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Blog, Digital Ecosystems, Future of Insurance, InsurTech
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Emerging Distribution Strategies and Solutions: Competing in a Digital Customer-Centric Market
04/04/2019
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
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.
Getting Smart about Blockchain and Insurance
02/21/2019
Blog
Blockchain has captured the imagination of the insurance industry. In the past several years, insurance has gone from ignoring blockchain to leading other industries in terms of investment. Individual insurers, startups, and alliances between major insurers, technology vendors and major commercial customers have produced amazing visions and proofs of concept. For all of that work, only a small number of commercially deployed insurance solutions have emerged. So the questions become, with all of the challenges and opportunities insurance faces and all of the other promising technologies at its disposal, is blockchain smart for insurance and if so, where should blockchain be on the priority list?
Insurance’s Digital Priorities
Insurers’ priorities need to enable them to sustain an advantage in a digitally-competitive market. That market will be empowered by digital ecosystems and platforms. A market-driven and shaped by the same economic and technical forces that created Apple’s App Store, Google, Amazon, Facebook, Linkedin, Salesforce, and Ping An the Chinese giant and the ecosystems it’s creating. These digital ecosystems deliver customer value by making it easy for customers to connect to the people and solutions that best help them achieve their goals. It creates value for ecosystem providers by making it easy for them to connect to customers and partners.
The ecosystems and platforms forming in insurance will give birth to hyper-connected customer-centric solutions, services, and digital business models that join and blur the boundaries between Industries and lines of business in insurance. These next-generation solutions will include data-driven On-Demand and Connected solutions that are tied into the sensors, buildings, equipment, social media activity, and data surrounding that are being generated by insureds. Highly personalized interoperable real-time solutions that help guide insureds’ behavior and decision making to more effectively achieve life and business goals and outcomes.
These ecosystems coupled with emerging technology enable those who take advantage of them to connect contextually to insureds based on what they’re doing and what their needs are in real time. With real-time profile information about the insured collected from those ecosystems, innovative leaders can deliver highly personalized experiences and insurance solutions to the customer throughout their lifecycle and journey.
New Digital Generation Enterprise Architectures and Core Systems are coming to the market. These are solutions designed for the digital industry. They will leverage the cloud and microservices making connections to the digital ecosystems, platforms, data, and services surrounding the customer far easier. They will enable companies to bring smarter, more powerful, highly personalized insurance offerings and core processes to market faster and less expensively.
The highest priority for insurers is creating the digital vision, culture, and infrastructure required to compete in the digital industry. One-off products or solutions won’t be sufficient. There are a number of resources, powerful technologies, and new business models that can help them to do this. The question companies exploring blockchain have to ask is where does blockchain help them address these requirements more effectively than other options.
The Promises of Blockchain
Blockchain promises to lower operating costs by automating processes, more effectively detecting fraud and by being a more effective and secure transport mechanism for data. Its cryptography, immutable ledger, and consensus validation are designed to Increase trust between parties. It also vows to Improve customer experience by using smart contracts to eliminate paper and accelerate processes, in addition to opening the door to new business models.
Blockchain Insurance POC examples
The range of insurance POCs is remarkable. They provide tantalizing examples of what blockchain might enable. Companies like Civic are developing a blockchain solution for transferable identity. A number of companies are following the example of Evident using blockchain to manage proof of insurance.
Collaboration in the Life, Health, and Medical space is focused on managing patient records and creating life and health insurance products. More than a few startups are developing peer-to-peer plays in the personal lines such as Umbrella and Addenda out of Dubai. State Farm is evaluating a solution for subrogation claims, while Kasko is developing an ICO-based Marketplace with a complete auto insurance offering. XL Catlin, Zurich, Allianz, and Swiss Re are experimenting with CAT Swap transactions and settlements. Still, others are evaluating ridesharing insurance, trading life insurance policies and securitizing CAT policies for property insurance.
In addition to these POCs, several blockchain solutions are in commercial operation. Examples of supply chain focused solutions include Everledger which supports tracking the providence of diamonds and Maersk the shipping Giant who is working with a number of companies to establish a maritime shipping and trade platform. Solidum Partners has enabled the securitization of reinsurance contracts. And, there are a number of companies that have launched Travel Insurance Solutions.
There are some clear divisions between how InsurTech Startups and Incumbent insurers are planning to use blockchain. Insurtechs for the most part are focusing on using the technology to create new products and services and creating new markets using distributed autonomous organizations. Incumbent insurers are focused on reducing the friction and cost and mistrust of existing processes.
The most exciting thing about these solutions is the industry’s willingness to step outside of its current paradigm. Blockchain enables the industry to look at inherent pain points in insurance business models and solutions with a fresh set of eyes. Additionally Blockchain has opened the door to collaborative innovation and development of solutions through groups like B3i, R3 / Corda, RiskBlock Alliance, and Open IDL. This kind of open collaboration will be critical to companies that want to sustain a leadership role in a Digital Industry.
Getting Smart about Blockchain and Insurance
As exciting as the work going on with Blockchain is, the technology has inherent weaknesses and challenges. Those include scalability, speed, complexity, compute and energy requirements and interoperability. Issues that arise from the foundational architecture of blockchain and how it stores data and transactions. In addition to these challenges, there is much work to be done in terms of laws and regulations surrounding blockchain solutions their ability to be audited.
Ease of use, speed to market, flexibility, scale, real-time processes involving huge amounts of data and transactions and interoperability are critical to the insurance products, processes, solutions and systems that will be needed to compete in a digital industry. To date, these are all things Blockchain is struggling to overcome.
There have been a number of surveys conducted throughout insurance and other Industries to determine when people believe blockchain and distributed ledger technology will become a core part of the technology platform powering industries. On average respondents place that somewhere between five to seven years out.
Let’s start with some baseline assumptions. First, large technology companies and startups are working around the world and literally around the clock to overcome blockchain’s limitations. Where true incremental value can be created at an industry level we will see commercially available solutions developed. We will also see “Blockchain as a Platform” solutions developed that make it far easier for others to build custom solutions. We will also interoperability addressed as Blockchain solutions gain traction in the market.
What Does a Pragmatic Blockchain Strategy Look Like?
Every company should start with an overall vision for what a digital insurance industry will look like and what it takes to compete within it. Next, they should look at where they currently are in terms of their digital transformation. Where do they have critical gaps in terms of vision, culture, people, processes, and systems? Once they have, they need to prioritize those and evaluate what the fastest most effective paths are for them to ensure that their customer engagement, products and services, processes, and infrastructure will be competitive in a digital market. Lastly, they need to assess where blockchain’s current capabilities with its limitations are better suited to address their most pressing priorities than any other solution.
Large companies that have a broad and well-funded innovation portfolio can afford to invest in a broad range of blockchain initiatives. Those include internal projects, associations, and investments in blockchain startups that are addressing blockchains limitations as part of the solution they are developing.
Midsize companies should participate in or develop collaborative Blockchain associations that are addressing the strategic priorities they have defined. If they have the bandwidth and budget they should also undertake lightweight POCs that align with their priorities internally with startups and technology companies.
Smaller companies should keep abreast of emerging packaged blockchain solutions that align with their internal priorities. When those solutions demonstrate clear proof of viability and incremental value, they should trial them.
Every company should go through the thought experiment of looking at internal priorities and asking how blockchain’s capabilities might help them create unique powerfully effective solutions. It’s a way to think outside of the box. Even if blockchain isn’t the solution, going through the process can yield new innovative ways to think about the issue and solve the problem. That’s called innovation.
For more blockchain insights, visit our podcast page to hear what some of the top innovators are saying on the subject.
Blockchain / Smart Insurance | SVIA | 02 – Blockchain in a Digital Insurance Industry
02/16/2019
Podcast, Podcast - Blockchain Smart Insurance 2019
Overview of Blockchain’s current / expected use / impact in a digital insurance industry. Primary use cases, initiatives & adoption timeline. ~ Speaking: Mike Connor – SVIA | Andrew Bull – Bull Blockchain Law
InsurTech Legal Forum | SVIA & Akin Gump | 02 – State of The Market – Rise of a Digital Industry
11/27/2018
Podcast, Podcast - InsurTech Legal Forum 2018
The current and future state of the insurance market, with an emphasis on digital ecosystems and on-demand, Insurance-as-a-Service products. ~ Speaking: Mike Connor – SVIA |
SVIA Podcast Series: SMB Insurance | 17 – Intro to Developing Digital Business Models & Strategies
11/05/2018
Podcast, Podcast - SMB Insurance 2018
Provides a brief overview of business modeling and how to approach it connected to the digital SMB market. ~ Speaking: Tom Kavanaugh – PWC |
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