Paul Carroll

I was interested in the consumer survey you published in December and figured we'd start there. Can you tell me a bit about the highlights? What are the situations that agents and their customers are facing these days because consumers are shopping more, or just acting differently than they have in the past?

Kasey Connors

For the last 18 months to two years, we have been hearing from agents on how much they've had to educate their clients on a number of factors and topics. We wanted to conduct that survey to really understand, from a consumer standpoint, how they're looking at their policies.

We saw that a little bit over 30% of respondents said they were not aware that there were external economic factors affecting their premiums, like supply chain issues, social inflation, rising litigation, soaring reinsurance costs, etc. Knowing that so many were not aware of these issues reinforces the value of independent agents, who serve as the information conduit between the industry and consumers.

Additionally, we learned, unsurprisingly, that consumers are really looking at price as a main driver and are putting their policies under a lot of scrutiny.

Paul Carroll

The survey was released in December, but I assume the basic trends are continuing?

Kasey Connors

I do think we’re facing the same main factors. We're starting to see inflation come down slightly. Insurance premiums can be influenced positively by interest rate decreases, but those things take time. I think we're going to continue to have a multitude of natural disasters. Overall, I think consumers are still looking at their price point, they're looking at their bottom line, they're putting their policies up for renewal.

At the same time, I think more consumers are starting to understand the effects of supply chain disruption and litigation, too. Now that we have been in a challenging market for a while, many agencies have adapted and are driving home with consumers the effects of the economics of the business.

As an aside, many of my friends don't work in the industry, but they've sent me emails from their agencies explaining the reasons that premiums are rising right now, and some of the bullet points are the very same that we shared with our members.

We have also seen some increase in consumers forgoing insurance altogether, which we hope will decrease as things stabilize. People are being educated that they can reduce rates by taking higher deductibles, but what is most important is that they are having that conversation with their agents to understand where that risk is really coming from.

Paul Carroll

So communication is big, to get in front of the confusion and dismay about rising rates. Is there anything more agents can do, beyond educating customers and preparing them for the fact that rates are going up all over the place?

Kasey Connors

Yes, and this is interesting timing, because we just released a follow-up survey with agents about how they're adapting to this marketplace. We really focused on four areas. The first is communication, with their clients and partners. There is also technology, and how agents are leveraging it to improve efficiency. Our survey found that almost 80% of agencies are getting more phone calls, so demands on staff are increasing. Agencies should also look at their remarketing ratio, as well as having renewal processes in place. Finally, we see that agencies can increase their focus on team morale.

Overall, agencies are thinking about their processes right now, and that is super important.

Paul Carroll

I'm curious about a couple things. One is, how do you recommend that people take the load off as long as 80% of agencies are getting more calls? Is this more self-service? Is this chatbots? How do you handle an influx of phone calls?

Kasey Connors

I think this varies depending on agency size and resources. We have seen some agencies leveraging technology more by using an AI feature to handle some of those direct communications via a chatbot. We have seen others automating their email workflows to really have that be more proactive in initiating renewals.

I think people have also looked at how they are aligning their staff and remarketing accounts based on how a client is affected. Many are only looking to remarket those that have a premium increase of 20% or more.

Some agencies are rethinking what the best client structure might be, as well. This might be a time where agencies are going to be looking at adding niche business lines or using other methods to increase their base book.

Agencies that are looking at improving their business processes are being the most successful.

Paul Carroll

The other question was about morale. It can't be a whole lot of fun to have clients calling up and yelling at your staff, who have to deliver bad news to people about rate increases. I'm wondering what agencies can do to improve the situation for their agents?

Kasey Connors

As part of the agents’ study, we found that at least 30% to 40% of agencies were implementing additional staff training. So, agencies are equipping their front end staff with ways to handle those situations. Agencies can also offer help to staff around mental health or just health in general.

There is a light at the end of the tunnel. If you talk to any agent right now who has been in the industry for 20-plus years, they're saying that this has been the most challenging market they have ever seen. If we can make it through this, we can make it through anything.

Agencies are having those important conversations with their staff and promoting the feeling that we're all in this together.

Paul Carroll

This is great. Do you have any final summary thoughts?

Kasey Connors

We know this market has been extremely challenging but Independent agents are positioned really well right now as they're able to be the real advocates and consultants to their clients and to support them.

It can be a lot more work for agencies currently. So it is important for agencies to review your business processes, as well as educating both your clients and your staff and leveraging technology when possible.

There's a lot of resources out there. Join an industry association, leverage your connections and talk to your peers about what technology is working for them and how you can get more out of what you already have. Leveraging your connections and relationships is even more important than ever as we lean on both our carrier partners and other industry contacts.

Paul Carroll

I’m certainly hoping things settle down this year and think they could.

Thanks, Kasey.

About Kasey Connors

Kasey Connors serves as the VP of Marketing Operations of Trusted Choice, the national brand representing more than 25,000 Independent Agents who are members of the Big "I". Kasey also oversees digital marketing support for members, helping independent insurance agencies nationwide with their websites, content, technology, and automation to improve efficiencies and grow their business. Kasey has been with the Big “I” for six years. Kasey serves on the board of the Insurance Marketing and Communications Association (IMCA). She is also an officer on Invest, a national program that educates high school and college students on insurance, financial services, and risk management topics.

Insurance fraud costs the US $308.6 billion dollars every year through higher premiums and elevated medical and legal costs. Broken down further, the FBI estimates P&C insurance fraud to be around $40 billion annually. It is estimated that the cost of casualty fraud adds another $6.8 to $9.3 billion to auto casualty losses every year. For Workers’ Compensation, claim and premium fraud is estimated at $34 billion annually.  

Following these numbers, it comes as no surprise that managing fraud within the insurance industry continues to be a global priority for stakeholders in the insurance industry. Insurance costs have been on the rise in recent years due to many different macroeconomic factors — and fraud only adds to the costs. Insurers must do all they can to mitigate and manage fraud in the insurance business. 

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Sponsored by ITL Partner: FRISS

Several years ago, I took my daughters on a tour of Civil War battlefields so the younger one could search for ideas for her senior thesis. She came away with a great idea that helped her get an "A." I came away thinking: Holy smokes, there are a lot of personal injury lawyers in Alabama, Mississippi, Kentucky and Tennessee. 

It seemed that every single billboard in those states was an ad for a personal injury lawyer--and we saw a lot of billboards. With my antennae raised, I've seen ads for personal injury lawyers just about everywhere, ever since -- ESPN+ broadcasts of my Pittsburgh Penguins even do split-screens so they can show personal injury lawyer ads while the game continues. 

Is there really that much money floating around in personal injury law that they can make sure I see attorneys wherever I turn?

Apparently.

And that's not just an expanding version of an existing problem for insurers; the problem is morphing into a quite new sort of problem by drawing in the massive resources of private equity. Investing in lawsuits against insurance companies or in companies that facilitate those suits is becoming a standard investment type. PE companies invest in oil leases, farmland, manufacturing operations and... lawsuits against insurers.

So more lawsuits will be filed. Plaintiffs will be able to sustain them longer. Demands will be higher, and so will settlements. 

Unless insurers do something about them -- and a game-changer like a massive infusion of private equity demands a game-changer of a response.

Let's start with some data:

--Taylor Smith and John Burge write in a piece this week for ITL that EvenUp Law "has raised $65 million and has a valuation of more than $325 million. They use AI to craft demand packages for personal injury attorneys, including facts, damages, liability estimates and detailed special damage analyses.... EvenUp asserts that they drive up the value of claims by 30%.

"AI is being used by the plaintiff bar to pick the best cases and pick the best venues, right down to quantifying the impact of facing off against specific insurance companies.... A January 2024 Bloomberg Law article highlighted how AI will enable litigation funders to invest with greater precision and effectiveness, especially in smaller cases – a segment litigation funders have typically avoided."

--Wesley Todd writes this week that the term "nuclear verdicts" is becoming obsolete. Those verdicts are "merely" at least $1 million, when many verdicts now exceed $10 million -- which he calls thermonuclear verdicts. He estimates that insurers are paying about $75 billion in settlements each year. 

He writes that "the consequences of unfettered litigation are exemplified by events such as the world's largest personal injury firm filing an astonishing 25,000 lawsuits in a single week in 2023.... Business is so good that one $30 billion technology investment fund just purchased another litigation tech company. Wall Street is deploying hundreds of millions of dollars to remove any obstacles to plaintiff attorneys acquiring as many claimants as possible."

--Our friends at Triple-I report that an investment yield of more than 20% is being generated by publicly traded and private third-party litigation funders, "transforming the legal landscape into an investment market."

The Triple-I says every American household pays an estimated annual “tort tax” that averages $3,621 and cites a 2021 study by the Perryman Group that found that legal system abuse resulted in the loss of 4.2 million jobs, $110 billion in government revenue and $429 billion in output in the U.S. each year.

How to respond?

The key change that seems to be needed is to become more like the plaintiff bar and to focus on settlement amounts, not process.

Yes, regulatory constraints force insurers to document everything they do and to be able to prove that they're treating all clients equitably, in some ways tying insurers' hands. But many don't seem to have even begun to change their thinking. 

Taylor and Bruge say, "For most commercial carriers, the negotiated amounts written on the settlement checks represent the largest expense for the company.... [But} the P&C Industry has focused nearly all technology on managing legal expenses, which only make up about 20% of total loss cost."

They add that insurers can use AI just as aggressively as the plaintiff bar does. 

"AI can help us quantify the economic risk of facing a specific plaintiff attorney or being in a specific venue," Taylor and Bruge write. "It can identify which attorneys take cases to trial and which do not. It can identify the verdicts they have obtained. [And], in the same way EvenUp Law prepares demand packages for personal injury attorneys, AI can assemble facts and negotiation points for claims professionals and defense attorneys."

A fundamental change in the thinking about litigation will take a lot of discipline, mental force and communication, communication, communication -- but realizing that you're staring down the barrel of an industry with trillions of dollars of assets should focus the mind.

Cheers,

Paul

P.S. My one brush with a potential personal injury lawsuit came many years ago, when I was cycling along the Palisades in New Jersey, just north of the Lincoln Tunnel. A driver didn't see me at dusk and turned left right in front of me. I was going a good 25mph -- young and fit, as I was -- and couldn't avoid her. I smashed into her hard enough that I put a dent in her car with my hip and another with my head -- later, when I took off my helmet, it came apart in more than a dozen pieces. I was knocked unconscious. 

But I came to the moment I hit the pavement and felt fine. The driver was mortified and very responsible. She gave me her insurance information and took down my name and contact information. After assuring her I was fine, I got back on my bike and rode the final five or six miles to my condo in Hoboken. 

Six months later, I got a call from her insurer, Allstate, to let me know they were getting ready to close the file but first wanted to make sure I was still okay. And good for Allstate. But just imagine if I'd said I'd been having headaches or muscle spasms, or was thinking of hiring a lawyer. That could have been a nice check.

But I hadn't once thought of the accident in those six months, and I was raised as an altar boy, Eagle Scout kind of kid, so it never occurred to me to invent symptoms. I said I was fine, and that was the end of it.

As it should have been. 

 

 

The theme of 2024 is “new challenges, new rules, new mindset” for the personal lines insurance industry. While combined ratios are expected to improve this year as increased rates take hold, expediting the return to profitability will require finding new ways to solve profitability issues. According to McKinsey, carriers who double down on innovation can create up to 20 times more value than their competitors, making this year a prime time for insurance carriers to boldly innovate. Meeting market challenges will be accomplished utilizing the next-generation tools that are shaping the future for the insurance industry. Carriers standing head and shoulders above the competition are the ones embracing innovation and thinking of how they solve problems differently.

Keep Your Best Policyholders

Consumers hit hard with renewal policies fraught with rate increases and personal lines experiencing the industry combined ratio as high as 103.4% at the end of September 2023. P&C Specialist reported auto insurance rates were up 12.3% over the previous year, and homeowners industry-wide rates increased by 10.3%. It’s been a rough-ride for everyone.

As carriers experience loss ratios and combined ratios rising, the cumulative impact of inflation and rising loss costs are problems big enough they cannot be solved by one increase. The challenge will be to keep the best customers and move away from rating plans using the lowest risk individuals to subsidize the losses seen with their highest risks.

Rising Personal Lines Shopping

Additionally, the industry is seeing a rise in personal lines shopping. The first-quarter of 2023 saw the most shoppers in more than 2 years. Unlike previous years, shopping is not solely by price-sensitive consumers. P&C insurers have been seeing more of their best, most loyal, and most profitable customers shop around for new coverage to ensure that they are getting the best rate. A recent TransUnion study found over the past 2 years the insurance shopping population has had more people with high credit scores compared to the traditional  “shoppers” who were higher-risk consumers.

While carriers scrambled to increase rates in 2023 to fix profitability, many cut advertising. Yet, with rising price shopping, investing in advertising spend is advantageous due to the large groups of shoppers and will reap benefits. The key strategy is to avoid adverse selection and to understand which customers have an adequate rate and who falls outside of the rating plan at the earliest possible point.

Reduce Tech Debt To Win

Gone are the days of allotting all technical resources to replacing legacy policy administration systems and programming rate changes. In an effort to keep ahead of market challenges, carriers are starting to shift thinking about long-term initiatives that tie up technology resources. Those who are able to devote resources leveraging new tools and digitizing the service and claims experience, in addition to supporting core operational functions of their businesses, will emerge as big winners in the evolving industry landscape.

Development in AI Regulation 

Key states like New York, Connecticut, California and Colorado have been early in contemplation of how to regulate the industry’s use of Artificial Intelligence, and most recently the NAIC approved a blueprint for using AI and third parties. The bulletin provides guidance for development of AI-system programs to mitigate the risk to customers through governance, risk management controls and internal audits and guidance for contractual relationships with vendors providing AI solutions.

Carriers should continue forging the path forward to use AI-powered solutions to solve their biggest challenges, and become more educated on how to evaluate both internal controls as well as that of their vendor partners to understand the appropriate risk management framework while leveraging AI.

Measure Fairness Differently

Building on the focus on AI regulation, carriers focusing on understanding how to clearly define fairness in the industry will be well-prepared in the coming years. In 2021 Colorado’s governor signed Senate Bill (SB) 21-169 to protect residents from unfair discrimination “on the basis of race, color, national or ethnic origin, religion, sex, sexual orientation, disability, and gender identity” by requiring insurers to test their data, algorithms and predictive models to ensure they are not discriminating against protected classes. Through dedicated discussions, the industry seeks to understand how to objectively measure existing bias in current insurance rating and practices and how to measure this among various protected classes. It’s certain that new perspectives in rating and underwriting practices are required to ensure the industry upholds its standards of fairness.

Seamless Digital Service and Digital Claims Handling

With the price shopper market, carriers focusing on improving the service and claims experience can emerge successful by using technology to provide a more seamless customer experience in the policy service and claims process. JD Power reported personal lines insurance companies having a “very easy” digital claims process see twice as many customers renewing. However, the aim of efforts is not only to provide a great customer experience, but also drive efficiency to reduce expenses.  Incorporating new data sources at every operational point, furthers the seamlessness of how processes are designed. Optimizing the digital customer experience for customers with new policies, policy changes and during a claim is key to profitability, customer retention, and operational excellence.

Large Language Models (LLMs)

Generative AI and LLMs (large language models) are a hot topic as carriers consider how these technologies can be harnessed to automate processes. Key learnings for carriers can center on what LLMs can and cannot do, and where human support will be needed. As the rate of new technology increases, carriers are cautioned that the traditional approach of not being first-movers but fast-followers may not be a sustainable position.

Beyond Proof of Concept to Test and Learn

The insurance industry deserves high praise for its willingness to test new technologies and innovations. However, the number of initiatives lost in the operational priorities of the business are astounding. This often happens when the company culture penalizes failed initiatives. The most innovative insurers are those adopting a “fail fast” mindset where teams become less afraid of failing and see the opportunity cost of never trying to innovate. The message for industry leaders is to empower teams to move initiatives with compelling business results beyond the Proof of Concept phase into an environment of “test and learn” to see real-world results, and act in an agile manner.

2024 will no doubt bring about major changes as carriers course-correct to improve profitability. Some of these solutions will take form in the traditional measures of changing rates and revisiting underwriting rules and some will incorporate emerging technologies and new ways of thinking. Ultimately, insurers will need to start doing things differently to ensure a competitive advantage.

 

Sponsored by ITL Partner: Pinpoint Predictive

 

Pinpoint’s Head of Client Services is Shannon Shallcross, a TEDx speaker and 2021 Entrepreneur in Residence for the Breakthrough Lab Accelerator at Brown University. Shallcross has decades of experience as an executive leader, entrepreneur and advisor in insurance and data science. She has advised many Fortune 500 clients on analytics strategy and was the Co-Founder of BetaXAnalytics, a data science company that pioneered cutting-edge capabilities in artificial intelligence to pull actionable insights from data. Prior to this, Shallcross spent 12 years running operations in 18 states for Amica Insurance, where she was also responsible for the company's proprietary credit-based insurance scoring model. She has a Master of Science degree in Insurance Management from Boston University.

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Paul Carroll

To start us off, would you give me your general sense of where we are as an industry at the moment?

Shannon Shallcross

This is a really challenging time, from so many angles. Going back to 2022, we started to see carriers feeling a lot of pain, specifically on personal lines, as inflation increased loss costs. All of a sudden, no one's rates were adequate for auto or homeowners, not even close. Carriers have been scrambling to get rate increases, but right now almost no personal lines carrier can say their combined ratio is at a profitable point.

Everyone is concerned about their AM Best rating, but even if you don't get downgraded, the industry still has a negative outlook.

Then we have reinsurance. P&C carriers are having to very tightly manage how they're bringing in money, but what they have to pay to get reinsurance is completely unregulated at a time when the market is very volatile. You see carriers that are getting squeezed from all sides.

I believe carriers need to get laser-precise about their ability to truly understand risk and act on those insights as early as possible because they just do not have the luxury to have any processes that are not optimized. That's really the key to help their return to profitability.

Paul Carroll

That is a great setup for what I want to ask about innovation. The insurance industry is not known for innovation, even though it's been a huge adopter of some of the most advanced computer and data technologies for a very long time. How do you get people to embrace innovation in ways that maybe they haven't before so they can tackle some of these problems you're describing?

Shannon Shallcross

In some ways, the profitability problems we're seeing now are both a blessing and a curse—a blessing because carriers will have more of an appetite to find solutions when they're feeling that pain.

In insurance, as you know, the carriers are typically slow to lead but fast to follow. A lot of times, a carrier is not going to want to implement a new solution when they don't know that several others have traveled that path before them and have seen that the solution worked.

Now we're at a point where so many new technologies are exploding, and no one really knows what problems they can solve. The industry is being forced to test and learn in real time. We don't have the ability to wait three years to see what the clear winner is. There's really a race to find the technologies that are going to help us to solve the real problems that we have today.

Paul Carroll

You have an interesting perspective, having worked on the carrier side and then also having founded a data analytics company that you sold prior to joining Pinpoint Predictive. What does the right answer or the right culture look and feel like?

Shannon Shallcross

This really goes for any company, not just for the insurance industry, but creating the right company culture to allow people to truly embrace innovation is the key.

In the insurance industry—and I can say this because the first 12 years of my career I worked on the carrier side—people are largely risk-averse. They don't want to be taking on initiatives if there's a possibility they could fail.

But in anything having to do with technology and innovation, failure is part of the story. The only way you can get to the solution that really works is by finding out what doesn't work. So it's really helpful, particularly for carriers, to adopt a company culture where someone's career is not going to be over if they end up trying something that fails.

The idea of failing fast is a very healthy one. When you have a proof of concept that has really compelling business results, great. Let's try it. But if it doesn't work, we're going to shut it down really quickly. That doesn't mean your career is going to be over.

A lot of times in this industry, there is that fear that if I fail one or two times, things are going to be over. We need to set a culture within our own companies that failure is part of getting to the solution. That is the way we're going to solve problems.

We just want to fail fast and move on and try that next thing. That's what is really going to help this industry embrace innovation.

Paul Carroll

I'm a big believer in engendering corporate myths. Part of the reason is that when I covered IBM for the Wall Street Journal in the ‘80s and ‘90s, I saw how much some stories from their early days shaped how people thought and acted. My favorite is about Tom Watson Jr., who was the ferocious CEO in the ‘50s, ‘60s and into the ‘70s. At one point, he called somebody into his office after the guy had lost $10 million on a project. Watson asked the guy why he thought he’d been called in, and the guy said, “I assume you called me here to fire me.” Watson said, "Fire you? Hell, I just spent $10 million educating you. I just wanted to be sure you learn the right lessons."

I can’t even count the number of IBMers who told me that story. And I wonder if you've seen stories like that used elsewhere, or what you have seen senior management do that can engender this sort of culture that believes in noble failure.

Shannon Shallcross

That's a really great story. And it shows why the messages need to come from the top.

You have to instill the belief that failure is okay. You fail quickly, you pivot on to the next thing and that is okay. Failure has to be part of the innovation story, for long-standing companies and for startups.

Paul Carroll

It's also been my thesis that it's sometimes easier to instill a culture of noble failure with smaller companies than with huge companies. Are you seeing things you can do at Pinpoint Predictive that maybe the carriers weren't doing when you spent your 12 years there?

Shannon Shallcross

Well, I've seen a lot of changes since 2002, when I started in the insurance industry. You probably know this quote from Eric Schmidt from Google, "There were five exabytes of information created between the dawn of civilization through 2003, but that much information is now created every two days." That quote was from 2010. At this point, it might only take one day to create five exabytes of information.

When I started in the insurance industry, it was very much, "Here's how we win this game. We are going to keep an eye on our rates, and we're going to keep an eye on our underwriting roles, and those are the only tools that we have to run our business." Now, there's so much more information, so much more data, so many more innovative tools that are available to help us to run our businesses well.

The rate of change in technology over the past two decades has been mind-boggling.

Paul Carroll

In my experience covering technology, Gen AI has had a more sweeping debut than anything other than perhaps the internet, and probably even more than the internet. So I'll ask, first, how you're seeing that play out, and then I want to ask you a little bit about the regulation of it.

Shannon Shallcross

This is probably one of the first times we have stumbled on a technology where we don't quite know where this is going to go. Even people who have been involved with bringing ChatGPT to the public have said as much. This is why it's great to see that the people who have been so close to bringing these technologies to fruition are the ones who are the biggest proponents for placing reins on this technology. We need to make sure we are doing things that are making the world a better place.

Paul Carroll

Do you have thoughts on how those guidelines ought to develop or maybe how the insurance industry ought to act in the meantime, while we set up the proverbial bumpers as we try to roll the bowling ball down the lane?

Shannon Shallcross

I think education is first and foremost. The worst thing that can happen is that people don't look beyond the headlines. They just say, Okay, New York is starting to regulate artificial intelligence, or Colorado is regulating artificial intelligence, and they interpret that as a bad thing. It's actually a good thing.

It just requires education from our leaders, especially on the vendor side. We at Pinpoint have been at the forefront of this for a long time and have been helping to educate even our clients. Now to see a little bit more definition coming out from a regulatory standpoint is really important.

The second key is developing the appropriate risk management framework in your company. This was outlined in the NAIC bulletin that they released in December 2023 on regulating the use of artificial intelligence and how carriers are working with vendors. That piece talks about the importance of having that risk management framework. It's just doing that due diligence to make sure people understand how to evaluate these solutions and how to put the proper guardrails in place to ensure that they're being managed properly.

Paul Carroll

I've always found it interesting that while people think of innovation in Silicon Valley as this sexy thing and insurance as this sort of dull industry, there's actually no innovation that happens without insurance. You can't have Google driverless cars and all that sort of stuff until somebody figures out a way to deal with the risks. So I think there's some hand-in-glove interaction going on between insurance and Gen AI that can probably benefit all of us.

Any final thoughts?

Shannon Shallcross

I’ll add a final thought on the regulatory piece, only because this is a topic of such interest right now to carriers.

We, Pinpoint Predictive, embarked on a third-party AI audit that we finalized in 2023. We do risk predictions for the insurance industry, and the audit was to ensure that the data we were using was not adding bias to the modeling process. The auditor also made sure that all our processes and modeling conformed to any existing regulation and looked ahead to the next five years. If the insurance industry starts to look to other industries to mirror some of their regulation regarding bias or discrimination, how would that change the context of how carriers can use artificial intelligence?

The auditing company that we partnered with is called Luminos Law. They were amazing. They partner with Fortune 500 companies to advise them on their use of artificial intelligence. They also have weighed in for governmental bodies and helped to release the NIST AI risk management framework. So they definitely know not only artificial intelligence but also understand specifically the insurance industry. The other thing that's cool about them is they employ data scientists. They basically perform this level of due diligence that a carrier would not be able to; they invest the time and resources to go through all the thousands of data points that we use, and also to put us through rigorous statistical tests to check for bias.

We took this audit on because this is something that's always been really important to us. We have provided carriers with all of the guardrails that we have in place, but until the audit, it was just a "trust us" thing. We never had our data and processes verified by a third party.

This level of due diligence was a very large undertaking for us, but we learned a lot in the process. We came through with a clean bill of health, but everything we learned we turned around and used to help educate some of our clients, who had a lot of the same questions on how one evaluates artificial intelligence. What do you even look for?

Insurance is all about fairness. When partnering with any third party that's using an artificial intelligence solution, it is best practice to ensure that they have had a third-party audit of their use of artificial intelligence just to ensure that you're doing the right thing and have the right controls in place.

Paul Carroll

I think that's very smart. I think audits will have to be implemented very, very broadly. A lot of this AI stuff is just a black box. You don't know what's going on in there. And there has to be some way to double check and make sure that the decisions are being made based on real data and not on gender, race, any number of other things that should not be part of the decisions.

This was great. Thank you so much for your time today.

 

Sponsored by ITL Partner: Pinpoint Predictive

The plaintiff bar’s unprecedented investment in AI presents a real and present danger to the insurance litigation defense industry. It is a danger that is only now starting to show on the radar screens of chief claim and litigation officers. This article explores why it is such a threat and why the first response must be, at a minimum, awareness.

The P&C insurance industry runs the largest negotiation network in the world. Annually, 30,000-plus claims professionals assign out over a million litigated claims to 30,000-plus defense attorneys with one goal in mind – negotiating a good outcome. A full 98% of those cases will settle.  

In negotiation, success boils down to two critical factors: (1) having better data than your opponent and (2) being able to use that data to negotiate more effectively. Data is critical to eliminating uncertainty, quantifying risk and predicting value. And those who have data to use in their negotiations do better than those that don’t. 

Let’s start with a real-world example of how the plaintiff bar is leveraging technology to do this. EvenUp Law is a company that has raised $65 million and has a valuation of more than $325 million. They are helping personal injury attorneys leapfrog P&C in two areas:

1. GenAI demand packages. They use AI to craft demand packages for personal injury attorneys, including facts, damages, liability estimates and detailed special damage analyses. They use AI to tell stories to maximize general damages. The plaintiff bar has always “sold” their demands better than we “sell” our offers, and now they are doing that on steroids.  EvenUp asserts that they drive up the value of claims by 30%.
    
2. Tech-enabled data sharing. EvenUp has started a contributory database for the plaintiff bar. The plaintiff bar has always been better at sharing data than the defense.  We have been talking about a contributory litigation database for 20 years but have yet to actually do it.

That’s just the start. AI is being used by the plaintiff bar to pick the best cases and pick the best venues, right down to quantifying the impact of facing off against specific insurance companies. Investors see the opportunity in this, and money follows opportunity. A January 2024 Bloomberg Law article highlighted how AI will enable litigation funders to invest with greater precision and effectiveness, especially in smaller cases – a segment litigation funders have typically avoided. Insurance companies will see more cases funded by third parties, not fewer. 

See also: AI and the Future of Independent Agents

Social inflation, nuclear verdicts and legal system abuse have been three tenets of our industry conversation for years now. If you believe those trends present existential risk to our industry now, just wait until AI takes hold. The plaintiff bar is poised to adopt AI much faster than the defense given their advantages in a few key areas:

1. Data accessibility. Plaintiff firms value their data and store it one accessible spot. On the defense side, it tends to sit in highly disparate data sets. There is a disconnect, a gap, and inconsistency between data at the defense firm and data in the claims department. Critical components of the data remain unstructured and unusable. Names of attorneys and law firms are spelled differently, and key data is not reliably recorded in the claim system, which frequently fails to capture offers and demands and sometimes even settlement amounts.
    
2. Economic incentives. Plaintiff attorney economics strongly encourage AI adoption. Their very compensation is driven by maximizing outcomes while minimizing expenditures through less work. The benefit that AI offers is completely synergistic with their desire for efficiencies. Generative AI is not a threat to them, it is a massive opportunity!
    
3. Minimal IT barriers. If a partner at a personal injury firm wants to use AI, then that means it is going to happen. They don’t face extensive IT and compliance approvals, politics or backlogs. If something improves performance, they can just do it.
    
4. Sharing mentality. The plaintiff bar loves to share. They hold an abundance mentality and don’t let competitive concerns get in the way. Chief claim and litigation officers want to share, but they have to convince layers of legal and IT teams that data sharing is good and necessary, which has proven an insurmountable hurdle for the last 20 years. Personal injury law firms don’t have that hurdle.

At its core, AI is about either creating data where there is none or creating insights into data in ways just not humanly possible. Or both. But the real power of these insights is in how they can be used to negotiate better outcomes. And while the plaintiff bar charges ahead, claim professionals and defense attorneys are left to negotiate as all humans do in the absence of data --  they engage in reactionary bargaining and anecdotal predictions and rely on their maturity, seasoning and experience to guide them.

There is nothing wrong with that – negotiation is half-art, half-science. But we’re not going to win by ignoring the science part, and we operate in an industry where both claim department and defense firms are finding it difficult to find and keep experienced people. The plaintiff bar is rapidly becoming systematic in their approach, and we badly need to catch up.

See also: Balancing AI and the Future of Insurance

How will we respond to this threat? What might that response look like? Let’s explore three use-case scenarios for AI in the defense industry. Each is designed to support better negotiations and to put tools and actionable data in the hands of the claim professionals and defense attorneys who desperately need those things. 

1. Better analyze risk. AI can help us quantify the economic risk of facing a specific plaintiff attorney or being in a specific venue. It can identify which attorneys take cases to trial and which do not. It can identify the verdicts they have obtained. I am a better negotiation decision-maker and strategist when I know this. 
    
2. “Sell” our offers. Second, in the same way EvenUp Law prepares demand packages for personal injury attorneys, AI can assemble facts and negotiation points for claims professionals and defense attorneys. Defense teams benefit from “selling” their offer amounts with evidence and with conviction, just like plaintiff attorneys “sell” their demand packages. I am a better negotiator when I do this.
    
3. Negotiate with strength. The winner of the negotiation is usually the one who has attained a superior position of information. Predicting your opposing party’s walk-away number is the key piece of information to attaining an optimal resolution. Your opposing party will happily take $1 more than their walk-away number, or $250,000 more. Imagine the use of AI in a tool that helps claim professionals and defense attorneys zero in on that walk-away number, establish bargaining zones and predict the impact of anticipated legal activities (costs) against that bargaining zone. Keeping the business economics of every litigated claim squarely top-page and top-of-mind makes me a better negotiator. Additionally, AI will be better than we are at predicting and quantifying nuclear verdict risk. Ultimately, it will help in guiding and advising defense teams on offer cadence, anchoring effects, legal spend efficiency and overall negotiation strategy. 

For most commercial carriers, the negotiated amounts written on the settlement checks represent the largest expense for the company. Contrast that with the fact that less than 10% of defense attorneys who perform the actual settlement negotiations report any formal training in negotiation science.  Then factor in the plaintiff bar blazing past the defense in their use of AI tech – heavily focused on gaining negotiation advantages. 

When it comes to litigated claims, the P&C Industry has focused nearly all technology on managing legal expenses, which only make up about 20% of total loss cost. It is time for P&C to get just as serious about indemnity as the personal injury attorneys who make their living from it, which means it is time to get serious about AI tech and data. 

And it needs to happen fast – we have never been faced with technology that is moving as fast as it is today.

As cyberattacks become more frequent, sophisticated and damaging, fueled by AI-powered tools, a surge in insurance claims related to these incidents is anticipated. This surge is expected to trigger a collective response within the insurance industry, prompting a reassessment of policies. Much like regions grappling with the aftermath of hurricanes, where damage insurance policies became unsustainable, the escalating cost of cyber claims will force insurance companies to reevaluate their offerings.

See also: Risks, Trends, Challenges for Cyber Insurance

Stricter Requirements for Leadership

In response to the rising tide of cyber claims, insurance providers are expected to impose new restrictions. A notable development will be the enforcement of stricter requirements for board members and executives. Leadership will be mandated to possess a comprehensive understanding of cybersecurity, reflecting the growing recognition that effective cyber risk management begins at the top.

Leadership teams will need to demonstrate expertise in areas such as security and ransomware. This shift aims to ensure that organizations are not merely reactive in the face of cyber threats but are actively engaged in preventative cybersecurity measures. Consequently, there will be a push for the establishment of robust processes and technology frameworks that facilitate effective incident response.

2024 will also usher in an era where organizations go beyond merely requesting recovery in the aftermath of a cyber incident. Instead, there will be a paradigm shift toward well-prepared checklists and measures in anticipation of potential cybersecurity attacks, incorporating a "shift left" approach to bolstering defenses and minimizing vulnerabilities from the outset.

As the industry navigates these changes, organizations must stay abreast of evolving cyber threats and assess their cyber insurance needs meticulously. The collaboration among insurers and businesses in implementing effective cybersecurity measures is set to become a cornerstone in mitigating the financial impact of cyber incidents.

Mandating Comprehensive Security Frameworks

This year, insurers will push for stricter policy conditions that mandate comprehensive security frameworks, including:

• Regular security audits and penetration testing: Identifying vulnerabilities before they're exploited is key. Expect mandatory audits and penetration tests to become the norm, ensuring systems are constantly under scrutiny. Moreover, there may be requirements that anyone performing pentests or incident response are those that are trusted in the industry and have a demonstrable track record. This could include references to ensure these frameworks are executed by security practitioners with keen insight and experience.
• Robust incident response plans: The days of scrambling after a breach are over. Insurance companies will demand well-rehearsed incident response plans, with clear roles and responsibilities for each team member. As with pentesting, insurers may require incident response teams with trusted industry expertise and a proven track record, ensuring effective handling of cyber threats.
• Investment in cybersecurity technology: Implementing advanced security tools like intrusion detection systems and endpoint protection will become a non-negotiable requirement for securing coverage. Insurers may also require evidence of continuous monitoring and updating of these technologies to stay ahead of evolving threats.

The shift toward preparedness is not just about cost reduction for insurers; it's about protecting businesses and their customers from the devastating consequences of cyberattacks. By prioritizing prevention and resilience, the insurance industry can play a crucial role in building a more secure digital landscape.

See also: Cyber Trends, Risks and Opportunities in 2024

A New Era of Partnership Among Businesses and Insurers

In the evolving landscape of the cyber insurance industry, success may hinge on insurers taking a proactive approach. With the understanding that frequent large payouts can diminish profits, insurers may opt to deploy their own subject matter experts (SMEs) to guide new clients toward sustainable success.

While we can rely on existing knowledge frameworks like the MITRE ATT&CK, the real danger lies in what we are unaware of. Instances such as nation-state actors infiltrating systems for years underscore the critical need for heightened vigilance. As we move into 2024, collaboration, information sharing, and diligent attention to blind spots will be paramount.

The insurance industry is poised for transformation as cyber threats surge, necessitating stricter policy measures and a deeper integration of cybersecurity expertise. This paradigm shift signifies a move beyond premium adjustments toward a resilient partnership among organizations and insurers, reinforcing our collective ability to combat cyber risks.

Drone usage in insurance will increase this decade as it enters the mainstream. Experts say the commercial drone market will grow annually by 14% until 2030. Here are five ways drones will affect insurance companies and their imaging practices. 

Changing Risk Assessment

Risk assessment will be among the biggest changes with drone-based imaging and photogrammetry. When assessing risk, insurers look for various hazards and signs of damage to determine what a client’s rate should be. Drones change this practice by increasing accuracy, considering their ability to capture images and detect details humans cannot see. 

For instance, insurance companies may cover tall, hard-to-reach buildings that are challenging for employees to inspect. Drones aid human workers by taking detailed pictures of these structures and increasing accuracy when giving estimates. Complex buildings cost time and money for insurers to evaluate, so crewless aircraft have become essential in risk assessment.

Decreasing Fraud

Fraud is a consistent problem for insurers, with fraudsters taking advantage in numerous corners of the insurance industry. The FBI says non-health insurance fraud costs over $40 billion annually, causing increased premiums for American families. Drone technology can reduce fraud with its highly detailed imaging and photogrammetry systems and increase accuracy for insurers. 

Some insurers instruct their customers to take photographs of the accident to determine the claim’s validity. While many users submit good pictures, insurance companies can dispatch drones to the site of the incident and collect images there. That puts more control into their hands when mitigating fraud. 

Insurers can reduce the risk of fraud through drones because some customers may try to trick the system. Users may misrepresent the severity of their claim to receive a higher reimbursement than appropriate. Using drones lets insurance companies inspect a car or property before the incident and compare it with its appearance afterward. Thus, it’s harder for customers to mislead their insurers.

See also: How Technology Is Changing Fraud Detection

Improving Safety

Another important pillar of drone-based imaging and photogrammetry is the safety improvements for insurers and their customers. Crewless aircraft can increase safety by eliminating the need for employees to trek dangerous terrain to survey accident sites. Problems may arise when an insurer surveys storm damage, collapsed buildings and other hazardous structures, and drones protect employees from these liabilities. 

Drones also help insurers and their employees by their ability to create detailed 3D models. The insurance company can apprise professionals of the landscape before arriving in dangerous terrain. Thus, the risk of harm decreases for workers heading to accident scenes because they know what to expect. Improving safety cuts costs and aids profitability for insurers.

Enhancing Efficiency

Drones are growing in demand across industries because of their various services. Efficiency is among the chief reasons insurance companies use them, considering their ability to capture topographical data and assess dangerous areas. Drones also speed up response and help insurers get the most accurate information on any site. 

For instance, drones significantly help insurers after natural disasters strike. Roads may be too dangerous to drive, so insurers can dispatch drones. Rapid arrival means insurance companies can process claims more quickly and help those with damaged property. These benefits also reduce strain on adjusters, who can do their job more efficiently thanks to this advanced technology.

One example in the industry comes from Allstate. The company made drone usage more widespread in the late 2010s, and now it needs only 4.5 days to produce repair estimates for its customers. 

Drones are still advantageous even when storms or accidents haven’t occurred. Dispatching this technology optimizes insurance company operations by reaching rural areas or hard-to-access sites like wind farms. Minimizing the need for manual inspections makes processes more efficient and can lead to cost savings for insurers.  

Reducing Costs

Saving money is another premier feature of drone technology. Using crewless aircraft means humans have less responsibility for insurance, thus reducing the risk of on-the-job injuries and the associated costs. The cost-saving benefits are a significant reason why experts say commercial drone use will outpace consumer use by 2024.

Drones also reduce operational costs by eliminating the need to send somebody to a remote area or use specialized equipment to access a dangerous site. However, this feature awaits permission because the Federal Aviation Administration (FAA) requires a human operator to have a line of sight with their drone. 

While operational costs are critical, insurers also benefit from reducing organizational losses. For instance, insurers using drone technology have more accurate pricing and a lowered risk of underpricing their customers when assessing rates.

See also: Cyber Trends, Risks and Opportunities in 2024

Are There Legal Concerns for Drone-Based Imaging? 

While they have demonstrated their impact on claims, drones bring challenges for insurance companies they must address to ensure the staying power of this technology. What legal and ethical concerns come with drone-based imaging? Here are a few issues to watch for. 

Flying Restrictions

A primary concern for insurance companies is the flying restrictions on drones in the U.S. The FAA permits flying over most areas in the country, but insurers must avoid sending their drones over restricted areas. 

Illegal drone-flying sites include national parks and military bases, but insurers must also avoid dispatching their devices within five miles of airports. Special permission from air traffic control is necessary to access these areas, which can involve more red tape than required to maintain efficiency.

The insurance industry must also consider what countries ban drones or have heavy restrictions. For instance, Egypt requires drone users to receive permission from its Ministry of Defense before flying within the country. In India, only its citizens have permission to operate these advanced devices.

Limiting the use of drones means insurance companies in these countries cannot take advantage of their benefits and must find other ways to optimize their operations. 

Cybersecurity

Cybersecurity is another significant issue for insurance companies and their drone usage. Drones rely on Wi-Fi and radio signals for their operations, thus opening the possibility of hacking and hijacking. Bad actors could take control of a drone’s radio signal, alter its direction or steal confidential information stored inside the machine. They could also intentionally crash the drone and cause significant losses for the insurer. 

Cybersecurity liabilities are critical for insurance companies because of the sensitive data stored inside the drones. Stolen information could harm the insurer’s reputation and make it liable for data breaches and financial losses. 

Privacy Concerns

Deploying drones also brings privacy concerns for insurance companies with their imaging and photogrammetry abilities. For instance, drones could cause legal trouble if they intrude on private property without permission. 

While there hasn’t been much litigation, court cases have already started to shape common law throughout the states. For instance, the Michigan Supreme Court will decide a case determining whether Long Lake Township could legally use a drone to inspect somebody’s private property.  

Other privacy concerns arise if drones collect biometric data, license plate numbers and additional sensitive information while inspecting accident sites. Drones can fly at lower levels than the average crewed machine, making privacy issues more pronounced.

Damage and Injury Risks

Residents may sue insurance companies for damages if they think the business has violated their privacy rights. However, the insurers could be at greater risk if the drones cause injuries or property damage during their inspections. The low-flying capabilities of drones increase the risk of colliding with humans. 

While consumer machines tend to be lightweight, commercial drones are heavier and can cause more bodily harm if something malfunctions. The drones could lose power or succumb to a sudden change in weather conditions, causing the machine to fall to the ground and injure bystanders.   

Leveraging Drone Technology for Insurance

The insurance industry has recently taken advantage of drone technology as companies look to optimize their operations. Drones provide opportunities to save money, decrease fraud and improve risk management. However, there are also legal and ethical concerns to watch as more guidance and common law emerge. Regardless, drone technology is here to stay for insurers.

We are currently seeing advances in AI and automation coming at a pace that is hard to keep up with. Underwriters are starting to recognize that they will need to adapt and in many cases acquire new skills so they can thrive in this era of AI.

Just how will we see the traditional skills of an underwriter changing?

A role that will evolve, not be replaced

The first thing to make very clear is that no machine is ever going to replace the human underwriter. It is a role that relies heavily on skills that robots simply cannot replicate, evaluating complex risks, refining portfolio strategy, using creativity and deepening crucial relationships with brokers. But AI allows for automating many tasks that have to date been performed manually and been time-consuming, such as data entry and re-keying.

Those repetitive, more menial tasks, such as sieving through data, reviewing data fields, trying to identify missing data fields, entering data fields to different systems, can take up one-third of the average underwriter's working day. Streamlining this process vastly increases efficiency and enables skilled risk professionals to concentrate on higher-value work.

See also: Insurance Underwriting Will Never Be the Same

Data-savvy underwriters

At a basic level, many underwriters will soon find that their job becomes less admin-focused and less monotonous. This will create the opportunity -- and the need, to keep up with the competition -- to develop a host of new skills. These include skills related to interpreting data, making consistently high-quality decisions and thinking of creative solutions.

To make effective use of data -- to understand it, apply it and make decisions from it -- you need to have, at the very least, a basic data education. Put simply, the next generation of underwriters will be much more data-savvy, applying the insights created by data analysis in a creative and thoughtful way. 

Agility and creativity

The old, monolithic tech stacks are giving way to combinations of modular solutions that fulfil specific purposes. These platforms can quickly evolve to fit different needs. Consequently, underwriters will have to be more flexible in the way they work, able to upskill and adapt to different tech solutions.

We are going to see faster feedback loops between changing levels of risk and market conditions and portfolio appetite, which will mean that underwriters need to be adept at identifying emerging risks and opportunities in real time and making continuous refinements to portfolio strategy. Underwriters are going to be met with ever more complex and varied scenarios, with climate change, for example, having a huge impact on the insurance industry.

As volatility increases, the agility to identify changes in risk and operationalize refinements to portfolio strategy will become increasingly important. Underwriters will need to leverage the technology around them and come up with unique solutions to understand, manage and transfer risk. There is no textbook to tackle the challenges we are going to face over the next few decades -= the most creative underwriters will be the ones writing it.

See also: Why Underwriters Don't Underwrite Much

Multi-functional teams

Generative AI may well lead to new roles within the insurance sector, such as "risk flow engineers" and "risk flow experts” -- people who know exactly how to extract the most useful outputs for decision-making and continuously optimize risk flows. There will be digital trading managers skilled in monitoring the health and performance of digital trading -- providing critical human oversight. There will be underwriters who will use the time that has been freed up to further develop their broker relationship skills and develop a broader portfolio view.  

Greater digitization and AI will also create more unity among underwriting, data strategy and technology teams. Siloed departments will become increasingly untenable. The best organizations will have multi-functional teams enabled by digital risk flows where information flows throughout the organization. Every team member will need the technical tools and expertise to work together.

The underwriting landscape is changing dramatically as a result of machine learning algorithms, data analytics and other AI technologies. While learning more about AI and technology will be critical for success, it is not as simple as saying there is a checklist of skills you really need to learn. Just as important will be having a curious mind and the will to constantly update your expertise and learn things.

As this transformation progresses, we can expect to see a new breed of underwriter that has developed skills around data analysis, digital literacy and critical thinking, but who is also creative, flexible and adaptable in the way they approach their role.

In the insurance industry, premium payments are the most frequent interaction that carriers have with their policyholders, and claims payments are the most sensitive. Carriers that are focused on enhancing the customer experience need to prioritize these important interactions.

In today’s digital environment, highly streamlined weekly—or even daily—electronic transactions are normalized thanks to digital giants like Amazon, Alphabet and Apple. In the insurance industry, by contrast, InvoiceCloud’s annual State of Online Payments report reveals that 60% of respondents who were surveyed regularly encounter issues when receiving bills or making payments. For insurers, this statistic could mean disaster. Aware of the stakes (namely, losing policyholders), insurance executives are becoming increasingly vigilant about digital transformation, especially for the payment experience.

With so much attention focused on meeting customer expectations, why do these transactions so often go awry? And what can insurance companies do to enhance the policyholder experience at these critical moments? 

See also: Revolutionizing Digital Payments

Streamline consumer transactions

Customers today, across all verticals, expect simple, secure and convenient digital interactions – and their intolerance for unintuitive online experiences could mean higher abandonment rates and more. 

According to the State of Online Payments report, 23% of respondents cite forgetting their username and password as the top issue they face when attempting to pay a bill online. This creates customer dissatisfaction, late payments and low digital adoption. Offering self-service capabilities like password reset or the ability to easily change banking information and payment methods is critical for overcoming this roadblock. Easy enrollment in AutoPay can also eliminate this issue entirely, allowing policyholders to “set it and forget it” for monthly premiums.

Additionally, offering a simple guest checkout option enables policyholders to forego registering for an account or remembering login information. Guest checkout allows insureds to make payments without logging in, allowing insurance companies to remove friction from the process, promote a positive customer experience and increase timely payments.

Making it easier for policyholders to adopt self-service options streamlines the payment experience, reduces costs and bolsters customer satisfaction. Research from McKinsey found that 62% of policyholders prefer digital self-service options, and yet the State of Online Payments report found that self-service adoption has become relatively stagnant, experiencing YoY growth in the low single digits. One possible explanation for the discrepancy is that finding and enrolling in self-service routes is prohibitively complicated for consumers. By making self-service options easy to find and opt into, insurers can drive higher adoption and better accommodate customer preferences.

Facilitate communication with mobile bill payers

Mobile devices are now the most common channel for making digital bill payments, with 65% of respondents to the State of Online Payments survey reporting they have used their phone to pay a bill within the past 12 months—more than any other method. Yet respondents crave more robust, interactive communications through their mobile interactions.

Interactive reminders and payment confirmations are a critical part of facilitating timely payments and meeting customer preferences. However, 17% of survey respondents reported not receiving useful reminders, and 11% did not get confirmation of payment. Lack of basic communication undermines policyholder trust and increases confusion and frustration when premiums are due, which results in late payments and customer dissatisfaction.

Respondents also reported that when they did receive reminders, they were at times unclear or lacking necessary context such as the amount due or due dates. Offering simple, interactive communication with clear, accurate information optimizes mobile usage and allows policyholders to engage the way they prefer. 

See also: Enhancing Claims Via Digital Payouts

Cater to all policyholder preferences

While the vast majority of respondents to the State of Online Payments survey indicated that they prefer digital engagement both in paying premiums and receiving claims payments, there are still other payment options preferred. As such, carriers should understand their customer demographics and offer options that appeal to various preferences. In addition, policyholders often use multiple methods for payment and disbursement (i.e., paying one month by automated phone system and the next on mobile). Therefore, offering a true omni-channel experience with real-time, integrated payments methods is key to meeting customer expectations. 

When it comes to receiving claim payments, data from the State of Online Payments report reveals that among respondents who typically pay bills online, the vast majority (73%) prefer a direct deposit into their bank account. Furthermore, 14% of respondents would prefer to receive payments as a paper check, 8% prefer a payment through PayPal or Venmo and 5% prefer to receive a pre-paid card. Clearly, offering digital disbursement options is non-negotiable for carriers. However, it’s important to note that some respondents (i.e., older policyholders) are more likely to prefer analog payment methods. Offering multiple, integrated options allows carriers to respond to the diverse preferences of their customers. 

It doesn’t matter how many new tools or payment options an insurer offers its policyholders – if the solution is not simple, convenient and personalized, policyholders will not use the system. Low digital adoption means that policyholders, agents and carriers won't realize the downstream benefits of an enhanced customer experience, like expense reduction and streamlined processes.

In insurance, the experience of making premium payments and receiving claims is the customer experience. Understanding and addressing your policyholder preferences and providing convenient digital options is critical in driving customer satisfaction, policy retention and profitability. Embracing digital transformation at these critical touchpoints is the best way for carriers to compete effectively in this tech-forward environment.