KEY TAKEAWAYS:

--A "human in the loop" model lets insurers fight rising costs through rapid adoption of advancements in AI.

--The trifecta of AI, automation and analytics allows for breakthroughs in requisitions, claims, personalization, predictive analytics and embedded insurance.

----------

The insurance industry dates back to ancient Babylon and China, where merchants would pool their resources to protect themselves against losses from piracy and theft. The concept landed on the U.S. shores in 1752, when Benjamin Franklin co-founded the first insurance company in Philadelphia. Since then, the industry has grown to become a massive global enterprise. According to Insurance (Providers, Brokers and Re-Insurers) Market Global Report 2022, the global insurance market is estimated to grow from $5.38 trillion in 2021 to $8.39 trillion in 2026.

Key Challenges – Inflation and Natural Disasters

The industry needs sharp efficiency improvements to combat inflation, which skyrocketed from 1.23% in 2020 in the U.S. to 8% in 2022 during the COVID-19 pandemic, consequently increasing the costs of paying claims. Furthermore, due to climate change, population growth and migration to vulnerable areas such as coasts and river floodplains, there were 60 $1 billion natural disasters in the U.S. in the last three years, which is already nearly half of the 128 in the entire previous decade (2010-2019), and those numbers are inflation-adjusted to 2022 dollars.

Technology has the potential to offset these rising costs. The insurance industry needs to adopt a "human in the loop" model for rapid adoption of technological advancements in artificial intelligence.

There are numerous debates on the advancement in AI, thanks to ChatGPT and several similar generative AI tools. While there are concerns about the potential risks and unintended consequences that could arise, generative AI models could revolutionize the way humans interact with machines. These technologies have the potential to reinvent the insurance industry -- increase requisition and claims efficiency by up to 80%, reduce premiums through more detailed customer information and insights and even improve the economy.

While AI, intelligent automation and analytics can revamp the insurance industry, insurers need to ensure that the data they collect is protected and used ethically. 

AAA Trifecta

AI can be leveraged to analyze large datasets and identify patterns and trends that would be difficult or impossible for humans to detect. Intelligent automation can streamline processes, such as claims, and can handle routine tasks, such as sending out policy renewal notices. Analytics can identify patterns of fraud and detect suspicious claims.

Listed below are five ways in which the trifecta of AI, automation and analytics can transform insurance:

1. Breakthrough in requisitions

The insurance industry still struggles with ingesting, aggregating, contextualizing and processing incoming applications. This is partially due to many sources of unstructured application data such as paper documents, emails and voicemails that must be processed and incorporated into applications to properly evaluate risk and provide the best quote based on the most complete possible applicant profile. AI can automate most of the data acquisition, contextualization and decision-making with up to 90% accuracy, resulting in business benefits of up to 80% greater efficiency. AI allows for processing five times the volume of applications, resulting in more revenue.

2. Advancements in claims

Automated processes and AI will largely replace the adjuster who travels to view and photograph damage and file a report, followed by days or weeks of review by an in-house expert. The new AI and image-processing technologies based on customer-generated images and geospatial data can reduce claims processing from days or weeks to hours or even minutes. 

3. Predictive analytics

Once policies are in place, AI and predictive analytics technologies can further refine quotes, risk assessment and customer service by predicting which customers, regions and ZIP codes will likely incur losses and when and what types of losses will occur.

4. Personalization by leveraging AI

The more an insurer knows about a customer and their requirements, the better the insurer can service the customer and provide the best possible coverage and rate. AI and predictive analytics based on current and historical data combined with marketing automation can help insurers tailor their offerings, resulting in better customer service, customer intimacy and revenue increases through new, appropriate offers and a higher percentage of renewals.

See also: Key Challenges on AI, Machine Learning

5. Innovation in embedded insurance

It’s common to embed offers for extended warranties with product sales or travel insurance with travel purchases, but there are many more possibilities for embedded insurance using AI, intelligent automation, analytics and geospatial data, which will help improve customer intimacy and revenue opportunities while not being overly invasive.

According to a recent report by PwC, 54% of insurance CEOs say implementation of AI solutions has increased productivity in their businesses and believe AI will transform their industry in the next five years.

In today's fast-paced world, businesses need to make better and more informed decisions to stay competitive and grow. This is where AI can be incredibly valuable with a "human in loop" model that can provide timely and efficient insights in real time and support insurance business leaders to make better decisions.

All the frothy talk about how ChatGPT changes everything and about how we all need to be part of a land grab in the metaverse suggests that it's worth taking a look back at how the changes-everything/land-grab adherents fared during the early days of the internet in the late 1990s. 

It wasn't pretty.

While there were a few monster successes, notably Amazon, there were far more face plants like those by Webvan and Pets.com. The companies that reliably prospered, such as Sun Microsystems and Cisco, were what those of us in the financial media referred to at the time as "arms merchants" -- they supplied the combatants in the internet wars rather than forming "armies" themselves.

I'd suggest that being a metaphorical "arms supplier" is the best way for companies, including insurers, to play on ChatGPT and the metaverse.

In many ways, I'm repeating myself here, but, as a veteran reporter told me when I was a young pup at the Wall Street Journal, "If you have a good story, you ought to write it every once in a while."

Let me provide a bit of context, then I'll get into what I think the "arms merchant" concept means for ChatGPT and the metaverse. I'll start in August 2017, when I wrote about the early internet days:

"There was a class of 'arms merchants,' including Sun Microsystems and Cisco, that made gobs of money by outfitting the pioneers—in fact, more than almost all the pioneers.

"The analogy was: If you try to name a miner who won big in the Gold Rush of 1849, good luck. But you know many of the outfitters, including Levi Strauss, who supplied blue jeans to miners, and Leland Stanford, who made his fortune mostly on the railroad that connected the miners to the rest of the country, before founding his eponymous university."

Turning to the lessons for the insurtech movement, then in its infancy, I added:

"Lemonade, Trov, Slice and some other truly new business models stretch our thinking and throw shade on those merely looking for 'faster, better, cheaper'.... The Lemonades of the world will be the most important and will transform insurance. In time. If they work. (Some will, but, if history is any guide, many others will fall by the wayside.) 

"In the meantime, there is an awful lot to be gained through incremental improvement. Insurance is such a paper-heavy, process-based, inefficient industry that the potential efficiencies from digital improvement exceed those in perhaps any other industry."

Many of the big ideas that flopped in the early 2000s weren't bad ideas. They were just ahead of their time. Customer behavior hadn't yet adjusted to the new possibilities, and, in particular, the technology infrastructure couldn't yet provide the sorts of robust, vivid, fast interactions and delivery capabilities that e-business models required. While Pets.com filed for bankruptcy in 1999, for instance, Chewy carries a market valuation north of $14 billion, operating the same sort of e-commerce pet supply business. 

Venture capitalist Marc Andreessen was once asked how he determined which nascent technologies would work and replied that they all will work -- the multibillion-dollar question was WHEN they would work. That uncertainty is why so many big ideas fail. In Silicon Valley terms, the founders and backers confuse a clear view with a short distance. That uncertainty is also why it's much safer to be an arms supplier rather than lead the charge on something like ChatGPT.

It's not that I worry about insurers running off and trying to establish whole new business models based on ChatGPT or the metaverse. But I do see suggestions about ChatGPT, in particular, that strike me as being much too ambitious for now.

A newsletter from a venture capital firm -- Andreessen's, in fact -- suggested in the past week that ChatGPT could answer questions for customer service at financial services firms because it could pull together information from all the firm's internal documents. Others have suggested ChatGPT could soon be used to make underwriting decisions automatically or handle claims with almost no human interaction. 

But if you look into "large language models" like ChatGPT and see, among other problems, their tendency to make things up -- to "hallucinate," as the scientists euphemistically put it -- you see that they won't be ready for prime time any time soon. Yes, there's a clear view to utility in all sorts of applications, but not a short distance.

It's better to take the view that ChatGPT and its kin can supply information for now, but not to yet fight the war. That perspective will not only help insurers with their own implementations but should inform their interactions with clients, who need to understand the risks associated with their own buildouts and to see what sorts of coverage they should purchase.

As I wrote back in February:

"The issue with large language models like those used for generative AIs like ChatGPT and Bard is that they don't know much about the real world. They've just been fed unimaginable amounts of text and learned to imitate it. You give one a prompt, and it figures out what word is most likely to go next and then next after that and after that... and on and on and on. The results are scarily impressive but have a tenuous relationship with reality, which is why Bard claimed that the James Webb telescope discovered exoplanets, why ChatGPT has claimed that the most-cited medical journal article of all time is a piece that doesn't actually exist, why ChatGPT told a friend that he was married to a number of women he'd never met, had children he'd never had and wrote books that didn't exist....

"It's important to see the results from these generative AIs as what they are: a very rough draft. Now, as someone who has spent decades doing his thinking with his fingers on a keyboard, I can tell you that even a very rough draft can be extremely valuable," but it still requires human insight to become the finished product.  

What about the metaverse? I don't think you need to worry about that any time soon. As I wrote in late 2021 (to quote myself one final time): 

"The vision of a metaverse laid out by Mark Zuckerberg last week is bonkers. Nutso on steroids. It won't be realized in my lifetime, yours or his, even if some of the wildest claims about longevity come true and we all live to be 150.

"The vision is essentially a fever dream for gamers who'd love to immerse themselves in their online worlds and not have to worry about the messy details of physical existence."

Some day, I'll tell you what I really think. :) Yikes. I stand by what I said about how insurers should avoid involvement with the metaverse, unless a client drags you there, but I must have been in some kind of cranky mood when I wrote that.

Cheers,

Paul

Two developments, in particular, in 2023 will inform the approaches that regulators will take in the years ahead on how (and how much) to regulate artificial intelligence’s use in the business of insurance

First, insurance regulators via the National Association of Insurance Commissioners (NAIC) are drafting a model bulletin on artificial intelligence use with the aim of guiding companies in establishing governance systems and regulatory expectations for such systems. As explained during the 2023 spring national meeting in Louisville, the NAIC’s Committee on Innovation, Cybersecurity and Technology is taking the lead on producing a commissioner-driven deliverable that likely will be exposed for public comment this year. Much like the NAIC’s AI Principles adopted in 2021, the bulletin likely will provide high-level, principles-driven guidance that will serve as a good guide for companies seeking to understand, at a minimum, what kinds of questions and information regulators will ask when seeking more information about artificial intelligence and machine learning products.

Second, Colorado continues to move forward with its rulemaking under the Colorado Privacy Act, with the first round of draft rules for life insurers exposed for public comment in February. Although focused on life insurers, the Colorado Department of Insurance has stated in public meetings that property and casualty insurers should expect the version of the rule applicable to them will be similar. Colorado’s rules are more prescriptive than anything coming out of the NAIC thus far in detailing the information insurers will need to have available for using AI as well as how to report such information to the department.

The differences in these approaches is a preview for regulatory differences insurers will face in the near future across jurisdictions. Some will adopt the NAIC model bulletin, while others will modify it. Still others may follow Colorado’s lead in seeking legislation or adopting rules specific to AI usage. At a minimum, carriers using AI as part of their insurance offerings in multiple jurisdictions, irrespective of line, likely will be faced with a somewhat disjointed regulatory regime in the near term, even as regulators work to find consensus wherever possible.

So what should savvy insurers do now? At a minimum, any insurer that is using or considering the use of AI should be giving thought to implementing a well-documented governance system for its AI and machine learning tools. In other words — how does the enterprise show its work? Whether a jurisdiction elects a more front-loaded approach to regulation (like Colorado, with significant reporting requirements) or back-loaded (guidance followed up with market conduct reviews, if necessary), much of the regulatory risk surrounding AI boils down to two questions: Do guardrails exist around a company’s AI and machine learning tools, and can the company defend those guardrails as appropriate and adequate through testing and documentation?

See also: Regulatory Interest in Big Data

In addition, companies with robust governance integrated into their AI and machine learning portfolios are in a much stronger position to shape regulatory requirements as they come into sharper focus. As regulators and policymakers focus more on how and to what extent companies should be prepared to explain AI guardrails, such carriers will not only be more prepared when regulation comes, they will also be in a much stronger position to speak up and be taken seriously when regulatory proposals become unnecessarily burdensome. As counterintuitive as it may seem to some, patient engagement with insurance regulators will make for a more navigable long-term regulatory framework.

Near-term regulatory uncertainty notwithstanding, establishing robust governance and testing regimes for AI and machine learning are smart investments for insurers in anticipating whatever regulatory requirements emerge. It will be much easier to tweak such systems as needed, once established, than scramble to implement wholesale systems in response to new regulatory requirements. Keep in mind: Governance is distinct from AI and machine learning tools themselves. If AI and machine learning are the economic engines of the future for insurance carriers, effective governance is the oil that will keep the engine running smoothly — and compliantly.

As first published in Digital Insurance.

Q1 '23 has shown a clear trend in the insurtech deals: It is not any more about raising money, it is about M&A. The Financial Technology Partners / FT Partners' monthly report has certified it:

• The number of investments in Q1 '23 has been 47, with less than $800 million invested (the most recent lower quarter was Q2 '18, with less than $600 million).

• The number of M&A deals has been 34, totaling $4.7 billion (already higher than the entire 2022).

Even looking at the listed insurtech carriers, we had some exciting takeaways (while waiting for the Q1 earnings calls). These takeaways are highlighted by the recent journeys of Lemonade and Oscar.

I've already compared the two players in this newsletter last July. Comments on their financials can be pretty similar eight months after: Both companies are still burning a ton of cash (Lemonade had $289 million in net losses in 2022, Oscar $610 million). However, their valuations diverged in these last few months: Lemonade has even lost "unicorn status," while Oscar has just gained it again.

This dynamic seems to be due to "insurance ignorance":

• Everybody remembers the original Lemonade celebration of their ignorance of the sector. ("Instead of reaching out to insurance experts to gain a better understanding of the industry, the co-founders resisted what Schreiber describes as a 'temptation' to access insider knowledge and opted for an alternate route: 'We milked our ignorance for all its worth.'")
  • 
• More recently, they offered the exotic rationalization that churned policyholders haven't left; they've become alumni!

The jump of Oscar's market cap instead has been due to the appointment of the new CEO at the end of March: Mark Bertolini, former chairman and CEO of Aetna. It is not cool anymore to be ignorant, better to have some knowledge and expertise. Robust insurance foundations are a necessary element for successful insurtech initiatives.

See also: Is My Organization Actually Innovative?

Talking about robust insurance knowledge -- and its virtuous combination with innovation -- I want to share some insights from a thought-provoking presentation John Ingersoll, head of strategy at CSAA, gave recently about their ambitious innovation journey.

"Find Time for Innovation" Josh Ingersoll, April '23

This 100-year-old insurance group -- focused on personal auto and homeowners insurance -- created an internal insurtech startup in 2019: Mobilitas Insurance. This startup is a commercial insurance carrier focused on new mobility. It has already increased the group's top line significantly -- representing 11% of the total premiums -- and aims to be as relevant as the traditional business by the next decade.

"Find Time for Innovation" Josh Ingersoll, April '23

The CSAA innovation journey is a great example that highlights how insurance insurers can be innovative. As I wrote the first time in 2016: "All the players in the insurance arena will be insurtech! Meaning, organizations where technology will prevail as the key enabler for the achievement of strategic goals."

Over the past few years, in any business line and in any international market, you can find insurers that have successfully applied and scaled insurtech solutions in their business. These success stories should inspire more insurance carriers to design and execute their innovation journey. Insurtech can make the insurance sector stronger and, therefore, more capable of achieving its strategic goal: to protect the way people live and enterprises operate!

When diversity, equity and inclusion (DEI) conversations come up in the corporate world, they often center on hiring and retaining talent. Those are important conversations for creating thriving workplaces. But we can also go a step further by championing DEI principles through inclusive design and delivering powerful, customer-first solutions in the world of software. 

A report from the Capgemini Research Institute found that 84% of tech employees acknowledge that their products are not inclusive. The report also identified stark differences between the opinions of leadership executives and underrepresented employees, including women and ethnic minorities. 

There’s a dire need for inclusivity in tech, and it’s apparent across industries. As the insurance industry continues to become more digitized year after year, insurtech product designers are tasked with not only creating products that save time and boost efficiency but also with creating a great user experience and ensuring products are accessible to a broad range of users.

My team’s goal is to create products that are not only accessible but also intuitive, efficient and effective for all our users. Vertafore’s product team is engaged in a multi-year project to modernize the user experience (UX) of our solutions. For example, as we look at our use of color, we are considering the needs of users with vision challenges and ensuring we create sufficient contrast. When we design for everyone, we further diversity, equity and inclusion.

User experience is key 

No digital tech escapes the need for inclusive product design, from apps on your iPhone, to your Google Chrome browser, to your agency’s latest tech solution. 

There’s a growing understanding in the insurtech marketplace that technology can create the efficiencies that empower insurance professionals to focus on what they do best. Agency management system users, for example, want to accomplish specific tasks and functions. But too much information, and multiple complex workflows, shift their focus to figuring out what’s useful and what they need to do next. By placing UX at the forefront, products not only become more accessible, but the relationship between design and end-user efficiency grows stronger. 

As insurance tools become more robust (and as users become savvier), forward-looking tech providers and agencies are realizing that efficiency results not just from features and functions but also from how users experience their technology. 

Inclusive technology is a journey 

Inclusive design describes methodologies to create products that enable people of all backgrounds and abilities to access the same experience. Software that prioritizes inclusive design improves the user experience, which can boost brand awareness, sales and positive reviews.

The move toward a more inclusive product design strategy can seem painstakingly slow. In the B2B industry, software is complex—with a broad spectrum of data and usages—and often is slow to change. As a result, it’s still common to find biases throughout these intricate systems. 

It’s important to think of product design as an evolution and an opportunity to eliminate points of exclusion. In doing so, we help to lead the change and begin to set new patterns other designers can replicate. 

1. Listen to users 

Successful design starts with listening to users and observing the user experience with your products from their perspective—striving to make accessibility and inclusion a product’s default rather than an option. A diverse product design team increases the group’s ability to see various ways of solving problems and establish a sense of belonging and results in higher employee engagement. 

Once the team is in place, insurtech leaders can begin the product design or redesign process by watching how real people use their tools to find ways to create focus and effective workflows. In practice, that can mean:

• Automatically surfacing the right information at the right point in a workflow 
• Streamlining and standardizing how users navigate the system
• Developing an open platform that can readily share data across applications
• Breaking tasks into steps, with built-in guidance to help users complete them
• Decluttering screens and menus so users can better focus
• Integrating simple, culturally diverse design elements—like icons and colors—to make the user experience more intuitive

See also: Industry Still Lags on Diversity

2. Standardize best practices 

DEI principles help product designers identify points of exclusion—and opportunities for inclusion—in the user experience. 

For example, most users recognize the “hamburger” symbol in mobile apps and websites as an indicator for the navigation menu. If designers replace that icon with something like a company logo to support the brand, it comes at the expense of the user experience. When faced with multiple ways to complete a function, users often default to the path they know best, even if there’s a better option.

Complex or unique styling—like an alternative to the universal “hamburger” menu icon—is less intuitive and forces users to mentally translate what they see.

3. Inclusivity as the default 

In the ‘70s, sidewalk indentations were created in response to the advocacy for people in wheelchairs. We now know these indentations turned out to benefit many, from bikers, to travelers pulling suitcases on wheels, to parents pushing children in strollers. Now known as the “Curb-Cut Effect,” that building for a historically marginalized group resulted in better outcomes for everyone.

Text size is another great example where opportunities for greater inclusivity abound. Developers used to favor small, compact text because they were used to computer code. Yet the National Institutes of Health (NIH) estimates that 11 million Americans aged 12 and older have uncorrected visual impairments. Rather than strain these users or force them to change text sizes, many software designers now default to larger text, along with more legible fonts and more whitespace.

These changes benefit all users by creating an experience that is not only more accessible but also more visually engaging, with content that is easier to comprehend.

Invest in your tech 

Good user design doesn’t happen by accident—it is the result of investment, applied expertise and customer engagement. 

As agency leaders evaluate their tech stack in search of tools that deliver on the promise of efficiency, they must also consider what the software can do and how it supports users. That marriage of form and function is where agencies will see the real return on their investment.

It may be hard to imagine now, but there was a time not too long ago when individuals had to balance a checkbook to determine their available cash flow. Nowadays, consumers know better, having come to expect the modern experience of logging into an app or online account to see their current, pending and investment balances in real time.

Today, the health insurance and employee benefits industries are seeing a similar shift in mindset. Consumer expectations for how they research, select and procure most products today have reached new levels of sophistication, due in part to third-party experiences developed by digital leaders such as Amazon and Netflix.

With a wave of change in employee expectations, employers have placed a higher value on benefits programs to satisfy rising workforce needs and compete for scarce talent post-pandemic. All industry stakeholders — brokers, general agents, insurers, benefits providers and tech platforms — have abruptly found themselves functioning virtually. They strive for more intelligent, digitally enabled ways to do business and remain relevant. The insurance industry faces a great opportunity and significant risk as it changes in response to powerful demographic, societal and technological forces.

The healthcare industry, despite being a multibillion-dollar market, is known for its complexities and slow pace when it comes to technology adoption. Health insurance brokers, in particular, face challenges with managing data and processes among carriers, brokers, employers and the millions of employees they represent. For example, setting up a new plan requires brokers to gather information from various sources and enter it manually into their systems. This process can take hours or even days and is prone to human error. Furthermore, verifying eligibility, claims processing and communicating with carrier partners and customers often involves cumbersome and inefficient back-and-forth email transactions.

For one employer group to enroll with a carrier, it could take hundreds of hours of interactions spanning request for proposal (RFP) and quoting to plan consulting and routine service. This process includes the email transmission of millions of data points trapped inside PDFs, creating opportunities for quality control, lost time and errors.

A Better Way

Carriers typically have complex legacy systems that can be time-consuming and costly to update or replace and face significant regulatory pressures. If new solutions are ineffective or improperly implemented, the financial and reputational consequences could be disastrous. The lack of flexibility has prevented large-scale change and innovation within the healthcare ecosystem. In contrast, nearly every other industry has evolved at a pace and scale that at least meets consumer expectations.

Fortunately, application programming interfaces (APIs) offer a modern solution to integrate different systems and streamline processes, allowing health insurance brokers to save time, improve accuracy and enhance communications to improve the overall customer experience. An API is a set of protocols allowing different software applications to communicate. This means that data can be shared seamlessly between other systems, eliminating the need for manual data entry and reducing the likelihood of errors. With APIs, health insurance brokers can integrate their systems with carrier partners' systems, enabling real-time data transfer and automation of various processes.

One of the key benefits of APIs is the amount of time they can save for health insurance brokers. Brokers can free up thousands of hours each year by eliminating manual data entry and back-and-forth email transactions. As a result, brokers can focus on higher-value tasks such as building customer relationships, providing better service and growing their business. APIs also reduce the time it takes to set up new plans and verify eligibility, enabling brokers to respond to customers' needs faster and more efficiently.

See also: Building Your Digital Sales Arsenal

APIs can also help minimize the likelihood of human error in data entry. When data is entered manually, there is always the risk of typos, missing information or incorrect data. This can lead to delays, re-quotes and even legal issues. APIs, however, enable real-time data transfer and automatic data validation, ensuring that the information is accurate and up-to-date. This can improve the overall quality of service and reduce the likelihood of errors, elevating the customer experience.

Furthermore, APIs can enhance overall communication efficiency. With APIs, health insurance brokers can communicate with carrier partners and customers in real time, enabling faster responses. For example, when a customer submits a claim, the API can automatically transfer the data to the carrier partner's system, which can be processed quickly and efficiently, reducing the time it takes for the claim to be processed and allowing customers to receive their reimbursement faster.

Bridging the Human and Digital Touch

While the healthcare industry has made significant strides in new offerings and solutions, such as patient virtual reality and aggregated health data apps, the lingering effects of the pandemic continue to expose the lack of industry-wide data standards and customer interfaces. These challenges emphasize how true digital reinvention requires a strategic combination of data, a robust set of APIs to integrate data sets across organizations and domains and people with the consulting chops necessary to work meaningfully with the results.

Overall, APIs offer health insurance brokers an efficient and modern way to manage data and processes, saving time, improving accuracy and enhancing communication efficiencies. By integrating their systems with carrier partners' systems, brokers can streamline operations and improve the overall quality of service. This can lead to a better customer experience and enable brokers to grow their business by focusing on higher-value tasks. In today's fast-paced world, where customers expect instant gratification, APIs can help health insurance brokers keep up with the changing times and stay competitive in a challenging market.

Telehealth experienced a surge in use during the COVID-19 global pandemic. According to McKinsey, consumer interest in telemedicine rose from 11% to 76% during the pandemic. In addition, 57% of healthcare providers said they viewed telemedicine more favorably, and 64% of providers said they were comfortable using telemedicine. In the course of just a few months, telemedicine physician visits increased by 50% to 175%, depending on geography and type of practice. The popularity of telehealth has continued to grow post-pandemic.

“Telehealth has become a useful resource in the workers’ compensation arena,” said Lisa Haug, assistant vice president of medical management at Safety National. “However, it is essential to perform a good hands-on assessment by a specialist or physical therapy provider for the initial treatment or visit, then transition to telehealth. It is imperative to assess the overall well-being of the individual in a brick-and-mortar environment, because it is extremely difficult to effectively assess movement via telehealth, for example, seeing how the patient transitions from sit to stand, how they move about the room, their range of motion and overall well-being.”

The following are advantages and disadvantages of telehealth.

Advantages

• Immediate triage, assessment and diagnosis of a workplace injury or illness, acceleration of diagnosis and treatment plan, increased adherence, speed of recovery and improved outcomes.
• Efficient and personalized treatment.
• Time savings by eliminating trips to the ER, urgent care, clinic or provider’s office.
• Same licensing standards for physicians as in brick-and-mortar setting, and they must be licensed in that particular state to practice via telehealth.
• Convenient access for injured workers in rural areas that may not have healthcare entities nearby. This helps to avoid the transportation issue of showing up for doctor’s visits.
• Easy ability to perform physical therapy, including home exercise program via telehealth.
• Early intervention of therapy without delay due to access to the therapy facility and transportation issues.
• Potential of earlier return to work for many.
• Better access to clinicians, including infectious disease specialists and pulmonologists for respiratory conditions. Prior to COVID, it was rare to make a referral to these types of specialists, but, with the onset of COVID, these referrals became more commonplace.
• If there are language barriers, patients can align with a translator via telehealth, which is oftentimes easier than arranging for a translator at the appointment.
• Many areas have a shortage of specialists, such as dermatologists. With cross-licensing, we can offer a provider from a larger geographical space via telehealth.
• Reduced wait time for telehealth, which reduces time away from home/office.
• Earlier treatment intervention, which allows for the ability to prescribe treatment sooner for items like medications, physical therapy, durable medical equipment and diagnostics.
• Ability to empower employees to use technology and take a more active role in their care.

See also: How Digital Health, Insurtech Are Adapting

Disadvantages

• Lack of in-person experience. Severe injuries and diagnoses require physical hands-on assessment with the patient.
• Potential for inaccurate diagnosis based on video. Some diagnoses require a hands-on visual component.
• Initial PT evaluation and final PT evaluation/FCE need to be in person for a thorough assessment.
• Limitations for assessing body image, gait and overall well-being, which can tell a lot about a patient’s status.
• Poor patient perception. Some patients feel that they are not getting the proper care with telehealth.

As a resource, telehealth is here to stay. If used properly, it is another tool in the toolbox to allow the continuation of treatment for injured workers. The key is knowing when and when not to use it.

Like other industries, insurance is undergoing a talent crisis. The Baby Boom’s peak was in 1957, and talent born that year has now reached the typical retirement age of 65, leading to record high retirement numbers. As a result, the World Economic Forum expects Gen Z and millennials to make up more than half of the tech workforce by 2025. 

Contrary to their predecessors, Gen Z and millennials think differently about where, when and how they work. Those thoughts must be considered when trying to attract and bring this talent profile onboard. To further complicate things, when surveyed on potential career choices,

Gen Z and millennials ranked insurance below mining and manufacturing, according to research conducted by ACORD. This is due in part to the fact that any industry rumored to have manual, time-consuming and error-prone processes will keep them away in droves -- a perception that, unfortunately, many Gen Z and millennials have about the insurance industry. It will require investment in technology, as well as some cultural and process changes internally to engage this group and encourage them to consider a career in insurance. 

Read on for five ways to attract, recruit and retain the new generation of talent, ensuring you have the right talent, in the right role, at the right time. 

Embrace Digital Transformation 

Gen Z and millennials are digital natives. Not only do these tech-savvy generations expect cutting-edge technology as consumers, they also expect it in the workplace. There’s a belief among these generations that if an organization isn’t adopting the latest technology, it’s not likely to be around in the long run. A lack of technological investment deters serious candidates and is often one of the reasons existing employees become frustrated and leave. 

Digital transformation reduces manual tasks and processes, empowering employees to see beyond their day-to-day tasks. Freeing their time gives them more flexibility to concentrate on meaningful and rewarding work like client retention and enhanced customer experience. 

Your brokerage can make your business more appealing to a workforce expecting instant, customer-centric experiences by implementing a digital strategy that enables: 

• Innovation: Using digital technology to transform business operations. 
• Flexibility: Providing mobile-friendly applications and remote work options. 
• Security and Sustainability: Future-proofing the brokerage to ensure business longevity and stability. 

Reimagine Job Descriptions 

Brokers face an enormous task when they post a new job, and how you write your job descriptions can make or break finding top talent. 

You might already be opening your job description with a promotional summary of your brokerage, but does it tell a story about your culture, work environment and plans for the future? Be sure to include details that distinguish you from your competitors, including higher compensation, greater flexibility, better work/life balance, increased learning and development opportunities and mental health and wellness support. These are all compelling benefits to the evolving profile of insurance brokers and are likely to intrigue candidates. 

We all know that insurance is a jargon-based industry that uses countless acronyms. This may turn off candidates, especially those looking to break into the industry. Indeed.com suggests avoiding internal or industry-specific lingo, acronyms or other terms candidates are less likely to search for or understand. 

See also: 5 Ways Tech Can Draw Young Talent

Emphasize a Diverse and Inclusive Culture 

There is no longer a “typical” profile of an insurance professional. Their ages and origins are different — they speak multiple languages and have different beliefs, practices and backgrounds. According to Deloitte, Gen Z and millennials see diversity as something that boosts performance, especially when senior management teams are diverse insurance brokers. They must then demonstrate a commitment to workplace diversity and recruiting. While this can be challenging in a flexible work environment, leveraging digital communication channels, such as interactive webinars, community channels, a company intranet or other online collaboration tools, can create a culture in which you purposefully develop a sense of belonging, diversity and inclusiveness.

Aligning with Gen Z and millennial values is key. Nearly two in five say they have rejected a job because it did not align with their values. Meanwhile, those who are satisfied with their employers’ societal and environmental impact, and their efforts to create a diverse and inclusive culture, are more likely to want to stay with their employer for more than five years. 

Revitalize the Onboarding Process 

The onboarding process shifted considerably during the pandemic. New hires didn’t meet their team in person, and training was virtual. Even though many brokerages have returned to working in the office full-time, 75% of Gen Z and 76% of millennials prefer a hybrid or remote working situation. Your brokerage must adjust to this pattern, especially during onboarding, if you want to keep them. 

Onboarding a new hire remotely (or a mixture of in-person and online onboarding) is here to stay. Consider integrating technology into your employee orientation processes to simplify compliance aspects, such as filling out paperwork and learning the basic rules of the organization. For instance, by using digital documents, the employee can confirm they have watched presentations and video material explaining the organization’s rules using a digital signature.

Developing programs that include on-the-job learning, social learning and formal learning in a format of the candidate’s choice, whether digital or in-person, will demonstrate that they’re a valued team member and that you’re committed to making their integration a success. 

Provide Career Development Opportunities 

It has become essential to provide career paths within your business. A new study by Amazon finds that almost three-quarters of millennial and Gen Z workers are planning to quit their jobs in 2023 due to a lack of skills-building opportunities. Millennials and Gen Z want to know there is room to grow if they join your brokerage, so providing them with a clear path to future development can help attract and retain that talent. Some ways you can do this include:

• Identify clear goals to work toward: Collaborate and clearly identify their career goals and then come up with a development plan to achieve them. 
• Create a mentorship program: Offer opportunities to be paired with mentors who can help guide their careers with the company. 
• Promote from within: Consider hiring from within when a position becomes open. If you know you will need to fill a position in the future and it aligns with one of your employees' career goals, create a cross-training program that will enable them to earn that spot. 

See also: 3 Reasons Millennials Should Join Industry

Every corner of our industry is facing a talent crunch. In addition to recruiting more producers, marketers and customer service representatives (CSRs), we also need more actuaries, accountants, social media experts, data analysts, benefits experts, IT professionals and experienced managers.

Potential candidates need to know that the people working in insurance are problem solvers with bright futures and use their talents to help their communities. Using these five points can aid in not only attracting and retaining the new generational talent, but also fostering an environment that promotes growth and embraces change, allowing your talent to count on having a long and fulfilling career in insurance.

Diversity, equity and inclusion have come under fire recently, as people question the need for DEI, its effectiveness and occasionally even the motives behind it.

In many cases, the criticisms may be because of a lack of understanding about all that DEI entails. People hear about a DEI program or initiative and they think only about race, or perhaps about efforts to get more women into the C-suite. And they think that for conditions for one group of people to improve, conditions for others must be made worse.

Certainly, race and the effects of systemic racism remain at the center of DEI discussions, and with good reason. If we can’t fix that, we won’t be able to fix anything else. But with that said, DEI is about more than race. DEI also includes people with varying degrees of physical ability, neurodivergence, illness, sexual preference, economics, trauma and more. 

DEI also is not a zero-sum game. Improving one person’s situation doesn’t mean someone else must lose. The goal is equity, removing barriers so that everyone gets access to the same opportunities.

Another thing critics miss is that embracing DEI is crucial for any business. Not only are companies that support the concepts of DEI more profitable than those that don’t, as shown by a 2020 study by McKinsey & Company, but DEI also can play a significant role in risk management.

As just one example, when businesses fail to address DEI issues, their reputation can be at risk. Think back to 2020 and the political, business and social climate surrounding the murder of George Floyd. It became clear that not addressing DEI or sharing thoughts publicly about inequities in society could affect a business's public perception and bottom line.

But here’s another example, perhaps more directly relevant to the culture within a company. All people have biases, and that’s true no matter their race, their gender or any other characteristic connected to them. Biases are universal. But the fact that this is a problem we all share doesn’t make it less of a problem. Businesses that ignore this problem – that pretend it isn't there – run the risk of legal troubles when a supervisor or an employee crosses the line and discriminates or creates a hostile work environment.

See also: April ITL Focus: Diversity, Equity, and Inclusion

Part of the work of DEI is to get everyone involved; to make DEI everyone’s responsibility. The more people who have buy-in, the less likely the business is to run afoul of any law and end up on the wrong side of a lawsuit.

But that’s just part of the legal reason behind the need for DEI initiatives. There is also the more compelling reason that it’s the right thing to do, and that DEI comes with the bonus feature that the right thing also happens to have benefits. The company culture becomes more inviting, more inclusive for all employees.

This is because everyone, regardless of background, has at some time felt rejected, exploited or completely invisible. For some, those experiences have been few and far between. For others, they are common due to historic systems of oppression in employment, healthcare and social structures.

Part of what DEI does is encourage us to understand and feel empathy for the experiences of others, helping us better recognize that all people are entitled to humanity and dignity. When we do this, attitudes and behaviors change. People look forward to coming to work, rather than dreading it. Absenteeism rates go down. Employee engagement goes up. Turnover is less of a problem as the improved culture makes workers want to stay where they are, rather than go in search of something better. The company saves money because it is not constantly searching for and training new employees.  

Sometimes people criticize DEI efforts, saying the point is to make white people feel guilty, or to imply that white people don’t have significant problems. But DEI work doesn’t suggest that white people have never suffered burdens or hardships. It’s just that those burdens or hardships were not caused by skin color. 

All of this said, it’s important to consider that everyone has a DEI story. Even if you aren’t a member of a historically marginalized group, you have a story. 

This is because diversity is about how things differ, and when you think about how people differ – in age, race, gender, sexual preference, physical abilities, neurodivergence and much more – no one is left out

Ahhh... a full-bodied merlot or cabernet sauvignon. Nothing tastes better than an aged red wine. The longer these vintage spirts lay dormant, the better. 

Unfortunately, there is no such happy result when it comes to delayed vehicle claims. In fact, the more time a claim goes unattended, the more “collateral damage” is created, with increases in (already challenged) cycle times and decreases in customer satisfaction. 

Cycle Times and Customer Satisfaction 

A recent J.D. Power report reinforces the correlation between delayed cycle times and reduced customer satisfaction, citing a notable drop in satisfaction when claims exceed two weeks.  

Specifically, compared with the quickest claims (resolved in less than one week), satisfaction levels dropped 56 points for the 34% of claims that stretch beyond two weeks, and plummet nearly 90 points when lasting beyond a month and 140 points among the longest claims. Time to settle is a key driver of overall satisfaction. 

Source: J.D. Power

Communication-related metrics, such as for keeping the customer informed of progress, also notably decline.  

Mark Garrett, director of insurance intelligence at J.D. Power, recommends a “laser focus on both speed and high-quality communications to maximize customer satisfaction.”

And that is one of the many reasons touchless vehicle claims are finding a stronghold. 

From Novel to Mainstream 

Once considered novel, these fully automated, touchless claims are now growing in popularity, empowering customers to jump-start the claims process, anytime, anywhere.   

But that’s not their only superpower.   

The portability and convenience of touchless claims open the door to a fully streamlined, virtual experience – from first notice of loss (FNOL) to settlement, repair and getting customers back on the road. There’s no waiting for callbacks, navigating busy phone lines or moving your day/week around the confines of set service hours. Instead, touchless claims bolster consumer confidence via personalized, proficient claims experiences. 

It’s all about managing consumer expectations through positive carrier experiences, and while not for everyone, touchless claims place the customer in the driver’s seat, keeping them engaged with every step of the claims process.  

Tech-Savvy Customers  

Make no mistake, current and prospective customers are primed and ready for digital experiences, including Millennials and GenX individuals – often referred to as the Digital Generation – who essentially grew up with technology and digital innovation. 

Those experiences embedded in AI – the “engine” of touchless claims – are no exception. Look no further than the findings of the Solera Innovation Index 2022, a survey of 2,000-plus consumers, OEM dealers, repairers and insurers regarding their view of AI technology and its impact on the claims/repair journey: 

• 79% of tech-savvy customers would trust automotive claims powered entirely by AI (up 7% year-over-year) 
• Approximately 1/3 of respondents personally completed a claim devoid of human interaction 
• 49% of consumers prefer end-to-end self-serve claims options 

Accelerating Carrier Adoption 

With all of the upsides to touchless claims, the exceptional customization features make their use a blend of art and science. While carrier adoption is underway, the pace is closer to a crawl than a sprint. Some may turn to a plug-in option to their existing, legacy process, then discover the approach is more clunky than seamless and throw in the touchless towel only to revert back to old ways.   

Garrett suggests a more holistic view. “The best way forward is for insurers to start focusing on carefully managing customers’ expectations and fine-tuning their digital engagement strategies to shepherd their customers through the process,“ he said.   

Improving Communications 

The J.D. Power ACS findings also point to the role of communication in the claims process, noting the three most affected key performance indicators (KPIs) when cycle time extends beyond two weeks as:  

• Accurate claim length expectations  
• Unnecessary delays  
• Updates 

A well-designed touchless claims model can provide avenues and features to address these KPIs, customized to reflect your carrier’s own unique flow, customer engagement cadence and process touchpoints.    

See also: How Claims Process Must Drive Change

Intentional Design vs. Afterthought 

To that end, carriers that can reimagine touchless claims as an intentionally designed service of their business plan vs. a piecemeal afterthought to an outdated, longtime existing “legacy” system stand to have better outcomes in the long run.   

Holdouts to touchless claims may argue that nothing can replace human touchpoints that come with relating to customers personally during one of the most stressful times in their lives. That’s true for some claims and why all roads lead back to enhancing customer satisfaction by managing expectations. We realize no single workflow for non-complex auto claims pleases every customer. That’s why complementing a customer-friendly touchless claims workflow with a hybrid model -- where digital customers may opt out to immediately speak with a human (a well-trained adjuster) when desired -- is ideal for the future claims design. 

Being empathetic throughout the process is key, especially for the longer-tailed claims that can create more effort for customers who have questions, need updates and are trying to determine next steps, Garrett says. 

Touchless claims offer many ways for carriers to personalize updates and foster strong communication – there are no cookie cutter approaches.  

If there’s any doubt about whether your current – and future – customers are ready for a touchless claims experience, cast that thinking away. They’re here, and they’re ready. Take the time to develop your unique process – rushing through the steps to “check the box” is ill-advised.  

The best results are always aligned with timely, quality claims communications, says Martin Ellingsworth, executive managing director, P&C insurance intelligence at J.D. Power. “You can never go wrong with the foundational underpinnings,” he said.

Let's have a toast to a touchless claims future. 

Cheers!