Insurance agencies across the globe are embracing software solutions that transform the filing and settling of claims into a quick and satisfying experience. In this blog, we will explore the typical lifecycle of a claim and how claims management software can streamline it. 

The Lifecycle of Insurance Claims

The insurance claims process usually involves five key stages, starting from first notice of loss (FNOL) to resolution. 

• Claims creation or FNOL
• Validation of the claim
• Review and evaluation
• Adjustment
• Cancellation or payment 

How Claims Software Can Streamline the Lifecycle 

Integrating automation into the claims process benefits all types and sizes of insurance agencies. It allows them to introduce efficiencies and shorten the lifecycle of the process, providing numerous benefits: 

1. Process Standardization

Manual workflows tend to get complicated, as several employees and partners may be involved. Each has a unique approach, which can lead to inconsistencies. Claims software offers a shortcut to process standardization, meaning more compliance and ensuring that no crucial steps are overlooked.

2. Efficient Collaboration

Nowadays, the most efficient insurance agencies are the ones that have digitized, streamlining their day-to-day processes and encouraging collaboration among previously siloed departments. Claims management software lets you send updates and notify the concerned departments, teams or individuals on coming tasks and activities. The software reduces the scope for miscommunication and enables claims handlers to coordinate better with customers. 

3. Higher Efficiency

The automation means users do not have to consistently check whether the process is advancing; the software keeps track for you. Likewise, the software, powered by machine learning and artificial intelligence, recognizes and address mistakes or bottlenecks.  

4. Regulatory Compliance

Regulations keep changing, making it challenging for agencies to ensure compliance as they strain to improve operations and meet the needs of customers. Failing to meet compliance norms can bring expensive, as well as inconvenient, consequences. 

But claims software helps with compliance. Automating the process means you are continually recording key information, producing a database that comes in handy during audit and compliance reviews. 

5. Data Security

Paper-based records are vulnerable to theft and can be destroyed in accidents and natural disasters, but digitizing processes and storing the data electronically keeps the information safe and easily accessible. Insurance claims software includes advanced security measures, such as multi-factor authentication. 

See also: How to Resist Sexy Analytics Software

6. Cost Optimization

Claims management software supports end-to-end processes, from registration to resolution, and accelerates the everyday work of claims handlers, producing efficiencies and saving on costs.

7. Increased Accuracy

Irrespective of how skilled or prepared the staff is, errors will undoubtedly occur occasionally, but automating the claims processes drastically lowers the probability of slip-ups or redundancies. 

8. Faster Resolution

Insurance processes can be tedious and lengthy, but customers want quick resolutions and frequent updates -- and automation can shorten the settlement process while helping spot fraud.

Final Words

Insurance claims software lets agencies reduce fraud, shorten the claims lifecycle, optimize costs, improve efficiency and a lot more.

Medical debt totals at least $140 billion nationally and is the most common type of past-due bill for which consumers report being contacted by debt collections. The pandemic only increased the debt load for many Americans, despite insurer cost-sharing wavers. And, given that more than three in five adults struggle to pay medical bills even with insurance, it's clear that insurance alone does not provide adequate protection against medical debt.

New solutions and approaches are needed, and insurers have an important role to play. Existing strategies addressing medical debt - such as stopping lawsuits, negotiating repayment terms, removing it from credit reports and even charity buyouts of debt — are important but do little to actually prevent debt.

A new series of reports from the Financial Health Network, the nation's leading authority on financial health, and the Robert Wood Johnson Foundation finds that healthcare system actors, including hospitals, insurers and employers, can all intervene earlier to curb the risk of debilitating medical debt.

Medical Debt is a Social Determinant of Health

Medical debt forces tradeoffs in basic needs, such as choosing between food and paying off debt, disrupts physical and mental health and often leads to litigation, property seizure, wage garnishments, reduced credit scores and even bankruptcy. The financial implications are far-reaching, limiting consumers' ability to buy homes, pay for education, advance careers, build savings and pay off other debts, such as credit cards and student loans. Individuals with medical debt have triple the incidence of mental health conditions such as anxiety, stress and depression. And those with medical debt are more likely to forgo necessary care due to costs, potentially exacerbating health conditions and increasing healthcare costs down the line.

Worse, the burden of medical debt and its adverse implications disproportionately affect those with lower incomes, those who experience chronic illness and disabilities and Black, Latinx and indigenous households. For instance, 28% of Black and 21% of Hispanic households have medical debt, compared with 17% of white households. This creates a spiral wherein those least able to manage debt continue to incur more of it in their pursuit of medical treatment.

See also: Why Financial Wellness Is Elusive

Insurers as the First Line of Defense

Health insurers play an important role in stopping medical debt before it starts. This is especially true among the commercially insured, because the way in which members understand, use and experience their insurance can lead to unexpected medical debt.

Unfortunately, most members do not fully understand insurance terms, and lower health insurance literacy -- the ability to understand, select and use insurance -- is associated with higher medical debt. In fact, more than one in four Americans report forgoing care because they are unsure what is covered by their health plan.

Further, members can be caught in the middle or left with excessive medical bills when providers and insurers do not settle disputed claims quickly. Even worse, more than a quarter of adults in employer-sponsored plans are now considered underinsured.

Not only does acting to prevent medical debt fit under insurers' efforts to address the social drivers of health, but it can help to improve overall health and health equity. Our research found four key actions insurers can take to curb medical debt, improving the health of their members and the larger healthcare ecosystem:

1. Aid members in plan selection, and ensure members understand key health insurance terms. Insurers need to support members in selecting plans based on their particular health and financial circumstances with decision support tools, and ensure members understand health insurance terms.
2. Inform members of out-of-pocket expectations and how to navigate lower-cost options through effective price transparency resources. Insurers have a responsibility to support member decision-making by providing user-friendly, accessible and plain-language explanations of out-of-pocket expenses so members can plan for and navigate these costs. Knowing the cost of care in advance allows members to better budget for those payments.
3. Encourage primary and preventive care services by reducing or eliminating associated out-of-pocket expenses. This can prevent the need for unnecessary or costly care that puts members at risk for medical debt. This is particularly important for members with chronic conditions who tend to require more frequent and sometimes more customized care to manage their conditions. The same may be true for members experiencing long COVID symptoms.
4. Improve claims adjustment and prior authorization processes. Insurers should coordinate with providers to ensure disputed claims are settled quickly. Insurers should also streamline prior authorization, which can often be burdensome for members and providers and create delays in care.

These actions can lower members' risk of medical debt and should be part of insurers efforts to create more responsive, member-driven care. Doing so can improve member experiences, improve health and health equity, prevent members from catapulting into financial ruin, drive use of higher-value and lower-cost care and even help insurers build a competitive advantage.

You can read the full Insurance-focused report, as well as the other reports in this series on medical debt as a social determinant of health, here.

A favorite line among technophiles is that “the future is here; it’s just not evenly distributed.” Every once in a while, we get a glimpse of the future in the here and now, in a way that can help us prepare for when that technology or way of life will become pervasive.

And I believe that the exceptionally quick, vivid and detailed coverage of the Russian invasion of Ukraine shows us what a truly connected world will look like – a world that all businesses, including insurers, are moving into, whether they like it or not.

We talk a lot about living in a connected world, with the IoT, telematics and so on, but we’re actually still in a pretty primitive state. I’d say the world of business is connected in much the way the world of communication was connected for the coverage of the Gulf War in 1991 – some crackly video, often days after it was shot; audio reports from correspondents while the TV showed a map; reports from military headquarters, etc. But the world of business is moving toward the world of unlimited communication and cameras and sensors everywhere that is giving us almost instant understanding of what’s happening on the front lines in Ukraine. The implications will be profound.

Think back to early this year, as Russia massed troops on the Ukrainian border -- and satellites let everyone see what was happening. While Saddam Hussein had managed to surprise the world with his invasion of Kuwait in 1990, even a cable-TV audience today could watch what Putin was doing. He insisted that he intended no harm, and some commentators bought the line, but then the satellites saw medical units being moved up to the border, including supplies of blood -- a pretty clear sign that he intended to attack.

He did, on Feb. 24, and all sorts of other cameras came into play. While few TV cameras were in Saudi Arabia in 1991, and transmission via satellite was spotty as the U.S. and allies geared up to retake Kuwait and then attacked, cameras are everywhere in Ukraine. Living on the U.S. West Coast, 10 hours behind Kyiv, I could turn my TV on at 9 every night, see the scenes from cities across the country and assure myself that Ukraine still stood.

That sort of coverage helped Ukraine President Volodymyr Zelenskyy rally support from the international community and turn some initial victories into a resounding defeat of the overwhelming Russian forces in the northern part of Ukraine. The availability of cameras and high-bandwidth connections has also let Zelenskyy boost morale by showing himself daily and even to address the U.S. Congress and the E.U. Parliament.

The ubiquitous cameras in people's phones have captured video of Russian atrocities, like a tank veering from its path to run over a car with an old man in it (miraculously, he survived) and like all the bombings of civilian targets, including a maternity hospital. The cameras also broadcast the remarkable courage of the Ukrainians, such as someone popping out from behind a tree to fire a Javelin missile and blow up a Russian tank at the head of the convoy, making the whole convoy a stationary target, or such as the intrepid farmers who hitched up tractors to tanks and hauled them away if they were briefly left behind because of a mechanical problem or because they ran out of gas.

In the Gulf War, you'd get some action footage, but not at this level of intimacy, not this quickly and not from the very front lines. (I have pictures of myself from 1991 standing in a Russian tank whose top had been blown off, but I assure you that no combatants were anywhere in the vicinity.) Russia has banned journalists from entering Mariupol, to hide the hardships that its siege is inflicting on residents, but satellite images let us count just how many desperate people are standing in line outside supermarkets. Today, satellites can see the front lines or even beyond, even when journalists can't get there. 

The adage says that the first casualty of war is truth, but satellites have even pushed back there. When the Russians pulled back from Kyiv over the weekend, they claimed that the hundreds of dead civilians left behind had actually been killed by Ukraine or that the scenes had been staged. But, as this New York Times article documents, satellite images showed that the bodies had been in the streets of Bucha for weeks, while the Russians controlled the area. 

Thomas Friedman of the New York Times refers to the invasion of Ukraine as World War Wired because of all the digital aspects to it. He writes: 

"Anyone with a smartphone and a credit card can aid strangers in Ukraine, through Airbnb, by just reserving a night at their home and not using it. Teenagers anywhere can create apps on Twitter to track Russian oligarchs and their yachts. 

"Meanwhile, Ukraine’s government has been able to tap a whole new source of funding — raising more than $70 million worth of cryptocurrencies from individuals around the world after appealing on social media for donations." 

What happens to insurance when the future becomes more evenly distributed and a Ukraine war-level of connection takes hold broadly? We can already see pieces of that future.

Telematics, while progressing slowly over the past two decades-plus, is nonetheless offering real-time observation of drivers. Cameras on the rearview mirror will increase that monitoring -- then autonomous cars will change the game entirely. 

The ever-present cameras in our phones are already being used to take pictures of car accidents and damage to homes, to speed the filing and processing of claims and to lower costs. Those cameras are also being used increasingly for do-it-yourself home inspections. Drones are being used to inspect rooftops, especially after major storms. All of those trends will continue.

And I think the satellites that are playing such a role in Ukraine will become increasingly important. If you can count people standing outside a supermarket in Mariupol, why can't you routinely check on the homes you insure to warn of risks -- perhaps a problem with a roof or the growing potential for flooding or a mudslide -- or make sure a home is properly insured after the owner installs a pool or a trampoline? At a macro level, satellites will make it increasingly possible to monitor the effects of climate change -- erosion, the effects of increased heat on water supplies, etc.

Cameras will also feed social media. Just as the images out of Ukraine are touching people's hearts, consumers will increasingly use images and videos to document and share their interactions with companies. In my experience, I'm sorry to say, consumers are much more likely to share complaints than to offer praise, so I'd say insurers should be prepared to deal with unhappy customers who tell compelling "stories" on social media using visuals designed to make a company look bad. 

Finally, while the issue doesn't relate to what's happening in Ukraine, I'd say insurers also need to be increasingly prepared for unhappy customers to start producing audio recordings of their interactions with agents and other representatives. Those smartphones don't just contain cameras; they're all recording devices, too. Disputes about guidance may no longer be, he-said, he-said; they may be, he-said-and-he-has-the-recording-to-prove-it.

War drives innovation to the extreme because so many lives are at stake, and it'll take insurance a while to catch up to the cutting-edge uses of technology happening in Ukraine. But we'll get there, and we can start preparing for the implications now.

Cheers,

Paul

I've spent the last six years bragging about insurtech's potential in improving the insurance business, for instance in the 2016 article My Four P's of Insurtech and, at the end of 2017, the book All the Insurance Players Will Be Insurtech. One of the insurtech topics I have talked most about has been telematics (usage-based insurance for my U.S. friends), such as in The Past, Present and Future of Telematics and UBI

But, since its inception, Root's auto insurance book has not performed well. For each dollar of premium paid by the client, their risk transfer approach has always cost more than $1.35 (Lemonade has done worse.)

So we have an insurer that in 2017 underwrote $4 million in premiums and -- in just four calendar years -- has scaled to more than $700 million. Root obtained a $3.6 billion evaluation at the halfway point of this journey.

As of March 25, that valuation had tumbled to slightly above $500 million. Something has not gone as they expected.

In recent weeks, we've read about Root reducing marketing and other expenses:

• "Cutting marketing spend by 62% in Q4 and run-rate fixed expenses by roughly $48 million annually from peak 2021 levels"
• Root layoffs 

However, these cuts don't seem to compensate for the main problem: the amount of claims compared with the premiums.

For reference, this is the historical series of U.S. auto insurance key performance indicators (KPIs)...

...and the evolution of the loss ratios in 2021:

Here we have the key point: the book of business' (un)profitability and the role of insurtech (usage of telematics data).

How it started

Root started its journey in 2015 and the following year began to transfer risks using telematics:

• "Root takes into account the driver's habits, which it uses to offer low-cost insurance to safe drivers"
• “The worst 15 to 20 percent of drivers are really causing the majority of accidents," he said, and the rest of consumers pay for that. “We give good drivers the rates they deserve.”
• "We only insure good drivers. And by eliminating the other drivers—the people who cut you off in traffic, swerve through lanes, and tailgate—we save a lot on claims"
• "Simply let the insurance company watch you drive for a little bit and come up with a quote based on that actual recent driving history [...] After a two-week initial trial period, out pops an insurance premium and then the user no longer needs to keep the app running."

I like this idea of using telematics data for providing the first quotation. Even Progressive has liked it (this probably is even more indicative that it makes really sense) and introduced Snapshot Road Test in 2020.

See also: 5 Tips to Ensure an Insurtech Fails

How it's going

Root's loss ratio has been really, really bad for the new policies, and not too bad for the ones they have renewed.

From Root's Form S-1: "As of June 30, 2020, our term one and term two policy retention rates, excluding policies that do not make it through the underwriting period and company-initiated rescissions, were 84% and 75%, respectively. Over time, retention rates may improve as we build deep relationships with our customers, and already we are seeing an improvement in retention with bundled offerings. Our retention rates include customers that retain through the first day of the subsequent term and exclude policies that do not make it through the underwriting period, as defined by state law, and company-initiated rescissions. Adjusting for these customers reduces one- and two-term policy retention by 33% and 10%, respectively."

From an oversimplified, outside-in perspective, Root's usage of telematics data for insuring only good drivers (eliminating the other drivers) and charging them an adequate price is not performing well at all: the first period of coverage has an awful loss ratio!

The company needs to prune the portfolio at each renewal.

Even Lemonade has started to play with telematics data and acquired Metromile (the pay-per-use insurance icon). I recently spoke about this situation in Business Reporter's Future of Insurance, claiming that insurance professionals have chosen the wrong insurtech idols!

Root is not using telematics data well for pricing and risk selection. Moreover, they have even denied the usage of telematics data for claim management and for changing driver behaviors.

But there are many different startups and incumbents’ initiatives out there that are showing great returns on their telematics investment and can be used as inspiration.

One great example comes from one of the members of my IoT Insurance Observatory: Discovery Insure. I fell in love with this telematics approach in 2013 when I saw their brochure for the first time (below) and I started studying their behavioral change approach. My recent exchange (below) with their CEO Anton Ossip shows the potential of telematics data in the auto insurance business.

This is a great example of Insurtech as the superpower for assessing, managing and transferring risks.

Matteo: We have known each other for almost 10 years, and I have enjoyed discussing with you the sequence of innovation cycles you and the Discovery Insure team have implemented. How has telematics been relevant in this journey?

Anton: Our business began in June 2011. The simple premise was whether we could create a business that encouraged and rewarded people for being better drivers. This was especially relevant in a South African context, where we had the third-highest road deaths per annum in the world. We had the benefit of 20 years of shared-value insurance that Discovery had pioneered globally through the Vitality program that encourages people to live healthier lives. We believed we could leverage off this science and know-how to achieve this. That is how Vitality Drive, our behavioral-based incentive program, came to be. When we first started the business, the use of telematics technology in the insurance industry was not common, but it enabled us to offer a highly differentiated value proposition to an otherwise saturated market. Through vehicle telematics, we are able to accurately measure a client’s driving behavior from how and when they drive to whether they use their cellphones while driving. By doing this, we’ve been able to collect over 14 billion kilometers of driving data, which has allowed us to risk-differentiate and offer more accurate premiums as well as provide exceptional rewards to our clients who drive well. Our telematics technology also allows us to provide unique safety features to our clients, such as Impact Alert, where we can detect if a driver has been in an accident and send emergency assistance without them having to call us.

Vitality Drive has proven to be an extremely successful value proposition, not just for our business but for our clients, who receive significant value. Over the last 11 years, we have grown to be one of the larger insurers in our market, growing at double digits, profitable and demonstrating constantly improving actuarial dynamics. We recently spoke about our journey since inception, which I have linked here.

Matteo: I’ve always admired Discovery’s capability to track the innovation initiative impact. Could you share the main economic benefits achieved through the usage of telematics?

Anton: As a business with lots of actuaries, measuring every aspect of the business is part of who we are. From day 1, we saw the incredible correlation between driving ability as we measure it and claims frequency and severity. In our experience, there is so much value you can get from telematics, but it’s not just the data that achieves this. It is ultimately how it’s used. The Vitality Drive program engages customers throughout their journey with us, and through this we have been able to achieve the goals we set out for ourselves, including:

• Attracting the best drivers. We found that drivers who joined Vitality Drive were on average more than 27% better drivers than the general population.
• Improving their driving behavior. On average, clients who install a telematics device have a 15% improvement in driving behavior within 30 days.
• Improving our loss ratio and passing these savings back on to clients. We found that our best drivers have on average a 54% lower loss ratio than our worst drivers. This allows us to reward these drivers with over 70% of their premium in rewards.
• Retaining the best drivers by offering them greater rewards. We find that our drivers with a Gold or Diamond Vitality Drive status have an 84% lower lapse rate than drivers with a Blue Vitality Drive status. Over time, this decreases our overall loss ratio and lapse rate.
• Getting to our clients the fastest and offering valuable safety features. For instance, in the last half of 2021, we reached out to over 36 000 clients when our data detected in real time that they might have been in an accident.

The data we’ve gotten from our telematics devices has also given us the ability to innovate and adapt our model over time so that we are able to offer the most relevant benefits to clients"

Matteo: Is it possible to change policyholder behaviors? This is a question I had to address in many of the workshops with the IoT Insurance Observatory members for the last six years in Europe and North America. Could you share something about the lessons learned and achieved results?

Anton: Yes, through Vitality Drive, we have seen that it is possible to positively change behaviors. We have seen that the Vitality drive program achieves behavior change quickly, where we see an incredible improvement in the driving behavior of our clients as a result of installing a telematics device. On average, drivers have a 15% improvement in driving behavior within the first 30 days.

But we’ve also put the mechanisms in place to sustain this over time. Most drivers know that some of the things they do when driving are not ultimately good for them or those around them. As an example, it’s no surprise that texting while driving is a very dangerous thing to do. This is where the concept of goal setting comes in. Merely educating clients driving well does not encourage behavior change, even though people will often recognize the importance of such behaviors. By setting challenging yet attainable goals and providing explicit rewards for achieving the result, people increase their effort to improve the relevant behavior. Vitality Drive offers weekly rewards for meeting your drive goal, and we’ve seen that people who meet their goals every week improve their driving behavior 15 times more than drivers who only achieve their goal once a month. So, without the correct nudges offered in the right way, most people don’t change their behavior.

See also: Time to 'Flip the Bird' on Insurtech

By combining our telematics data with our claims data, we are able to more accurately predict accident risk. We see that clients who drive better (as indicated by their driving scores) are less likely to get into an accident. Clients who improve their driving behavior score by more than 300 points in one year have a 24% reduction in their motor accident frequency, again showcasing the efficacy of the model.

Matteo: Looking to Discovery Insure’s journey, I have seen a focus on innovating commercial auto over the last few years. Would you like to share any facts and figures about these new offers?

Anton: The transport sector contributes significantly to GDP, with 76% of freight in South Africa being transported by road. Three and a half years ago, we extended this to business customers and now have a growing base of commercial fleet drivers on the Vitality Drive for Business program. Our commercial presence is growing quickly, with the size of book doubling annually over the past two years. Discovery Business Insurance is a natural extension of Discovery Insure and is committed to creating better businesses by sharing value through incentives. Even during this early stage of our Vitality Drive for Business program, we have seen encouraging results from Vitality Drive for Business that show that vehicles driven by better drivers have a lower loss ratio. Our driving data shows that vehicles that have the best drivers have a loss ratio that is 87% lower than those vehicles that are not on the Vitality Drive for Business program.

We have also extended the Vitality Drive program through partnerships with Covea in the U.K. (Vitality Car) and in the Saudi market as (Tawuniya Drive). Both of these businesses show favorable dynamics and provide the opportunity to make a significant impact to drivers in those markets. We expect such partnerships to continue to develop over the next few years. We haven’t stopped at developing a program for personal lines clients.

As FloodFlash CEO, my focus gravitates toward certain news items as they float across my personal ticker. So far this year I’ve been drawn to the events industry re-opening and how we will finally be able to meet the brokers we work with across the U.K. and overseas, and then to the Met Office as the weather forecasts showed the first warnings that ultimately became Storms Dudley, Eunice and Franklin, all of which struck the U.K. in February.

These storms filled my newsfeed as wind, rain and snow pummeled the U.K., eventually leading to widespread floods. FloodFlash claims are almost entirely automated, so having that heads-up two days in advance has little impact. We have removed loss adjustment from the process, so there’s no need to mobilize early or book support functions. Nonetheless, I keep an eye on the events and trends that will affect FloodFlash in the coming hours, months and decades.

A career quantifying the probability of "black swan" events has taught me that the world is full of randomness. I sympathize with the unknowableness espoused by Nassim Taleb rather than the idea of pre-written destiny found in the world of Hollywood (although the latter makes for a better movie). However, trends sit below the randomness. The confluence of these trends has the power to steer products, companies and markets.

One such market, that of catastrophe insurance, plays host to two sets of unstoppable macro trends. Climate change, population growth and urbanization are all driving up annual catastrophe damages. And increasing computer power and the proliferation of IoT networks mean that mass-market parametric insurance is possible for the first time. These trends will shape the catastrophe insurance market for years to come. They are also why Ian and I started FloodFlash.

Those macro trends explain why parametric insurance has started to take hold. In this article, I want to explore three smaller but significant trends that are accelerating parametric growth. Together, they explain why parametric insurance has gone from a conference buzzword to form award-winning coverage used by clients worldwide.

#1: For the first time, all businesses understand what they need to survive a catastrophe

Catastrophes kill businesses. The U.S. Federal Emergency Management Agency (FEMA) says “90% of smaller companies fail within a year unless they can resume operations within five days.” COVID created a world in which every business is alert to the threat of being closed.

The best way to steady a business whose source of income is in crisis is to provide cash fast. This is where the gap between traditional and parametric insurance products begins to emerge.

Traditional claims employ an arduous loss-adjustment processes. Catastrophic flood claims take months to resolve. That’s months in which a business might have no source of income but plenty of debt in the form of mortgages, rent, staff wages or tax liabilities. When protecting a business’s balance sheet, you sacrifice time at the altar of perfect indemnity. Not just time waiting for the final settlement, but staff resource managing and chasing the claim, too. And, as FEMA says, time is the one thing businesses can’t afford to lose.

Parametric insurance uses pre-defined values for claims. That means insurers remove the value of damage from the underwriting equation, and with it the requirement for claim adjustment. Parametric claims happen in hours, not the months it can take traditional catastrophe coverage to pay out. FloodFlash paid a Storm Franklin claim in under six hours. In the wake of COVID, that’s what businesses demand, and need, to survive.

It’s a relief to think that you don’t have to bother with chasing insurance companies. Most businesses with any sort of business interruption spend so much time trying to sort out the claim[…] It does involve the individual running the firm, and usually the top person within the firm. To take away that worry so the people running it can just get on with their business is a hell of a relief -- Clive Steggel, whose business, CRS Consultants, flooded during Storm Christoph in January 2021.

See also: Parametric Insurance: 12 Firms to Know

#2: Hard markets drive insurance innovation

Like any other market, insurance has the dynamics of supply and demand. On one hand, there are people looking to buy insurance coverage for their risks. On the other are those with capital looking for a return by covering that risk. When there is plenty of money in the system, supply of capital is plentiful. That means lower insurance premiums and looser policy wordings: a "soft market."

When money flows out of the insurance market – typically due to paying out claims from one or a series of catastrophe events – the supply of capital tightens. There is less capital to insure the same amount of risk. Premiums rise, and risks are harder to cover. We are experiencing a “hard market” right now.

Insurance prices have risen consistently over the last few years, and COVID-19 has made capital and capacity even harder to come by. According to the Marsh Market Index, global property insurance pricing increased by 17% in Q1 2021, with U.S. prices increasing by 14% in the same period, capping off many months of increases.

One of the first casualties in a hard market is catastrophe coverage. When the supply of capital runs dry, insurers are more reserved about the business they write. Policy wordings tighten, prices increase and exclusions start to creep in. This is where parametric insurance comes into its own.

Parametric insurance is attractive in hard markets for two reasons. The first is the lack of uncertainty: Using pre-defined values for a claim means the insurer is exposed to fewer variables. Insurers pass that benefit on to clients as lower premiums.

The second reason comes down to how parametric covers are structured. If a client sees an unattractive price, they can adjust the parameters of the coverage to suit their budget. They might not get penny-perfect indemnification, but they have coverage in place to protect their cash flow and survive.

The adage that "necessity is the mother of invention" holds true in the insurance market. Previous recessions have hosted the creation of some of the world's most successful technologies. Necessity is now driving the demands for parametric covers. As a specialist parametric broker told me recently: “It has gone crazy since Christmas.”

#3: The word is out

I’m not the only person recognizing these trends. Venture capitalists concerned with what the world looks like in 10 years have also cottoned on. Renowned VC and early Facebook executive Chamath Palihapitiya announced his latest venture at the beginning of last year: OTT Risk, a platform for pricing and trading parametric business interruption coverage. Descartes Underwriting, Parsyl and Arbol have all announced big equity raises from VC funds in recent years. Not to mention the FloodFlash Series A raise announced earlier this year.

Fueled by this interest, new and exciting applications of parametric insurance principles are emerging and growing faster than ever. Clients, brokers, insurers and investors have woken up to the possibilities of simpler, faster catastrophe insurance, and they are already experiencing the benefits. The capital pouring into parametric insurance firms will fuel this growth.

These parametric insurance trends mean movement is accelerating every day. Based on the trends on my news ticker, 2022 is set to be a landmark year. By December, more livelihoods and more businesses in more markets will be protected – and survive – because of parametric insurance.

In 2017, a large insurance carrier challenged our law firm to significantly reduce its legal spending and cycle times without any material uptick in indemnity costs or compromise to the quality of legal services. Last year, the carrier publicly reported that the program we jointly developed was responsible for closing 25% of the carrier’s claims litigation annually with an average reduction in legal costs of 49% on closed files, which has led to millions of dollars in cost savings to the carrier.

Over the past five years we have implemented, tested and refined numerous measures to deliver those results. Along the way, we have learned a lot about how a law firm can deliver more value to an insurance carrier and its policyholders. Here are three critical items that any carrier working with outside defense counsel should consider and discuss with counsel.    

1. The Appropriate Staffing Model on Each Case

Typically, outside defense counsel will assign two attorneys—e.g., a partner (or partner-level attorney) and an associate—to each case. In fact, the litigation management guidelines for many carriers state that this is the expected or preferred staffing model. The conventional thinking is that the carrier does not want to pay a partner’s higher hourly rate for work that can be adequately performed by an associate. The problem is that, when two attorneys work on a case, there is invariably some duplication of effort. While the partner generally handles the more complex and strategically important tasks, both attorneys must review the pleadings, motions and discovery to remain informed. Further, the two attorneys must communicate closely. Two attorneys working the case means more overall attorney time, which translates to higher defense costs.

Carriers that employ staff counsel have figured this out. Carriers using a staff counsel model typically assign only one attorney to handle all aspects of each case.

Carriers that employ outside defense counsel would be well-served to consider the complexity of each assigned case and to work with counsel to identify those cases that can be staffed with only one attorney. Yes, that one attorney must be experienced, and, yes, that experienced attorney will handle basic tasks (e.g., direct oversight of drafting and responding to discovery, drafting and arguing simple motions) while billing at the partner rate. But, in our experience, the result is a meaningful reduction in average attorney fees per case. 

See also: Time to Send Employees to Sleep?

2. Methods for Identifying and Pursuing Risk-Transfer Opportunities

What better way to reduce defense (and indemnity) costs and shorten cycle times than to convince another party or its insurer that it is obligated to defend and indemnify a policyholder who has been sued? Outside defense counsel who are truly committed to lowering a carrier’s defense costs should implement measures to systematically identify and aggressively pursue risk-transfer opportunities. “Systematically” is emphasized here for good reason. Counsel’s efforts to transfer risk should be structured and methodical in each case. Here are some steps outside counsel can take:

• Provide detailed training to all firm litigators on how to identify and pursue risk-transfer opportunities.
• Create a checklist of information and items to be obtained from the policyholder to facilitate a risk-transfer analysis (e.g., contracts with vendors and management companies, other insurance policies that may provide coverage, etc.). During the very first communication with the policyholder, ask that all such items be immediately gathered and provided, and keep asking until they are received.
• At the outset of each case, automatically assign the handling attorney the task of conducting a risk-transfer analysis and reporting the results to the carrier.
• Create robust templates (preferably using automated document assembly software, as described below) for tender demand letters.
• Develop a calendar with automatic reminders that prompt continual follow-up on tender demands until a response has been received.
• Keep metrics on the cases resolved through risk transfer and use the metrics for process and performance improvement.

Risk-transfer opportunities are the proverbial “low-hanging fruit.” Carriers should work with their panel counsel to ensure that they are systematically (there’s that word again) harvesting this fruit. 

3. Time- and Cost-Saving Technologies

Software claiming to use AI has become all the rage and, without question, may be beneficial in certain types of cases (e.g., those that are document-intensive). But several more basic technologies can significantly reduce the time required to complete billable tasks on a wide variety of legal matters. Outside defense counsel should consider: 

• Automated document assembly software: These programs have become very inexpensive to implement and simple to use. Various types of case-specific information—such as the case caption, court, case number, parties and their counsel, claim number, etc.—are typed in once, and thereafter documents are automatically populated. A small library of automated templates can save countless hours of time on each case.
• Macros and autotext: Some text is used repeatedly in litigation documents. Consider, “Defendant lacks sufficient knowledge and information to form a belief as to the truth of this allegation and on that basis denies it in its entirety.” This language might be used repeatedly in an answer. Likewise, the same objections often appear many times in a discovery response. With macros and autotext, there is no need to type the same language again and again, or to repeatedly scroll to another location in the document, copy the text, scroll back and paste it. The language can be inserted with a simple mouseclick or keystroke. 
• Quick steps and quick parts: These are similar to macros and autotext, but they are used in MS Outlook, reducing time-on-task for email communications. 
• Task-based matter management systems: While the facts of each case vary, litigation is largely a series of repeatable events. Many matter management systems permit automated assignment of repetitive tasks and the ability to “program” into the task the relevant instructions and required information for completing it. Potentially billable time to provide such information and instructions (or to research it) can be minimized.
• Role-based automated task assignment: Carrier litigation management guidelines often prescribe that certain types of work should be performed by qualified paralegals and billed at the paralegal rate. We use a system that automatically assigns such tasks to paralegals, thereby ensuring compliance with guidelines and billing at the appropriate rate. This reduces inadvertent overcharges and cuts down on administrative time (ours and the carrier’s) for invoice review.

See also: The End of the 9-to-5 Workday

You Can Get There From Here

The above are a few of the many measures and strategies our firm has taken to significantly reduce the legal defense costs for a large carrier. The results have been extremely well-received.

While none of the measures are overly complicated or difficult to implement, it does require commitment and discipline to consistently use them. We are all creatures of habit, and we tend to return to the same old ways of doing things until a newer, better behavior or routine becomes ingrained as the new habit.

With that said, any outside defense firm that is willing to commit to and invest in these strategies, and take steps to ensure that they are consistently used firmwide, should be able to meaningfully reduce carriers’ legal spending and cycle times. Carriers that seek such results can begin by simply challenging their outside counsel to deliver more value and then discussing how to get there together.

New variants of the COVID-19 virus and the “Great Resignation” affected the insurance industry deeply in 2021 and are primed to keep influencing 2022. To enhance the customer experience and improve internal efficiencies, insurers’ focus this year is on digitization. 

These efforts will include using technology to improve the ease of doing business for agents and implementing tools and applications to increase employee productivity. 

Aite-Novarica Group has identified 10 trends that will shape property/casualty insurance around the globe in 2022 and beyond. These include:

• Insurtech goes mainstream. Even during a global pandemic, investment in insurtech has continued unabated. One curious trend is that traditional core vendors now view themselves as insurtech firms or architects of insurtech adoption, with some acquiring startups in areas like predictive analytics. Speed to market is always a key objective for insurers, resulting in the growing trend of low-code/no-code engines in their core platforms.
• Increased adoption of purpose-built AI-based solutions will change the game. Despite concerns surrounding data privacy, model bias and regulations like the European Union’s AI Act, insurers are continuing to invest in AI. Insurers are adopting purpose-built AI-based solutions to overcome financial and operational challenges. Core systems vendors are offering insurers access to these solutions through application programming interfaces (APIs) and open-platform architecture. These solutions tend to be cloud-based and can be implemented immediately. 
• Insurers and distributors will come together to embrace digital. As insurers and distributors implement agent portals and vendor agency management systems, many of these solutions do not meet customer expectations in today’s digital world. The ability to offer capabilities such as real-time quotes and automated underwriting requires digital investments in online and mobile capabilities. Insurers and distributors need to work together to provide more robust digital capabilities and stay competitive.  

See also: Future of P&C Tech Comes Into Focus

While these trends will be important for property/casualty insurers this year and in the future, they are by no means the only areas of focus. Data and analytics, the evolution of cyber risk, claims optimization and more are occupying property/casualty insurers’ time and budgets. 

Customer expectations are at an all-time high, and countless digital technologies are emerging in the insurtech sector. Aite-Novarica Group expects insurers and vendors to continue working together to prioritize the insurance experience for all stakeholders as the year moves on.

To learn more about the trends our team foresees dominating the space in 2022 and into the future, please read our full report, Top 10 Trends in Property and Casualty, 2022.

As corporate offices increasingly reopen, many managers are focused on finding the right mix of work from home and work in the office, and that's certainly important. But another key topic has been flying under the radar and deserves more attention: the fact that the model of the 9-to-5 work day needs to adapt, too, and in some cases be eliminated.

While many jobs don't lend themselves either to remote work or to variable work hours -- think of construction workers, restaurant employees, most doctors and nurses and so on -- many jobs in insurance afford a great deal of flexibility, and we'd do well to take advantage of what we've learned in the two years of working from home during the pandemic. Employers could see a boost in productivity, while employees could live healthier, better-adjusted lives. 

When many of us started working from home, we not only gained the time that our commutes used to eat up but found that we could structure our days however we liked. Sure, we had Zoom calls -- lots and lots of Zoom calls -- and we might be expected to respond fairly quickly to a boss or coworker during the meat of the day. But whatever output we were supposed to produce -- analysis for a claim, underwriting, whatever -- could then be slotted in whenever we wanted. 

Some of us work better in the morning and tackled projects when we were fresh. Others work better in the evening or even late at night (count me in that group) and increasingly pushed the work that demanded the most attention into those times of day when we thought most clearly and, perhaps, had the fewest interruptions.

Many of us learned the value of naps, something that would never have even occurred to me before COVID. In the past, if I felt tired, I'd have kept banging my head against a writing project because I felt locked into a work schedule -- but would have gotten nowhere. Now, I close my eyes for an hour and, when I return to the project, am clear-headed enough to feel some creativity and generate some flow. I'm more productive even if you count the naptime as work time. (I don't, of course.)

There still needs to be some coordination, of course. If a morning person is working with a night person on a project, simple communication could make a project take many days if they just keep passing drafts and questions back and forth, while having them both focused on a project for an hours-long stretch could allow completion in a single day. But, to the extent that individual, remote work is possible, breaking the 9-to-5 paradigm can deliver big productivity gains.

Employees may benefit even more. If they just owe a chunk of hours per week or a certain amount of output to the employer, they can sleep in when they're tired, can make that trip to the gym when they're most motivated, go shopping when there won't be much traffic and so on. Parents with small kids may benefit the most, especially if both work, because they can cover for each other. Work fits into life, rather than the other way around.

The biggest obstacle I see to greater variability in hours is that employers just aren't accustomed to measuring employee performance that flexibly. If an employee is in the office, the employer feels reassured. With remote workers, seeing that green signal of Teams shows that they're at their computer. Surely, some sort of work is going on. 

Employers will have to find new ways to evaluate employee performance, based on some combination of volume of work and quality. And, yes, some employees will game the system once constraints on hours are removed, so HR departments will have to stay on their toes. 

A recent New York Times op-ed on flexible hours says that "a few simple tweaks to work culture would make a big difference.... Scrap all but the most essential meetings. Don’t expect remote workers to be always available or use invasive software to keep them on task. Focus on results and normalize later start times. To foster collaboration among workers who are on different schedules, companies could set limited core hours."

I've actually lived that flexible future for more than 35 years. Even when I showed up at a Wall Street Journal office in suit and tie every day, the life of a reporter lets you do pretty much whatever you want. You show up early, you show up late, you leave early, you leave late, you work in the office, you work at home -- all that matters is what shows up in the paper, and that's there for everybody to see. (Once or twice, when I went a couple of weeks without my name in the paper, my father called and said he just wanted to be sure I was still employed there.)

When I became a partner in a consulting firm, I had to commute to headquarters in Chicago two or three times a month from the Bay Area, which was no fun, especially with little kids, but when I was home, I was home, and had lots of flexibility. If my daughters wanted me to jump in the pool with them in the middle of the afternoon, I could just about always indulge them (and myself). 

And the sorts of writing projects, mostly books, that I've done for the past 20 years, leading up to my work with ITL, have certainly allowed for flexibility, including probably the best decision I made as a parent. My younger daughter was a nationally ranked distance runner in high school, and I felt bad that she would have to head out in the heat in the summer to do a hard 10- or 12-mile run, so I made a standing offer that I'd go with her any time she asked (on a bike, of course; I couldn't possibly have kept up with her on foot). She'd pick a history topic and ask me to tell her about it for the hour or so she'd be breathing hard, which indulged my fondness for telling stories and would let me make some use of all the histories I've read over the years. Those run/rides were some of the best bonding time imaginable -- and she later earned a history degree from Yale, on her way to a law degree and a job in Washington, DC. 

Flexible hours don't work for many jobs, just as remote work doesn't, but, if flexibility is possible, I highly recommend it. And it's possible for a lot of insurance jobs.  

Cheers,

Paul

It's not often that someone tells me that something I published made him "physically cringe." In fact, I'm not sure I've ever received that particular form of hate mail. But someone made that claim recently on LinkedIn and tagged me, after I published at www.insurancethoughtleadership.com a piece that I thought was pretty straightforward. It argued simply that insurtechs should work with human agents to provide the human touch even as they improve the technology that connects with customers and insurers. 

The writer argued that "insurtechs can definitely be independent agents themselves and provide the advice and human touch that some customers require. I think this is the model that will be successful for transactional and simple products."

Who needs human agents?

I prepared to wade into the discussion -- and found I really didn't have to, because so many others had already made my points for me.

Matteo Carbone, who I think of as Mr. Insurtech, wrote in defense of the agent's role: "At a global level, only 6% of personal line premiums have been generated without a human touch."

Another wrote that, when insurtech platforms first came out, "Their leaders were implying that they are going to disrupt the existing system. Some belittled the existing system, only to turn to agents when they could not pull off what they initially claimed they would. Many did not have any insurance experience and knew very little about all the issues and moving parts associated with insurance. There just has been so much insincerity and frankly taking advantage of investors.... Is there a marketplace for selling insurance online? Sure, but it's not causing the disruption as some had falsely claimed it would."

Still another: "Look to the travel agent.... Despite popular conceptions, select travel agents are experiencing a golden age. How? They evolved to luxury and niche (complex) excursions for high-net-worth individuals or people with specialized interests (helicopter skiing, exclusive resorts, ecotourism, etc.) The ones who just assumed people would always be intimidated by booking basic holiday packages were devoured by Expedia (which absolutely provides advice and comfort via online chats). There's a salient lesson in there somewhere."

I'm not at all arguing that agents don't need to stay on their toes. As you'll see from this month's interview and from the articles we've highlighted, agents very much need to keep up with the times. And not all comments were so firm in their support of agents. (You can read the full exchange here:. I've highlighted the article below that stirred up the fuss -- "3 Reasons for Insurtechs, Independent Agents to Collaborate.")

But I did find it encouraging that so many rallied around the role of the agent, which I see evolving much as travel agents have.

That, and it's always nice to be read.

Cheers, 

Paul 

According to McKinsey’s Global Innovation Survey, 84% of executives agreed that innovation is critical for their business and is an important component of their growth strategy, but only 6% are satisfied with innovation performance. This gap between strategy and results can be felt across the commercial insurance industry. While commercial lines carriers and brokers have focused intensely on digital transformation initiatives for the past several years, many lines of business, core operational processes and manual workflows have not been modernized in a meaningful way in 30 years.

We all know that digital transformation is a journey, not a destination. Large-scale change doesn't happen overnight, and digital strategies can take years to develop and implement.

“I’ve been in the insurance industry for 20 years, and, as long as I’ve been here, we’ve been transforming,” says Stacey Brown, head of global technology innovation, AXA XL, a division of AXA, and founder at InsurTech Hartford. “And I’m certain that, long after I’ve retired, we will still be transforming. Change is the only constant. There is always resistance to change. Everyone in an organization can know they need to change, but they can’t agree on how.”

We also know that change agents at all levels of the organization play an important role in sustaining the momentum of any innovation initiative.

Change agents are essential to overcome organizational inertia and resistance to change; they help motivate and align people around the “how and why.” But what qualities define an insurance change agent, and how can insurers identify and nurture those qualities? To help answer these questions, we reached out to several insurance industry leaders and subject matter experts who know first-hand what it takes to roll out successful digital strategies and mobilize internal change agents to embrace – and lead – meaningful change.

Change Agents Stand Out

A common theme is that identifying internal change agents isn’t an issue; they’re easy to spot.

“Innovative change agents often think outside the box, leveraging knowledge and experiences from a wide variety of areas – from different jobs, roles and industries to reimagine the possibilities,” says Denise Garth, chief strategy officer at Majesco. “Because of this background, they are often considered rebels or rabble-rousers who too often are discounted but instead should be embraced by leaders.”

Brown agrees: “Change agents are vocal for the most part. They tend to stand out in organizations because they are outspoken about how they see that things could be different. If you want to empower change agents and teams to embrace or lead change, you need to give them a reason. Help them understand why innovation is important and how it fits into the organization’s strategic goals. Find out what motivates them. The intrinsic and extrinsic motivators to embrace change will differ from person to person. Sometimes, ‘your job will suck less’ can be a motivator. Sometimes it’s incentive plans, promotions or opportunities to advance in their career and take on new challenges.”

The real challenge for insurers is how leadership responds to change agents – whether companies encourage challenges to “the way we’ve always done it” or attempt to ignore or suppress them.

“I would argue that one of the greatest roadblocks to digital transformation in commercial insurance is a lack of organizational courage,” says Jason McDermott, president and CEO of Chisel AI. “In an industry composed of professional risk managers, courage to challenge the status quo is not a natural strong suit; it must be purposefully cultivated and nurtured.”

It takes courage to step up and speak about the need to change and improve. “You need to be comfortable with challenging people, with being the only person at the table who thinks one way and who isn't going to get swayed the other way automatically,” says Mark Rieder, senior vice president, head of innovation at NFP, a leading insurance broker and consultant.

Any type of organization can transform its culture, according to Kris Østergaard, author of Transforming Legacy Organizations: Turn Your Established Business Into An Innovation Champion To Win The Future. “But it doesn’t happen by itself, and it is probably also the most difficult endeavor that organizations can set out on – much more difficult than getting to know and apply technology. Culture is the ‘hard problem’ of corporate innovation. It demands that companies transform their entire systems away from misaligned key performance indicators, legacy IT and business models, ineffective work methods, too-high-risk averseness built into strategies and business plans and short-term thinking. It has far more to do with this than it has to do with people’s lack of willingness to change. Of course, there is human resistance to change. It is a real thing. But human beings are actually remarkably adaptable to change – if they have the right conditions to change under.”

See also: Bright Prospects for 2022

Building a Culture of 'Change Resiliency'

“It all comes down to two things,” says Kacie Conroy, director of IT at M3 Insurance, one of the top insurance brokers in the U.S.: “Merge the IT and business worlds together to innovate and to experiment early and often. This means you need to build a culture of experimentation and change resiliency. That also means that the term ‘failure’ needs to be redefined. The only failure is not trying, not experimenting, and not learning. This approach allows you to learn, adapt and ultimately bring more value to your business.

“When cultivating innovation in your organization, locate those ‘intrapreneurs’ who thrive on change, are curious and think creatively to establish a foundation of innovation. Use this newly formed community to participate in pilots of new, innovative technology.

“Technology is the easy part. The focus, and the hard part, is all about HOW you innovate, HOW you implement the change. With seemingly unlimited options, it requires businesses to think more creatively like an artist when it comes to painting the picture of their innovation strategy.”

“What isn’t changing?” asks Amy Radin, author of The Change Maker’s Playbook: How to Seek, Seed and Scale Innovation in Any Company. “Today’s pressures are not defined by any one trend; they are the sum, with compounding effects, of multiple parts of the business model changing simultaneously, unpredictably and at times in conflict with each other.”

“Change agents are people at the top and throughout an organization who provide leadership and direction that motivate, inspire and empower others to execute toward a new future state,” Radin says. Based on Radin’s experience, these leaders:

• Recognize the inevitability of change and demonstrate urgency to act
• Visualize a purpose and North Star direction
• Magnetically attract diverse talent – intellectually curious, continuous learners and collaborators
• Create a culture where people are empowered to execute, take risks and bring forth new thinking
• Ensure people have access to required capabilities and resources
• Establish governance that is fit for the purpose of transformation
• Are decisive and role models of agility
• Are customer- and partner-focused, letting market insights drive strategy 

NFP’s Rieder believes that insurance leaders who are effective at leading change and motivating change agents possess the ability to help people “come to a decision on their own and allow them to be the ones bringing the ideas to the table.” Innovation leaders need to “be comfortable with being behind the scenes, pushing people ‘towards the light.’”

Tapping Into an Innovation Ecosystem

While we’ve focused primarily on internal change agents, insurers often look to distribution partners and insurtechs for guidance and solutions to help accelerate change. The emergence and maturation of a robust insurtech ecosystem has generated ideas and innovative solutions that insurers can tap into. Dan Keough, chairman and CEO at Holmes Murphy & Associates and co-CEO at BrokerTech Ventures, stresses that insurance innovation is collaborative, requiring industry-wide cooperation and alignment both within and beyond the insurer’s walls:

“At the highest level, there should be alignment around change, and the solution impacting change to achieve end-results we are working toward, together,” Keough says. “Effective change agents are action-oriented individuals who have a great understanding around the problem we are collectively trying to solve, and those who are relatable to the individuals with the task [change] at hand. Transformative change needs to be supported and led out by senior leadership, and then activated through and by internal entrepreneurs [e.g., labs by BTV & Holmes Murphy].

“As an example, in our first BrokerTech Ventures Cohort, we were able to learn about Broker Buddha – an insurtech company that is addressing the insurance application process, activating technology to create ease and efficiency, demonstrating a smoother process for our service teams, ultimately delivering a greater client experience for our carriers and to the end-client. The success of such change/transactional transformation was predicated around the alignment of stakeholders along the insurance value chain, who all worked together to produce a better outcome for our client.

“Ultimately, alignment around change, and integration throughout the stakeholder value chain, delivers a culture of innovation and one which is open for lasting and transformative change.” 

Bold Is Beautiful

If there’s a common denominator in the perspectives above, it’s that change is constant and inevitable. How insurance organizations manage change is critical.

“Change is always scary, uncomfortable and harder to accept than the status quo,” says Chisel AI’s McDermott, “but it can also be tremendously rewarding. Having spent 30-plus years of my career working with technology startups, I’ve experienced firsthand how it feels to take a leap of faith and stand on the ledge of uncertainty. So, we need change agents with the courage to provoke change, to act as the catalyst for change and to emphatically guide co-workers and peers through the transformation. With technology as the enabler, it takes individuals with grit and determination to thrust innovation forward within their organizations, rally others for the change ahead and reimagine new approaches to drive tangible business outcomes.”

See also: 3 Reasons for Insurtechs, Agents to Collaborate

“Technology moves at such a rapid pace, and the insurance industry is now seeing this firsthand,” says M3 Insurance’s Conroy. “In some ways, insurtech is challenging our risk management roots. We need to get more comfortable with change, specifically the unknown, and stop striving for perfection.”

“I also think we as an industry need to be bolder,” Rieder says. “I see a lot of people get caught in ‘pilot hell,’ where they’re doing 12 technology pilots at once. Well, how’s that impact top-line revenue growth or bottom-line efficiency if you just test a bunch of stuff and never pull the trigger? You need to get into the game. You’ve got to get off the edge of the pool and start swimming.”

Further Reading

Check out this recent article for more perspectives on change management and how to cultivate a culture of innovation in commercial insurance. Industry leaders and change agents -- including Tony Fenton, vice president of commercial lines underwriting and product, Nationwide; Brian Falchuk, author of The Future of Insurance: From Disruption to Evolution; Ryan Collier, chief digital officer, risk placement services; Tina Osen, president, Hub International Canada; Abel Travis, vice president and head of Fundamental Underwriters, a division of AF Group; and Bob Frady, vice president, HazardHub at Guidewire Software -- provide their insights on how insurers can embolden change agents and embed courage into their culture from top to bottom.