Accelerating Into 2021

While the pandemic upended 2020, the insurance industry can now build on its digitization efforts to greatly accelerate innovation in 2021.

As we close out a year that brought "Blursday" into the lexicon and that feels like it's been going on for decades, I'll actually stick with the prediction I made at the start of the year: that innovation is poised to accelerate greatly in the insurance industry.

As I wrote in Six Things on Jan. 7, I thought the industry had been focusing on innovation for long enough that it had begun to see what worked and what didn't and "will begin to get better at… getting better." I had no idea, of course, that a global pandemic would compress five years or so of digitization plans into one. But I don't think this year's phenomenal progress marks the end of a round of innovation. Rather, I think we're at the beginning. The structural pieces that were in place at the start of the year, because of our collective experience, are still there, and this year's progress creates lots of opportunities as we come out the other side of the crisis that has gripped us all.

We certainly have hard days still ahead of us. Vaccines won't inoculate enough people until perhaps May or June to let life even begin to return to normal, and an awful lot of people will die between now and then. Although the economy could be poised to snap back, many economists warn that the stimulus plan just passed by the U.S. Congress will soon need to be reinforced to sustain small businesses (and their many employees) until next summer. In normal circumstances, Washington, DC, could be expected to respond to the nation's needs, but the capital seems to be getting more dysfunctional these days, not less.

Still, needles are going into arms with COVID vaccines a month or two sooner than I had thought possible and with far higher effectiveness. Lots of good things can happen once the virus is vanquished.

I may be a tad biased as I write this -- I somehow always feel lighter when we pass the winter solstice and I know the days are getting longer, even if I won't feel the difference for a good while -- but I'm confident that insurers will be creative once employees start returning to offices, perhaps in new physical and temporal arrangements, and as customers' lives and businesses start to return to normal.

Customers can continue to be steered to online resources for much of the drudgery, such as supplying basic information, while agents will be able to provide more of the high-touch counseling that they're trained for and enjoy. Likewise, now that clients have become more accustomed to digital connections, companies will be able to expand on what they've been doing with automated and semi-automated customer service systems, such as chatbots that rely on artificial intelligence. Such systems not only lower costs but eliminate often-boring work while providing better service -- what customer wants to call in and wait on hold, listening to bad music or sales pitches, when she can just text the insurer and get an immediate response about the status of a payment?

With customers now used to avoiding personal contact when processing claims, insurers have license to continue developing the processes for no-touch or low-touch claims, especially in auto insurance but increasingly in homeowners insurance, too. Such processes, like AI-based communications, cut costs while speeding processing and making customers happier. What's not to like? And what now stands in the way?

Work processes can go to the next level, too. Much of the hard work of digitization has been done over the past several months. It's not as though people working remotely can share paper any more. You don't just casually walk a file upstairs to the coworker who is the next stop in the process, not with that coworker somewhere across town. So just about everything has at least been scanned and exists in digital form. Companies can now build on that digitization to optimize a host of processes. No more phone tag required, or even emailing in most cases. In optimized processes, documentation can take care of itself, making queries of data bases or of people when information is needed and then automatically moving on to the next stage of the process. AI can help manage the workload, using all this newly available digital information to prioritize where adjusters or underwriters should be allocating their attention.

We're still months away from relief from the COVID scourge, but at least we can all start planning, with confidence, for what comes next. And I'm betting that 2021 will see at least as much innovation as 2020 did.

In the meantime, I wish all of you a joyous -- and safe -- holiday season.



P.S. We'll send a year-end wrap-up of the most-read articles of 2020 next week. Six Things will return in early January.

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

Record Insurtech Fundraising in Q3

Relatively well-known but not particularly well-established insurtechs across the board could be about to face their toughest moment to date.

No More Apples-to-Apples Comparisons

Yes, insurance is complex, but such comparisons oversimplify insurance, make it a commodity and serve neither the client nor the agency.

Long-Overdue Change in Commercial Lines

Commercial insurers need to leap forward with a big vision for the future of underwriting, then reverse-engineer a holistic strategy to deliver on it.

Diversity and Respect: Best Insurance Policy

"Insurers must not only diversify their agent base but create and market plans that reward those living in areas they once punished.”

5 Risk Management Mistakes to Avoid

Because of the dynamic nature of markets, risk management programs need to be regularly updated or they, themselves, become at risk.

5 Things to Keep in Mind for Benefits in ’21

Insurance providers looking for a reset that strengthens relationships with customers and HR departments have a real opportunity here.

Paul Carroll

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Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership.

He is also co-author of A Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and 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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