Since 1980,the U.S. has sustained 323 weather and climate disasters that have resulted in over $2.1 trillion in damages. Climate-related disasters have become more frequent in all regions of the globe, with the World Meteorological Organization calculating that disasters have increased by a factor of five in the past 50 years. As we face a future with more frequent and more disastrous weather events, insurance agents need to be ready at a moment's notice to provide clients with timely communication on coverage, policies and safety information. Wildfires, floods, hurricanes and snowstorms are among some of the disasters that have caused havoc and require immediate reactions.

While no one can predict a crisis, agents serving areas that experience extreme weather on a seasonal basis can prepare clients (and themselves) for climate-related disasters with relevant messages about how to protect their property and lives. There is an obligation to communicate to clients if something's going to affect their wellbeing and communities. Creating a preparedness plan that readies agents for these situations can go a long way to facing these situations when they occur and ultimately supporting clients.

Some disasters, like earthquakes, are largely surprises, but many weather events are seasonal and predictable. California's wildfire season, for example, historically runs from July through October. However, extended drought conditions mean the state is susceptible to human-caused wildfires all year long. Agents need to know what seasonal conditions and potential disasters can affect their customers and make sure they prepare them year-round for both anticipated and unexpected climate crises.

When disasters strike, there is the initial wave of chaos, but the impact can last more than one day, and customers need more than just one check-in. They need to be communicated with on a continuing basis as the situation evolves. As an individual agent, there is only so much one can do to contact everyone affected; this is why automated messages/calls are critical during crises. Those who leverage automated communications, whether through email, text or call that can be personalized, can create custom calls to action to help customers. Some examples of messages to include are: evacuation instructions, resource center information and post disaster claim information. Automated messages allow you to stay connected with your clients and provide a sense of relief when it is needed the most.

Preparing tailored messages for climate-related emergencies is a great way to stay ahead of any situation. Agents who fail to prepare are preparing to fail their clients. Creating ready-to-go materials for these types of events that can be used when a disaster arises will streamline processes. The last thing an agent wants is for a disaster to happen and to find themselves with no materials prepared for their clients. By using technology solutions that provide relevant content that can be customized, you can instantly have ready-to-send materials to your customers at a moment's notice. Automated systems can deliver materials that can address nearly any situation you might encounter. Curating materials/messages about general or specific disasters, safety kits, will allow agents to easily prepare, customize and distribute information in a timely manner. And, when disaster strikes and customers need to know their next steps, agents can quickly send out prepared messaging about how to file a claim so customers can start the process immediately.

See also: Need for Scalable Response Teams

Those trying to respond with manual processes are unlikely to respond in a timely manner to clients. Without the support of technology, agents would need to manually go through their book of business to identify those affected, then create messaging and directly contact each individual. This is likely to take days, if not weeks. For clients going through a difficult time, knowing that an agent is there to support them is important. An automated system allows you to have a communication strategy that can be used in emergencies and be sent in minutes.

This allows agents to focus on processing claims being submitted by clients instead of being bogged down by the initial wave of necessary respondents. Prepared communications also allow agents to provide clear directives to those affected on the information needed to streamline the claim process and veer off any confusion or delays. During this period, customers want to easily access information regarding their policies and process claims as quickly as possible. Agents who are able to deliver this efficiency to their clients can expect to retain those clients long-term, while those who do not are likely to experience an exodus as those same unhappy clients spread their experience to people they know.

Understanding your customers' expectations when it comes to their protection is important, and delivering at a crucial time is exactly why they pay insurance premiums. Technology can help identify those customers instantly and reduce the time needed to reach them. From direct communications to making it simple for clients to navigate your websites, these things matter to them. Creating easy-to-use pathways for clients to access this information will reduce the difficulty as an influx of claims are submitted. Setting yourself up for success means preparing where possible and leveraging the necessary tools to provide clients with quality service at any time.

According to a new Chubb survey, which was fielded in at the end of 2021, U.S. and Canadian homeowners and renters are often overlooking risk. This fifth annual survey, which examines the respondents’ attitudes and behaviors toward property protection, not only looked at renovations and weather-related risks, it also explored purchasing decisions in the past two years.   

The survey found that 44% of U.S. homeowners experienced internal water damage in their home in the past two years, up from 27% in 2020. Non-weather-related water losses continue to be the number one source of property damage, as 48% of all interior property damage is caused by water, according to Chubb’s internal claims data.  

Other key findings:  

Protecting a Renovation Project

While home renovations can add value to your home, such projects also present potential new risks and damages if not handled properly. The survey found the top three types of renovations U.S. and Canadian homeowners and renters were considering included a bathroom overhaul (40%), a kitchen renovation (26%) or a living or family room refresh (23%). While renters might not be top of mind when it comes to renovations, minor projects are often acceptable with the landlord’s permission, especially if the renovation will help to increase the property’s value. 

During a renovation project, workers on the premises raise the risk of injury or damage. To make sure a home renovation project is insured properly, homeowners must work with their insurance agent or broker before starting a project to make sure that prime and any subcontractors have workers' compensation and liability coverage. 

Protection Against Water Damage 

A home renovation project is the perfect time to install a water shut-off device to help alert the homeowner of water leaks and minimize the potential for costly damages. According to our recent homeowners’ risk survey, 26% of U.S. and Canadian homeowners and renters with no personal experience with water damage preemptively installed a device; and 56% of U.S. homeowners have installed a water shut-off device in their primary homes after they or a friend experienced a water leak. Frequency of water-related losses can be significantly reduced with proper education about ways to mitigate the risk. 

Riskier Purchasing Behavior

With the hot housing market, it’s becoming more common for home buyers to waive home inspections to make their offer appear more attractive when the seller is presented with multiple offers. What’s more, our recent survey found additional risky purchasing behavior—some U.S. and Canadian homeowners have purchased a home sight unseen within the past two years. Those 18 to 24 years old were more likely to purchase a home sight unseen (39%) or consider purchasing a home sight unseen (34%) than other generations. Homeowners who purchase a residence sight unseen can leave themselves vulnerable to several risks, such as water damage or other potential issues (e.g., problems with the home’s physical structure and mechanical systems) and costly repairs associated with damage to roofs, plumbing and electrical systems. 

It’s vital for homeowners to have inspections during the home-buying process to pinpoint unresolved maintenance issues and potential sources of damage. Proper due diligence can help future homeowners understand if the home has structural issues in the foundation, a roof that needs total replacement or load-bearing walls rotted out from water damage. Even with a home inspection, an overwhelming 65% of U.S. and Canadian homeowners and renters who purchased a home in the past two years found areas of concern after a purchase. 

Weather-Related Risks 

No matter where U.S. and Canadian homeowners and renters live, weather-related exposures are often affecting their lives. In fact, the increased frequency and severity of natural disasters and extreme weather have become a factor in some homeowners’ and renters’ property decisions. For example, our survey found that homeowners and renters in the Southern U.S. (24%) and Western U.S. (20%) said the frequency/severity of tornadoes contributed to their decision to sell primary and secondary residences. Similarly, 15% of homeowners and renters who live in the Southern U.S. would consider selling their primary and secondary residences due to the frequency and severity of tropical storms/hurricanes compared with 12% of those who live in the Northeast U.S. and the 9.3% who reside in the Western U.S. 

For more information, download the Chubb 2021 Homeowners Risk Report – Trends in Home Renovations and Water Damage, the Chubb 2021 Homeowners Risk Report – Trends in Purchasing Behavior, and the Chubb 2021 Homeowners Risk Report – Impact of Weather on Property Decisions.

Automating insurance business processes is certainly not a new concept. Many insurance companies have implemented rules-based engines and business process management software and continue to do so. However, insurance is complex and heavily regulated, with state and regional exceptions quickly overwhelming these process models and solutions. Ultimately, this leads to a massive repository of rules that is messy and difficult to maintain. To overcome this challenge, some insurers are investing in "intelligent decision-making."

What Is Intelligent Decision-Making?

Intelligent decision-making is fundamentally the ability for AI to ingest information and use it to make a decision or recommendation for the next best action. It can be used to automate and streamline everyday tasks to complement and enhance the productivity of skilled knowledge workers and customer service representatives. 

The first key component of intelligent decision-making is digitalization. The insurance industry is still a heavily paper-based industry, but times are changing, and insurance is amid a transformation driven by digital technologies. Advances in technology and digitalization have dramatically increased the volume, variety and velocity of data, which is the second key component of intelligent decision-making. Data enables insurers to make more informed decisions about risk and business processes. 

However, data on its own is worthless without the ability to use it for insights to transform the business. Hence, the third component for intelligent decision-making is AI. AI uses machine learning algorithms to analyze data to replicate human decisions, resulting in faster and improved decision-making processes. The key value proposition of an intelligent decision-making engine is the ability to integrate AI-driven machine learning models into core transactions systems.

The final component for intelligent decision-making is value tracking. Delivering value is crucial for the success of any AI and intelligent decision-making project, so it is essential to measure the business benefit and ROI from implementing AI and machine learning models. 

See also: The Evolution of Leadership Intelligence

Challenges of Intelligent Decision-Making

Intelligent decision-making is not easy, and insurance companies need to overcome many challenges to use it successfully. Some challenges arise due to the regulation of the insurance industry. For example, carriers and compliance officers need to prove to regulators how the model makes decisions. Doing so is not always straightforward; some types of AI, such as neural networks, are not transparent. There are also fears about model bias and fairness, especially when associated with age, gender and race.

Insurance companies must also consider data usage and privacy issues. Ethical use of data is becoming essential. It goes further than simply adhering to the rules and obligations imposed by regulators; insurance companies must also apply their own judgment in line with organizational values and commitment to building customer trust.

Lastly, to use intelligent decision-making successfully, companies must put in the work to improve their data quality. AI and intelligent decision-making are only as effective as the data used to train the models. Poor data quality leads to inaccurate and faulty algorithms.

Use Cases for Intelligent Decision-Making 

Companies are using these models to drive efficiency in several ways. Companies can detect point-of-sale and claims fraud by using AI to identify fraudulent behavior such as suspicious quotations, policy applications and claims. An intelligent decision-making engine can improve productivity and effectiveness in underwriting with instant information about underlying risk characteristics and by reducing manual dual entry of submission data into rating engines, underwriting workbenches and policy systems. 

Lastly, as consumers have become more familiar with digital tools and more comfortable with remote and virtual interactions, insurance companies are looking for better ways to engage with and enhance the customer experience. An intelligent decision-making engine can be used to analyze all customer and operational data to determine the next best actions along the customer journey.

Concluding Thoughts

Insurers are navigating a complex industry full of complex regulations and massive rule repositories, but implementing intelligent decision-making is helping some carriers respond to these hurdles more rapidly. An increase in digitization, the rise of AI, and better value-tracking methodologies have paved the way for more advanced technology like intelligent decision-making.

To learn more about how property/casualty insurers are using intelligent decision-making to bolster their processes, read Aite-Novarica Group’s report Intelligent Decisioning for P/C Insurance: How AI Is Automating Insurance Business Processes.

Chips. Who knew they could be such disruptors?

As COVID affected supply lines throughout the world, the manufacturing and supply of computer chips that seemed to cause the most disruption. Everything from PlayStations to pickup trucks were placed on wait lists — parked in anticipation of necessary microprocessors and controller boards. The fallout is pushing some industries to their limits. This one supply chain issue can be linked to a host of consumer disruptions.

Take auto rental. At the onset of COVID, rental companies decided to thin their fleets in an attempt to ride out the travel-sparse months with low auto rental demand. At the same time, computer chips weren’t arriving at auto manufacturers in time to keep up with demand for new cars. New car lots emptied out. Used car lots emptied out. Used car values skyrocketed (up 40% in 2021).

Now travel picked up. Rental car companies couldn’t meet demand. They couldn’t expand their fleets with new cars. Many are scrambling to find acceptable used cars. No matter what they do, they can’t shift gears fast enough to meet the market. They are forced to raise their prices to all-time highs. The result is that they are sending frustrated customers straight to Uber, Lyft and Turo.

Are insurers on the cusp of frustrating customers, as well?

Choosing to wait on technology transformation in insurance can be just as disruptive as not receiving timely technology in manufacturing. Insurers need to rapidly adapt and let market demand pull them into the future.   

A joint Majesco-Deloitte paper titled, Insurance Billing and Payments: From Back Office Calculators to Channel Growth Accelerators, examines how and why insurers' billing and payments operating model is changing — as seen through the eyes of insurance executives at a recent round table.

In our last blog on billing, we established the case for billing transformation. Using current data and interviews with engaged insurance executives, we discussed how customer service is increasingly difficult without next-gen, digital billing. Difficult service will soon become impossible service as new products and value-added services require new billing models. These models are not compatible with yesterday’s billing systems, and patchwork solutions are not feasible.

“How agents and insureds are dealing with every other type of bill or payment is the last experience that they think about. Insurance legacy systems are not the way they want to deal with insurance.” — Roundtable Participant

The convergence of different forces is driving new customer behaviors and creating new risks. At the same time, new expectations for the interactions between customers and companies are rising in communications, education/researching, transactions, problem resolution and buying. In Majesco’s customer research, we found strong interest in using innovative methods for pricing, billing and payments for insurance across a range of methods as well as the demand for value-added services. These new products and services demand new billing and payment options.

The result of these changes is creating a series of “from – to” shifts that have huge implications for billing and payments. We’ve identified six of the shifts as those that need a quick response to align billing models with customer trends.

From contents coverage to coverage of single items 

Digital data and advanced analytics now allow insurers to break apart the “lump” of contents coverage in a standard property policy to focus coverage on a limited set of specific items of highest importance or value to the customer.

From standard six- and 12-month billing to on-demand, parametric and usage-based billing

Similar to single-item coverage, digital data, advanced analytics and mobile technology now let insurers break apart the standard lengths of insurance policies into flexible, non-contiguous “chunks” of coverage whenever they are used, as determined by the customer, not the company. Parametric insurance uses defined parameters that trigger different elements including on/off coverage and payout, such as insurance for Uber or Airbnb coverages for the sharing economy. Parametric insurance makes a mess of traditional billing systems. (For an example, read the introduction to our last billing blog.)

Usage-based insurance (UBI) requires billing to be more flexible and transparent based on mileage driven or timeframe of use. UBI includes the capture of real-time data to calculate the price.

From personal use OR commercial use of assets to personal use AND commercial use

Platform companies like Uber, Lyft, VRBO, Airbnb and Turo have liberated people’s assets from the confines of "personal use only" by connecting them with people who want to use them temporarily and are willing to pay to do so. Because many personal assets like cars, homes or rooms within homes can include significant periods of non-usage that still incur costs for their owners, these platforms empower millions of asset owners to earn money at a scale that was never possible before.

From indemnification to prevention

Insurers have decades of historical data on losses, so it is well known how often different perils occur and how much monetary damage they incur. The problem is that this knowledge is only created after the losses have occurred. Sensors and IoT technology are lifting the veil on these events as they’re happening or even before they happen, making it increasingly possible to prevent losses from occurring in the first place, or limiting the damage they cause.

From standard billing to subscription billing

Subscription billing has grown very popular across many industries, but insurance is just now beginning to catch up. Subscription types require more than just calendarized transactions. Subscription capabilities include frequency changes, free trial periods and the application of promotion codes. Billing’s subscription capabilities should also extend to freemium or premium services — mimicking popular app features, where services could be supplemented by ads. 

From standard billing to seasonal billing

Insurers have traditionally shied away from seasonal insurance products and those that you can turn on and off — likely because of the loss of consistent income and the possibility that, once the product is turned off, it may not be turned back on again. The consumer, however, might rather pay for the seasons in which they are using the insured property. 

Ultimately, what is required is that billing and payment solutions must be built to adapt and flex as the market, product, services and customer expectations continue to shift. Insurers need the flexibility to deal with anything new that might be thrown at them, enabling agility, innovation, and speed. 

“The big challenge is keeping up with the customer because they are groomed by forces outside of insurance. They pay online. They order online. They pay with credit card, Venmo, PayPal and even Bitcoin.” — Roundtable Participant

See also: 3 Steps to Achieve a Digital Architecture

Meeting the shifts with a tech vision that delivers ROI

“If you take the technology and put it into the old operating model, it will underperform what you get from the investment, operationally and strategically.” — Roundtable Participant

Most carriers are primed for growth as the economy rebounds, with firms bullish about top- and bottom-line gains fueled by greater technology investments. According to a 2021 survey of top executives by the Deloitte Institute for Financial Services, most surveyed insurers have pivoted to a post-pandemic growth strategy, often doubling down on technology investments that allowed them to engage with customers to drive further efficiencies and deliver long-term business model upgrades. Given the need to digitize and virtualize their operations overnight, 96% of firms are accelerating major digitization and platform initiatives, intending to enhance efficiencies and improve customer experiences. 

While recognizing that delivering near- and mid-term ROI is a key lens by which firms need to develop and execute a sustainable technology vision, it is critical that technology executives keep two long-term trends in mind:

• Empowered customers: The explosion of data has paved the way for the AI-enabled personalization of the customer experience. As customers increasingly recognize the value of their activity and the data it generates, it is inevitable that they will demand more power to create, capture and transfer that value themselves. This will herald a new era of customer empowerment, with the value of data dictated by the ability to access it.
• Ecosystem strategies: Innovative firms will continue to emerge in the distribution, payments and servicing space, further challenging existing operations and supporting technology. Firms that actively monitor ecosystem players and develop "agile" partnerships will capture more value.

“With today’s technology, it shouldn’t be a moonshot to be able to know who the customer is, what products they have and what information will be most valuable to anticipate and help them. Data and analytics can help them digitally and predict and meet those needs.”  - Roundtable Participant

In addition to collaborating with business and operations executives to redesign operating models, executives need to design their technology vision based on a few considerations:

Understand where ROI is generated and the horizon for capturing it. 

The technology stack that supports billing includes engagement, integration, core and data layers. Innovation pace at each of these layers is different and so are the time horizons to capture value. Engagement and data/insight capabilities have the power to deliver significant value while core platforms are more foundational investments. Build-vs.-buy decisions should be dictated by speed to market, speed to value and sustainability criteria.

Pursue a holistic, enterprise model with rapidly expanding capabilities for billing.

Insurers need to consider much more than just redesigning for a modern solution. Instead, they must shift to an enterprise model with modules and services, a configurable chassis and a robust ecosystem of partners that provide new capabilities, data and services that together can help insurers rapidly adapt to changing market demands. 

Impose “digital first” through APIs.

Fully digital insurers can react to trends and establish a presence through multiple sales channels, and storefronts. To get a better picture of the importance of establishing an API platform in the cloud, read this blog.

Embrace the need for pervasive data access and insights for both internal and external stakeholders. 

In addition to regulators, external stakeholders, including the customer, as well as distribution and servicing partnerships, will increasingly need data access. Internal access to data and insights is more critical in the near term while expectations of external stakeholders on access will increase over time.

Understand and accept execution complexity.

The scale and complexity of billing modernizations requires very detailed planning and risk management across operations and technology. This is usually further complicated by the complex legacy architecture landscape involved. A few considerations include:

• A compressed timeline between deployments where teams are given only one sprint each for design, development and testing
• Releases of new functionality at the same time or just prior to a customer migration/deployment
• The number of migration/deployment events and the ‘fatigue factor’ of repeating this for an extended period
• The ability to support an overlapping chain of activities required from testing to validation to migration to operation readiness

Develop an ecosystem of partners.

An enterprise billing chassis provides the configurability and flexibility needed to respond to the requirements of innovative products, services and payment methods, and it answers the need for customer service capabilities that will pay off in customer engagement, loyalty and retention. A payment gateway can provide flexibility through security within its domain, but payment integration outside the gateway. 

“Billing has been underinvested for a long time. The entire paradigm of what we need to do in the future, how we need to shape all the investments that need to be done versus playing small ball must change. We need to show the bigger picture of what’s at stake.”  — Roundtable Participant

Caring for the customer experience is key. It is becoming clear that the product shifts required to meet customer demands will mandate the long-overdue modernization of billing and payments. Now is the time to act to ensure that billing technologies won’t be the disrupter of insurance experiences and insurance profitability. 

Today’s blog is co-written with Ajay Radhakrishnan, managing director at Deloitte Insurance.

“New normal” was the phrase heard around the workplace throughout much of the first year of the pandemic. It’s become the colloquial term used to describe the lifestyle changes society undertook that have become commonplace, such as remote work.

If “new normal” was the buzzword of 2020, “great resignation” seems to be reigning supreme over the past year. In July 2021, 4 million Americans quit their jobs, and there were a record-breaking 10.9 million job openings at the end of the month.

Fast forward to today, and the war for talent is still in full swing. Thanks in part to 4.4 million Americans quitting their jobs in February, employers are seeking to fill a staggering 11.3 million jobs, according to the Bureau of Labor Statistics.

What’s motivating this great resignation? The pandemic has certainly made individuals take a step back and reevaluate what’s important to them, what they want for their careers and the significant impact and financial burden on their families. A Prudential survey found that nearly 80% of employees are seeking benefits such as retirement plans, health, disability and life insurance, paid family medical leave and emergency savings programs.

In response, employers are seeking to offer a broader portfolio of offerings, including an overall benefits package that addresses the wants and needs of today’s employees. This was a key discussion in roundtables Majesco held and reflected in a report Majesco commissioned Celent to do, Next-Gen Platforms in Group and Voluntary Benefits. Carriers, in turn, need to deliver innovative product offerings quickly to enable employers to offer some of these new benefits employees are seeking. While it may be a stressful time for HR departments, there is significant room for growth for L&AH insurers in 2022 and beyond.

Growth has returned to L&AH

Despite a need to undertake digital transformation to leverage benefits of the cloud, new technologies and ecosystems to bring products and services to market more quickly, many carriers were forced to trim budgets in 2020 due to profitability challenges. In fact, from 2016 to 2020, DWP growth in the L&A space was down 1.7% compared with increases of 6.5% for accident and health and about 4% growth for both commercial and personal lines for P&C, per Celent analysis.

But those challenges appear to be in the rearview mirror. Among North American life insurance CIOs polled by Celent in its 2022 report “CIO Pressures and Priorities, 2022: Life Insurance North America,” growth was the No. 1 area of emphasis among CIOs. Nearly 80% of CIOs reported a significant focus on growth, narrowly outpacing digital acceleration, another key focus on the heels of the pandemic.

Traditional insurance products focused on life, disability and A&H are no longer sufficient for the new needs and expectations of today’s insurance buyer. Consider that, in 2021, millennials overtook Gen X and Boomers as the dominant 30- to 60-year-old insurance buyer segment in the U.S. and will be joined by members of Gen Z in 2025. These cohorts are accustomed to digital, easy-to-buy products from other industries and have different work and lifestyles that drive different needs and expectations for their insurance and benefits.

Carriers are being forced to adapt or risk being left behind. In Majesco’s 2021 Strategic Priorities Report: Despite Challenges, Leaders Widen the Gap, the Modernize and Optimize gap between Leaders and Laggards grew significantly from 9% to 33% over the past three years.

One area of strong growth focus for insurers is on wellness. Among all voluntary benefits growth in 2021 for North America, wellness outpaced all other products with 27% growth, according to Celent’s preliminary 2021 Group & Voluntary PAS ABC Report — up from 15% in 2019.

See also: Go Ahead, Let the Analysts Freak Out

Addressing the life insurance protection gap

Another growth opportunity for insurers is in the life insurance market. There is a significant protection gap for U,S, households, with 48% of consumers living without life insurance, but there’s reason for optimism as 2021 data shows strong buying signals.

Propelled by 26% fourth quarter premium growth, total life insurance new annualized premium grew 20% in 2021, representing the highest annual growth since 1983, according to LIMRA’s Fourth Quarter U.S. Retail Life Insurance Sales Survey.

As noted from the report’s release, “Our research shows that the pandemic raised consumer awareness and demand for life insurance protection. Three in 10 Americans tell us they are more likely to purchase coverage due to COVID-19,” said David Levenson, president and CEO, LIMRA, LOMA and LL Global. “This interest has translated into record sales. Nearly two-thirds of carriers reported significant positive gains, including nine of the top 10 carriers.”

With the biggest area of growth available from younger generations seeking coverage, carriers need to evaluate their distribution and underwriting models. These digital customers are expecting a frictionless, digital buying experience that is on par with their interactions in other sectors.

Modernizing the back office to create an intelligent core

While modernizing core back systems has been on the radar for carriers for some time, the pandemic shifted its priority on many carriers’ roadmap as they significantly limit digital transformation. The need to bring products to market quickly, operate on more efficient systems and enhance scalability in the cloud has forced carriers to undergo significant core system digital transformation processes.

One of the key drivers for many insurers in the process of replacing legacy systems is putting solutions in place that are better suited to integrate via APIs with third-party partners and solutions to benefit from the data and workflows and extended innovative capabilities of those platforms. By embracing next-generation intelligent core platforms, carriers can position themselves to meet the dynamic demands of today’s multi-generational employee base.

New business and underwriting systems are a leading focus area for carriers seeking to better leverage data to personalize and prioritize the products that fit with employees’ life stages and personal needs and interests.

The upheaval of today’s workforce was bound to happen eventually as insurers and employers alike adapt to the younger generation. The timeline has just been accelerated by the pandemic. But amid the chaos, L&AH insurers with next-gen intelligent core systems are poised to capitalize on the growth opportunities presented by today’s evolving employee needs.

The digital future is today, and high performance is expected of the industry.

If I say, “Tell me about your home security system,” you might describe the sensors that are on your windows or the keypad that is close to the entry door. You may tell me that you installed a doorbell cam, or maybe say, “I don’t have a security system on my house. I’m not sure I need one.”

What you might not tell me about may be areas of your home security where you are vulnerable but where you haven’t thought about the risk. Maybe you keep a garage door opener in the car that’s parked outside every night. The weather in May is gorgeous, so you like to keep the windows of your home open. You rarely take the time to arm the security system when you leave.

If we think of the insurance company as a home, it has similar types of vulnerabilities that are ripe for exploitation.

Where are insurers most vulnerable?

An application programming interface (API) gateway protects the enterprise from outside hacking by closing up the points of vulnerability you may never have considered. At a high level, there are three types of security vulnerabilities:

1. Role-based vulnerabilities. This is the wrong person having access to the wrong items and areas.
2. Data-based vulnerabilities. These might include the open spigots of data spilling into the outer world because “someone left the data on.”
3. The API function itself. This would include open access to an application through the system or developer toolkit.

In our previous blog on API security, we discussed role-based security and not allowing full access to every API for every internal associate – from developers to business users. This is essential just to keep everything structurally secure. But the idea of security roles is just as applicable when it comes to outside access. APIs are rapidly growing in use. The dramatic increase in embedded insurance, partnerships and platforms means that insurers are finding themselves with a host of new people who need to access some level of systems and processes. Keeping track of system keys and keeping watch over access has to become an automated process. The API gateway will be this essential guard at the gate. It will keep roles straight and prevent anyone from accessing systems through exposed API endpoints.

Data leakage is a completely different type of issue. In today’s API environments, keeping track of who, how and when an API is being used is largely a matter of someone within IT who is tasked with knowing the complete system architecture. The use of an API at the time it was installed may have been perfectly secure. Data was moving from point A to point B and was facilitating whatever transaction it needed to facilitate. Over time, however, system teams may upgrade an API or shift its usage. This might be happening on the other end of a partner system. It doesn’t mean that the flow of the data has been turned off, just that it is no longer fulfilling its original purpose. This presents two security issues. The data may fall into the wrong hands, and hackers may also have a route into core systems. All of these issues are real and multiplied within companies that govern their own APIs directly from their internal systems, not yet using cloud API platforms.

See also: How API Hub Can Spark Innovation

API gateways — a portal for secure access

Use cases help us to identify the disparities between a secure environment and an insecure environment. Let’s say your company has 50 APIs with no gateway in place (all of them windows with potential outside access) and you begin to measure your potential exposure. You catalog how many outside users have access to these APIs end-to-end and realize that the system security that you have in place is piecemeal and not completely visible anywhere on a dashboard or console. Your business may have imagined it was more secure than it actually is.

An API gateway would fix these issues. It will add a horizontal shared orchestration layer on top of the APIs, so end users are only accessing up-to-date, usable APIs that they need at a console level. The console works as well on the inside as it does on the outside of a company’s systems. A dashboard will give system administrators complete visibility into usage, breakage, volume and invalid attempts at entry. Customers will end up with less API complexity and an environment that is understandable and manageable. Still, some companies may wonder how secure they can be if they are operating in a hybrid cloud environment that still houses on-premises systems.

“If we’re never going to fully be on the cloud, only our cloud-based systems will be secure. Right?”

Part of the beauty of an API platform in the cloud is the gateway’s ability to make the full environment more secure by securing API endpoints.

Let’s say for a moment that you are currently running in a hybrid environment. In some cases, your back-end systems are situated in the cloud. Others are on-premises. It would make sense that you might need two different gateways or two different API platforms. Yet that is not the case. With an API-platform approach, your multi-nodal systems can all be managed at the API gateway level. Your nodes could be different, or the processing could be in the cloud or on premises. A gateway can make points of entry and exit secure. It can add security to every system where APIs are hooked in.

The last hurdle to implementing an API Platform

One of the last hurdles that organizations have when it comes to adopting a new API approach is simply understanding how easy it is. We have been trained that nothing is truly easy when it comes to systems, so we think, ”Why would setting up an API platform be any different? Insurance is a different kind of industry, and we have different protocols. Won’t we need to set up insurance-specific security standards?”

Yes, insurance is unique. Standards and governance principles are specific to every industry and insurance is no exception. No, you will not need to fuss over insurance-specific standards. Cloud providers have made it super-simple for insurers to set up their gateways. Insurers will find that they don’t need to write code to define rules or build out environments. They will be using drag and drop, picking and choosing options for gateway setup. It is part of the interface.

In addition, the modern cloud-based or cloud-native API platforms, like AWS or Azure, have prebuilt frameworks or prebuilt activators already built out, whether it is for specific functional needs, like claims processing, or for specific industries, like healthcare or insurance. They have prebuilt rules templates, which, as a new customer, or a new deployer, you can simply plug in. When you copy and paste the framework into your gateway, it inherits the rules that are defined for our industry. Once connected, you’ve created an industry-specific API gateway, and your organization is now far more protected because you’ve reduced key points of vulnerability.

At Majesco, realizing an API-centric enterprise for our clients means a concerted program to craft an end-to-end API orchestration platform founded on a cloud-native API management service. Exciting developments are underway in this regard. Stay tuned for more in the coming months!

Anyone at all versed in behavioral economics already has some understanding of the intention-action gap, in which one’s words don’t always match deeds. For many consumers, a similar cycle develops around sustainability. They want to live more sustainable lives, but time, money or some other factor prevents them from seeing that intention through. So, if a brand were to reduce the common friction points associated with doing business with and investing in green companies, then it stands to reason it would emerge as a leader and earn more market share.

This is especially true today, as a joint report by Barkley and Jefferies Group found that 95% of consumers say sustainability is as or more important than 18 months ago. With two-thirds of consumers reporting that they base purchasing decisions on brand values, an increased focus on sustainability presents a huge opportunity for insurance companies to gain traction with consumers looking to invest in like-minded brands.

In the insurance sector, the difference between quality and cost of coverage from one brand to the next are often minimal, at best, so brand values and consumer trust are increasingly important. Either one can be the tipping point in purchasing decisions. An increased focus on sustainability, therefore, can help insurance companies not only differentiate themselves from competitors but also connect with consumers on a deeper level.

Benefits of Sustainability in the Insurance Sector

People now expect all companies to take a stance on sustainability issues. Shifting your focus from a myopic view of consumer needs to a larger view of worldly needs meets this consumer preference for sustainability while also leading to better innovation within companies. Here are some other benefits of sustainability in the insurance sector:

1. Sustainability can lead to greater profits.

The purpose of most companies is to produce profitable solutions that help meet consumers’ needs. At first glance, it can appear as if generating more profits is in conflict with doing good in the world. However, shifts in consumer attitudes, beliefs and behaviors suggest that it’s often more profitable for companies to develop and launch sustainability initiatives. The majority of consumers (60%, according to the Barkley and Jefferies report) say they’re willing to pay a premium for products from environmentally or socially conscious brands.

Take Unilever North America. The company’s commitment to sustainability has more than paid off in its revenue growth. As of 2020, 75% of Unilever’s growth has been driven by its cadre of more than 28 sustainable living brands, which include the likes of Ben & Jerry’s, Dove and Seventh Generation. SAP, a multinational software and technology company, has experienced similar results in not only revenue but also business outcomes with its increased focus on sustainability. It’s also not shy about sharing its beliefs that sustainability can be profitable and that profitability can be sustainable.

2. Sustainability can improve employee engagement.

Engaged employees are less likely to leave, thereby cutting the time and expense associated with replacing and retraining talent. Companies focused on sustainability don’t often run into questions about how to engage their team members. Sustainability efforts provide employees with a sense of belonging and the feeling of contributing to the greater good, which improves job satisfaction and overall sentiments about a company.

This isn’t to say that pay or benefits are inconsequential, but good pay and benefits don’t guarantee low turnover rates. One survey found that a majority of Millennials would accept a smaller salary to work for an environmentally responsible company. Sustainability in the insurance sector could be a cure for its talent crisis.

See also: Good, Bad and Ugly of Going Digital

3. Sustainability can support brand growth.

Word of mouth has become a critical component to brand awareness and growth in the insurance industry. The question then is, how does an increased focus on sustainability encourage positive word of mouth? With younger generations, “green” word of mouth has become a trend: Millennials especially will recommend companies with ESG initiatives to friends and family.

In fact, 75% of people who recommended a brand in a six-month period in 2021 did so because of the brand’s environmental or social responsibility. Improved word of mouth can lead to increases in the quality and quantity of viable leads.

4. Sustainability can strengthen brand reputation.

Let’s look at two companies on opposite sides of the political spectrum: Chick-fil-A and Ben & Jerry’s. Chick-fil-A might make solid nuggets, but that’s not what the business is selling; Ben & Jerry’s might make excellent ice cream, but that’s also not what the business is selling. In truth, both sell their values and service experience to customers.

How is it that these category leaders — businesses that charge more per ounce for their respective products than their competitors — continue to win? It’s the reputation of their brands. It’s the values, service and trust that bring people back. Those three factors are crucial and connected. That’s what sustainability in the insurance sector can do for your brand’s reputation.

Why should companies focus on sustainability? Sustainability begets innovation and vice versa. Though quality and price will always play a role in purchase decisions, values have become the differentiator for many consumers — 50% of consumers, in fact, choose to buy from brands that share their values, the Barkley and Jefferies report found. An increased focus on sustainability efforts creates the trust capital your insurance brand needs to remain relevant and drive profits for years to come. Besides, our planet will be better for it, and isn’t that the most important reason of all?

Amazon Web Services (AWS) is the fastest-growing business in the history of technology. (Per analysts at Deutsche Bank who measure such things, AWS is the fastest-growing business in history, period.) AWS also innovates faster than any other commercial technology player, averaging one product release or major upgrade per day since their founding in 2006.   

This column isn’t a commercial for AWS or the cloud. But there are useful lessons in AWS’ inception and rise to prominence that are relevant to all of us working to drive innovation in the insurance enterprise, irrespective of tool or stack.   

First, a little history. 

The year was 2000. Amazon was struggling to grow amid headlines predicting “Amazon Dot Bomb” and “Amazon Dot Toast.” It was trying to launch an e-commerce platform called Merchant.com to help third-party retailers like Target and Marks & Spencer build online shopping sites on top of Amazon’s e-commerce engine. I say “trying” because Amazon’s development teams were missing key milestones and blowing deadlines. Raise a hand if you’ve been there. I’m raising mine.      

The problem was Amazon’s legacy technology. When Amazon launched in 1994, they geared their platform to selling only their own inventory. They didn’t plan for future requirements such as shared environments and secure multi-tenancy.      

In parallel with Merchant.com, Amazon was hiring hundreds of engineers to build out their core e-commerce capabilities. More engineers, the thinking went, should result in more innovation delivered faster. But project teams, forced to provision their own database, computing and storage resources, were waiting three months for infrastructure--for projects that should’ve taken less than three months to complete. Amazon’s technology operating model, based on best practices, was proving itself too slow for the high-velocity e-commerce market Amazon was striving to create.              

Slowing revenue growth, a dwindling cash pile, nervous investors and a NASDAQ in free fall meant that everyone with a pen or keyboard was urging Amazon to cut costs, on technology in particular, to weather the storm. But Amazon went the other way, doubling their technology spending. Analysts freaked. 

Job One was to untangle Amazon’s monolithic legacy stack into a well-documented set of distinct services capable of interacting with each other through a well-defined set of application program interfaces (APIs). The good news for Amazon was Merchant.com ultimately went live. The bad news was it was a total flop. The silver lining was the Merchant.com platform was repurposed for Amazon’s Third-Party Seller network, which today delivers about half of Amazon’s e-commerce revenue.

Job Two was to build a common set of computing, storage and database resources that internal development teams could provision in minutes instead of months. The result was all good news here for Amazon as development cycles and innovation accelerated as team sizes and development costs shrank. New features such as “customer reviews” and Amazon Prime were added quickly, about as quickly as the ideas themselves were conceived.    

See also: Why Analysts Need Business Awareness

Competing against Walmart’s massive size and razor-thin 3% margins, as Amazon’s new technology operating model bore fruit, internal development teams were tasked with finding open-source alternatives to expensive commercial software. Why spend, for example, $100 million on Oracle licenses when there were open source options? Building and operating their own datacenters, Amazon likewise cost-optimized everything from building construction to CPU design to server procurement to energy consumption.  

As Merchant.com was an attempt to let other retailers leverage Amazon’s platform for their own e-commerce, AWS was about letting businesses in any industry leverage Amazon’s tools and processes to rapidly build and scale technology solutions at a low price, paying only for capacity used.   

The time between the first business case for what became AWS and writing the first line of code for what became their first product--S3? Eighteen months. Amazon spent that time forcing a specificity of thought and intent around the product, working customer-back. “Slow down,” went the internal mantra, “to move fast.”

Though several lessons can be drawn from this mini-case study, I take four:

1. What’s your real problem? What aspects are people/process-related versus technology-related? Humans tend to blame their tools when results are suboptimal. Missing targets, is it the archer or the crossbow? If it is in fact the latter, by all means accelerate replacement.
2. Are your best practices still best? The acceleration of technology innovation means best practices expire faster. This isn’t about chasing every fad. It’s about questioning core principles from time to time, especially if you’re struggling to deliver results, disconfirming beliefs.   
3. Slow down to move fast. The larger the initiative, the bet, the more planning required. “Build fast and break things” may be a winning mantra for tech startups in Silicon Valley beginning life with zero customers. But you have customers, and you can lose them if you’re not careful. Rigorously think and plan things through, always working customer-back. Speed comes later.  
4. If you believe you’re right on the first three points, then gut it out, stick with it, be prepared to be misunderstood internally and externally for what may be an uncomfortably long time. Go ahead, let the analysts freak out.

In 2021 alone, the U.S. had 1,376 tornadoes – up more than 300 from the previous year. They caused billions in damage for homeowners across the country, leaving a lasting financial impact. 

Home and renter insurance policies often don’t provide full coverage, resulting in massive out-of-pocket expenses for families with limited cash savings and immediate expenses to deal with – like temporary housing, childcare, tree removal and their insurance deductible – that cannot be ignored and cannot wait 30 or more days for the claims process to unfold. Families need flexible cash, and they need it fast.

The 2022 tornado season is upon us, and it’s expected to be even busier than last year. So, policyholders need help understanding their coverage and where they may have gaps or face risks that can endanger their financial resilience. 

Identify where current coverage falls short

As you advise your clients, it’s imperative to know what their current policies do and do not cover to ensure they’re adequately covered when disaster strikes. An average home is underinsured by 20%.

In addition, just because severe weather strikes doesn’t always mean that the insurance they have will cover it. Almost 70% of disaster damage since the '80s hasn’t been covered by insurance.

See also: Unusual Weather We're Having, Right?

Limited cash on hand

The average U.S. household savings is only $3,800, and 60% of Americans have no emergency fund. Recovering from a tornado, on the other hand, is often much more costly. The typical price for tornado repairs can range from $4,600 to $17,000. Your clients’ deductible can range anywhere from 5% to 30% of their home’s insured value. 

And, while homeowners wait for a claim to be processed, they can burn through their emergency funds.

Reasons like these are why products like Recoop Disaster Insurance were created, delivering quick cash that insured homeowners can access within days of making a claim following a declared disaster. This recovery cash is designed to be flexible so families can do what they need to get back on their feet swiftly.

With anticipated severe weather on the horizon, no one is immune from the damages caused by tornadoes. Instead of rolling the dice and helping clients after a tornado occurs, help them prepare before the busy season arrives.

Not only will your clients appreciate that their home will be covered no matter what happens, they’ll be thankful they have an insurer considering their overall financial wellbeing.

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It's Time to Rethink the Spreadsheet Paul Carroll, Editor-in-Chief of ITL The oddest venue where I've ever delivered a talk was the QEII. In 2000, a conference group had hired out the ship, which carried an audience of CIOs east for a day and a half out of New York, then did a U-turn and sailed back. The group hired me to give two talks on how the CIOs could regain control of corporate data processing following nearly two decades of decentralization caused by the spread of personal computers and local area networks. A key concern was the spreadsheet. Seemingly every person had one, containing data that might or might not be current and that might or might not come from a source that was recognized as authoritative throughout an organization. Basically, every person could have their own version of truth, and big organizations have thousands or even tens of thousands of people.  That problem persists. But the sort of theoretical solution I laid out 20-plus years ago is becoming practical today, because the massive improvement in computing power and connectivity means we can rethink what a spreadsheet is and how it should be used.  continue reading > Podcast Alert Check out Majesco's latest podcast featuring Denise Garth, Chief Strategy Officer at Majesco as she is joined by guests Abhishek Bakre, Senior Manager of Strategy and Santosh Kutty, Principal at Deloitte as they discuss how to modernize disability insurance and absence management to drive profitability and customer satisfaction. Listen Now SIX THINGS The Next Evolution of Insurance by Ron Gura Instead of simply selling consumers products, smart companies. including insurers, market themselves as companies to believe in and make part of one’s life. Read More COVID Drives Tech in Workers' Comp by Shahin Hatamian Workers’ compensation survey shows more payers are investing in electronic payment platforms and digital claims management tools. Read More The Future of Work  Sponsored by JobsOhio  As employees start to return to work after two years of mostly working remotely, smart employers are rethinking just about all aspects of how work is done to get the best of both the home and office worlds.  Register Today The Return of In-Person Events by Matteo Carbone With all the complex challenges and opportunities facing the industry, there is real benefit to meeting face to face. Read More 7 of the Wackiest Workplace Injuries by Matthew Elson The majority of workplace injuries are slips, trips or falls, but there are many unexpected injuries, such as getting hit by lightning or falling overboard. Read More Insurance Needs More Women in Leadership by Lindsey Davies Organizations that focus on gender inclusion and prioritize the advancement of women report up to 61% higher revenue growth than other companies. Read More The Risks of AI and Machine Learning by Anthony Habayeb If the proper guardrails and governance are not put into place early, insurers could face legal, regulatory, reputational, operational and strategic consequences down the road. Read More THE NEW COMPETITIVE LANDSCAPE Sponsored by PwC Insurers increasingly go to market not as individual companies but as part of ecosystems -- a radical change in thinking. Watch Now  MORE FROM ITL May Focus: Claims When Dan Bricklin was a student at Harvard Business School in the late 1970s, he got tired of having to recalculate all the values for the cells in a spreadsheet and realized he could produce an electronic version of a spreadsheet that would run on a personal computer from a little company called Apple. In the process, he didn't just have software take over tedious work that had bedeviled MBA students for generations; he unleashed a wave of innovations far beyond anything he expected. Read More   Winning the War for Talent  Sponsored by PwC This webinar tackles a key issue -- maybe the key issue -- facing the insurance industry: How can we attract, train and retain the talent that we need and that the industry's mission merits. Watch Now