The pandemic reimagined work, and organizations were swift to adapt digital technologies and embrace a remote work model. This not only enabled flexibility for employees but allowed employers to tap a borderless workforce. With the pandemic in the rearview mirror, as organizations navigate the shift from remote work to return-to-office (RTO) or a hybrid work model, the focus is on innovative approaches to providing incentives to the workforce.

This includes focusing on group benefits and how data and AI can play a pivotal role in providing value-based care.

Why employers need to focus on group benefits

Employees face myriad stressors such as isolated or remote work environments, rising inflation and social pressures. There is no finite line separating personal priorities from work responsibilities, and stress related to caregiving, finances, untenable workloads, etc. can accumulate. With increased focus on RTO, employers need to provide benefits that are personalized, to alleviate stress, and affordable, to attract and retain the talent.

See also: Survey Data Is Your Secret Weapon

How to personalize group benefits

Employers need to take a holistic view of wellness and demonstrate care while designing the plan for employees. Employers should use pulse surveys, benefits discussions, healthcare literacy townhalls, etc. to make sure benefits have a meaningful impact and broad utilization.

Factors such as high healthcare costs, diversified care needs, preferences and outcomes should drive organizations toward value-based care.

Role of data and AI in group benefits

Data and AI hold the key to delivering personalized, value-based care while reducing costs, accelerating diagnostics, providing recommendations for treatment plans, speeding recovery and improving wellbeing. Here are some approaches:

Virtual Benefits Adviser - This is a digital twin illustrating to employees the value of the benefits they select, how they work and how to maximize their use based on the employees' needs. The adviser can also serve as a guide to improve health through its well-being score and insights.

AI-Driven Employee Assistance Program (EAP) - Mental health is a focal point in employee wellbeing, and an effective program requires access to a tailored provider network. AI and machine learning can match patients with providers based on treatment sought, demographics, social determinants of health (SDOH), member preferences, etc.

AI-Driven Claims to Improve Provider Experience - Delay in payment to providers is one of the sticking points that can drive quality providers out of a network. Delays are primarily due to manual processing of treatment plans, procedures, bills, etc. and lack of adoption of unstructured or semi-structured data. Delays can be addressed by leveraging AI to process radiographs/X-rays, charting, etc. and improve adjudication of expenses.

Predictive Analytics - They can be used to monitor the treatment patterns of participating provider and identify instances to see if usage of procedures goes above the norm in a peer group.

Wearables for Workplace Safety - Workplace injuries such as overexertion, slips and trips and falls contribute significantly to lost time. Wearables can supplement workers' physical capabilities and speed an injured worker’s return to work. Also, data associated with the wearables can help to detect hazardous conditions, measure the posture and lifting techniques of the worker and thereby prevent future injuries. 

See also: 6 Words to Focus Your AI Innovation Strategy

Way forward

Data and AI can function as a personalized fitness coach and virtual care provider, while aiding in recovery/rehabilitation and improving overall wellbeing. 

KEY TAKEAWAY:

--Misconceptions can be created that the customer experience is positive, simply because certain touchpoints in the journey are scoring well in a survey or seem to have other positive measurables.

--To get started on a better approach, narrow your measurement focus to a few key journeys rather than trying to measure too much. 

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Insurance firms are increasingly investing resources to map and manage customer journeys to improve experiences and drive business results. Yet measurement of customer journeys is still being approached from a very siloed perspective. Data and metrics related to the various steps of the customer journey are trapped within the business units and are difficult to aggregate, let alone connect to the journey. 

The challenges are twofold. First, the effectiveness of journey improvement efforts is hard to determine, and it’s difficult to connect those efforts to business outcomes. Second, misconceptions are created that the customer experience is good, simply because certain touchpoints in the journey are scoring well in a survey or seem to have other positive measurables. Meanwhile from the customer’s perspective, the overall experience could be suffering. Customers measure their experience from the perspective of a lifecycle – the sum of all their interactions. Firms measure the experience from a single snapshot in time. 

A McKinsey study highlighted a story that illustrates this common issue. A company faced customer retention challenges despite high satisfaction scores at individual touchpoints. When the company decided to view the experience from the customer journey perspective, they found that the accumulation of negatives experiences was the issue, often involving multiple functions of the business. Despite satisfaction with individual touchpoints, the journey itself was driving customers away. Measuring touchpoints alone can often hide poor experiences. That’s why customer journey measurement is critical to unlocking the true potential of your experience.

See also: Tips for Improving Customer Experience

Why Customer Journey Measurement Matters

Customer journey measurement can be likened to using a fitness tracker for personal health. Your fitness tracker lets you view your health metrics on a dashboard to measure progress and personalize actions for better outcomes. Similarly, in a business context, customer journey health measurement quantifies the quality of experiences and their link to business key performance indicators. 

While it can be easy to understand why journey measurement is important in theory, putting it into practice is another story. A study by the Nielsen Norman Group found that around 80% of journey maps lack implemented measurement. Starting down the path of customer journey measurement can seem intimidating. But the good news is that it doesn’t have to be a hard process. Let’s look at a simplified approach to help you get started.

Getting Started With Customer Journey Measurement

Insurance firms likely have a handful of customer journeys they have prioritized for impact on their overall business strategy and the connections of these journeys to the firm’s mission and vision. Narrow your measurement focus to these key journeys rather than trying to measure too much. 

1. Start with one journey to measure:
   • Start small, focusing on a key journey crucial to your organization and customers. 
   • This approach allows quick wins, builds buy-in, enables agility and positions you to scale to the other key journeys once your practice is established.
2. Define and Align:
   • Identify the key journey steps or moments of truth and align metrics with the customer and business goals. You can think of business outcomes as traditional key performance indicators (KPIs). Metrics that measure outcomes aligned to customer goals are called CPIs, or customer performance indicators. 
   • Collect existing metrics and align on metrics that may need to be developed, identify data sources and define roles within the team.
3. Gather Data, Test, Learn and Adapt:
   • Start collecting data and metrics for the selected journey.
   • Test metrics alignment to business objectives and adapt based on insights.
   • Repeat phases as needed, acknowledging the continuing nature of this process.
4. Tell the Story:
   • Share CX insights through various channels, such as monthly reviews, dashboards or reports.
   • Celebrate wins, capture opportunities and agree on actions.

See also: How to Improve the Customer Experience

The Future of Journey Measurement

The landscape of data and analytics, powered by generative AI, is rapidly advancing. However, journey measurement is a practice, not just a tool. The practices shared here are timeless and can be applied with technology as an accelerant, but they are not technology-dependent.

Whether you are in a firm that has access to cutting-edge technology and has ready access to connected data or you are in a firm with fewer resources and disconnected or limited data, there is some element of journey measurement you can execute. The key is to start with what you have and mature as your capabilities, skills and data improve.

Journey measurement is itself a journey. As the industry evolves, adopting a robust journey measurement practice, founded on best practices, remains key. Technology should be viewed as an enabler, not a replacement for a solid foundation.

Investing in customer journey measurement is valuable for businesses, translating the intrinsic belief that helping customers win enables the business to win into actionable insights. As CX professionals, instilling this belief and quantifying what "winning" means can empower organizations to drive positive outcomes for both customers and the business.

Commercial insurance prices in the U.S. have been rising for a staggering 24 consecutive quarters. That’s six years of relentless price increases. Worse, blameless brokers and agents must explain to their long-suffering clients that insurers now often exclude catastrophe perils from their standard property coverage. That makes it ever-more difficult to fulfil clients’ fundamental risk-transfer needs.

Back to basics 

One possible solution is to go all the way back to basics, rethink the way insurance works and give serious consideration to a different way of insuring. Many brokers are now doing so by offering their clients parametric coverage of excluded perils. It’s a whole new kind of insurance product that might come off the shelf or be built from scratch specifically to meet affinity groups’ specific risk challenges in this extraordinary insurance environment.

The process begins by thinking about your clients and identifying the coverage they are unable to get through regular insurance. For example, you may have built your niche structuring and placing comprehensive insurance for hotel owners. Those with properties in flood zones, or on a geological fault that places them at earthquake risk, or even those in a lovely forest that could be prone to wildfire, may find those specific perils are excluded from their traditional property insurance policies. 

Perils excluded can usually be written back under conventional insurance, but only at great expense. Because conventional insurers find, say, the risk of wildfire so unattractive that they exclude it, it is understandable that they charge a lot of money to take it back, especially when the risk is severe. Unfortunately, that makes it very difficult for an broker to ensure their clients have the complete protection they need.

See also: Best of Both: Bundling Parametric, Indemnity

Parametric solutions

Parametric insurance provides a viable and incredibly straightforward alternative. This new kind of policy provides a fixed, predetermined claims payments when a third-party “computation agent” confirms it is due. That happens when data related to the specific peril insured at the precise location specified in the policy shows that a wildfire, flood or earthquake (etc.) of sufficient intensity has occurred at that location and triggered the coverage. The specified payment is then made within weeks, or even days.

Risk carriers are flocking to underwrite parametric insurance because so much uncertainty is removed from the process. The insurer behind a policy can be sure, for example, of the precise amount that a specific event will cost them. It is simply the total of all the policy limits they have exposed to that risk. 

An event such as a flood will damage some insured buildings but not others. The severity of damage to those that do suffer will vary, perhaps drastically. Conventional insurers spend months and small fortunes deciding who will get paid, and how much. But a parametric policy requires no loss adjusting. All that uncertainty is removed, for the carrier and the insurer alike. If the flood happens, the policy limits are paid. No room is left for uncertainty.

See also: Solving Life Insurance Coverage Gap

Off the peg, or tailor-made?

If one or two of customers face a coverage shortfall due to the exclusion of a natural peril risk, intermediaries may choose to fill the gap with an off-the-shelf parametric product. More such solutions are reaching the market every day. Some are intended specifically to cover the gaps left by insurers’ exclusions. These innovative alternative products range from coastal flood coverage triggered by floating sensors that measure wave height, to niche business interruption policies that pay when third-party cloud computing services cease to function.

When the number of clients in need is larger, brokers may choose to work with a partner such as Skyline to develop their own parametric insurance products. Tailor-made products fill the coverage gap even more tightly, and the process of creating a product is surprisingly straightforward and potentially very swift. Skyline has helped brokers and insurers develop custom coverage for commonplace carved-out risks such as hurricane events but also for specialty risks such as lone-shooter incidents. 

Any manifestation of risk that can be measured either on a binary basis or against a specially constructed index can be insured under a parametric policy. The policies are recognized by insurance supervisors world-wide as legitimate insurance, because policyholders must hold an insurable interest in the insured event.

The benefits of parametric are therefore enormous. It provides coverage where conventional insurers will not, removes the uncertainty inherent in traditional policies and delivers payments much faster than old-fashioned property all-risks insurance can. After six years of bad news, at last brokers have this positive proposition for long-suffering clients.

KEY TAKEAWAY:

--If a causal, legal link between an industry’s actions and the exacerbation of climate change can be directly demonstrated, climate-related property losses could become recoverable from defendants within that industry. Property insurers could then begin to seek recovery from companies proven to be at fault. A new area of liability subrogation would begin, one which makes liability insurers liable for perils they never intended to underwrite.

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Pointing fingers in court over the impacts of climate change is increasingly popular. According to a report by the UN Environment Program and Columbia University, the number of suits over the fallout from global warming has more than doubled during the past five years. The impacts range from arsenic in rice tainting baby food, to more intensive rainfall driving flash floods. About three-quarters of the actions are in the U.S. 

Seeking monetary remedy from private industries for their part in causing damage to the climate is not an entirely new idea. Corporate responsibility has been well established in cases of pollution, for example, when companies have been held responsible for spills or other discharges of waste products. It remains to be seen if courts will level a similar consensus over the liability of companies due to the effects of climate change on third parties. 

Governments have already been found wanting, and blame assigned. In the first-ever constitutional climate trial in the U.S., 16 young people in Montana successfully challenged their state government for permitting fossil-fuel developments without considering the impact of greenhouse gases. The state court upheld their claim that their rights under the Montana state constitution’s guarantee of a safe environment were violated by various state actions. Similar actions are underway in Hawaii and other states, and around the world in the European Court of Human Rights, Sweden and many other jurisdictions. 

See also: Review of 2023 Atlantic Hurricane Season

Connecting the causality dots 

If a causal, legal link between an industry’s actions and the exacerbation of climate change can be directly demonstrated, climate-related property losses could become recoverable from defendants within that industry. Property insurers could then begin to seek recovery from companies proven to be at fault. A new area of liability subrogation would begin, one which makes liability insurers liable for perils they never intended to underwrite. If, meanwhile, the observed increasing intensity of flood events induced by precipitation is related causally to human-induced climate change, the property insurance landscape would change dramatically. Subrogation of insurance is theoretically possible, but establishing this causality will prove complex. 

Flood requires two chief catalysts. First is the storm itself. It is an atmospheric phenomenon understood as a natural hazard. The second is the conditions on the ground. These may be the result of the actions of humans (such as the intentional opening of a levee). The second catalyst is readily acknowledged as actionable, but the first is not. 

Actions have already been brought against third parties to recover the cost of flood damage to property when human action has caused the loss. It happened in 2011, for example, after Federal officials called in the military to protect the small town of Cairo, Illinois from the rapidly rising Mississippi River. Blaming resulting water damage to their farmland and homes on the decision to bulldoze through a protective levee, 25 property owners sued, seeking compensation for their losses. 

The case was dismissed, but the federal government provided reimbursements, even though no government insurance had been intended prior to the suit. (The opened sections were intended as “fuse plugs” to be treated as safety relief valves.) Other legal recovery opportunities arising from human actions also have precedent. For example, inappropriate building in a floodway has been cited as justification for claims subrogation. 

From physical to natural

As for the first catalyst of flood events – the storm itself – it has not heretofore been possible to sue a human entity for changing the weather. However, the Montana case shows that the “natural phenomenon” exemption from liability may no longer hold. More and more court cases around the world argue that one or another anthropomorphic third-party organization is responsible for altering the course of atmospheric phenomena and therefore should be held liable for the property damage the changed weather causes. 

The phenomenon is not limited to flooding. Earthquake damage is caused by a combination of faults in the Earth’s crust and insufficiently robust construction. The former is a natural hazard, but the latter could be construed as a result of human error. However, the first fact may no longer hold water (pun intended). Earthquakes in Oklahoma, Texas and Pennsylvania – albeit small ones – are being seen as a result of nearby fracking activity. 

Similarly, wildfire, a former natural-only hazard, is now often blamed on a utility company and has become an actionable loss. Subrogations by insurers against power suppliers have been enormous. For example, a subrogation claims settlement between Southern California Edison and insurance subrogation claimants for the 2017 Thomas and Koenigstein fires and the 2018 Montecito mudslides totaled $1.16 billion. No admission of wrongdoing or liability was made, but the basis of the claims is the utilities’ direct responsibility for sources of ignition.

However, climate-related increase in the dryness of woodlands and grasslands is a further factor, as is increased frequency of lightning strikes. These phenomena could drag climate-affecting industries into the fray.  

See also: U.S. Is Ready for Parametric Flood Insurance

Flood: the next unnatural hazard?

It has long been argued that human-caused climate change is not proven as a direct cause of increased flood losses. The connection is intuitively apparent, but is it really a driving factor? Human development in flood-prone areas, inadequate and aging infrastructure and increased runoff all contribute to flood severity risk. All are the product of human actions, but they do not subvert the natural nature of the underlying event.  

However, as with other climate litigation, proof (or evidence, at least) may be coming. Stanford University researchers have published an initial analysis that concludes that climate-changed induced increases in precipitation accounted for 36% of the actual flooding costs that occurred in the U.S. between 1988 and 2017. Lead author Frances Davenport from the School of Earth, Energy & Environmental Sciences wrote: “Even in states where the long-term mean precipitation hasn’t changed, in most cases the wettest events have intensified, increasing the financial damages relative to what would have occurred without the changes in precipitation.”

If climate change is shown conclusively to be driven by human activity, expect to see increases in event severity as actionable. It may be difficult to pin down a particular defendant, but that probably means only that claimants will cast a wider net in their effort to cast blame for altering the nature of natural events.

Let's start with the bad news and a little background. For better or worse, Oprah has been American’s biggest weight loss influencer since the liquid diet fad in the late 1980s. 

And now she’s all in for Ozempic, and presumably other GLP-1 drugs. Of course, her regimen also includes significant exercise and, we would guess, the means and opportunity to eat healthy. Unfortunately, those nuances will likely be lost on your clients’ employees jumping on the GLP-1 bandwagon in hopes of a magic cure. 

Magic bullet or not, never before in the history of healthcare has anything – any drug, procedure, test, anything – combined this much effectiveness, popularity…and cost. Indeed, this single class of drugs – in what is forecast to be a "bumper year" for them – will likely add 10 basis points to the overall U.S. inflation rate in 2024. (You heard it here first, folks.)

Tip 1: Run the Numbers

Your clients covering these drugs for weight loss will experience the largest-ever cost increase attributable to a single covered benefit, so large that it will squeeze their overall profit margin.  Don’t believe that? 

Ask us for our Weight Loss Drug Economics Calculator (WLDEC), enter your own assumptions and see for yourselves.

WLDEC models every significant input – from obesity rate to uptake to cheating (see Tip 3 below), to our default estimates of the benefits – to estimate your cost increase, with and without using Quizzify.

WLDEC is available gratis to most advisers by writing to Al@Quizzify.com. Or, you can visit https://wldec.quizzify.com/, where you can enter your own assumptions, your own data and your own credit card.

See also: How Wearables Can Improve Worker Safety

Tip 2: Cover Zepbound, not Wegovy

Most of your clients have never even heard of Zepbound (“Sounds like an off-brand bus line,” someone said). Yet it is both more effective and currently much less expensive than Wegovy. 

Of course, you’ve heard of Mounjaro. You may not be aware that the exact same dosage of the exact same drug, Zepbound, is also called Mounjaro.

As of this writing, Wegovy is $16,200/year before rebates vs. Zepbound @ $12,720/year.

Tip 3: Don’t Rely on PBM Preauthorization to Limit Use

Preauthorization only works if the diagnosis, test, image, etc. supporting it is objective and somewhat definitive. In my particular case, to get authorized for continued physical therapy (PT), I needed an actual MRI. (Probably cost more than the 12 additional PT sessions, but that’s a tale for another time.)

For weight-loss drug preauthorization, all you need is a body mass index (BMI) of 30. Unlike blood tests or scans, this hurdle can be easily gamed. 

How do we know this? To begin with, the average American adult BMI is 30. (The median is lower.) A few hearty meals prior to a weigh-in can clear that hurdle for a big chunk of the population.

But will people gain this weight? Yes. Those old outcomes-based wellness programs were a hotbed of cheating, as employees would gain weight in order to lose it again. (People also cheat in "steps" programs.) And that was for maybe $1,000 tops. This is for a drug worth more than ten times that amount.

Cheating has an outsized effect on cost. Each point of cheating moves a full percentage point in your gross healthcare spending increase. (WLDEC will show you that.)

See also: How To Self-Fund Employee Healthcare Effectively

Tip 4: Ignore all the vendors who want to sell “coaching” or “behavior change” or “support” for people on these drugs

When you “run your numbers” on WLDEC and include coaching, you’ll find that hand-holding simply doesn’t pay for itself. It costs a lot and doesn’t meaningfully reduce use of other drugs or adverse medical events. All it does is keep people on the drugs longer before they drop out.

Further, coaches aren’t trained to know, for example, the safest way to treat common complications like constipation or heartburn, or what is by far the most likely and most hazardous nutrient deficiency or why those authoritative-looking Nutrition Facts labels are mostly misleading for people trying to improve their eating habits.

Tip 5: Teach client employees the downsides of these drugs before authorizing them

The optimal strategy would cover the drugs only for folks who are committed to using them as intended, with the greatest chances of keeping the weight off afterward – and educate them to help them realize those chances. 

Of course, you can’t do that. What you can do instead is teach clients’ employees the downsides of these drugs, so only those who are serious and committed will want to continue. Your wellness or diabetes vendor should have a set of Q&A designed to do exactly that and track the results. (Publicly, we call our 22-question quiz Before Your Journey, though we privately call it Curb Their Enthusiasm.)   

Many employees either won’t complete the quiz or else decide these drugs aren’t for them once they do. So you avoid a lot of eventual dropouts without spending for many months first, and without denying anybody anything. We call it “self-preauthorization.”

If you try to do your own self-preauthorizations or have your third-party administrator (TPA) do them, the PBMs will push back, because they make a lot of money on the rebates and want to maximize usage. But stand your ground! You work for your clients, not the PBMs.

Summary

What you just read is the most elegant and cost-effective way to direct your weight-loss drug spending to those who would benefit most.

You can start by asking AL@Quizzify.com for the weight-loss drug calculator. And if you ask nicely, we might even provide the answers to those questions in Tip #4. Or you could ask the coaches themselves. [SPOILER ALERT: As suggested above, they won’t know.]

Out Front Ideas with Kimberly and Mark kicks off yearly with our popular 20 Issues to Watch webinar. While there are certainly more than 20 issues to discuss, we focused on the high-impact matters relating to risk management and employee benefits that need more attention. These are essential issues for every risk manager, HR manager and insurance professional to monitor in 2024.

1. Election watch

This year’s federal election could significantly affect policies for businesses and individuals. One such policy is the Department of Labor’s new guidelines around independent contractor classification, which will take effect on March 11. Based on California’s AB 5, these guidelines will significantly reduce the number of workers classified as independent contractors. 

With insurance regulated at the state level, gubernatorial elections tend to bear more significance for the industry. Governors have significant influence over state policy, often including appointing insurance regulators. In 2024, there are 11 gubernatorial elections, in Delaware, Indiana, Missouri, Montana, New Hampshire, North Carolina, North Dakota, Utah, Vermont, Washington and West Virginia. Some of the more notable state reforms expected this year include:

• Georgia – With the state ranked by the American Tort Reform Association (ATRA) as the top “Judicial Hellhole,” tort reform legislation is expected to be introduced.
• Florida – Comprehensive tort reforms were passed last year, but will they survive court challenges and lead to cost savings for consumers and businesses, as expected?
• Louisiana – With some of the highest rates in the country, the state’s insurance commissioner is focused on homeowners and personal auto insurance reforms.

See also: Biggest Business Trends for 2024

2. Economic outlook

According to J.P. Morgan, economic growth is likely to decelerate in 2024 as the effects of monetary policy take a broader toll and post-pandemic tailwinds fade. Inflation, high interest rates and rising consumer debt are contributing to the forecast. Inflation is expected to remain above the federal long-term target of 2%. Mortgage rates are expected to drop under 6.5% by year’s end. For those currently with 3% to 4% interest rates, doubling that with a new property is less than appealing. 

The commercial property market continues to have challenges, with office occupancy well below pre-pandemic levels. When leases expire, many companies are downsizing their office footprint, leading to rising commercial vacancy levels. The Financial Times reported last week that $117 billion of commercial mortgages related to offices must either be repaid or refinanced by the end of 2024. 

According to KPMG, the mergers and acquisitions (M&A) volume in 2024 will be in the technology, health IT and physician practice sectors. S&P Global suggests creative deal structures and a relentless focus on value creation in private equity portfolios are critical in the year ahead. 

3. Geopolitical risks

Active wars in the Middle East and Ukraine and a threat of conflict between the U.S. and China over Taiwan have created a higher geopolitical risk, potentially affecting companies in various ways. Terrorists have been attacking ships in the Red Sea, leading to the Suez Canal, which is responsible for 12% of global trade. These attacks could lead to cargo loss, endanger crews and cause supply chain delays. 

Organizations with overseas employees should know where they are and how to evacuate them in the event of unrest. A complicating factor in dealing with these risks is that many insurance and reinsurance contracts have war risk exclusion clauses, which can exclude coverage for bodily injury or property damage deemed to have come from a war risk, in addition to business interruption and cyber incidents. Risk managers should work closely with their brokers to understand potential exposures.

4. Employee benefits

Employers have continued to expand benefit programs to align with the expectations and needs of their workforce, and 2024 is no different. Some of the expanded specialty health solutions include: 

• Family planning benefits – Fertility and in vitro fertilization (IVF), pregnancy loss, and maternity management
• Gender-affirming care – Transgender-inclusive benefits 
• Age-inclusive benefits – Menopausal care, providing access to virtual specialists and wellness coaches
• Financial wellness – Employee discount programs, money management tools, investment education and financial planning
• No copay healthcare plans – Surest, a new market entrant, offers full price transparency for each service and provider. Insureds can compare treatment options with prices across a network of doctors, hospitals and clinics before visits.

Additionally, benefit managers are grappling with weight loss drugs. Glucagon-like peptide 1 (GLP-1) coverage is expected to double and is projected to be a $22 billion market by 2030. Pharmaceutical costs are expected to worsen with a rise in specialty medications and their associated cost and coverage. 

See also: The ABCs of Agency Planning for 2024

5. Frequency rates

Data from the National Council on Compensation Insurance (NCCI) show that workers’ compensation accident frequency rates have trended downward in the last 20 years, resulting in rate reductions for many businesses. However, this trend may be changing. November and December 2022 data from the Bureau of Labor Statistics (BLS) noted that private industry employers saw a 4.5% increase in workplace injuries and a 5.7% increase in fatal injuries. The overall workplace injury rate was mostly unchanged from 2021, but when work-related illnesses were factored in, the rate increased. Additionally, the rate of fatal work injuries increased compared with 2021. Some of this can be attributed to new employees, who carry an increased accident frequency rate. For risk managers, safety training and pre-employment physicals should be a continued priority.

6. Climate change

2023 was the hottest year in recorded history. Across the U.S., cities smashed records for consecutive days with record temperatures, forcing risk managers to reevaluate heat safety for their workforce. Cal/OSHA passed new heat-related prevention guidelines, and federal OSHA is also working on new rules. Risk managers should consider indoor air quality assessments, additional water or rest stations, ventilation and cooling centers.

Additionally, the Panama Canal, which handles approximately 5% of seaborne trade, has been operating at reduced capacity for several months. A 30% decrease in rainfall has reduced water flow into the canal, which is necessary to use it. This leads to shipping delays and significantly higher shipping prices for companies. 

7. Medical inflation 

Medical inflation in workers’ compensation has recently been lower than overall economic inflation. However, most workers’ compensation medical costs are controlled by fee schedules lacking automatic adjustment provisions, so it can take longer for any increased cost to be reflected during inflationary periods. With rising labor and material costs, providers are pushing for fee schedule revisions. For example, Illinois has an automatic inflation adjustment built into its medical fee schedule, so as of Jan.1, 2024, most workers’ compensation medical service costs increased by 8.3%. Services not covered by fee schedules, such as attendant care, long-term care, transportation and durable medical equipment (DME), are already seeing significant inflation.

8. Redefined property insurance

Insurance Business America recently said the North American property insurance market will start to see more stability and capacity in 2024, and, barring catastrophes, insureds should expect to receive relief after years of pricing increases. Although the market is improving, risk managers are increasingly seeking property resilience assessments. When considering physical climate risks, an assessment may cover wind, precipitation, drought, wildfire, earthquakes, sea-level rise, extreme temperatures and more. Understanding the risks leads to a mitigation plan and allows a risk manager and their business stakeholders to determine the most meaningful measures.

While carriers may perform similar assessments related to the accuracy of valuations and as an added benefit to their insured, some risk managers and insurance buyers select independent partners to perform this work to obtain an unbiased review. In addition to property insurance, climate risk assessments and mitigation and adaptation recommendations may be helpful for a company’s environmental, social and governance (ESG) initiatives. 

Insurtech has become crucial to the property insurance industry, assisting with underwriting, risk mitigation and claims management. Real-time and historical weather data coupled with a suite of tech tools, AI, and machine learning are providing meaningful insights, which assist in streamlining the claims process, restoring property and allowing early detection and communication.

9. Liability verdicts

For several years, the number of commercial liability verdicts above $10 million has been increasing. Juries are increasingly hostile toward large organizations and public entities and desensitized to large dollar awards. This phenomenon is often called social inflation or nuclear verdicts, but in reality it is legal system abuse. According to the U.S. Chamber Institute for Legal Reform, the average household pays more than $3,600 in higher costs annually for goods and services because of unnecessary and abusive litigation. 

In addition, third-party litigation funding allows uninvolved investors to cover litigation costs on behalf of the plaintiff in exchange for a portion of the verdict. This encourages plaintiffs and attorneys to take cases to trial rather than settle because of the limited financial downside. 

The solution to the challenges of legal system abuse is tort reforms. However, these have been slow to materialize. In the meantime, businesses can expect their insurance and claims costs to rise as the jury awards continue to increase.

See also: In 2024, Change Becomes Non-Negotiable

10. Leave and accommodation landscape

The leave of absence space continues to evolve, resulting in employers implementing new company and state programs. Paid family and medical leave is expanding at the state level. Leave programs may include pregnancy loss, bereavement beyond immediate family and organ donation. Leave laws are complex for multi-state employers and require significant administration, coordination and communication to implement and manage them.

Legislation regarding transparency in drug pricing is beginning to mount challenges to the Employee Retirement Income Security Act of 1974 (ERISA) and the preemption of state pharmacy benefit manager (PBM) laws. Court rulings could have a significant impact on ERISA protections, which will affect short-term disability (STD) and long-term disability (LTD) plans. If the preemption clause is invalidated, group benefit plans could be at risk for lawsuits at the state level. 

The Mental Health Parity and Addiction Equity Act (MHPAEA) faces proposed regulation changes and enhanced enforcement, which could significantly affect employers. The changes would limit employer health and disability plans from providing less favorable mental health and substance abuse benefit plans to employees. For example, this change could potentially affect the 24-month limitation of mental health benefits under most LTD benefit plans, leading to a significant cost increase.

The Equal Employment Opportunity Commission (EEOC) has yet to issue the final rules for the Pregnant Workers Fairness Act (PWFA). This new law requires covered employers to provide “reasonable accommodations” for pregnancy, childbirth or related medical conditions. The EEOC noted in its strategic release plan that PWFA enforcement is a top priority, and cases are already being introduced against employers. 

11. Liability insurance tower challenges

Another factor increasing costs for businesses, public entities and insurance carriers is the challenge of managing liability insurance towers. Coverage layers above primary may have different terms, conditions and exclusions. 

Bad faith exposure is also creating a challenge. Insurance carriers could face a bad faith claim with higher excess/umbrella layers arguing the case should have been resolved within the primary layer. This leaves carriers stuck between their policyholders, who want to take a case to trial, and the excess/umbrella, who threaten bad faith litigation if there is an adverse jury verdict. Brokers and policyholders do not always contemplate bad faith exposure, so they may not understand a carrier’s reluctance to take cases to trial. While the policyholder may only have exposures up to their policy attachment point, bad faith litigation can create exposures well beyond the policy limit for a carrier.

12. Adverse reserve development

There are concerns that the insurance industry may find itself needing to increase tail claim reserves in multiple lines because of a variety of factors, including: 

1. Increasing commercial general liability and auto jury awards
2. Remaining backlog of pending cases in the courts due to COVID
3. Jury awards granted now that are related to seven- to 10-year-old incidents
4. Inflation rates that are much higher than anticipated on claims prior to 2019
5. Extensive losses due to climate change and rates that, while increasing, cannot keep up
6. Adverse development on workers’ compensation tail claims due to increased attendant care costs and longer life expectancies for severely injured workers

Risk managers and brokers should pay attention to the carrier earnings calls. If there are comments around the need to strengthen reserves in lines of coverage, this may signal that rates could increase or that the carrier might withhold certain lines of coverage.

13. Sustainability and regulations

For the last few years, ESG has become increasingly important for businesses, with tighter regulations from specific states, the Securities and Exchange Commission, the federal government and the European Union. These far-reaching regulations cover everything from climate emissions to workforce and board demographics and even investments. The regulations mean employers must track all their relevant data, in addition to data from their suppliers and business partners. Publicly traded companies have faced shareholder lawsuits pertaining to some of these issues. 

Conflicting rules from state insurance regulators are adding to the confusion for carriers. One state will attempt to restrict carriers from insuring or investing in fossil fuel companies, while others will penalize insurers that refuse to insure these companies. Last year, several states threatened antitrust lawsuits against carriers because of these issues. 

14. Human capital 

The December 2023 U.S. jobs report indicates more job openings than job seekers. Talent attraction is evolving in how to source candidates into the insurance industry, with efforts to recruit veterans, stay-at-home parents returning to the workforce, people with disabilities and high school graduates. There are growing conversations around skills-based hiring within insurance and, more broadly, across businesses globally. Organizations are also increasingly using artificial intelligence tools to assess competencies and potential among the candidate pool.

Recent labor strikes brought the issue of a four-day workweek to the forefront. Some companies are starting with one day off every other week or a half-day on Fridays. Additionally, many employers are planning a significant average salary increase in 2024 due to inflation and a tight labor market. In December 2023, a Willis Towers Watson survey found that U.S. employers are planning for an average salary increase of 4% in 2024 compared wth 4.4% in 2023 and 3.1% in 2021 and earlier years. 

See also: Top Employee Incentive Trends for 2024

15. Evolving presumptions

Presumption laws regarding first responders have been the most common form of workers’ compensation legislation for years and have expanded to include cancers. These presumptions switch the burden of proof so conditions are “presumed” to be work-related unless the employer can prove otherwise. In recent years, post-traumatic stress disorder (PTSD) has emerged as a presumption and now includes dispatchers and other occupations. The presumptions create situations where different workers exposed to the same situation have different claim outcomes. For example, a police officer responding to a workplace shooting could file for a PTSD claim, but those onsite employees where the shooting occurred may not. This year, Connecticut made all employee PTSD claims compensable. Washington also passed a PTSD presumption that applies to nurses, including the private sector. With a legislative blueprint in place, will other states expand presumptions?

16. Cyber preparedness

Cyber attacks have increased exponentially in volume, velocity and effectiveness. The National Cybersecurity Strategy is exploring whether a government backstop is needed for the cyber marketplace. This would resemble the Terrorism Risk Insurance Act (TRIA) and the terrorism risk marketplace. The concerns are that policy limits and exclusions in the cyber marketplace would leave cloud-based companies with inadequate protections in the case of a sustained outage. Also in question is the market’s ability to adequately cover the business interruption costs associated with a widespread attack on the infrastructure, such as the electrical grid. 

17. Workplace violence

Workplace violence continues to be a trend year over year. It is a leading cause of injury for healthcare and K-12 education employees. Retailers have also seen an increase, with employees walking off the job due to safety concerns and businesses closing locations due to risks. Law enforcement officers have also been heavily affected. Data from the National Police Association shows 378 officers were shot in 2023, a 60% increase compared with 2018. Employers are increasingly focused on safety in the workplace, including psychological safety, which can hurt employee morale and worker retention.

18. Employee well-being

Mental health and well-being have become an increasingly important area of focus for employers, which are offering benefit models that include virtual and in-person mental healthcare and apps for meditation, mindfulness, deep breathing, stress reduction and coping strategies. Employee resource groups are working to destigmatize mental health discussions. At every opportunity, environments should be created where employees feel safe to seek help.

Corporate and team culture matters, and companies have evaluated mission, purpose and core values to support a positive workplace. Pulse surveys often address well-being, providing meaningful insights across the business.

Mental health and well-being literacy is an opportunity for employers to grow their offerings as a resource for employees to learn about why mental health matters, personally and professionally, about signs and symptoms and about self-care and treatment options, along with easy access to the benefits available.

See also: Investment Outlook for 2024

19. Exclusive remedy

Lawsuits involving exclusive remedy have typically been dismissed on summary judgment because the burden to overcome it is difficult. Throughout the pandemic, there were several challenges to exclusive remedy, with most claiming that an employee brought COVID-19 home to their family. For the most part, these cases were dismissed. Recently, two high-profile cases were allowed to proceed on merits to let a jury decide if the burden to overcome exclusive remedy was met. Both of these cases involve workplace shootings in Virginia, with employees claiming their employer was aware of the risks and did not take appropriate action to protect them. If these plaintiffs prevail, similar suits will likely be introduced in other jurisdictions.

20. Implementing AI

When thinking about implementing AI, companies should contemplate their risk tolerance. Are you a first-to-market company? Are your internal stakeholder’s innovation drivers? Do you have clarity on use case scenarios, costs to implement and maintain and return on investment, and do you have leaders willing to support the short- and long-term investment? 

Generative AI, conversational AI, machine learning and the suite of tech tools supporting AI have significant potential to change the way underwriting is performed, claims are lodged and processed, customer service interactions are performed and claims are resolved from start to finish. 

AI already supports expedited claims processing for low-dollar, high-frequency claims in the liability, auto and property industries. With AI supporting the review and summarization of medical documents, the process for an adjuster is simplified. Will there ever be low-touch processing of medical-only claims in workers’ compensation? If so, it may develop with early adopter customers and innovative claims payers. AI could help the industry focus on what matters, improve human interaction and provide the claims expertise necessary to get the best outcome. 

Incumbent insurers must adapt their operating models, products and core processes to a new reality. All executives need an understanding of technological impacts and should ensure that their organizations are poised to unlock the potential. 

The traditional insurance business model has demonstrated remarkable resilience, but insurers must strive to exceed the evolving expectations of customers.

They want simplicity, like one-click shopping. They demand 24-hour accessibility and swift delivery. They expect unambiguous yet pertinent information about product features -- pricing being a pivotal consideration. Moreover, their needs extend beyond mere convenience. They need innovative, tailored services fit for the digital age.

Top Tech Trends Transforming the Insurance Sector

1. Robotic process automation (RPA) for back-office operations

RPA enhances both customer experience and operational efficiency, bridging the gap between legacy insurance systems. RPA platforms execute actions at the precise mouse and keyboard levels. Further integration with lower-level systems occurs through application programming interfaces (APIs). When constructing workflows with RPA for end-to-end automation, insurers can use API connectors.

RPA solutions are ideal for a distributed workforce, offering the ability to:

• Transfer data from one application to another by copying and pasting.
• Open emails, gather the data and transfer it into a core system.
• Create month-end profitability reports by calculating data.
• Integrate with components such as workflow automation and rules engines, to entirely automate processes.
• Enhance bot capabilities using add-ons of artificial intelligence (AI).

2. Transforming claims and underwriting with AI

Typically, underwriting involves routine administrative tasks such as data entry, email correspondence management and document editing. These time-intensive procedures have conditioned clients to anticipate slow turnarounds and minimal communication – fostering an increased desire for transparency.

AI's capacity to automate routine underwriting tasks has enabled underwriters to allocate more time to high-priority assignments. They can tailor policies for unique scenarios and foster robust customer relationships.

The lack of a central clearinghouse in the industry—a body scrutinizing loss runs, or claims losses often analyzed by insurers to gauge future risk—poses a significant challenge. Insurers that generate quotes have to sift through numerous PDFs and extract loss and claim amounts before inputting this data into another system for quote generation. 

AI simplifies this cumbersome process by enabling insurers to automatically extract these fields from underwriting applications and process most of the application information that comes their way. 

See also: 5 AI Trends You Can't Ignore in 2024

3. Predictive insurance analytics

Among the AI applications available for solving business problems in the insurance industry, predictive analytics stands out as supremely versatile. Predictive analytics provide a dual-purpose solution – enhancing customer experience and mitigating the temporal and financial burdens of claims handling while eliminating fraud. 

Insurance companies amalgamate external data, such as credit history, medical records and driving records, with their proprietary data stores to garner a more profound understanding of claimants and injured parties. Insurers employ predictive analytics and other AI technologies to enhance risk model accuracy through the automated adjustment of data models, which conserves significant time and effort for actuaries. 

4. Omnichannel customer experience

Insurance interactions have long relied on face-to-face or phone call interactions. However, in light of technological advancement and shifting customer expectations, insurance companies have acknowledged the imperative to evolve their digital service delivery, and omnichannel e-commerce has emerged as a potent force.

Omnichannel insurance hinges on delivering a satisfying experience across numerous touchpoints, whether it's an online policy purchase initiation, support solicitation via a mobile app or an in-person visit to seek assistance at a physical office. This approach guarantees that all customer information—preferences and historical data included—is immediately accessible by the insurance provider.

Imagine stepping into an insurance office and conversing with an agent attuned to your needs. Subsequently, you stumble on a bespoke policy recommendation in your email. Seamlessly—wherever you may be—the threads of your insurance experience remain connected.

5. Internet of Things (IoT) and telematics

In the coming years, the Internet of Things (IoT) promises to revolutionize our world. As of 2010, global ownership for networked devices stood at 12.5 billion; the number is expected to exceed 50 billion by 2025. 

Customers can transfer massive data volumes to their insurance providers or third parties—this happens either for real-time analysis or automation of reactions/services—already reshaping traditional business and operating models across multiple sectors.

Insurers predominantly employ IoT capabilities to enhance customer interactions and expedite underwriting, as well as claims processing. However, these is a surge in novel, attractive IoT-based services and business models. Digital networking via the IoT might develop into a strategic component specifically tailored for insurers.

See also: Cybersecurity Turns Attention to IoT

6. Low- and no-code development

Simply put, low/no-code software represents any software that sidesteps the need for intricate coding. Both developers and non-developers can create applications using a simple drag-and-drop interface. 

KPMG discovered that 7% of insurance companies lack the IT capacity to incorporate digital solutions into their businesses. Additionally, 39% of companies grapple with implementing digital solutions. 

Using low/no-code development, insurance companies have the ability to:

• Significantly reduce the sunk costs of their IT investments.
• Adapt rapidly to the dynamic environment and embrace change with agility.
• Aim to eradicate the detrimental impacts of skills differentials within their employee pool to enhance operational efficiency.

7. API-based insurance

Insurers' digital experience only satisfies 15% of their customers. To remain competitive, insurance companies must accelerate their digital transformation and adopt new technologies like APIs. A lack of digital capabilities might prompt over 40% of consumers to consider changing their insurance provider.

Why does the insurance industry, despite operating across a broad spectrum of businesses and potentially reaping numerous advantages from APIs, still need to integrate them at this stage?

The likely answer resides deep within the persistent stagnation at insurance organizations. It is only now, perhaps out of sheer necessity, that integration and APIs are capturing the attention of insurance C-suites.

8. Chatbots

Providers of insurance business process outsourcing (BPO) services have been popular for customer service. However, with the advent of chatbot, things changed. This virtual assistant fosters communication between a company and its customers.

An agent initiates the creation of workflows for rule-based insurance chatbots. These bots can commence conversations, provide support and handle requests by pre-established rules. Particularly when addressing standard user questions, the bot adheres to a path charted out by its creator. 

While rule-based chatbots can resolve simple issues, they do not provide you with all the opportunities that AI chatbots can offer after training. 

See also: The Rise of AI: a Double-Edged Sword

9. Self-service insurance portals

Sometimes, engaging with an insurance agent about a policy, acquiring crucial documents or updating account information can prove hectic, so providers enable customers to manage their policies online. 

The provision yields manifold advantages for both customers and insurers.

10. Embedded insurance

Because acquiring one-off insurance policies can be cumbersome, embedding non-insurance products with a policy presents an excellent solution.  

Embedded insurance is an innovative approach that facilitates insurers' entry into untapped markets and expands their reach. Established businesses can leverage the trend to penetrate developing markets more effectively.

Navigating the Future: Adapting to Next-Gen Technologies

Embracing agile and open digital systems on the cloud and providing a seamless customer-centric experience is what it means to be a next-generation digital insurer, but insurers must adapt their core insurance systems to fit into this new landscape. 

KEY TAKEAWAY:

--Insurers can get ahead by embracing technology like digital identity verification that achieves a balance between rigorous fraud prevention and providing a great customer experience. Every insurance company should acknowledge that digital identity making its way into onboarding flows is not an if – it’s a when.

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As Canada's insurance landscape evolves, one issue that continues to loom large is a rising rate of fraud.

The pandemic drove an uptick in fraud across many industries, as digital-first transactions became the norm. But while other sectors have made strides in mitigating fraud since, the insurance industry has struggled to get a handle on the issue.

While the rate of digital fraud across all industries decreased nearly 19% year over year from Q2 2021 to Q2 2022 in the U.S., the insurance industry saw a 22% increase during the same period. While multiple dynamics play into these trends, a key reason lies in the existing customer experience standards in the sector.

Unlike industries such as gaming and finance, where a certain level of friction while onboarding is acceptable to prevent fraud, insurance providers face a unique challenge. The competitive nature of the insurance market revolves around speed –specifically, the need to quote and enroll customers quickly.

With "time to quote" a key metric for winning customers, insurers are reluctant to create extra steps that add friction, and fraud protection, in front of prospects. Ultimately, this is costing insurers.

One way insurers can get ahead of these challenges is by embracing technology like digital identity verification that achieves a balance between rigorous fraud prevention and providing a great customer experience. Thankfully, digital identity technology advances every year and can be leveraged to support both. 

See also: How Technology Is Changing Fraud Detection

The true cost of fraud for policyholders

Health-insurance costs in the U.S. are climbing at the steepest rate in years, with some projecting the biggest increase in more than a decade. Costs for employer coverage alone are expected to jump by 6.5% in 2024, year over year.

Without technology in place to detect and prevent fraud, these costs are being passed on to policyholders through increased premiums. Over time, this undercurrent of rising costs will create challenges.

And it will certainly change the way companies compete. In today’s market, insurers that provide a good and fast quoting experience win. With little identity verification management in place, companies are optimizing for a two-minute verification process. This lean process often results in fraudulent claims being filed, or inaccurate information being updated for better rates. 

As cost and fraud trends spike, tomorrow’s competitive advantage will go beyond the traditional speed to quote. Insurers will also need to assure customers of robust measures to reduce fraud, protect identities online and ultimately keep rising premiums at bay.

See also: Using AI to Prevent Insurance Fraud

The power of digital identity 

Insurers can address these challenges through digital identity verification, which uses digital credentials to analyze and verify personal data, while keeping the ownership in the hands of the user. By incorporating digital ID verification into the policy application process, insurers can maintain a streamlined onboarding flow while customers can feel more confident that their information will be kept safe. 

Every insurance company should acknowledge that digital identity making its way into onboarding flows is not an if – it’s a when. At the federal level, the Digital ID & Authentication Council of Canada (DIACC) is advocating for a secure, interoperable digital identity for Canadians. On a provincial level, policy makers are working to support the adoption of digital credentials across levels of government and industry.

With technology intended to roll out across Canada, there will be a first-mover advantage for organizations that lean into digital ID technology. Making it a priority to lead with a streamlined customer experience, reduce fraud risks and ultimately cut operating costs will create a competitive advantage. 

For insurers new to digital ID technology, a great place to start leaning in is by taking a look at open standards-based technology. As digital identity is still in its early days in Canada, you’ll want to explore products that are built with the capability to facilitate credentials that allow the technology to work across various networks. By building with open standards, you’ll decrease the likelihood of larger expenditures later, thanks to standards set by DIACC’s Pan-Canadian Trust Framework. 

The rise of fraud in the insurance sector is calling for a paradigm shift. The power behind digital identity technology is no longer just nice to have – it offers a lifeline for an industry at a crossroads. 

The future of insurance affordability hinges on its ability to adapt, innovate and harness the capabilities of digital identity technology to create a more secure and supported industry.

The insurance industry is stressed by factors driving global volatility and disruption, like climate change, cybersecurity threats, war and a growing talent crisis. Seven in 10 insurance organizations worldwide say they feel pessimistic about market prospects or unprepared for disruptions on the horizon, a 2023 IDC survey found. A staggering 86% of the C-suite feel the same. 

But I don’t share their downcast mood. 

At the risk of sounding Pollyannaish, I see the industry’s future as bright—if only insurers move quickly to seize AI’s wide-ranging value. By spurring automation and next-gen data analytics capabilities, AI can drive productivity gains and product innovations and improve the employee experience. 

Once all this enterprise value comes into focus—and for many insurers, it already has—the industry’s pessimism will dissipate. Frayed nerves will calm as new tools and technologies integrating AI boost agility and evolve workforces. Leaders’ confidence in their industry’s rock-solid value and growth prospects will grow because of–not despite–an increasingly risk-laden world.

Here are three of the biggest ways AI-driven change will help build the insurance industry’s future.

See also: 5 Ways Generative AI Will Transform Claims

Powerful Risk Management Predictions

AI can bolster insurers’ core competency: managing and pricing risk. Consider climate change—as historic weather patterns change and extreme events become more frequent, AI models can help predict emerging trends. These models live and breathe data. Give them reams of climate data detailing geography, temperature and other weather variables—not to mention piles of claims data drawn from millions of policies— and AI tools can offer location-specific predictive analyses. 

Simply put, AI enables superior risk management, and that can help organizations get ahead of big changes reshaping property and casualty insurance underwriting, for example. While still not a crystal ball, AI can provide firms with a better understanding of the most powerful force shaping the planet’s future: climate change.

AI can also level up the power of HR platforms to help leaders improve workforce predictions. Organizations can train customized large language models on datasets detailing employee skill self-assessments, the skills required for specific roles, teams and functions and turnover and vacancies. HR leaders can then track workforce skill trends, flags deficits, prioritizes needs and predicts skills gaps. Assisted by AI, leaders can stop guessing about their future hiring needs.

Recommendations From Policies to Organizational Management

AI’s capabilities will help insurers do more than just predict and track risks. As AI models become more sophisticated, they can provide suggestions built from predictions and analyses to support insurers and customers. For example, AI can offer product and policy recommendations geared to climate-change scenarios for specific geographic regions, like surfacing a three-month flood insurance policy proposal ahead of hurricane season. 

Within organizations, AI can help leaders determine recruiting priorities and develop upskilling strategies mapped to strategic goals. AI can even recommend knowledge-capture ideas based on recent turnover and retirement-based attrition trends.  

Of course, AI suggestions must be reviewed, validated and possibly tweaked. Humans must remain in the driver’s seat. The point is that, with guardrails in place, AI can help insurers actively manage customer, market and workforce risks instead of simply reacting to circumstances. 

Or think of it this way: AI will help fuel an organization’s innovation engine, allowing insurers to strengthen their role as value creators and customer advisers. 

See also: 5 AI Trends You Can't Ignore in 2024

Improved Employee Experience 

Cultivating a culture of innovation is a workforce imperative, as well. With many insurance veterans on the cusp of retirement—by 2030, the industry is expected to face the largest shortage of workers of any industry—insurers need to reel in new talent ASAP. 

But here’s the deal—younger generations don’t want to work with cumbersome, outdated technology. Fortunately, insurers get it: IDC reports that technology is the top priority for insurance organizations worldwide, with profitability and customer satisfaction closely following. 

To attract next-gen talent, the industry must improve the employee experience. AI can play a valuable role here in two ways. First, streamlining IT processes via automation can free employees to spend more time on strategic–and satisfying–work. Second, AI can directly support and improve the employee experience via faster analytics capabilities that shorten time to insights and accelerate decision-making. 

That dual value proposition is what's driving IT investments in the insurance industry: Nearly eight in 10 insurance leaders surveyed by IDC say they want more streamlined IT processes to simplify uncovering business insights for nimbler decision making, and 34% of IT initiatives are intended to create a more intuitive user experience across functional areas to make employees happier and agile. 

AI will play a key role on both sides, helping to power innovation and workforce retention and recruiting. That’s reason enough to be optimistic about the industry’s future.

The rapid pace of technology changes happening this decade is a sign of how things are going to be. Unexpected events are going to occur more often, newer factors such as climate change, and advancements in AI, are going to disrupt normalcy and unpredictability is going to occupy more room. Hence insurers are increasingly adopting the role of– as this Deloitte article says–“society’s safety net.”

To take on this responsibility; to help predict rather than react; to stay transparent; to increase customer-centricity; and still remain profitable, is a tall order.   As insurers focus on their transformation objectives in 2024, two important things stand out:

1. Unifying journeys within the organization to ensure greatest collaboration and remove silos
2. Leveraging the right technology to accelerate this unification and see tangible outcomes.

Insurers are successfully transforming various business functions collaborating with technology partners. But the prospecting journey is least talked about - at least not as much as lead management and customer focus. How can insurers streamline the prospecting journey in the next few years, thereby aligning with a more holistic adoption of technology across their sales lifecycles and resulting in better performance?

Existing Prospecting challenges

• Too many leads of poor quality: With intense competition and outreach via several communication channels, there are a lot of enquiries, interest, but not many of these are high-quality leads.
• Evolving customer behavior- As customer needs rapidly evolve, it becomes a sustained priority to keep tabs on their preferred modes of engagement, their product interests and so on.
• Prospect nurturing - Managing the high volume of prospects and enquiries, and then identifying those that may have potential and nurturing them becomes a challenge for distributors, especially if they are not using the right tools.

The ideal tech blueprint for prospecting for this year

Does your sales technology cover the seller journey, end-to-end? Evaluate tools that can not only help your sellers automate their activities and provide insights, but also tighten and effectivize the prospecting journey, setting the right context for lead allocation and management. The two components of prospecting that can be streamlined with tech are prospect sourcing and prospect nurturing.

Prospect Sourcing

• Use AI-based chatbots on the website, social media to engage visitors and help in better prospecting
• Implement systems that can import leads coming in from various channels: email, Whatsapp, Linkedin, or an event list on excel into one central repository
• Your prospecting tool should also be able to auto schedule outreach with tailored content, links and other material based on prospect’s interest

Prospect Nurturing

• Use tech to nurture the leads that are in the central repository through sales playbooks that can determine the next best action for every lead in the system
• It can be a great push if these leads can be auto-allocated to distributors/agents depending on various parameters that are defined in the system (geography, product interested in, and so on)
• Leveraging tech such as Machine Learning, if the tech is able to guide the agent with recommended next steps, or further nudge the distributor to pass on the lead to the right agent - it can help catalyze the lead journey at the prospecting stage
• Finally, with the right kind of analytics, insurers/distributors can measure outreach effectiveness in real time to increase the probability of conversion in the next steps.

Tech-enabled prospecting creates a more efficient and targeted approach to customer acquisition. Tools with AI and ML capabilities, and data analytics will play an important role in separating the wheat from the chaff and identify potential customers far more accurately. A tighter prospecting journey automatically results in a smoother lead journey for the seller and better customer engagement for the insurance carrier.

Sponsored by ITL Partner: Vymo