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August 2, 2020

Burn the Fax Machines

Summary:

Clients will be happier, and companies will be happier, once clients can interact directly with insurers' information systems.

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Here’s an analogy for you that may shed some light on how far we can still go — and must go — in smoothing our interactions with customers.

The analogy starts from the idea that, over time, every industry becomes a technology industry. That’s sometimes expressed in different ways, notably in venture capitalist Marc Andreessen’s famous line that “software is eating the world.” But the basic idea is the same: Old practices in every industry give way to the faster/better/cheaper — and sometimes very different — ways of doing business enabled by technology, and whatever companies are most adept at the technology have a major advantage.

So, here’s the analogy:

If the insurance industry were to map its user interactions onto those of the software world, I’d say we’re right about where software was in 1990, maybe 1995. As you may remember, installing a big software application like Word in those days involved inserting a series of floppy disks into a drive in a certain order — sometimes more than once — and waiting while the drive whirred away, then finally getting a notification to proceed to the next floppy disk. Installation could easily take 20 minutes, and that assumes that everything worked right. If something went wrong, well, good luck to you. You went back to the beginning or wound up on an excruciating call with the developer’s tech support.

Doesn’t that sound like what a customer goes through when buying anything other than a routine policy or filing something beyond a plain-vanilla claim?

There’s all sorts of paper involved, perhaps a fax machine or seven. Errors get introduced as the handwriting is misread or the data is rekeyed. Maybe something gets lost in the translation as the data moves from system to system. There are lots of phone calls and emails back and forth to sort out the problems. Then an underwriter or adjuster sends out a request for information or analysis, and the whole process stalls until responses trickle in.

The good news is that the world of technology has moved well beyond the early to mid-1990s. If you want to load even a sizable app, you just go to the app store and click. Your phone or laptop prompts you when a software update is recommended, and you can have it done while you’re asleep. Not that it takes more than a couple of minutes, anyway, with no involvement for you — and I can’t remember the last time anything went wrong during an update. If you mention floppy disks to anyone under age 30, the response is likely to be, “Floppy what?”

So, my analogy suggests that there is lots of potential progress ahead of us. It also suggests that we’ve already come a long way.

The 1974 computer that inspired Bill Gates to drop out of Harvard and join childhood friend Paul Allen in founding Microsoft didn’t even have a screen. It just had a face plate with toggle switches that you used to input data and 14 little LED lights that provided the output — you, of course, had to be able to read binary code and know what the 1s and 0s represented by the lights actually meant. So, getting to 1990 or 1995 and floppy disks that could load massive programs and produce results on screens represented massive improvement, despite how buggy the process was.

How do we in insurance get from 1990-95 tech world to the sort of ease that technology companies provide today?

First, let’s burn all the fax machines. Yes, I know about the “long tail” concept, meaning that some clients will want to use fax machines for years yet, but the pandemic has given digitization a huge boost. Let’s at least pretend the machines don’t exist and encourage clients and partners to interact directly with our data systems, without a bunch of paper and typists in the middle.

I wrote a story for the Wall Street Journal almost 30 years ago about the advent of online forms and waxed eloquent about how they’d save time and reduce errors. It’s about time the insurance industry made an honest man out of me.

Clients will be happier, and companies will be happier, once clients can interact directly with insurers’ information systems, at least on routine issues like entering data.

After burning the fax machines, the issues get more complex but are still pretty straightforward. Use public data or data from previous interactions with customers to do as much autofill as possible, both on the applicants and on the assets that are being insured. Use AI to pluck information electronically from all the various data bases, both your own and partners’, to reduce the amount of manual querying and replying. Take a look at all your processes from the viewpoint of the customer, rather than based on your internal organization plans, and see what steps you can eliminate or at least accelerate. And so on.

No, you’ll never get to the same smoothness that, say, Apple offers. Big Tech can enforce a one-size-fits-all standard, while in insurance, beyond the most routine transactions, one size fits one. But the industry has come a long way since the equivalent of toggle-switch inputs and readouts in binary code. If we burn the fax machines and keep pushing on other fronts, we can keep moving.

I’d bet a floppy disk on that.

Stay safe.

Paul

P.S. Here are the six articles I’d like to highlight from the past week:

Bigger Disruptor: Lemonade or Tesla?

With its spectacular IPO, Lemonade has the attention of the insurance world, but Tesla may be the bigger disruptor in the long run.

COVID: Agents’ Chance to Rethink Insurance

The COVID-19 virus has given agents a wonderful opportunity to rethink insurance in general and their operations specifically.

AI in a Post-Pandemic Future

The post-COVID-19 world requires accelerated adoption of AI to deliver the efficiencies and augmentations of a highly digitized workplace.

Crisis Mitigation Beyond COVID-19

Whether at small companies or in massive industries, the ability to pivot to support new ways to work is key to sustaining operations.

Things Heating Up in Low-Code/No-Code

Low-code/no-code tackles three huge IT challenges: time to market for new capabilities, development capacity and managing cost.

Underwriting Wildfire Takes Extra Care

Insurers can’t rely on previous wildfire seasons or events, They need a more strategic approach that goes well beyond a single risk score.

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About the Author

Paul Carroll is the editor-in-chief of Insurance Thought Leadership. He is also co-author of Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993. Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.

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