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April 25, 2018

Common Error on Going Digital

Summary:

The process that many insurers currently use to capture underwriting data illustrates why digitization alone isn’t enough.

Photo Courtesy of Pixabay

If you’re an insurance professional who follows industry trends, you’ve probably heard the phrase “digital transformation” many times from consultants and industry analysts. And if you’ve been in the business for more than a few years, you’ve likely seen a huge uptick in the use of digital tools. But many insurers mistake digitization, such as collecting forms on a tablet instead of paper, for digital transformation. The truly exciting business developments in digital transformation are found in automation.

Digital transformation isn’t about going paperless, though that’s a nice side benefit. It’s not about using apps to support the same old processes. Instead, it’s about rethinking traditional ways of doing business and replacing old processes with intelligent tools that eliminate or reduce the friction in transactions between carriers and customers. It’s about creating processes that address persistent pain points for insurers and policyholders alike.

Traditional Processes Don’t Work in the Modern World

For property insurers, underwriting without adequate data is a huge pain point. Many carriers either use area averages that may or may not reflect actual property value to assess risk, or they send out an inspector to conduct an assessment and create a report. Neither option is optimal in a world where customers expect personalization, transparency and speed.

Assessing risk on averages can result in cancellations that disappoint customers and harm the brand. In-person inspections yield important data, but scheduling a time for the inspector to evaluate the customer’s property and home or business contents can be a time-consuming hassle on both the carrier and customer side. Carriers often wait for weeks or months to receive a report from an inspector. It’s not uncommon for up to 60 days to elapse between the coverage request and receipt of the report, which is frustrating for carriers and customers alike.

See also: Digital Playbooks for Insurers (Part 4)  

Why Digitization Isn’t Enough

The process many insurers currently use to capture underwriting data illustrates why digitization alone isn’t enough. Sending an inspector out with an iPad to file an electronic report might shave a couple of days off the underwriting cycle, but it’s using digital tools to support a process that is fundamentally broken. It’s a solution that doesn’t address the root cause of customer and carrier pain points.

Instead of putting digital band-aids on broken procedures, it’s time to rethink processes and change workflows. It’s time to evaluate solutions that go beyond digitization and look for truly transformative technologies that harness data, automation and machine learning to create more efficient, effective processes. And it’s time to apply insurance-centric computer vision to new applications rather than adapting products that weren’t designed to address the unique issues that insurers face.

Automated Processes Deliver a Better Experience for Everyone

So, how can automation and machine learning improve the customer experience and streamline carrier operations? Recall the underwriting process that is currently painful on both sides of the transaction: Rather than improving it on the margins with digitization, what if insurers reinvented the underwriting process entirely using technology that allows them to remove the friction from key processes and made the experience more personalized for customers while improving pricing transparency?

Thanks to automation and machine learning that improve key underwriting processes, this is a reality today: Carriers can provide a link to a customer or third party to conduct an inspection through a smartphone camera lens. A friendly, artificial intelligence (AI)-powered assistant walks users through the inspection, automatically categorizing and inventorying items to create a baseline — a rich media record of the customer’s property and contents in near real-time. Built-in, insurance-specific computer vision ensures that the AI inspector notices things a good human inspector would, such as the presence (or absence) of a fire extinguisher near an oven.

For insurers, this type of breakthrough automation eliminates the problem of delayed quotes and mispriced policies. It also opens new opportunities for the agent and the customer to work together to mitigate risk, which protects customer property and the insurer’s bottom line at the same time. It makes a formerly opaque process clear so that coverage is priced correctly, and, if there is a claim, there are no unpleasant surprises because customers know what they’re buying up-front.

From Customer Churn to Customer Delight

For customers, an underwriting solution that automates key processes makes getting quotes fast and easy, and it ensures that pricing is completely transparent, so they understand what they’re paying for prior to filing a claim. Using automation in this underwriting process makes it simple to document customer possessions, which provides peace of mind. Using this automated underwriting process, customers can follow step-by-step instructions from a conversational AI assistant, using a program that is intuitive and requires no training.

See also: How Underwriting Is Being Transformed  

Underwriting that leverages automation makes it easy for customers to work with carriers to price their premiums correctly, identifying items under warranty and making suggestions to improve safety. In the event of a claim, having full documentation of all customer possessions streamlines the claims process. Perhaps most importantly, an underwriting solution that automates key processes allows the agent to focus on customer relationships — enabling agents to be more “heads up” rather than “heads down” over reports and paperwork.

The underwriting technology described here isn’t a vision of the future; it exists now, and carriers who are looking for a competitive edge are evaluating AI-powered technologies like this today, so they can not only improve processes but transform them. Sometimes, an opportunity comes along to skip interim steps and embrace a better future. Insurers today have such an opportunity; they can skip digitization and move toward digital transformation by adopting automated, AI-driven processes, and the choice couldn’t be more clear.

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About the Author

Laurie Kuhn is COO and cofounder of Flyreel, the most advanced AI-assisted underwriting solution for commercial and residential properties. She brings 20-plus years of experience in digital innovation to Flyreel, where she leads the company’s product, marketing and operations strategies.

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