When I moved my older daughter to Washington, DC, a year ago, we piled all her worldly possessions into a 16-foot truck and made the 2,982-mile trip from northern California in 72 hours. While we weren't exactly a Formula 1 pit crew when we refueled, we could fill up the tank and get on the road again for the next 400 miles in 10 minutes. 

Now imagine how this might look in 25 years in an all-electric future if she returns the favor and moves me into a retirement home. It could take an hour or more to recharge a battery big enough to move a truck hundreds of miles. My daughter is great company, and all, but we were already getting plenty of together time and didn't need to be sitting across from each other at a recharging station. 

And trucks don't really lend themselves to electrification, anyway. Those using internal combustion engines (ICEs) are already plenty heavy -- even without my daughter's 20 boxes of books -- and the huge batteries needed to move all that weight make EVs far heavier. That means less range, which means more frequent recharging, which means even more time on a plastic chair at the recharging station, drinking bad coffee. 

While many people have assumed that EVs would steadily take market share, more and more rapidly, until ICE vehicles disappeared, that thinking was based on the idea that EVs could be a one-for-one replacement for ICEs. But mulling the before and after versions of a cross-country moving trip made me realize that the path to the future may not be as straightforward as I thought, and recent trends support that new thinking -- sales of hybrids are surging, while the growth for EVs is slowing.

The realization comes as two electric scooter companies have filed for bankruptcy and in the wake of the problems at Cruise that have set back the move toward autonomous vehicles, so this seems like a good time to take a broad look at the future of transportation. Auto insurers, among many others, need to get the transition to the electric future right. 

To be clear, I still think the future of vehicles is electric, and I hope we get there as quickly as feasible for the sake of the climate. The next car I buy will be electric. But it's worth taking a look at a very smart piece in Business Insider that carries the headline, "What Happened to EVs? The sudden slowdown in electric car sales is a symptom of a much uglier problem." 

The article says: "Industry analysts have pointed to several reasons for the slowdown, including insufficient charging infrastructure and a lack of affordable EV options. But they're a symptom of the larger problem: America's EV plan was flawed from the start.... 'The entire myth at the heart of this whole transition is that the battery car seamlessly fits right into the gas car's position,' Edward Niedermeyer, the author of 'Ludicrous: The Unvarnished Story of Tesla Motors,' told me. 'It doesn't, and that's the problem.'"

The piece continues: "When automakers pivoted to EVs, they focused on the kinds of cars that were already popular — which meant a flood of big electrified SUVs and trucks. But massive-bodied EVs don't make much sense.... While bigger batteries allow drivers to travel farther between charges, they also make the cars heavier, more dangerous, more expensive and worse for the planet."

The average U.S. driver traveled only some 40 miles a day in 2023, the article says, and 93% of trips were under 30 miles -- but car buyers still think about the days when they'll drive more than 40 miles, perhaps much more, and about those longer trips. Their "range anxiety" makes them disinclined to switch fully to an EV. The article says Norway has been touted as the model for moving to EVs, yet more than 20 years after it began offering incentives for buying EVs, only 20% of the cars on its roads are electric.

The author concludes: "America's EV plan needs to lean into what these cars do well: short daily trips that can be taken in small, affordable cars. People who frequently take long trips can take advantage of hybrid cars. And better public transit and faster intercity trains could make a huge difference for people and the planet. While it may be a sexy and industry-friendly approach to the climate crisis, an EV-first plan isn't the most effective way to tackle the enormous challenge we face."

Scooters have also taken a hit recently -- Superpedestrian announced it was going out of business; Hellbiz was delisted from Nasdaq because its share price has settled below $1; and, biggest of all, Bird filed for bankruptcy. While scooters aren't yet much of a factor for insurers, it's worth thinking about them as part of the changing mix of transportation, especially within cities. 

I've long thought scooters have a neither-fish-nor-fowl problem. They're too fast for sidewalks, where they endanger both the riders (who seldom wear helmets) and unsuspecting pedestrians. Yet they're too slow for streets and, of course, don't wrap riders in the thousands of pounds of protective metal that cars provide. Scooters can work in some environments but not in enough, at least soon enough, to justify scooter companies' flooding of markets in recent years. 

An article in Fast Company makes the case that cities need to adapt by marking off special "protected" lanes for scooters, because they provide a useful form of transportation for many and reduce the number of car trips. That makes sense in the abstract but is hardly a solution everywhere. Many cities, especially older ones, have streets too narrow for special lanes to be carved out. And you can "protect" lanes all you want, but car drivers and passengers have well-engrained habits. Back in the 1980s, New York City made a big todo about establishing a bike lane on Sixth Avenue, so I decided to ride my bike from my apartment in Greenwich Village up to Central Park and almost died three times in three miles as cars pulled into my lane right in front of me or as a passenger opened the door to a cab just ahead of me. I never used the bike lane again.

An article in TechCrunch also faults cities, though for a different reason. Perhaps feeling burned by Uber and Lyft, which had run roughshod over regulators in the early days of ride-sharing, cities quickly decided to maintain tight control over scooter companies, including by offering only short-term operating permits. Cities also charged scooter companies for those permits, rather than seeing them as offering an amenity to citizens. The article does blame the companies for accepting the terms that cities set, even though the companies could see that there was no hope of being profitable under those conditions. An article in Wired details loads of mismanagement at Bird, once valued at $2.5 billion.

Where do the confusing indicators about EVs and the disappearance of some scooter companies leave us? I'd say we're left in the middle of a transition that will be messy at least for several years.

EVs will still march forward, but maybe in fits and starts, depending on government incentives for purchases, on the buildout of charging infrastructure to allay range anxiety, on changes in consumer perceptions and so on.

I can imagine some sort of new model emerging, where maybe I use my (soon-to-be) EV for driving around town and for short trips but someone patches together for me some combination of public transportation and car rental if a trip would require more than one charging stop en route. 

In any case, the effect of the EV trend on auto insurers may not happen as fast as some of the pledges about ending ICE sales by 2035 would suggest. 

The problems with scooters suggest that cities are going to have to adapt their basic design if they want to be more people-friendly and less focused on being car-friendly. That process, too, will happen in fits and starts, subject to the push and pull of local politics and lobbying by companies and citizens. 

My hope is that autonomous cars will recover from their recent black eye and improve to the point that cities can do away with on-street parking -- who needs parking if cars just keep moving? Just think about how much room that would create in cities for scooters, bikes and anything else city designers could want. 

That won't happen soon -- but something will. An awful lot of pieces of our transportation model are in flux at the moment.

Cheers,

Paul 

KEY TAKEAWAYS:

--How do you get better at retaining customers? Through a consistent, personalized omnichannel experience. When all customer access systems align — the IVR, web portal, mobile experience and customer service representatives — the customer experience is fluid, agile and modern.

--An omnichannel experience is within reach, even for small and mid-sized carriers, including those with multiple systems or legacy systems. Flexible SaaS options allow even the smallest insurers to give their customers a sleek, modern, digital experience without expensive systems overhauls. 

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Insurance carriers, like other businesses, prioritize growth for several reasons. As insurance carriers grow, they can spread their fixed costs (such as administrative expenses or technology investments) over a more extensive customer base. This can lead to cost savings and improved operational efficiency, resulting in higher profits or more competitive customer pricing. 

Insurance relies on the principle of spreading risk. With a more extensive customer base and a more diversified portfolio of policies, insurance carriers can better manage their exposure to risk. This reduces the impact of large claims or catastrophic events on their financial stability. Growth can lead to increased revenue and, ideally, greater profitability. 

Growth is the key to survival in today’s insurance landscape, but it requires strategy and planning, especially as competition gets tighter. Mid-sized insurance carriers seeking to hit their growth goals are squeezed on all sides. They’re facing pressure from large incumbent carriers with deep pockets, as well as agile, digital-first startups. 

Most insurers’ growth strategies revolve around customer acquisition and adding new risk products. These are wise initiatives, but they won’t be enough. Here are 10 reasons why customer retention must be part of a carrier’s growth strategy.

1. Stable Revenue: Retained customers provide a steady stream of premium payments, ensuring a stable and predictable source of revenue for insurance companies.
2. Cost-Effectiveness: Acquiring customers can be significantly more expensive than retaining existing ones. The insurance industry has one of the highest customer acquisition cost (CAC) ratios. It costs an average of seven to nine times more for an insurance agency to acquire a new customer than to retain one. Building and maintaining customer relationships can save on marketing and acquisition costs.
3. Long-Term Profitability: Loyal customers tend to stay with their insurance provider for the long term, leading to increased profitability as they continue to pay premiums.
4. Cross-Selling Opportunities: Satisfied and loyal customers are more likely to purchase additional insurance products from the same provider, leading to increased cross-selling and upselling opportunities.
5. Referral Business: Happy customers are more likely to refer friends and family to their insurance provider, creating a valuable source of new business.
6. Reduced Policy Churn: Customer retention efforts can reduce churn, which is the rate at which customers leave an insurance provider. Lower churn rates mean less business lost to competitors.
7. Customer Data and Insights: Customer data is a gold mine for carriers in today's data-driven insurance industry. Retained customers provide valuable data and insights that can be used for personalized marketing, product development and risk assessment. Quality, reliable data from a long-term customer is more valuable to you than a newly acquired customer.
8. Captive Audience: If customers are happy with your products and services, they’re less likely to shop around to other carriers when a new insurance need pops up.
9. Robust Claims Experience: Satisfied, loyal customers are more likely to have a positive claims experience.
10. Regulatory and Compliance Benefits: In some cases, regulatory requirements may be easier to fulfill with a stable customer base. Retained customers also tend to have lower cancellation rates, which can improve compliance records.

Customer retention is essential for insurance carriers to maintain profitability, reduce costs and thrive in a competitive industry. It's not just about retaining customers for the sake of it but also providing superior customer service, value and personalized solutions that build long-lasting relationships. 

Omnichannel Engagement Leads to Retention

Now that we’ve established the value of customer retention, the question is, how? How can carriers invest more in retaining the great customers they already have? 

Creating a consistent, personalized omnichannel customer experience leads to higher customer satisfaction, increased loyalty and improved business performance. In other words, growth.

We have some strong evidence to back this up. In a recent study my company commissioned with independent data scientists, we analyzed the behavioral data of 250,000 property and casualty insureds over two years and saw that a consistent omnichannel experience can boost policy retention by 21%. Having a single channel, such as a customer portal, also saw a lift to retention of 12%. Data shows that an integrated, multichannel experience provided the most significant boost to customer loyalty.

One of the study's most significant findings is that using multiple self-service channels significantly increases customer retention. For example, customers using an insurance portal are 12% less likely to cancel their policies compared with those who do not engage with a portal. Those who use multiple channels, such as phone, email and SMS, are 21% less likely to cancel their policies, and those who repeatedly use multiple channels show a 25% higher retention rate. Customers who use advanced features like policy document retrieval and ID card access exhibit even higher retention rates. Repeated interaction with the portal solidifies customer trust and commitment. 

Building an omnichannel experience requires carriers to better understand their target audience, including their preferences, behaviors and needs. This will help you tailor your engagement and retention strategy to meet their expectations. For example, how often should you contact your customers? Using data about your customers can help inform you when and how often to send messages and on which channels. The time of day, day of the week and timing during the month are critical factors to consider when planning messages. Decisions all depend on who they are and what they need at any time in the relationship.

See also: Here’s Why Insurance Customer Engagement Needs an Extreme Makeover

Legacy Tech Can Be a Barrier 

Providing multiple, tailored channels for your customers is a great start, but more is needed. These channels must be relevant to how customers prefer to communicate with you. The channels must suit their specific needs. At the same time, your communications channels should natively work together to create a unified ecosystem of success for the customer. That means consistency in your data, messaging and behavior across each channel. 

For example, a saved payment method in the insured portal should be available when paying via SMS or IVR. Activity in any channel should reflect in any other channels in real time. Carriers will maintain the customer's trust when everything feels and acts consistently. 

Legacy insurance systems often struggle to provide a consistent omnichannel experience. Because these systems can be disconnected and create data silos, the result is a lag time between the insured’s digital updates and the CSR system update. 

For example, a customer who calls a carrier right after making a digital change online may need help being serviced immediately. If a CSR doesn't have the change in their system, this increases customer frustration and possibly causes them to shop for another insurer. It also costs the insurer more to make a second phone call to help the customer once its systems catch up. CSRs must have updated, synchronous systems to rely on when fielding customer calls to provide an outstanding customer experience, regardless of contact channel.

When all customer access systems align — the IVR, web portal, mobile experience and customer service representatives — the customer experience is fluid, agile and modern. Current, accurate data that is easily accessible by the customer changes everything. Customers can answer their questions, make payments and access policy information whenever possible. This self-service design gives control back to customers and saves time for insurers. 

See also: Low Insurance Premiums Aren't Enough

A Great Customer Experience is Within Reach

When executed well, an omnichannel experience means an insurer's different tools and systems are connected. It means that whether customers interact over the phone or in a portal or respond to a text message, they enjoy the same consistent experience. 

The good news is that the omnichannel experience is within reach, even for small and mid-sized carriers, including those with multiple systems or legacy systems. It used to be that the large incumbent carriers built their own omnichannel engagement solutions in-house, but that has changed dramatically as cloud-based customer engagement software has matured. Flexible SaaS options allow even the smallest insurers to give their customers a sleek, modern, digital experience without expensive systems overhauls. 

All of this adds up to a stronger relationship with your customers, who, in turn, will reward you with their loyalty and long-term business. Growth may be the name of the game, but customer retention is crucial to helping you meet those growth goals.

Fraud is a significant concern for group and employee benefits insurers. In Canada alone, workplace benefits fraud is costing insurers and employers hundreds of millions of dollars every year, according to the Canadian Life and Health Insurance Association.

Advances in technology are increasing the frequency of fraudulent activity in insurance. A study by Deloitte says remote work, increased digitalization and weakened controls are the top three reasons for the recent uptick.

While today's digital environment allows new fraudulent behaviors to evolve, it's also making identifying and stopping fraudulent activity easier than ever before.

1. Real-Time Monitoring With AI

Manual detection of group insurance fraud is next to impossible because of its high costs, and the sheer volume of claims is too high for any group insurer to handle.

As a result, McKinsey predicts that AI-driven technology will be a prevailing method for spotting fraud by 2030. This is because AI and predictive analytic systems can spot copious amounts of fraudulent activity in real time significantly better than humans.

AI can monitor customer interactions, track behavior and language and leverage machine learning algorithms to detect suspicious activity early and minimize potential losses.

Let's say a plan member tries to file a fraudulent health insurance claim through an AI chatbot or systems. However, the AI's algorithms analyze the user's claims history and find that they frequently submit an unusual amount of claims.

AI could detect this suspicious activity and other inconsistencies in real time, probe the customer for additional proof and alert the appropriate manager.

Fraud prevention in insurance is critical to maintaining customer trust in security practices. Integrating AI into security infrastructure is a great way to reduce the probability of such incidents, resulting in significant savings for providers.

See also: Data Breaches' Impact on Consumers

2. Machine Vision and OCR Image Assessments

Identity theft is the root of the group insurance industry’s fraud issues. Fraudsters who compromise a plan member's identity can use their information to make fraudulent claims. This harms the policyholder, the insurer and the providers.

Machine vision refers to the AI-powered analysis of images from sources such as smartphones or satellites. Insurers integrating machine vision-powered technology into their core claims systems or self-service portals can spot identity theft with greater proficiency.

For example, by making the user upload a live “selfie” and ID, the machine vision system can determine if the photo and ID provided are legitimate and ensure the person listed on the ID or group benefits card is the same person submitting a claim.

Insurers must also have accurate data for claims processing, as incorrect information and data can facilitate fraud. Optical character recognition (OCR)-enabled claims processing software can help improve claims processing data accuracy without human intervention.

For instance, plan members can use their phone to take a picture of the receipt from their dentist, eye doctor, etc., and send it to their insurer. Then, OCR systems can structure data from the image of the receipt, confirming if the transaction is legitimate and if the plan member is entitled to coverage.

3. Industry-Wide Data Sharing on Fraud

As organized fraud groups become more sophisticated, the insurance industry has been increasingly willing to share data and insights to stay ahead of fraudsters and develop more effective countermeasures.

Industry-wide data analysis can be facilitated through data-sharing platforms or industry associations that promote information exchange on fraud trends, techniques and prevention strategies.

For example, in 2022, the Canada Life and Health Association (CLHIA) launched an industrywide initiative to pool anonymized claims data and use advanced artificial intelligence tools to analyze and enhance the detection and investigation of employee benefits fraud. By identifying patterns across millions of records, the program improved the effectiveness of benefits fraud investigations across the industry.

Fraudsters often target organizations within the same industry. Therefore, analyzing industrywide data can help identify fraudulent activities that may go unnoticed within a single organization. 

For example, predictive modeling uses analytics, machine learning and large amounts of data to build digital models that gauge the likelihood of whether new applications and claims have the potential to be fraudulent. Insurers that train their predictive models with the plethora of shared data and patterns about fraudulent activity can scale and improve the accuracy of their models.

See also: How Technology Is Changing Fraud Detection

4. Blockchain Security

Blockchain's potential for securing transactions from fraudsters and providing trustworthy information has made it an effective and popular method for eliminating many vulnerabilities.

In fact, blockchain deployments can save banks and insurance companies $27 billion annually by 2030, with much of the saving opportunities stemming from fraud reduction.

Blockchain is a type of database that can create immutable and dependable records and validate transactions. It does this through distributed transactions that are shared among a decentralized network of computers. The records shared among these systems are encrypted and can't be erased.

For example, suppose a business buys a healthcare-focused employee benefits insurance package through a blockchain smart contract. In that case, the blockchain smart contract will create immutable data based on the client's records that can accept or refute any insurance claims made by the company.

So, suppose a policyholder makes a fraudulent claim or the carrier no longer agrees to provide coverage for a previously agreed-upon condition. In that case, a blockchain-based smart contract can dissolve and immediately pay the premium back to the plan member or client.

With blockchain, no record can be changed without changing all other records within the same block, meaning there's only a single version of the truth. As a result, fraudsters can't manipulate information to their advantage. This helps build trust between parties, facilitate transactions and maintain accurate claims information and data.

Protecting Tomorrow's Group Insurance Industry

The group benefits insurance industry will never fully eliminate fraud. However, using cutting-edge fraud-prevention technology and industry resources to fight fraud can help make headway against the operational goals of increased efficiency, reduced losses and cost savings for insurers and policyholders.

Fraudulent threats are constantly evolving – insurers and their partners need to use the latest fraud-prevention technologies to monitor new threats and work together to prevent the risks associated with group and employee benefits fraud.

The insurance industry is undergoing a transformation, driven by technological advancements that promise to enhance efficiency, security and transparency. At the forefront of this revolution is blockchain technology, a decentralized and secure system that has the potential to reshape the way insurance processes are conducted. In this article, we will delve into the impact of blockchain in the insurance sector, exploring its benefits, challenges and the emergence of future-ready insurers that are not only leveraging blockchain but also embracing mobility tech and trends.

Understanding Blockchain in Insurance

Blockchain, the distributed ledger technology that underlies cryptocurrencies like Bitcoin, has several features that make it particularly well-suited for the insurance industry. Its decentralized nature eliminates the need for intermediaries, reducing administrative costs and increasing efficiency. The immutability of blockchain ensures that once data is recorded, it cannot be altered, providing a transparent and tamper-proof record of transactions.

1. Enhanced Security and Fraud Prevention: Blockchain's cryptographic features ensure secure data transmission and storage. In the insurance industry, this translates to a significant reduction in fraud. Through the use of  smart contracts, which automatically execute and enforce the terms of an agreement, the risk of fraudulent claims is minimized. Insurers can verify the authenticity of claims in real time, streamlining the claims process and reducing the overall cost of fraud detection.

2. Improved Transparency and Trust: Transparency is a cornerstone of blockchain technology. In insurance, this translates to a transparent and accessible record of policy details, premiums and claims. This increased transparency fosters trust among stakeholders, including policyholders, insurers and regulators. By providing a shared view of transactions, blockchain reduces disputes and enhances the credibility of the insurance industry.

3. Streamlined and Efficient Processes: Traditional insurance processes are often marred by cumbersome paperwork, delays and manual errors. Blockchain's decentralized ledger simplifies and automates these processes. Smart contracts can automate underwriting, policy issuance and claims processing, reducing the time and resources required for these tasks. This streamlined approach not only enhances efficiency but also improves the customer experience.

See also: Blockchain's Future in Surety Industry

Challenges and Considerations

While the potential benefits of blockchain in insurance are substantial, the technology is not without its challenges. Integration with existing systems, regulatory concerns and the need for industry-wide collaboration are among the hurdles that insurers must clear. However, as the technology matures and regulatory frameworks evolve, these challenges are increasingly being addressed.

Future-Ready Insurers – Embracing Mobility Tech and Trends

In addition to blockchain, future-ready insurers are embracing mobility tech and trends to stay ahead in a rapidly evolving landscape. The integration of mobile technology, data analytics and emerging trends such as IoT (Internet of Things) is reshaping the way insurance is underwritten, sold and serviced.

1. Mobile Apps and Customer Engagement: Mobile apps have become a powerful tool for insurers to engage with their customers. Insurers are developing user-friendly apps that enable policyholders to manage their policies, submit claims and access important information seamlessly. The convenience offered by mobile apps enhances customer satisfaction and loyalty.

2. Data Analytics for Risk Assessment: The abundance of data in today's digital age is a goldmine for insurers. Advanced data analytics tools allow insurers to analyze vast amounts of data to assess risks more accurately. Machine learning algorithms can identify patterns and predict potential risks, enabling insurers to make informed underwriting decisions and set more precise premiums.

3. IoT Integration: The proliferation of IoT devices is transforming risk assessment and claims processing. Insurers can leverage data from connected devices such as smart home sensors, wearable devices and telematics in vehicles to gather real-time information. This not only enables personalized pricing based on individual behavior but also facilitates risk mitigation.

4. Artificial Intelligence (AI) in Underwriting and Claims Processing: AI is playing a pivotal role in automating underwriting and claims processing. Machine learning algorithms can analyze vast datasets to assess risks, while natural language processing facilitates faster and more accurate claims adjudication. This not only improves efficiency but also reduces the likelihood of errors.

See also: How Blockchain Enhances Reliability, Speed

Conclusion

Blockchain technology is a game-changer for the insurance industry, offering enhanced security, transparency and efficiency. As insurers navigate the challenges of integration, those that successfully implement blockchain stand to gain a competitive edge.

Moreover, the synergy between blockchain and mobility tech is propelling insurers into a future where customer-centricity, data-driven insights and automation are paramount. The future-ready insurer is not merely an adopter of technology but an innovator, embracing the transformative power of blockchain and mobility tech to redefine the insurance landscape.

As we move forward, the collaboration among insurtech, regulators and industry stakeholders will be crucial in shaping a future where insurance is not just a protective measure but a seamless and intelligent part of our daily lives.

Have you ever gotten frustrated filling out a paper form? It’s a slow, painful and error-prone process. Despite the ubiquity of digital interactions today, many forms-based interactions remain antiquated. 

Think back to the last time you were at your doctor’s office or local bank: To obtain service, you likely had to fill out a multi-page paper form. This problem is exacerbated in certain industries, such as insurance, where a claimant may be required to fill out numerous claim forms. 

Advances in technology stacks across artificial intelligence and process automation are changing things for the better, and it's about time. In this era of digital transformation, a streamlined and convenient forms-driven communication experience isn’t just a “nice to have” — it’s a must.

Complex industries need automation

The process of filling out forms is often overwhelming and redundant. Take disability insurance claims. For every form a customer fills out, they are repeatedly asked for the same basic information: name, address, date of birth, date of injury and more. This redundancy is commonplace across many forms, making the process cumbersome for the injured policyholder from the start.

In almost every case, insurance companies have this information, yet policyholders are required to provide it repeatedly. This leads to dissatisfaction at best and abandonment at worst. When policyholders abandon forms, insurance company employees must manually follow up with them through emails, phone calls or duplicate paper mailings — leading to increased costs for the insurer.

Even when the forms are completed, there’s still the issue of opaqueness. Policyholders (not to mention agents) have little insight into the process. There’s usually the lingering feeling that something fell through the cracks, or that some error will send the policyholder back to square one to start the process anew. Stakeholders don’t often have insights as to the status of a claim after requisite documents have been distributed or completed. 

Streamlining and digitalizing this traditionally paperwork-intensive process is crucial. Doing so reduces the burden for both policyholders and insurance companies. The industry is rife with automation opportunities that support a more efficient and transparent communication channel between policyholders and insurers, ultimately fostering trust and satisfaction. 

See also: Why Are We Still Talking About Digital Transformation?

Obstacles create opportunities 

The disability claims space offers another example of the industry’s complexity. There are claims forms that need to be signed by multiple stakeholders, such as lawyers, doctors and injured claimants. If just one of these individuals overlooks a necessary signature, the entire process stalls. 

Another potential landmine is filling out wage statement forms, which are critical in compensation claims. Traditional wage forms make it difficult for policyholders to know if they’re filling them out correctly. For example, a form might ask how much an injured claimant earns on a daily or weekly basis, but many claimants aren’t used to thinking about their wages at these frequencies. They are often more familiar with their bi-weekly or annual salary and need to calculate their wages to align to the form’s formats.

Barriers like these led to the development of our forms-driven communications solution. It auto-populates information, making it easier for the policyholder to complete forms. It also offers a multitude of pay frequency options and calculates the correct wages for the time period of the injury.

This solution embodies best customer experience practices because it’s more conversational and less cumbersome. We term these automated interactions as “conversational entries” because these digital experiences simulate the efficiency of an in-person interaction. If a recipient answers “yes” to a question, the workflow could then ask for additional information. Answering “no” to a question would prompt the workflow to move on, which is what we would expect when conversing with a human.

Similarly, in dynamic forms platforms, information already known about the customer is not redundantly solicited, thus avoiding frustration on the customer side. Digital forms are built to dynamically react to the individual customer’s payload, presenting a user interface that only asks for net-new information. This approach results in fewer errors, less redundancy, improved accuracy and faster processing speeds. 

See also: Digital Self-Service Is Transforming Insurance

A better experience for insurers

Claimants are not the only stakeholders who benefit from automation opportunities — insurance companies can also reap efficiencies. Insurers have to maintain libraries of documents, making sure every change to a form is stored and reflected as a new version. As a result, the library of forms an insurance company maintains is well into the thousands. Insurance employees have the arduous task of determining which are pertinent to a particular claimant or stakeholder. 

Translating forms can also create inefficiencies. In many cases, documents filled out by claimants are manually translated to state-specific forms per local regulation. Because disability coverage varies by state, it’s critical that claims agents present policyholders with the appropriate state-specific form. Existing composition processes often require an agent to manually select the state from a library of state-specific forms. 

Automated form processing eliminates the issues of translation and sprawling forms libraries entirely. With “document rationalization,” insurers can review their existing documents and consolidate hundreds of state-specific forms variants into a single document driven by business rules. These business rules can use an automated data payload to determine the appropriate state-specific form to distribute, saving the claims agent time and freeing them for more complex tasks. Similarly, modernized data intake processes can embed customer-provided data onto their state-specific form equivalents, eliminating the need for them to get involved.

Additionally, stakeholder follow-ups can be completed seamlessly through business-driven logic, which also enhances the user experience by reducing the number of manual steps in the process. For example, automated follow-up email reminders can be sent to an insured individual if they have not responded within a certain number of days. Decreasing reliance on manual data processes can lead to significant cost savings in terms of personnel and administrative overhead. 

See also: Digital Underwriting Now a No-Brainer

Harnessing the power of automation

The benefits of forms-driven communications go well beyond mere convenience. They indicate a pivotal shift toward a more customer-centric and efficient industry that recognizes customers’ need for personalized experiences. Automation opportunities in print and digital composition suites provide a level of customization not possible with paper-centric systems. This gives customers the confidence of knowing that their claim is being processed accurately. 

The days of insurance customers wading through mountains of redundant paperwork, feeling lost in a sea of irrelevant forms and experiencing uncertainty about the status of their claims are becoming a thing of the past. Thanks to cutting-edge technology and automation, insurers are on the brink of a transformative era of efficiency and improved customer experience. As artificial intelligence continues to permeate through the industry, we will continue to see significant enhancements with forms-based experiences. 

This transformation is about more than insurance forms. Ultimately, it’s about creating connections and building a communications ecosystem that leads to a positive customer, user and brand experience. 

By applying artificial intelligence (AI) to analyze client camera footage, we are seeing the beginning of a revolution in workplace safety.

The Traditional Approach and Its Limitations

Traditionally, workers' compensation has been a straightforward transaction: Employers buy insurance, and in return, injured employees receive compensation without having to sue their employer. Loss control measures, such as safety training and ergonomic assessments, are helpful but often fail to address all potential risks, primarily because they rely on human observation, which has limitations due to time and inability to objectively measure improvement.

AI-Powered Risk Detection: A Paradigm Shift

Applying AI, specifically computer vision, to camera footage marks a significant shift. AI algorithms, equipped with computer vision capabilities, can analyze video feeds to detect risky behaviors, such as forklift safety hazards or too-frequent overhead lifts. This technology goes beyond passive surveillance, actively identifying patterns and anomalies that might precede workers’ comp claims. Unlike traditional methods, AI-driven analysis is exhaustive and unbiased and can examine hundreds of hours of video instead of relying on a short visit by a loss control professional.

Superiority Over Traditional Loss Control

Using AI for risk assessment is superior to only using traditional loss control measures for multiple reasons. AI provides a constant and consistent level of vigilance that is humanly impossible to achieve. For instance, AI can monitor ergonomic practices across an entire factory floor simultaneously, flagging risky postures or movements that could lead to musculoskeletal issues. This level of detailed, continuous monitoring can pinpoint risks that would typically go unnoticed until an injury occurs.

See also: How Wearables Can Improve Worker Safety

The Role of Data Science: Making Sense of the Data

Data science translates the vast amounts of data collected by AI into actionable insights. Techniques like heat mapping can visually represent areas of high-risk activities, helping safety managers understand the frequency and severity of potentially dangerous behaviors. By converting raw data into a comprehensible format, data science enables organizations to focus their preventive measures more effectively.

Empowering Safety and Risk Managers

The insights garnered from AI analysis equip safety managers with a more profound understanding of workplace hazards. This understanding is grounded in tangible data, reflecting actual employee behaviors and environmental conditions. Managers can use this information to devise targeted strategies to mitigate identified risks, such as redesigning workstations, adjusting workflows or providing specific training.

Impact on Premiums

With a comprehensive report on risks, employers can take steps to lower these risks. Adjustments in the workplace based on AI-driven data not only enhance employee safety but significantly reduce the likelihood of workers' comp claims. As the frequency and severity of claims decrease, insurance providers may reassess the company's risk profile, leading to lower insurance premiums. This direct correlation between improved safety measures and reduced insurance costs underscores the financial benefits of leveraging AI in conjunction with cameras.

See also: How to Stop Claims Leakage

Conclusion

The confluence of AI and security cameras at CompScience represents a transformative development in the realm of workers' compensation and workplace safety. By enabling an aggressive, data-driven approach to risk management, this technology is helping businesses to significantly reduce the frequency and severity of workplace injuries. The resulting decline in workers' comp claims not only enhances employee well-being but also provides substantial financial benefits to employers in the form of lower insurance premiums.

As AI technology continues to evolve, its role in shaping a safer, more efficient workplace becomes increasingly important, heralding a new era in occupational health and safety management.

Every once in a while, a football team plays a game so bad that the coaches declare they aren't even going to do film review with the players. The coaches are just going to bury the film in a closet. I have that sort of feeling about 2023 for the P&C industry.

While the U.S. economy, in particular, was much stronger than expected in 2023, and while many individual companies made progress on innovation initiatives, the P&C industry as a whole took a beating.

2022 was bad enough: It produced a net combined ratio of 102.7% in the U.S., generating a net underwriting loss of $26.9 billion, the worst since 2011. And 2023 was worse: Triple-I and Milliman estimate that the net combined ratio was 103.8%.

Deloitte says in its year-end report that firms simply haven't been able to raise premiums fast enough to keep up with rising loss costs. It says the cost of construction materials for single-family homes soared 34% since the start of the pandemic, while the price of contractor services jumped 27%. In April, Deloitte says, motor vehicle repair costs were 20% higher than a year earlier.

Because of heavy losses in natural catastrophes in 2022, reinsurance rates for P&C insurers soared 30% in 2023, on top of a 15% surge in 2022. And the hits kept on coming: Estimates are that natcat claims in 2023 again exceeded $100 billion just in the U.S., even though the Atlantic hurricane season was relatively benign. The main culprit: severe convective storms, which have been steadily growing as a problem, apparently linked to the warming climate.

So enough with 2023. Let's treat it like the debacle my Steelers had against the Cardinals in a game I attended a month ago and just move on. 

What does 2024 have in store for us?

Let's look first at the external factors.

I don't see any reason to think the trend in natcat claims reversing, especially because we've entered an El Nino weather pattern. That tends to mean warmer temperatures, which increase the risk of wildfires and severe storms.

We'll still face loads of geopolitical risks -- the continuing war in Ukraine, the mess in the Middle East, U.S.-China tensions, with the ever-present possibility of a Chinese invasion of Taiwan. Any one of those could trigger at any time, with all sorts of economic implications. And who knows what could happen during the U.S. presidential campaign and election this year? I sure don't.

Inflation seems to have abated, yet interest rates, while they will likely decline, will still be higher than in recent years. Insurers will feel less pressure on repair costs while reaping the benefits of high interest rates in their investment portfolios.

The broader economy is always a question. Presidents always do everything they can to goose the economy in reelection years, but the U.S. economy's growth will certainly slow from its recent torrid pace. The only question is, by how much?

In any case, because the P&C industry's growth tends to lag the economy as a whole, the strong 2023 for the U.S. economy should mean a good year for P&C premiums.

Now, the issues that are internal to companies and the industry.

I suspect that auto rates will catch up with costs late this year, or at least get a lot closer than they are now. But there seems to be much more pushback from regulators about homeowners rates, so I think that mess will continue for some time, at least in the Gulf Coast states and in California, where conditions are so bad that insurers are pulling out of the markets. The Deloitte report says the combined ratio for homeowners insurance in the U.S. in 2023 was likely 105%, making that the sixth year in the past seven with a combined ratio north of 100%, so there's lots of work to be done. The recent insurance reforms in Florida are drawing good initial reviews, but that system is so broken that recovery will take years. 

I'd love to declare 2024 the Year of Operational Efficiency, but I think that'd be going too far. Instead, I think insurers will continue the progress they've been making, especially in underwriting and claims -- there's nothing like combined ratios of more than 100% to get firms focused on cutting costs. The pace won't be as fast as I'd like, but there will be real progress at many companies. Generative AI will play a big role.

I'll even go out on a limb and say I think a new wave of insurtech will take shape. The first wave seems to have played out, with most of the disappointingly few winners acquired and some of the bigger ideas discredited -- such as peer-to-peer insurance and the bold ambitions of the full-stack start-ups. Investment in insurtech was less than $1 billion in the third quarter, the first time in years a quarterly figure had been that low. But there's still so much white space for innovators to go after -- especially if you hold out any hope for a Year of Operational Efficiency. And entrepreneurs have learned some valuable lessons. This time around, you'll see more focus on business discipline and profits and less on growth at all costs. (I'll write much more on the new wave of insurtechs in coming weeks.)

You'll also see more companies -- both start-ups and incumbents -- lean into what we at The Institutes (where ITL is an affiliate) are calling "Predict & Prevent." I've been pleased to see how many leaders in the industry are talking about how insurers can use all their data and expertise to prevent claims from ever happening, rather than focusing on the traditional "repair and replace" model, where insurers come in after a loss and help clients recover.

Here's hoping we see a lot more of that sort of innovative thinking in 2024 and don't experience anything close to what happened in whatever that year is I'm trying to forget.

Happy New Year!

Paul

We cannot imagine a riskier undertaking than predicting the future given the totally unforeseeable events of recent years, as well as the current state of the insurance industry and the world in general. On the other hand, there are some basic principles that help guide us through our annual predictions. In addition, we have hedged by widening our timeframe to not just 2024 but also to the near future.

Change Becomes a Constant

The one thing we can count on is that very few of yesterday’s approaches will be successful in tomorrow’s world. The only constant now is change. It has become non-negotiable. Technology, especially AI, will be a major driver.

Insurers Breaks Out of Their Bubble

Insurers cannot continue to operate in a bubble. Other segments of financial services and other industries have already realized that diversification, partnerships and bold innovation are critical to success – and perhaps even survival. This is especially evident in bottom line under-performance of P&C insurers.

Technology Moves Beyond Enabler

Technology is much more than just an enabler. It is quickly becoming the lifeblood of all commercial undertakings. Those who see it as only an optional tool will be left behind. Use cases will expand beyond the basics to meaningful and measurable business outcomes.

Work and Workplace Shifts

Work, employment and the workplace as we have known them have been forever changed and will continue to change as the workforce ages and businesses continue to shed staff, enabled by technology and more efficient business models while attempting to lure, cajole or force return-to-office. There are significant opportunities for innovators who create business models that can leverage these realities.

See also: 10 Trends Shaping the Future of Insurance in 2024

Consolidation Marches On

Consolidation among competitors and strategic partners will continue apace, fueled by the growth of private equity and growing capital supply on top of already-record stockpiles of “dry powder” (investment capital). Recent slowdowns are a temporary reaction to overheated start-up business valuations and rising interest rates, neither of which will persist. Small independent businesses will find it increasingly difficult to earn a profit and compete with consolidated behemoths.

Transportation Evolves and Converges

The automotive, and transportation industries overall, have already begun their inevitable transformation as major industry segments converge on some future state that is yet to be clearly defined. Whether autonomous vehicles will become reality at some future date is almost irrelevant for now. What is clear is that the key participants in this converged landscape will be car makers, technology providers, aftermarket suppliers and service providers and – if they act quickly enough – insurers. The economic and safety benefits of advanced safety and driver assistance technologies will not fully offset the impact of increasing distracted and reckless driving behavior. 

Connected Everything and Everybody

Connected devices and the IoT – including cars, smartphones, wearables and sensors – will continue to grow in both number and functionality. This will spawn services of many kinds, along with significant revenue opportunities, for those who own or control the connections. Forward-thinking auto makers and auto insurers will have no choice but to collaborate on telematics-enabled solutions and offer services related to safe driving, emergency response, accident management and crash detection. We could conceivably see some combination between auto makers and insurers. Consumers will increasingly resign themselves to sharing defined personal information in exchange for perceived savings and other personal safety benefits. 

Climate Change Accelerates ‘Predict and Prevent’     

Climate change will continue to attract more headlines and global conferences than meaningful solutions, but insurers cannot afford to ignore the extreme implications to their businesses. Simply withdrawing from riskier markets and continuously increasing premiums is not sustainable. And adaptation may well overtake mitigation as a pragmatic strategy to cope with the effects of climate change rather than the cause.  

Emerging technologies that can accurately predict extreme weather events further into the future and down to rooftop level accuracy will enable insurers to better price and reduce risk while also providing valuable protection to their customers. Insurers will shift from a "repair and replace" to a "predict and prevent" mindset across the enterprise, including product, process, marketing, distribution, underwriting and claims.

See also: Opportunity Now and in 2024

Auto Insurers Transform Products and Processes 

Auto insurers face an unprecedented number of daunting challenges. Growing vehicle complexity and inflation in the aftermarket supply chain have driven combined ratios to record levels while consumers are reacting to round after round of premium increases by seeking lower-cost coverage and, in some cases, dropping coverages. Direct writers are fiercely competing on price for each other’s customers, and agency writers are seeking more effective and efficient distribution methods and models. Customer satisfaction – and ultimately loyalty – continues to erode as technology-enabled solutions are imperfect and displace comforting human interaction. Carriers that can transform their products and processes to overcome these challenges have an enormous market opportunity. 

Further consolidation involving the largest auto insurers is inevitable, in a market where each 1% U.S. market share is worth almost $3 billion in annual premium for private passenger auto.  Progressive will take market share and come much closer to overtaking State Farm as the #1 auto writer, and the top 10 rankings will be further re-ordered through acquisition.

Wild Cards in 2024

Any one of these events could alter our future in material ways:

• Global wars; how widely will they spread?
• Presidential election; a referendum on American democracy?
• Will AI eat software?
• U.S.-China relations; will economic growth objectives supersede geopolitical ambition?
• Crime – both cyber and physical; how will it change public policy and consumer behavior?

In the new future, people will still make the difference between highly successful companies and others, but these people will have to be as conversant and comfortable with technology as they are with other people.

Board members and company executives can be held liable for an increasing number of scenarios. Inadequate responses to economic pressures, geopolitical issues, implementing innovative technologies such as GenAI, or environmental, social and governance (ESG) challenges are among the main factors driving the possibility that a company and its directors and officers (D&Os) may be sued in 2024, according to Allianz Commercial’s latest D&O insurance report.

Gloomy outlook prevails

Since the world eased out of lockdown from the COVID-19 pandemic, a new normal has not made daily challenges for companies any easier. Economic growth across the globe remains disappointing. Business insolvencies are expected to rise by more than 10% in 2024, according to Allianz analysis. Inflationary pressures remain, and refinancing of existing debt after years of low interest rates is a new test for many. D&Os are seeing fresh pressure on cash generation, and decisions around how companies finance capital expenditure and manage their debt profiles are under more scrutiny from stakeholders, the report notes. 

In addition, businesses and their supply chains face considerable geopolitical risks with war in Ukraine, conflict in the Middle East and tensions around the world. Political risk in 2023 was at a five-year high, with some 100 countries considered at high or extreme risk of civil unrest, according to analyst Verisk Maplecroft, meaning there is greater pressure and scrutiny on directors to ensure their company is adequately prepared to withstand the impact of business interruption in higher-risk territories, in addition to ensuring the safety of employees.

See also: Biggest Business Trends for 2024

Everyone is talking about GenAI

GenAI (generative artificial intelligence) describes algorithms that are used to create complex content, mimicking human activity. Discussion around its use has been building as the expansion in its capabilities is now affecting how corporations think about their business processes. A third of organizations are using it regularly in at least one business function, according to a McKinsey global survey.

Litigation recently filed against AI companies has already highlighted privacy risks and copyright law violations. These cases, as well as the challenges noted above, have the potential to bring securities claims, intellectual property claims, breach of fiduciary duty claims, misrepresentation claims and shareholder and derivative lawsuits.

ESG claims from both sides

Regulatory action or litigation risks due to ESG-related issues are another major concern for boards, driven by increasing reporting and disclosure requirements around such topics, which could trigger claims in case of an inadequate response or non-compliance. The number of countries introducing ESG-reporting mandates has grown considerably in recent years, exposing directors to costs to responding to investigations, enforcement actions and potential fines and penalties for suspected non-disclosure or misrepresentation. Such requirements also expose directors to claims by private litigants, not only for alleged misrepresentation but also due to dissatisfaction with what the required disclosures reveal about a company’s commitments to ESG issues. Recent examples of claims have included allegations of failure to manage climate risk and alleged breach of duties by investing in underperforming funds that pursued ESG strategies.

See also: The ABCs of Agency Planning for 2024

Fallout from the U.S. banking crisis

The report also looks at the fallout from the March 2023 banking crisis in the U.S. Poor practices and rising interest rates resulted in several banks being dissolved or taken over. Securities fraud claims followed. An interesting aspect of this crisis was the role of social media. The depositors of one of the failed banks, Silicon Valley, were largely tech and healthcare startups, invested in by venture capitalists. When depositors started to withdraw funds, some venture capitalists advised their clients to start spreading their assets to other banks. This advice hit social media, leading to a run on the bank, which closed shortly thereafter. The power of social media to get large numbers of people to act in the same way at the same time means that bank runs can now happen too quickly to stop. The bank failure is also a reminder for D&Os how rapidly social media can exacerbate a crisis, the report notes.

The challenge for directors and officers for 2024 is to be prepared for headwinds, to not only be nimble but to have a strategy that can adapt when presented with an obstacle to the business. Diversity in the boardroom continues to allow companies to have varied approaches when presented with problems. To assist with the challenges ahead, the C-suite should push beyond the norm in their industry and allow themselves a better chance to be on the front foot for the future.

To read the full report, please visit: https://commercial.allianz.com/news-and-insights/reports/directors-and-officers-insurance-insights.html