice of loss intakes, deploy drones to conduct property inspections, empower claimants to upload photos or videos of damaged property, use telematics to determine exactly the extent of damage a car or home has incurred, or leverage artificial intelligence to detect fraud. Many of these solutions are focused on delivering an efficient process and include chatbots or flow management software.

Beyond process is the ever-increasing number of data sources that carriers can use to arrive at a more accurate claims decision more quickly than ever. These data sources are not limited to standard data, such as property characteristics or vital statistics. These sources can include data such as weather data, social media data, and geolocational data—all of which can be used to more fully inform carriers about the people behind the claims, conditions at the time a loss was incurred, or the true value of the contents lost. While data on its own is nice, analytics that can draw out meaningful insights about a claim is divine. This is where the evolution of digital claims is heading.

But the mere existence of these capabilities does not mean that carriers are embracing them widely. It would be fair to say that a majority of insurance carriers have only begun to explore using these InsurTech solutions, and a majority of those carriers that have gone beyond exploration have only embedded a limited number of these techniques into their claims processes. Indeed, there is a long way to go for carriers to embrace a holistic solution that makes the claims process less tedious, less complex, and more transparent.

The Silicon Valley Insurance Accelerator (SVIA) will host its annual InsurTech Fusion Summit: Rise of a Digital Insurance Industry on June 18 and 19, 2019, in San Francisco. Digital claims will be a main topic of conversation with many new data elements and technologies being discussed. Don’t miss the opportunity to learn how to take the next step in building a better claims experience through digital tools.

Register now at www.insurtechfusion.com and get 15% off of your registration using the code JAYS15. Aite Group and SVIA look forward to seeing you there and helping you take the next step in your digital transformation journey.

Digital Transformation for Insurance 3.0: Digital Ecosystems

04/15/2019 Mike Connor, CEO, SVIA Blog, Digital Ecosystems

Digital ecosystems are taking over industry after industry, especially those with a focus on products and services. From home buying services to banking to insurance, digital ecosystems are changing the way consumers and companies do business.

A simple example is Intuit, the online financial management software. Intuit makes it easy to connect all of your financial solutions and data together into one easy-to-manage solution. Another example is what John Hancock is doing with their life insurance offering. They offer rewards based on healthy food purchases and activities from wellness trackers such as Fitbits.

Insurance and InsurTech innovators are exploring and harnessing the digital ecosystems that surround and support people, their lifestyles, and stages of life. They are also exploring the digital ecosystems surrounding and supporting industries and the businesses within them. Digital ecosystems are composed of cloud-based interoperable platforms, solutions, devices, and data. The impact of digital ecosystems grows as the solutions within them grow in number, capability, interoperability, and the value they create. The solutions these innovators develop and/or become part of will completely upend the world of insurance.

Auto insurance, health insurance, coverage around businesses, and even life insurance will all be dramatically changed by these tech-forward ecosystem-enabled solutions and will set new standards in the value and the digital experience provided to insurance customers.

Participants across the industry are tapping into these digital ecosystems opening the door to growth and innovation opportunities.That includes InsurTechs and insurance companies. It also includes innovative solution providers like Majesco and other solution providers are developing platform strategies that make it easy for their insurance customers to tap into the data, analytics, and cloud-based insurance solutions that are available within digital ecosystems. This accelerates insurance companies’ and InsurTechs’ ability to modernize and streamline their processes and services and bring innovative solutions to market more quickly.

Digital ecosystems are helping insurance companies, brokers, agents, and InsurTech companies to open up new pathways in order to retain current customers and attract new customers with traditional services, as well as modern products.

Customer Engagement

Digital ecosystems are creating a number of new ways in which companies can connect with and stay in touch with customers. Multiple touchpoints, like mobile devices, wearables, social media, email, artificial intelligence-driven chatbots, and more are literally opening up avenues for companies to create new value and engage with customers. That includes value added solutions that become part of a broader insurance offering such as activity and diet trackers.

What’s more, having access to the data and insights that come back from these devices and solutions helps insurance companies personalize the insurance products and customer experience for individuals and businesses. Competing on a successful level in the future will require that insurers develop new capabilities and an ecosystem of partners that enable data-and-analytics-powered solutions to engage and create value for customers.

Risk Identification

Another major way in which digital ecosystems are changing the insurance industry, as well as the customer-consumer experience, is to help identify risks and gaps in coverage, which in turn will personalize and improve the overall experience for the customer.

New policies that adjust the price or overall coverage in relation to changing risk identifiers are creating incentives to manage risk more directly and actively. Some companies are now producing policies that provide premium credits to people who live a healthier and risk-free lifestyle.

Think about how Progressive Auto Insurance provides discounts and breaks for customers who drive better. The company uses technology known as Snapshot to see how their customer is driving and give them incentives based on their driver safety skills. Innovative insurers are exploring more potential around next-generation policies in other casualty areas to adjust price or coverage and use real-time streams to process claims more accurately and efficiently.

Creating Customer Value with Digital Claims Processes

The ability to tap into the devices, solutions, and data in the digital ecosystem surrounding the end insured is changing the traditional claims management system from an adversarial relationship with the customer to one that actually improves customer loyalty. Using data from devices and other sources, claims can be automatically generated and resolved. Examples of this are emerging in everything from flood to crop to auto to home appliances. The most innovative insurance companies are using these data sources and analytics-driven approaches to automate the entire claims-handling and fraud-detection process.

Chatbot-based systems, for example, are offering customers an automated claims payout process within a matter of seconds. This can be seen in digital native companies like Lemonade, a young startup insurance company that utilizes technology and behavioral science in every aspect of its services. Lemonade works actively with its customers to prevent claims and provide services that add value to customers.

Strategy and Partnering

Insurance companies and InsurTechs (and the tech vendors that support them) that want to succeed in a digital ecosystem market need to develop a culture and strategy that continually evaluates the ecosystems surrounding customers for solutions and data. Doing so will enable them to optimize the value they create and the experience they provide for customers as well as improve the effectiveness of internal processes. Companies like Rein provide insurers and other InsurTechs a next-generation platform and ecosystem that enables companies to bring digital generation insurance solutions that leverage ecosystem solutions and data and machine learning to market faster. From regulatory compliance to risk selection to security features, companies like Rein are helping accelerate the ability of insurance innovators to tap the power and speed of innovation provided by digital ecosystems.

The world of insurance is changing, and doing things the traditional way won’t take companies far enough. With the availability for more digitally-connected data and services and customer experiences, the consumer is demanding products and services that provide them the benefits provided by ecosystem enabled solutions.

Developing a digital ecosystem strategy is a necessity in today’s world. It requires thinking about the customer in a digital world and how the insurer can create value for them by becoming an integral and interoperable part of that world to see how they can successfully support their customers with effective insurance options and services. When this is determined and outlined in an effective way, insurance and InsurTech companies will be able to develop the right strategies and the right partnerships with which to develop products and customer experiences that give them a sustainable competitive advantage.

Underwriting: The Dangers of Data and Discrimination

04/11/2019 Shawn Hanson, Partner, Akin Gump 2019 SVIA Contributors, Blog

On January 18, 2019, New York’s Department of Financial Services (DFS) issued Circular Letter No. 1 (2019) to advise life insurers regarding the type of data that they may use when underwriting policies. The guidance was released after the DFS conducted an investigation into insurers’ underwriting practices, which followed reports that it had received of the emergence and use of “unconventional” data sources within the industry. The guidance—summarized below—will be of particular interest to InsurTech start-ups, as well as established carriers seeking to use new sources of data to underwrite risks.

Circular Letter No. 1 identifies two primary areas of concern regarding the use of external data (e.g., data—such as a credit card rating—that is not directly related to an applicant’s medical condition), algorithms and predictive models in the life insurance space. First, the use of such tools might unlawfully discriminate against protected classes of consumers. Second, such tools often lack transparency for consumers.

Unlawful Discrimination

New York Insurance Law Article 26 prohibits the use of, among other things, race, color, creed and national origin in underwriting.

The DFS’ investigation uncovered that life insurers used the following sources of external data in connection with underwriting policies: geographical data, homeownership data, credit information, educational attainment, licensures, civil judgments, and court records. According to the DFS, all of these sources of data have the potential to reflect “disguised and illegal race-based underwriting.” The DFS stated that other external data that it found in use, such as retail purchase history, social media or Internet activity, geographic location tracking, condition and type of applicant’s electronic devices (and software), and an applicant’s appearance in photos, also have a “strong potential to have a disparate impact on the protected classes identified under New York and federal law.

In light of these issues, the DFS provided, among other guidance, the following principles:

An insurer must determine that external sources do not collect or utilize prohibited criteria.
An insurer may not simply rely on a vendor’s claim of nondiscrimination or the proprietary nature of the third-party process.
An insurer may not use an external source, unless it can establish that it is not unfairly discriminatory. In so doing, an insurer should consider the following questions:
- Is the underwriting supported by generally accepted actuarial principles?
- Is there a valid explanation for the differential treatment of similarly situated applicants reflected by the underwriting guideline that is derived (in whole or in part) from external data sources?

Consumer Disclosure/Transparency

Pursuant to New York Insurance Law Section 4224(a)(2), insurers must notify the insured or potential insured of the right to receive the specific reason(s) for a declination, limitation, rate differential or other adverse underwriting decision.

The DFS reiterated that an insurer may not rely on the proprietary nature of a third-party vendor’s algorithmic processes to justify a lack of specificity related to an adverse underwriting action, and that insurers must also provide notice to, and obtain consent from, consumers to access external data, where required by law or regulation. According to the DFS, the failure to adequately disclose to a consumer the material elements of an algorithmic underwriting process (and the external data sources upon which it relies) may constitute an unfair trade practice under New York Insurance Law Article 24.

Conclusion

On the one hand, insurers are in the business of discrimination—a healthy 20-year-old will expect to pay less for life insurance than an ailing 90-year-old. On the other hand, there are legally mandated limits to the nature and type of discrimination allowed. Within this framework, the boundaries of permissible discrimination are often far from clear. The DFS’ latest guidance indicates that not only is it closely monitoring companies’ compliance with underwriting rules, but also that it believes that insurers may run afoul of the law by using criteria that has a “disparate impact” on a protected class—an issue that has received significant attention in the homeowners’ insurance industry, but comparatively less with respect to other lines of insurance. This development highlights the need for companies to review their underwriting models to ensure that they are actuarially sound and do not unfairly discriminate against a protected class.

The Circular is a bellwether for further action, including targeted enforcement investigations, by DFS. DFS has made it clear that it expects insurers to independently audit those data sources to assure they do not collect or use impermissible data and to verify not only the actuarial soundness of guidelines that use that data, but also evaluate whether those guidelines have an adverse disparate impact on protected classes.

Digital Underwriting: What’s Next?

04/10/2019 Samantha Chow, Senior Life and Annuities Analyst, Aite Group 2019 SVIA Contributors, Blog, Digital Underwriting

The insurance industry is finally making waves in the area of digital underwriting. It’s refreshing to see some carriers step out of their comfort zones and go beyond just automating basic activities with rules engines and more advanced workflow tools. Most carriers are starting to use additional external third-party data to help support the automation process as well, reducing the operational costs of onboarding a new customer and creating a better customer experience. While it seemed to take forever for many carriers to utilize some of the basic third-party data elements, such as Medical Information Bureau or motor vehicle records, or even credit or reinsurance scores, this is finally becoming the norm.

There is much more to come, though, in the advancement of digital or automated underwriting. Some carriers and startups are just beginning to scratch the surface of how data elements and advanced tools can support the underwriting process and help the industry.

There is so much more data available today to support the underwriting of the entire insurance industry: life, health, wealth, auto, home, commercial, business, and more. Wearables (e.g., Fitbit, Apple Watch, and Garmin) and connected health devices such as blood sugar monitors, toothbrushes, and blood pressure monitors help carriers better understand a person’s health. Drones, satellite images, weather data, and connected home and business devices such as water leak, fire, or CO2 detectors better assess the risk of a home or business. Telematics devices that are built into vehicles or mobile apps track a person’s driving patterns and behaviors to help carriers better assess a driver’s risk. All of these are available today and can provide great value to the digital underwriting process, but many are not being used, or their abilities are not being leveraged well enough to provide extreme benefits to the carrier or the customer.

Now let’s add on the advancement of robotic process automation, artificial intelligence, machine learning, and cognitive computing. The insurance industry has a recipe for next-generation digital underwriting: using a combination of human expertise and technology to reduce human error, improve risk, create consistency, and reach the ultimate customer experience without any of the major downfalls.

The Silicon Valley Insurance Accelerator (SVIA) will host its annual InsurTech FUSION Summit: Rise of a Digital Insurance Industry on June 18 and 19, 2019, in San Francisco. The session Next-Gen Digital Underwriting will be a featured topic of conversation with many new data elements and technologies being discussed. Don’t miss the opportunity to learn how to take the next step in your digital underwriting journey.

Register now at www.insurtechfusion.com and get 15% off of your registration using the code SAMANTHAC15. Aite Group and SVIA look forward to seeing you there and helping you take the next step in your digital transformation journey.

The Future of Insurance: A Customer-Centric Digital Ecosystem

04/09/2019 Mike Connor, CEO, SVIA Blog, Future of Insurance, InsurTech

The future of insurance is already upon us as traditional insurance companies incorporate more tech-savvy features into their options, and giant tech companies offer insurance services. Insurers, brokers, InsurTech companies, and companies such as Amazon are changing the foundation of insurance into a digital ecosystem providing connected insurance and value-added services for customers.

Insurance technology has been developing at a rapid pace in the last decade. Software robots can now mimic human actions and produce repetitive tasks across multiple business applications; FinTechs and InsurTech companies have made major inroads by creating powerful applications that handle problems and deliver high-quality digital experiences. Mining social media data is improving risk assessment for insurers, increasing the capabilities of fraud detection and enabling new customer experiences.

The future for insurance is a connected insurance atmosphere, a digital playground for everything from tech giants to hip startups. As platform providers change and become more dominant within these ecosystems, they’re beginning to change what is required to compete as an insurance provider.

Connected Data Boosts Innovation

Insurance companies, such as Progressive, began capturing real-time data from customers. Data-capturing devices and connected data coupled with predictive analytics and machine learning are delivering not only improved customer experience and overall satisfaction but better services and new business models that drive growth and profits.

Connected insurance has given way to personalized premiums for auto insurance companies and their customers. A U.K.-based InsurTech company, Bought By Many, has been aggregating users with specific and personalized insurance needs, allowing insurers to offer them services at scale. This kind of service is reflective of what’s going on in the commercial insurance industry. Everything from data patterns to cloud-based applications are forming what it means to offer insurance to customers, helping to personalize an experience and create a more tailor-fit model of connected insurance.

Insurers have a unique level of access to rich datasets. Most insurance companies can be reluctant when it comes to revealing why they ask certain questions because it can reveal too much about how they price out their products based on data. But InsurTech companies have learned that customers trust them more when they show the benefits of providing such data for a more personalized experience.

Companies who caught on to this customer-centric ecosystem have changed their business models to give customers more control over their premiums. This enables the customer to acquire insurance when and where they need insurance and also enables insurers to reward customers based on their risk profile. This pay-as-you-go, pay-as-you-drive structure has been changing the auto insurance game with companies like Root and MetroMile popping up as disruptors.

This model is also becoming popular among health insurance providers, which rewards customers for living healthier lifestyles with lower premiums. They can do this by tracking behavior using wearable technologies, like with Oscar, a Google-backed InsurTech startup that rewards users for every step they take when they are being tracked using a wearable band. Other insurers are collecting data on heart rate and blood sugar levels for diabetics to adjust their risk profile while also providing coverage. This change in the ecosystem has made insurance companies lifestyle companies or essentially tech companies that offer insurance as a bonus.

Offering Perks

Gamification has made its way into every industry as mobile app usage has seen a sharp rise. User experience and user design show up in insurance companies’ assessments of customers by providing a progress bar to show how much longer the customer has until they are finished. It’s a small but simple way to include gamification into a process that’s usually seen as a nuisance.

Gamification can help to display information for customers more clearly so they choose the right product and service and get the lowest premium for it. This could include having them answer a few basic questions that apply to them the most. Plus, with pay-as-you-go, companies are offering perks and discounts when customers track their lifestyle habits and daily goals, hitting milestones and competing in a friendly way with others in their health community.

AI and UX Design

UX design has paved the way for a more streamlined approach to holding the attention of the customer and prospects. Companies like New York Life offer up an abundant knowledge base for customers looking to get information on the purpose of life insurance and what types of coverage they can purchase. The company has made it easier for first-time insurance buyers to sift through stacks of policies with dense information and get to the information they need on a simpler scale.

When it comes to artificial intelligence (AI), companies like Lemonade, offering renters and home insurance policies for homes, apartments, co-ops, and condos, are using AI bots who can help find the best coverage through web chat features. Plus, mobile apps are allowing customers to get insured in under 90 seconds and paid in three minutes. This is making insurance sexy as opposed to dealing with the long, drawn-out process of legalese that would turn customers away in the past.

InsurTech technology has created a pathway for mobile diagnosis and prescribing, like with Roman, a men’s health startup that allows men to find the service they need for things like erectile dysfunction and hair loss. While not an insurance company, Roman is mirroring a new wave of Teladoc services that most major companies are implementing now with 24/7 access to health care.

The future of insurance is ripe with opportunity for insurers who move beyond a product focus and look deeply into the goals and outcomes that are most important to their customers. Those who learn how to harness data, services, and devices in the digital ecosystems surrounding the insured by leveraging emerging technology and utilizing awesome UX to help customers understand, prevent, and manage risk will emerge as the future insurance leaders.

Emerging Distribution Strategies and Solutions: Competing in a Digital Customer-Centric Market

04/04/2019 Mike Connor, CEO, SVIA Blog, Customer Engagement, Distribution Strategy, InsurTech

The insurance industry is rooted in tradition and has been consistently devoted to its tried and true processes. But with the advent of mobile devices, digital data and an analytics-based approach to working with, serving, and retaining the customer, insurance companies must embrace digitally-enabled distribution strategies or perish.

Digitally transformed insurance products, customer engagement, and processes are impacting everything from auto to life to home to commercial insurance. Personalized bundles are being developed to create streamlined offerings for customers. Leading insurance companies are coming to the understanding that they need to develop next-generation distribution strategies that can effectively sell and support these next-generation products if they are to remain at the forefront of the digital insurance industry.

But it’s not just the fact that the industry is changing, the customer and their expectations are changing as well. These changes are being driven by the customer’s experience they have within closely aligned industries such as banking, as well as, the experience offered by the big tech giants like Amazon, Google, and Apple. These expectations change the customer expectations about everything from where and how they are made aware of their needs and solutions that address them, to how they are onboarded, serviced, and supported as a customer to their expectations about how insurance-related solutions create value for them. Insurers will need to develop distribution strategies and capabilities that can address these needs by identifying new digital touch points in the ecosystems surrounding insureds, improving the flow of information between the customer, distribution partners, and the insurer’s various departments and processes. The ultimate objective is to deliver greater value, be faster in a more personalized manner, and do that far more effectively than current approaches. All of that will need to be executed through touchpoints and processes that span a myriad of digital ecosystems.

What’s Needed to Win: A Customer-First Strategy

Insurers, brokers, and agents that expect to survive and thrive must take the steps to understand the particular needs of both current and target customers and begin to build a strategy around them. Customers are already reliant on digital products and services at this point, and there’s no going back. They expect a fully personalized service meant to provide the easiest experience when inquiring about and applying for new insurance services. Expectations are high to receive the level of service and support they need that fits into their everyday personal and business lives.

And while customers are wanting to handle a lot of options on their own with self-service and tech, they still want the personal touch of an agent ready to help them when they need it. When it comes to more complex issues, customers would much rather speak with a live human who can make things simple for them.

That isn’t so different from what agents and brokers provided in the past. What is different is that in today’s world, the customer rightfully expects the person they reach to know far more about who they are, what their needs are, and where they currently are in their journey as a potential or existing customer when the person responding picks up the phone. They don’t want to repeat information and the last thing they want is for the person they speak with to be less informed about the topic and their situation than they are. The digital products, solutions, and broker and agent platforms that are emerging from the innovation being driven by InsurTechs use next-generation data sources, machine learning, and predictive analytics to provide automated insights and make connections to provide a more user-friendly experience. Within a few clicks and swipes, they enable agents and brokers to give customers completely personalized information based on the data that’s been provided previously.

This type of focus on service can help brokers and agents provide all kinds of new highly contextual support and value to the customer experience and will help them remain relevant in the digital market that is coming. Deploying these kinds of systems will help insurers preserve a critical source of new revenue and partnerships that help them build and retain loyal customers.

Setting Data Free: Supporting Next Generation Business and Distribution Models

Information has traditionally been siloed across the insurance industry. Brokerages, agents, underwriters, and claims management have all siloed this information behind legacy systems and legacy ways of thinking about the business. Companies who expect to survive break those silos apart and begin sharing that information based on its ability to provide greater value and support to the customer. Yes, the customer’s privacy still needs to be protected, but those who want to compete successfully will need to find ways to share the right information on a prospect or customer at the right time in real time. No one in insurance can expect to compete using the old ways of having to search through a number of actual paper files or departments and/or to call others who have to do the same to meet the customer’s needs. Digital sharing and protection of data is becoming a competitive weapon and is more streamlined than ever, reducing errors, and removing tedious manual tasks from day-to-day work.

Technology is changing at a rapid rate and isn’t going to let up anytime soon. This is where cloud-based solutions being introduced by InsurTechs have a huge advantage over legacy systems that are difficult to work with and upgrade. Platforms that are used today must be future-proof, designed to roll out automated updates in the years to come and keep from having issues with servicing customers.

Why the Sense of Urgency? The Future is Already Here

The change taking place in insurance is accelerating. Many of the leading insurers and InsurTechs have completed the work on the basic digital capabilities they need to compete. That means they are ready to undertake and deploy the systems and capabilities that will truly set them apart from their competitors and give them a running start against the big tech players that are circling even closer to the insurance market.

Customers are getting younger in the insurance market, and if they’re not getting younger, they’re still operating with a younger, more modern outlook. The future of insurance consists of lower rates, better service, and personalized counsel to grow off of. Brokers and agents need to have this understanding to meet the growing needs right now before they are left behind. This can be done by looking at how Millennials and Generation Y are operating since they are the ones driving the trend away from traditional models and toward a more digital-friendly landscape.

Customers want their information and digital insurance services supplied to them quickly and in a personalized way. But it’s the human touch that will never go away as customers also want to be able to get in touch with a human being who understands their needs when they want it. To do this, companies in the InsurTech market need to design a data-driven approach to the user experience and engagement models that keep everyone up to date on the modern customer’s needs.

This can be seen in the way people communicate with each other, such as the use of mobile devices, chatbots, and social media. Tech-savvy customers, especially Millennials, are entering their mid-career stage and are working with these technologies more and more in their everyday work tasks. Mobile devices, including phones and tablets, can get employees the information they need while on the go, heading into or out of the office or going from meeting to meeting.

Customers are increasingly putting the importance on the speed of service as well as the ability to tap into self-service options. The insurers and brokers / agents that emerge as leaders will have done the same.

Examples of companies bringing these capabilities to market include Bolt, who is providing a platform that enables insurers to quickly set up and provide new distribution channels, to Digital Fineprint that provides data to support commercial brokers and customers, to Certua, who is finding new ways for life insurance agents to create value for their customers.

Companies are starting to install more Saas (software as a service) technology in driving the new insurance process for customers. And data is playing a huge part in how insurance companies are working with their clients, enabling insurance companies to better understand their needs with a more analytical approach.

Come listen to topics like this and others from innovative industry leaders at InsurTech FUSION Summit on June 18 -19 in San Francisco.

Digital Engagement: The Empowerment of Insurance Customers & Communities

03/25/2019 Mike Connor, CEO SVIA Blog, Customer Engagement, InsurTech

It’s hard to look at any industry in today’s digitally connected world and spot something that isn’t being guided, influenced, or altered by technology. In today’s fast-paced economy of digital connectivity, it’s all about personalization and the push toward a more hands-on method of customer engagement, the business and communication strategy that connects an external stakeholder and a company through constant communication and the creation of value for the customer. Think about companies like Amazon, eBay, Apple—all stalwarts in the customer engagement community, bringing a hassle-free experience right to their fingertips and doorstep.

The same can now be said of leading insurance companies that rely on technology, or Insurtech, to deliver positive results and engage with customers in a more proactive, omnichannel way. In the world of on-demand and connected insurance offerings rapidly coming to market, a competitive customer experience will make all the difference. The most innovative of those are combining insurance with added value, added services, and benefits from ecosystems outside of insurance. These services will improve customer engagement and quality of product and require thinking through a totally new approach to the customer journey and the customer experience.

Redesigning Customer Expectations
First, it’s important to look at how tech companies that are unrelated to the insurance industry have changed the consumer experience from top to bottom. Tech giants, as alluded to above, have completely upended expectations that customers have in obtaining practically any product or service they need or want. By developing a truly digital and mobile experience, these tech companies have redefined a new customer engagement and experience standard. It’s results: instant gratification, immediate connectivity and a new set of expectations among the consumer base.

Companies like Apple and Netflix have not only changed what customers want and expect from their products and services but the entire customer experience. They are using, big data, social media, and artificial intelligence (AI), as well as other advanced technologies to more deeply understand the customer, anticipate their needs and recommend next steps. Insurance companies that don’t create digital-first strategies when looking to attract or retain customers will find themselves rapidly falling behind their more advanced competitors.

Consumers are also becoming more comfortable with trading their personal information for these more personalized faster and efficient experiences. Ease, convenience, and value across the customer journey are now king and are shaping connected and on-demand insurance which will become the new normal over the next few years. With data-driven insight and artificial intelligence, insurance companies that use this data and these technologies to anticipate and deliver personalized experiences and value their customers’ needs will emerge as the winners.

A New Thought Process
Customer engagement in the insurance sector is evolving thanks to InsurTech’s like Lemonade, with renters insurance or Ladder in life insurance or Next in Small Business Insurance. Even large carriers like John Hancock with their Vitality program are changing the game. The emerging paradigm changes the relationship between consumer, insurer, and increasingly the community surrounding the insured. New and innovative customer engagement paradigm starts by engaging the end insured through the ecosystems that surround them. Those include not only smart homes, smart cars, smart factories, and smart mobile devices but also the places online where users search for, purchase or use goods and services. This new engagement paradigm is moving insurance from a sterile relationship of premium payments and claims checks to a relationship in which insurance combined with other services helps the user more effectively achieve their life, health, and business goals.

Insurance companies are utilizing modern methods to work with the consumer and altering their entire business process to include forward-thinking on-demand insurance. Leading Insurance companies are investing time and effort to research to understand the touch points and services in the digital ecosystems surrounding their current and prospective customers.

Customer Engagement in Insurtech
With that information, leading insurers are now able to define new customer segments and risk pools: Information they are using to develop new products, new business models, and new engagement models. Customer engagement is now being leveraged by insurers in the on-demand insurance world through a digital-forward methodology. By combining big data, with social media engagement strategies these companies can now understand and provide personalized coverage and engagement models that align in real time with the customer’s life stage, style, and circumstance or activity.

The major impact of staying connected with customers through engagement has been the increase in retention ratio. Pleased customers help an insurance company get ahead of their competitors in the connected insurance industry because personalization has already been built out. This approach not only increases the loyalty and retention of customers it’s also increasing underwriting profits while at the same time reducing customer acquisition and support costs.

Looking Toward the Future
This is the perfect time for insurance companies to capitalize on the digital ecosystems and services surrounding customers to drive new revenue and profits through new customer engagement paradigms. Customers are looking for experiences and products in the insurance industry that meet their personalized needs and can keep them engaged with not only the company but the products and services that are being offered.

Digital generation customer engagement is the first move toward the completion of a digital transformation. As Insurer’s taking this step to find that it’s helping them develop a far more customer-centric strategy and even more importantly a customer-centric culture.

While insurance companies are seeing new threats and challenges coming from the digital ecosystems surrounding customers the leaders are also capitalizing on new opportunities to connect with customers and position themselves as leaders at the next frontier of the industry.

Come listen to topics like this and others from innovative industry leaders at InsurTech FUSION Summit on June 18 -19 in San Francisco.

The Value of Predicting Claims Litigation with Artificial Intelligence

03/20/2019 Yvette Cordero, Rama Venkateshwaran, and John Standish - Infiniyltics Blog, InsurTech, SVIA Contributors

The Value of Predicting Claims Litigation with Artificial Intelligence

The time-tested axiom in risk management: “If it’s predictable, it’s preventable,”¹ holds true today in the business of property and casualty insurance claims. What’s impressive is that we can take that axiom and energize it with artificial intelligence, machine learning, and natural language processing.

An On-Demand World: SMBs Demand On-Demand Insurance

03/06/2019 Michael Fitzgibbon, Chief Underwriting Officer, Slice Blog, InsurTech, SVIA Contributors

The insurance industry has long struggled to effectively serve Small-Medium Business (SMB). The cumbersome and inefficient process of buying business insurance doesn’t suit the needs of SMB’s, nor does it suit the expense structure of insurers and brokers. Consequently, affordable and convenient insurance options for SMB’s are limited.

When reviewing the options for SMB’s, it seems most insurers are focused on coverage rather than convenience. It’s a natural instinct – coverage is what they do. But, do most customers really care if they have $150,000 of Valuable Papers coverage instead of $100,000? Coverage is not necessarily customer-centric.

Although there are a number of options now for SMB’s to buy insurance online, it’s not actually that much easier. There are still lengthy applications to complete, small underwriting “boxes” that delay quotes, complicated proposals to review, wait-times for policy documents and archaic payment options. The same cumbersome buying process has simply been moved to the digital world. Almost everything an SMB needs to operate can be purchased instantly. If a small contractor needs equipment for a job, the owner can simply drop by Home Depot on the way to the office. Likewise, if a consultant needs data to complete an analysis, a few minutes researching on Google will find numerous sources that sell data subscriptions. Time for lunch? Delivery can be arranged with practically every restaurant in the city.

So why can’t insurance be purchased the same way– instantly, as needed, and without any hassle?

On-demand insurance will do just that! In fact, the first product from Slice for SMB’s will be cyber insurance. It’s not just a policy, it’s a program. Even with insurance, claims cost money in terms of deductibles and lost time. The cyber product rolls together insurance and loss prevention to minimize “Total Cost of Risk.” The result: fewer claims, fewer deductibles, less time spent on insurance and lower premiums for SMB’s.

Key things to look for with “On-Demand” Insurance:

A digital policy that can be purchased easily and instantly from a web or smartphone app
Submitting and being paid for claims digitally through the same app
You’re in control: buy it when you need it, keep it for as long you need it, and then cancel without penalty when you no longer need it
The ability to reach underserved markets, such as SMB’s.

Here’s how easy it is to buy insurance through some very exciting innovations:

No Application Form

Here’s a secret: the application form can only benefit the insurer. It is not customer-friendly. Most of the information required on the form is either pointless or available from other sources. The purpose of the application is to get a signature to a warranty statement to use against the business at the time of a claim.

Subscription Service

Rather than being forced into an annual insurance policy with an inconvenient renewal cycle, SMB’s can subscribe to their required coverage month-to-month. No more renewal questionnaires and no more premium finance contracts and the interest fees that go with them. Plus, at any time, the SMB can buy additional coverage on a temporary basis to address specific needs. Then, cancel at any time without penalty.

A Simple Policy

Insurance policies are short and written in plain English. Confusing insurance terms and legalese are eliminated. Policies are easy to read, easy to understand and easy to buy.

On-Demand insurance will not only make getting insurance easier for SMBs, it will have a huge impact on the industry as a whole.

Get all of your insurtech news and insights on the SVIA Blog.

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New and Emerging Data Brings Insurance Into the Streaming Age

02/27/2019 Max Drucker, CEO, Carpe Data Blog

The future of insurance is well and truly here: the only way insurance carriers will be
able to survive and thrive is by utilizing big data, including new and emerging data
sources.

In an interview with Mad Money’s Jim Cramer on CNBC, Chubb Ltd.’s Chairman
and CEO Evan Greenberg commented: “We spend a billion dollars a year on
technology. We’re in a world that’s going from analog to digital…if you remain analog,
you’re history.”

Greenberg wasn’t just describing digitizing an industry that has historically adopted
technology at glacial speeds, but how harnessing big data can help insurers actively
predict and prevent loss, rather than only deal with the financial aftermath.

“Loss costs rise every year by four to six percent,” explained Greenberg. “There is always
inflation on liability, property, repairs, labor, and so on.”

This is where technology, especially AI and machine learning becomes an advantage,
not just the latest industry buzzword. Traditionally, insurance carriers use legacy data
sources across all lines of business and some, like Chubb, are using new and
alternative data sources to alleviate systemic problems. These alternative data sources
include social media and publicly available online data and have been proven to
mitigate loss cost, among many other benefits.

In the interview, Greenberg specifically mentions claims and underwriting as areas to
better serve their clients. For example, the existing process for pricing, quoting, and
underwriting small and medium-sized businesses is predominantly manual, time-
consuming, expensive, and not ideal for the carrier or consumer.

“Right now, if you’re a small business, to underwrite you we ask you about 30
questions. For Chubb, over the next 18 months, that’ll come down to about seven
questions, because we can just scrape the answers from data that is publicly available.
[We] don’t need to bother you with that,” he told Cramer.

By using this type of new and emerging data, carriers can complete the picture of new
business and streamline their intake process by prefilling profile data and standard
eligibility questions with validated data. But why would a carrier only evaluate the
business once during the policy’s lifetime?

“Until now, carriers have looked at data at a single point in time, at the underwriting
stage or the first notice of loss or injury,” says Max Drucker, CEO, and Co-founder of
Carpe Data. “But now we live in a world where data can be accessed continuously, it’s
fluid—data is a stream. So we can see when business is offering a new service, or
when an apartment building added a pool as it happens, rather than waiting for the next,
undetermined point of time when a carrier may check a database.”

An insurer monitoring emerging data sources can see changes as they occur, giving
them the potential to react sooner to both risks and opportunities, like monitoring
business performance and reacting to material changes that either create new risk or
change eligibility.

Other ways that a carrier can see immediate benefits include being able to act quickly
on inaccurate or missed data that would have been too difficult to discover without
consistent data monitoring, or easing the intake of new business with better pre-fill and
eligibility checks. For instance, a beauty salon adding waxing services, or a cafe that
upgraded their alcohol license from beer and wine to add liquor are scenarios that
create potential upsell opportunities and valid touchpoints for agents with their clients.

In short, a matched business in the hands of an agent together with a detailed picture of
risk is a very compelling sales scenario.

“In the small space of time that these alternative data sources have been available to
carriers, they can now be at the forefront of this evolution by having the ability to
continuously monitor their policies with real-time data, across their entire book,” explains
Drucker.

Being able to underwrite with more than a static picture results in a true return on
investment for carriers, with prevented claims, opportunities to upsell, reduced premium
leakage, and overall processing efficiency.

Get all of your insurtech news and insights on the SVIA Blog.

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