KEY TAKEAWAYS:

--With so many variables in the equation, brokers and agents must devise strategies that won’t upend the objectives of affluent clients.

--Policyholders must be encouraged to obtain quotes before making a major purchase. This tends to reduce or eliminate insurance sticker shock after a significant expense, such as the purchase of an additional home or luxury automobile.  

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The personal property & casualty insurance landscape functions much differently now than it did a decade ago. Unprecedented national and global events have changed the way high-net-worth individuals secure protection for their assets. These circumstances have also significantly increased the ancillary costs of home, car and other high-end purchases that require insurance coverage. 

In one instance, an existing policyholder bought an additional home in Florida. Their insurance portfolio included two other homeowner policies with extensive jewelry riders, a five-car auto policy and an umbrella policy. After the closing, the client contacted his broker to add coverage on the new home, assuming that, at most, the insurance would add another $15,000 to their premium costs annually. However, the premium for the additional home amounted to $60,000 — a figure that would have been a deal breaker for many buyers. 

The policyholder may not have considered that purchasing home insurance in hurricane-ravaged Florida has become an exercise in caution. But it has. Insurance costs have escalated in Florida and elsewhere due to the pandemic, catastrophic weather events like Hurricane Ian and the inflationary environment over the last few years. 

In 2023 alone, HUB International has witnessed mid-year average increases across the board. Here’s an approximate range:

• Auto insurance: Up 15% to 20% 
• Homeowners insurance: Up 20% to 30% 
• Umbrella policies: Up 5% to10% 

With so many variables in the equation, brokers and agents must devise strategies that won’t upend the objectives of affluent clients. The plan should include a need assessment, coverage limit discussions and an understanding of policy exclusions that could prove costly. 

See also: 'It’s the Customer Experience, Stupid'

Four strategies for protecting high-end assets in a whirlwind insurance market 

Coastal areas are not the only regions witnessing tumultuous insurance rates and availability. Claims resulting from wildfires, hailstorms, extreme heat and water damage all have contributed to the mix as well as an increase in replacement cost value of a home with “smart” equipment and contents. Here are four best practices insurance representatives can adopt to protect policyholders and solidify business relationships. 

1. Communicate early and often. Policyholders must be encouraged to obtain quotes before making a major purchase. This tends to reduce or eliminate insurance sticker shock after a significant expense, such as the purchase of an additional home or luxury automobile. By understanding all possible details about a vacation home or sports car, brokers can work with clients to formulate estimates on what sufficient insurance coverage will cost.

Homeowners need to reframe the way they look at insurance costs. Whereas premiums had been a small percentage of a purchase, securing adequate coverage can now unexpectedly blow up a budget in strained insurance markets. 

2. Present all the facts of the case. Putting together a comprehensive personal lines insurance portfolio is a two-way street. Insurance agents must obtain all the details from clients about a high-end home, for example, so the carrier can properly underwrite each case.

In an increasingly digital marketplace, insurers are using more innovative means to arrive at optimal issuance and coverage decisions to help protect their clients’ bottom lines. Data drives insurance risk assessment decisions at executive management levels. On a lesser scale, agents can use data modeling to help forecast risk for clients. This might include calculating the probability of incurring a total loss of a home due to a wildfire or hurricane. 

3. Promote a preventive mindset. Offer guidance on how preventive measures help homeowners maintain a solid insurance program over time. Claims prevention likewise helps improve carrier loss ratios. To reduce the odds of a claim, agents should advise homeowners to recognize common hazards.

• Water. In 2020, 20% of all homeowner claims involved water. Policyholders must know that properly maintained indoor fire sprinklers and automatic water shutoffs are two preventive measures that underwriters consider when assessing a risk. 
• Fire. Testing fire systems periodically helps ensure safety and loss control. Heat sensors triggered at certain temperatures can be wired to notify fire departments, improving response time and mitigating damage. 
• Power failure. Insurance advisers can communicate how generators and backup power systems should be tested regularly to prevent water and sewer backup due to inoperable sump pumps during a power loss. 
• Combustible matter. Gas leaks produce fumes that can be costly and deadly if ignited. Offering tips to policyholders on installing and properly maintaining gas leak sensors can help avoid potential catastrophes in earthquake-prone areas. 
• Regional risks. Be it floodwaters, hurricanes or wildfires, affluent policyholders should understand the risks specific to a home’s location. They can take preventive measures, such as structural reinforcements or fire-resistant construction materials. 
• Storms. With a new sale or at renewal, agents should make clients aware that roof damage and replacement can be another costly endeavor. As a rule of thumb, the newer a roof is, the more acceptable a homeowner’s risk is. Hailstorms are a common culprit, and heat maps can help identify risks in storm-prone regions.

4. Encourage safe driving practices. The post-COVID inflationary trend has boosted vehicle prices skyward and increased the amount of risk carriers must bear. Collision and property damage claims have increased in both average amount and frequency. Distracted driving and driving under the influence have added to the risk of severe injury or death.

Continue to emphasize that foregoing the use of phones while driving can reduce the odds of a serious car crash. For teen drivers, let parents know about apps like Life360 to ensure that youthful operators cannot text or talk while driving. 

It’s a different world

Understanding insurance market dynamics and navigating the changes are the first steps to a prudent loss control plan. To prevent and mitigate claims, brokers and policyholders must communicate freely and gather all relevant data on homes and automobiles, while encouraging their clients to adopt a preventive frame of mind. With the unique challenge of protecting highly successful individuals and their assets, holistic risk management conversations can help pull the entire plan together.

KEY TAKEAWAYS

--Because of COVID, millennials were forced to start thinking about life insurance planning sooner than generations past did.

--Digital transformation in the insurance industry makes life insurance more appealing and amenable to millennials.

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Millennials are no strangers to disrupting legacy financial institutions. After all, these status-quo challengers pioneered buy-now-pay-later technology like Klarna and Afterpay, as well as innovated fintech banking apps like Chime.

And now they’ve set their sights on another legacy institution… life insurance. But not life insurance in the traditional sense.

Instead, millennials are revolutionizing the life insurance industry from the inside out, imposing their reach and influence on every aspect.

And as previous generations continue to age out, creating a greater shift toward millennial-friendly life insurance companies, the industry will look far more lucrative and appealing. Instead of a job millennials avoid at all costs, they’re going to see their dream job. One where they’ll redefine the industry for future generations, as well as secure their own futures.

How the COVID Pandemic Affected Millennials’ Mortality Mentality

The chaos of the COVID-19 pandemic almost seems like a lifetime ago. It’s so easy to forget just how uncertain those times were. New variants seemingly popped up every week, each more deadly than its predecessor, and we didn’t have concrete evidence about how you could (or couldn’t) spread the virus.

This uncertainty not only reminded us of just how fragile life can be but forced every person in the world to confront their own mortality and made us way more aware of our health.

This put millennials in a precarious position.

The idea of death and how loved ones would be affected is something traditionally reserved for “older” generations -- in this case, Baby Boomers, with Gen-X following closely behind. But thanks to COVID, millennials were becoming hyper-aware of their own mortality much sooner and were forced to start thinking about their life insurance plans earlier than past generations.

See also: Breathing Life Into Life Insurance

The Appeal of a Digital Insurance Industry

The traditional image of a life insurance agent is very much analog. An older gentleman, maybe someone with a comb-over, thick glasses and leather patches on the elbows of his jacket sleeve who would drive through his city or town, going door to door, collecting insurance premiums weekly or monthly. He would then return to his office, where a stack of long paper applications waited for him.

Now, as with so many other aspects of the world at large, technology has begun to play a larger part in the insurance industry.

These days, a good percentage of life insurance is sold virtually, with Zoom calls and mobile devices replacing door-to-door house calls. An insurance agent’s reach is no longer dictated by how much gas is in their tank or how much paper they’ve stocked. Applications and signature verification can be done directly from their phone… they don’t have to be in front of the person.

And this is where millennials thrive.

Instead offering a full-time job full of red tape and antiquated processes, the insurance industry is using technology to be more amenable to millennials. And in this current economic crisis, with inflation on the rise and so many other contributing factors, a virtual and technology-driven industry makes for a convenient second income.

Yes, you read that right. Millennials aren’t just buying more policies – they are becoming agents.

Side Effects of the Millennial Disruption on the Insurance Industry

In the future, millennials will continue to be a huge influence on the insurance industry… that’s pretty obvious.

Because not only are millennial-friendly life insurance companies becoming the place they turn to to facilitate their dream careers, but it’s also filling them with the knowledge to help them avoid the serious financial risk that comes with not having life insurance. After all, nearly 30% of millennials admit to not having life insurance because it’s too expensive.

And something else unexpected is that it’s not just other millennials selling to each other. There’s plenty of research out there that talks about how older folks view millennials and how much they trust them.

So with a lot more younger people getting involved and selling insurance, the future of the industry looks very bright. I truly think you’re going to continue to see this trend continue, and the industry as a whole will continue to thrive because of it.

KEY TAKEAWAYS:

--A digital adoption platform (DAP) is a no-code software that integrates with applications to help users learn the application. A DAP provides just-in-time prompts, nudges and smart tips to users while they are in an app.

--Sentry offered guidance and support to internal associates for sales, underwriting, claims and operations, along with external agents and customer service reps, and more than 75,000 customers. As a result, user engagement on the Workday application reached 94%, with a 91% success rate for self-help searches.

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The insurance industry has long struggled with barriers to software application adoption by its internal agents and external policyholders. That is why leading firms are exploring a better approach, to enhance the quality of their software user experiences.

In a world relying on digitization, more organizations are finding digital adoption platforms to be crucial to their overall digital transformation journey. A digital adoption platform (DAP) is a no-code software that integrates with applications to help users learn the application. The goal is to help users take charge of their digital environments while working within their apps. Automated support can equip functional users such as underwriters, adjusters, agents and service representatives with in-the-moment resources to improve their software decisions and thus increase business profitability.

A DAP combines guided walkthroughs with task lists to assist users in the software training process. Property and casualty (P&C) and life insurance companies are able to deliver superior customer experiences to their policyholders by accelerating policy and claims processes using a DAP. Insurers can also improve the user onboarding experience by creating training content that supports the adoption of complex applications. 

A digital adoption platform minimizes human errors by posting just-in-time prompts, nudges and smart tips directly in the user’s app experience, serving as a kind of trusted adviser. This approach can help reduce claims leakage, improve processing time and boost customer satisfaction.

Efficiency for Insurance Employees and Benefits for Customers

For example, Sentry Insurance, one of the largest mutual insurance companies in the U.S., sought to provide on-demand learning and self-help options to train employees and customers to use its applications and portals more effectively. With more than 4,400 employees, Sentry believed self-service training options were essential to reduce the support team’s workload.

The internal-facing applications included core P&C apps such as a claims management system for claims associates, a policy administration system for underwriters and a portal for independent agents. A customer-facing application allowed for easy management of their personal accounts. The platform also provided digital guided learning for the Workday HR and payroll systems.   

Using Whatfix, Sentry created user-specific content with just-in-time support by using pop-ups, videos and other self-help materials specific to each person’s role and application. Those resources highlighted operating procedures on topics such as lienholders and vehicle payments, how to handle different types of claims or how to raise additional requests. Both customers and employees could immediately access the most relevant support and training materials in the flow of their work, without searching through a vast knowledge base or engaging with the support team for help.

This approach is known as "userization," which involves making technology more accessible through experience-first principles and empowering users to drive efficiency and productivity. Userization focuses on making technology user-centric, rather than making people technology proficient. With userization, organizations can tailor their technology ecosystems to suit individual users, show intelligent nudges and provide step-by-step guidance.

By implementing a digital adoption platform across multiple applications, Sentry created a real-time, in-app interactive guidance system for the full range of end users and reduced the average time needed for content creation by 40%. In the past, in-house content development could take Sentry up to 50 hours for a single project. With the new digital adoption platform, that timeline was reduced to 30 hours. Such time savings are significant because each application can involve 500 or more content resources.

See also: Digital Future of Insurance Emerges

Driving Agile Policy Administration, Claims and Sales Growth

Until recently, Sentry used simple tools to point sales, customer service and claims teams to their training resources. The organization recognized the need to provide a better experience that could improve the efficiency of all stakeholders. Sentry applied the DAP software to eight main applications, including employee and customer-facing platforms. The company offered guidance and support to internal associates for sales, underwriting, claims and operations, along with external agents and customer service reps, and more than 75,000 customers. As a result, user engagement on the Workday application reached 94%, with a 91% success rate for self-help searches. 

In addition, Sentry created automated walk-throughs to guide users through different parts of the platform. The company also used in-app surveys to collect feedback on the walk-throughs and other training content to improve future versions. In in-app surveys, Sentry saw an increase in user satisfaction – both from employees and customers.

Online resources were accessed through self-help menus more than 15,000 times during the platform’s first 12 months of operation, enabling contextual self-service and streamlining faster claims processing. Over that first year, time savings for Sentry content designers, developers, customers and support staff totaled $1 million in resources, salaries and increased productivity. Sentry reallocated those resources toward profit-generating activities rather than toward creating training content, which does not directly generate profits.

Today, Sentry’s internal-facing claims system application receives over 100 queries a day in its self-help portal. With the new digital adoption platform, Sentry’s support team has reported a significant decrease in simple support requests, such as which browser to use, freeing the team to focus on higher-priority issues. By adopting a modern digital adoption platform, Sentry has created more efficient training content that provides users with immediate access to the most relevant guidance and self-help materials for every application.

Auto insurers are raising rates as fast as they can to stem mounting losses. For instance, Allstate just announced 12% increases in auto insurance rates in 12 markets, on top of a general 7.5% rise earlier this year.

But it's not clear that insurers can move fast enough — or that regulators and consumers will accept the rate increases.

Allstate had an unprofitable 110.1 combined ratio in auto last year, and the American Property Casualty Insurance Association said the direct loss ratio for the whole industry soared. It was 80.2 in 2022, up a whopping 24.1 points from 2020. So there's a lot of catching up to do. 

But consumers are rebelling. J.D. Power reported that shopping for auto policies in the second quarter in the U.S. was the highest they've seen in the three years they've been tracking the behavior on a daily basis. Not only that, but J.D. Power said a TransUnion survey of insurance customers in the first quarter found that "nearly 15% of respondents said they owned or used a car without valid insurance or allowed their coverage to lapse at some point in the previous six months, with nearly 30% having cited inability to pay as the primary reason." 

What happens now?

Well, as it turns out, our friends Stephen Applebaum and Alan Demers sent me an article yesterday afternoon with almost the exact headline I had on my draft of Six Things — "Auto Insurance in an Existential Crisis," in their case — and they go into "What next?" in considerable detail. So, I'll summarize their thoughts here, add a couple of my own and then, as always, encourage you to read their full piece.

The short answer is that what comes next won't be pretty. The longer answer follows. 

Their article summarizes the forces we've all been reading about. Supply chains have been disrupted by the pandemic, sending prices for parts through the roof and inflating costs for cars, in general. Delays in getting parts have also raised costs by extending the length of time for which drivers need rentals. The war for talent has pushed labor costs higher. The transition to electric vehicles and the growing use of safety devices have made many repairs far more expensive or even led to vehicles' being declared a total loss. Meanwhile, the pressures from inflation and general uncertainty about the economy have weighed on consumers.

But Stephen and Alan also get into subtleties that seem to be getting overlooked. In particular, they talk about the reshaping of the collision repair industry and about how it may sustain pricing pressures for auto insurers. They note that private equity has been buying up small operations and linking them into what are known as multi-shop operators (MSOs). Insurers have, in some ways, even been driving the trend because they want collision repair shops to adopt more efficient technologies and link more tightly into insurers' claims operations. But a result has been that the MSOs now have more pricing leverage and will continue using it.

The article describes how the many attempts to reduce the frequency and severity of accidents seem to have run their course, at least for now. For instance, they say, "Telematics-supported, usage-based insurance programs enabled a large group of safer drivers to take advantage of insurance discounts, but adoption has leveled out at under 20% of policies... and distracted driving is on the rise."

Stephen and Alan predict what they call a Great Rebalancing that will likely lead to consolidation among auto insurers, as the collision repair industry flexes its muscles, as EVs and other technologies continue to drive up costs and as regulators and consumers resist increases in rates. 

I'm sure they're right. The sorts of pressures facing auto insurers would, in other industries, force many to go out of business, but auto insurance isn't just something consumers want; it's required by law. So the industry will at least muddle through the current crisis.

The question is whether one or more companies will be able to innovate a way out of the crisis, keeping price increases to a minimum for good drivers while returning the industry to financial health. Supply chains have mostly healed, and inflation is declining, so some macroeconomic factors should help. 

But the field for innovation is still wide open. And consumers will surely find whatever auto insurer produces the best solution.

Cheers,

Paul

Insurance brokers remain an attractive category for private equity investment and changing market conditions have necessitated a refresh in the playbooks for success. As we navigate a period of high inflation and rising interest rates, how can brokers thrive during the potential ‘hard landing’ in coming months? Getting the basics right has never been more important. Here, we share an exclusive look of our Oliver Wyman report, The Next Phase of Growth for Insurance Brokers. We dive into the macroeconomic environment and the impacts to the brokerage ecosystem. We share perspectives on how to win in the long-term — through integrated business models, greater standardization, and by driving cross-organizational effectiveness

Read More

Sponsored by ITL Partner: Oliver Wyman

In Northern California, where I live, we had a mild start to the summer. I rarely even had my air conditioning on until this weekend. Following a winter with unrelenting rain and snow, the low temperatures seemed to augur a summer with few wildfires. 

No longer.

Soaring temperatures -- they hit 128 degrees Fahrenheit in Death Valley on Sunday -- are drying out the West. And there's even more feedstock than usual for fires because of the wet winter and spring. So Canada likely will soon not be alone in facing massive damage and smoke from wildfires.

Through mid-July, the U.S. is only at 26% of the historical average of acreage burned (while Canada is at 1,200% of its historical average) 

But AccuWeather says a heat dome forming across the Southwest and Southern California will cause wildfires that will likely peak in August or September but that could burn into the fall. In Southern California, the Rabbit Fire already exploded to more than 7,000 acres over the weekend. 

I'm actually on the Jersey shore this week, for a vacation with my many siblings and our families, so I'm still not using my air conditioning in California :), but I'll be back next week and experience the heat and, likely, fires first-hand. 

In the meantime, if you want to read more, here is a report from a sister organization, the Insurance Information Institute, and Capgemini on how to deal with wildfire threats, along with a raft of statistics on the threats they pose.

Stay safe.

Paul

KEY TAKEAWAY:

--None of the models singly can offer a solution, but, used together, they offer a compelling structure to power the pursuit of business value from data, analytics and artificial intelligence.

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Data, analytics and artificial intelligence (DAAI) agendas are now a part of boardroom discussions at all insurance companies, and what's the next big shiny thing is hotly debated at coffee tables at most insurance companies.

However, determining how much business value comes from DAAI efforts remains difficult. So does deciding who is responsible for ensuring that business value is measurable and sustainable.

We will delve into few value realization models that insurance firms can follow to deal with this conundrum and ensure that data, analytics and AI (DAAI) initiatives remain at the top of business agendas effortlessly.

1. Strategic Alignment Model

Insurance companies using this model have execution of DAAI across the company as an organizational strategy itself. DAAI capabilities are so pervasive that they influence strategic priorities or metrics in the first place.

With this model, questions around the value of DAAI do not have a direct, measurable answer. The strategic agenda alignment model requires a high level of organizational maturity. It is sustainable in the long run.

2. Pain-Point Model

This model uses DAAI to address opportunities and risks that keep the C-suite awake but primarily looks at addressing the pain points. This method follows an iterative process of identifying pain points, collecting data to validate each pain point, establishing DAAI initiatives to address prioritized pain points, implementing solutions and measuring benefits.

This is an effective tactical approach. It also helps build a data-driven culture. Typically, the value creation responsibility is a joint ownership between the respective C-suite executive and DAAl leaders.

3. Customer-at-Center Model

Insurance company operations are inherently complex, with most of the activities geared toward smoothing customer journeys across buy, service, claim and attrition points. Therefore, measuring value created by DAAI initiatives at customer touch points is a reasonable metric, although it does not account for the value created by operational efficiency enhancements.

Assessing, measuring and attributing value created by DAAI in the customer-centric model is a fairly straightforward task and ensures that capital is deployed to enhance the experience of the most important stakeholder of the insurance company, its customers. Value creation in this model is measured at customer touch points so it comes under the remit of teams and tools enabling such journeys.

4. KPI Model

Key performance indicators (KPIs), along with their owners and drivers, are essential for an effective and efficient insurance operation. Any initiative that improves KPIs creates business value, and DAAI initiatives can do so. 

Because organization KPIs and monetary gains are intertwined, however, value may be created but not be adequately showcased.

An organizational KPI model is a logical one to adopt. The individual KPI owners have responsibility for improvement, with a linkage to the DAAI team.

See also: Life Is a Bowl of... Customer Analytics

5. Technology Showcase Model

Adoption and proof-of-value are good surrogates for value creation here. Extrapolation and scenario analysis of future value using present outcomes, albeit limited, also provides good visibility into value.

DAAI teams are responsible for sustainability, measurability and visibility into value.

Conclusion

Ensuring business value from DAAI initiatives does not have a one-size-fits-all solution. There needs to be a single-minded focus on creating measurable and sustainable business value.

None of the models singly can offer a solution, but, used together, they offer a compelling structure to power the pursuit of DAAI business value.

KEY TAKEAWAYS:

--Begin by understanding your data relationship with your partner, then segment your customer base.

--Be sure to set an ambitious enough goal, then test and test -- and never stop.

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While data has long been the lifeblood of the insurance industry, embedded insurance is the latest hot ticket to growth — and for good reason! Executives are practically salivating when considering their share of the $70 billion U.S. embedded insurance opportunity.

Understanding the consumer purchasing the product or service unlocks opportunities for optimization. Consumers should not all be offered the same insurance solutions for all purchases. Such consistent delivery will quickly become white noise for consumers, something to skim past when checking out. The use of data, beyond underwriting, may be the difference that puts distance between winners and losers in the landscape.

Leaders should begin by crafting customer segmentation. The data to fuel this segmentation may include past buying behaviors, which will likely come from a retailer's customer relationship management (CRM) or loyalty program. Loyal buyers may react differently to coverage offers than first-time buyers will.  

See also: 9 Keys for Embedded Insurance

Third-party data can help fill the gaps. It may include standard attributes like age, gender, household income and presence of children. Some providers are even bringing in more advanced data, including a consumer's attitude toward uncertainty, price sensitivity, buying motivations and general interests.

Example: A consumer may be extremely price-sensitive, unwilling to insure any product or event costing less than $1,000. However, when it comes to children’s products, her appetite for uncertainty is reduced and she is more open to a policy on a $300 baby monitor.

Embedded insurance is a partnership

While insurance professionals understand the competitive capabilities of data, embedded insurance by its very nature includes other industries. As insurance products are distributed by non-insurance brands, there are many situations where partners may experience a "data skill imbalance." Said less kindly — the more sophisticated partner may need to drag the other forward if they are going to win as a team. Picture a three-legged race where Usain Bolt picks up his mother to get to the finish line faster. 

As you seek to apply data for marketing and product use cases, a winning partnership will function one of three ways. First, both sides of the partnership may be sophisticated about data. Second, the less sophisticated partner may want to increase their data sophistication. But that takes time and skill, so there is a third option. The less sophisticated partner may be self-aware enough to allow the more sophisticated one to take the lead in strategy and implementation. We are back to Usain Bolt picking up his mother to finish the race ahead of everyone else.

Unfortunately, many partnerships build their strategy based on the lowest common denominator in terms of data sophistication. Data-savvy providers don’t want to push too hard early in a new partnership.

Checking a box? Or competing to win?

Merely checking a box and saying, “Sure, we’re doing embedded insurance,” is going to net exactly the results you would expect.  

Many providers are early enough in their embedded insurance journeys that each incremental dollar is considered a win. With such a low revenue threshold, it’s easy to say “but we’re beating expectations! Don’t fix what isn’t broken.” 

With low revenue expectations for embedded insurance, product leaders can no doubt breathe easier. Unfortunately, low revenue expectations typically also mean the product isn’t provided enough resources or strategically supported internally. Essentially, low expectations hold brands back from greater gains in the future. 

How much embedded insurance revenue should you expect, given your customer base and product suite? By combining multiple datasets,and including a robust view of your typical customer base, you can generate much more accurate revenue forecasts.

While you are operating in a testing phase, or beta period, a pre-optimized solution is fine. The key is knowing when a product needs to graduate to the next level and truly enter the competitive arena.

See also: The Recipe for Embedded Insurance

Ready to win? 

First determine which type of partnership you have. Are you more sophisticated when it comes to applying consumer data, or is it your partner? If neither party is experienced, the first step may be securing a partner that can help bring your organization forward. 

Next, ensure that the data you bring into your analyses and processes is high-quality. The adage hasn’t lost power: It's still garbage in, garbage out. Use your data to establish meaningful goals for embedded insurance. If you take a full view of your product suite and customer base, you may discover that you should dream bigger.

Lastly, start testing and never stop. Consumer behavior is constantly shifting, and the providers that keep up are continually monitoring the performance of all strategies.

The rise of embedded insurance is the perfect example of how the world of commerce is continually changing. To win, providers must maximize all available resources to deliver a winning and simple customer experience.

KEY TAKEAWAY:

--In the wake of a death, beneficiaries have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”

--Insurers have begun using an app that streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.

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The old saying goes, “When you file a claim, it’s not a good day.”

When you file a life insurance claim following the death of a loved one, it’s a wretched day.

More than 10 million Americans died between 2020 and 2022, according to the Centers for Disease Control and Prevention and the U.S. Census. Assuming each person left behind the average number of three family members, at least 30 million Americans have experienced terrible grief in the past three years.

When carriers can verify the death, beneficiaries receive checks in a reasonable timeframe. In some cases, despite missing paperwork, many insurers issue emergency checks to handle funeral costs and other urgent fees and settle the rest of the policy later.

Even as exceptions are made, the industry is focused on process. Streamlining work methods and catching fraud are important. Becoming more efficient helps management focus on achieving business targets and saves everyone – carriers, clients, beneficiaries – money in the long run.

Process can frustrate policyholders

Yet, as companies experiment with digital engagement, they can inadvertently push their interaction with beneficiaries to the background. Carriers do not intend to upset beneficiaries, but the rigidity of the new processes has frustrated policyholders: Only 30% of Americans have high confidence in life insurance companies, according to a January 2023 LIMRA U.S. consumer sentiment study.

Let’s be honest: Policyholders don’t care about the process. They do care about being heard. And in the wake of a death, they have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”

Younger generations might turn to Reddit or Discord for answers, but the information from an online community may not be accurate. Older generations who have gone through this life event before can rely on experience, although there might be new regulations that they are unaware of.

Adding more humanity to insurance

Life insurance is designed to help people in their darkest hour. Now, technology is putting people back into the center of insurance.

For example, FINEOS recently formed a partnership with Empathy, a platform that helps families navigate the emotional and logistical challenges of a loved one’s death. The team at Empathy has found that death in America is an expensive and complicated business for the survivors. Families are faced with an average of $17,000 in costs for funeral expenses and financial and legal matters. On top of that, it takes 13 to 20 months for families to settle their loved one’s affairs.

Most U.S. employees are managing these tasks at work. In its 2023 annual report, Empathy found that 76% of employed respondents said that dealing with loss harmed their performance or work status. Roughly 20% of the workforce at any given company will be grieving a recent loss.

See also: A New Boom for Life Insurance?

Providing practical support

Many of the issues Empathy deals with are beyond the scope of an insurance company’s claims process but critical to support the beneficiary experiencing a life event. So, the Empathy app streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies (Social Security, Veterans Administration, etc.) and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.

On an individual level, providing comfort when people are grieving is a kind gesture. From an insurance perspective, it is both humane and makes good business sense. There is a business in ethically helping to build community, especially because traditional support networks are gone. Carriers that demonstrate concern when people are at their lowest point are not just ensuring favorable Yelp reviews. They are reinforcing brand loyalty in those families, quite possibly for generations.

Demonstrating compassion  

The benefits of demonstrating compassion outweigh its costs. Life insurance companies are in business to protect people. By extending themselves beyond putting a timely check in the mail, savvy life insurers are providing practical support to give their policyholders a soft place during an extremely hard time.

KEY TAKEAWAY:

--By embracing these advancements, insurers can enhance their competitiveness, improve operational efficiency and provide superior customer experiences in the ever-changing digital landscape.

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In the ever-evolving landscape of the property and casualty (P&C) insurance industry, technology continues to play a crucial role in shaping its future. With each passing year, new advancements emerge, revolutionizing the way insurance companies operate and serve their customers. Here are the top 10 P&C insurance technology trends that are expected to make a significant impact in the near term, paving the way for a more efficient and customer-centric insurance experience:

1. Artificial Intelligence (AI) and Machine Learning

Advancements in AI and machine learning have revolutionized the insurance industry by automating manual processes, enhancing underwriting accuracy and improving risk assessment. AI will continue to drive innovation in P&C insurance by enabling personalized customer experiences, optimizing claims handling and streamlining fraud detection.

2. Internet of Things (IoT)

The IoT has opened up possibilities in the insurance sector by connecting devices and gathering real-time data. Insurance companies will leverage IoT technology to offer usage-based insurance policies, monitor property conditions and mitigate risks.

3. Telematics and Usage-Based Insurance (UBI)

Telematics, combined with UBI, allows insurance providers to collect data on driving behavior and offer personalized premiums based on actual usage. This trend will gain traction as more insurers adopt telematics devices and develop innovative UBI programs to attract and retain customers.

4. Data Analytics and Predictive Modeling

Data analytics and predictive modeling empower insurers to analyze vast amounts of data and gain valuable insights into customer behavior, claims patterns and risk assessment. By harnessing the power of big data, insurance companies can make data-driven decisions and offer more tailored products and services.

5. Blockchain Technology

Blockchain technology provides a secure and transparent platform for managing insurance transactions, policy verification and claims settlement. Insurers will increasingly adopt blockchain to enhance data integrity, streamline processes and reduce fraud.

6. Digital Claims Processing

Digital claims processing solutions expedite the claims settlement process by automating manual tasks, improving accuracy and enhancing customer experience. Insurers will invest in advanced digital platforms to streamline claims handling, reduce costs and provide faster payouts to policyholders.

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7. Chatbots and Virtual Assistants

Chatbots and virtual assistants are revolutionizing customer service in the insurance industry. These AI-powered tools offer personalized assistance, answer policy-related queries and guide customers through the claims process. Insurers will integrate chatbot technologies to provide round-the-clock support and improve customer satisfaction.

8. Cybersecurity and Data Protection

With the increasing digitization of insurance processes, cybersecurity and data protection have become paramount. Insurance companies will invest heavily in robust cybersecurity measures to safeguard sensitive customer information, prevent data breaches and ensure regulatory compliance.

9. Robotic Process Automation (RPA)

RPA technology automates repetitive and rule-based tasks, enabling insurers to streamline operations, reduce errors and increase efficiency. RPA adoption will continue to grow as insurance companies leverage this technology to improve claims processing, policy administration and customer service.

10. Mobile Applications and Customer Engagement

Mobile applications have become an essential tool for insurers to engage with their customers. Insurance companies will develop user-friendly mobile apps that enable policyholders to manage their policies, file claims and access support services conveniently.

Conclusion

These technology trends will reshape the way insurance companies operate, interact with customers and mitigate risks. By embracing these advancements, insurers can enhance their competitiveness, improve operational efficiency and provide superior customer experiences in the ever-changing digital landscape.