The insurance industry was caught flat-footed by the business impact of the COVID pandemic. Many agents were still relying on in-person contact with leads and customers to maintain their business, but world events and industry trends have aligned to push agents into the digital age. 

Along with world events uprooting business norms, increasing expenses and changing client expectations, independent agencies are facing another pressure -- a tsunami of new competition. Last year, Nationwide released all its captive agents in favor of the independent model. This industry shift, very likely to be a trend in the coming months, makes branding and marketing even more important. Finding ways to stand out and showcase one’s expertise is critical to finding and retaining clients.

And while some carriers are keen to release their captive agents to reduce internal costs, the carriers still want to keep those relationships as independent agents (IAs) build their own books of business. After moving to an IA model, Nationwide reports that its formerly captive agents increased new written premiums by 35%.

Insurance customers want more choices, IAs value the freedom to make their own business decisions and carriers reduce operating costs. From the client to agents to the carriers, the benefits of going to an independent model are clear.  

However, this transition isn’t as simple as just turning all agents loose. The steps that Nationwide took leading up to this change are what positioned the carrier and its agents for success. Nationwide continues to provide support for those agents selling their products. The company provides a vast library of resources on their website, many of them related to marketing. 

This is probably one of the biggest differences for new IAs. For the first time, they are going to have control over their brand and will need to market themselves to stand out. This can be a time-consuming task and an ideal place to leverage technology. Digital marketing solutions can take the load of client communications off IAs so they can focus on helping customers. 

Traditional methods of acquiring customers can still bear fruit but can be costly and inefficient. To grow one’s book of business, IAs must approach client acquisition, cultivation and retention tasks with a modern eye. Embracing digital customer communication technologies will allow IAs to demonstrate authenticity and expertise that scale. Identifying your niche and segmenting your clients so you can communicate with them with the right information when they want it is key to deepening those relationships.  

See also: A Commentary on Agents & Brokers

Because the entire insurance marketplace has moved online, this is where IAs need to be to meet new leads and engage with existing clients. A website, email communications, text messages, ebooks, webinars, videos and social media can all be supported by digital tools. 

New IAs can select from templates and customize them to fit their specific market segment -- taking the fear of staring at a blank page out of the equation. Messages can even be automated so new IAs can “set it and forget it” when it comes to consistent customer updates. Leveraging technology can ease the load put on a new IA agency, streamlining processes and showing a quick return on investment. 

Nationwide's successful transition is sure to be a model for other carriers. As the market swells with IAs and continues to advance toward online channels, the time to adopt digital solutions to remain competitive is now. Technology can provide additional flexibility, efficiency and personality into the mix for IAs as they work to grow their own book of business.

New Thinking on Driverless Vehicles Paul Carroll, Editor-in-Chief of ITL Driverless vehicles reached a milestone last week when General Motors’ Cruise subsidiary began offering fully autonomous rides (as in, without a safety driver) in San Francisco. While Google’s Waymo has been offering fully autonomous rides in the East Valley of Phoenix for more than a year, operating in San Francisco’s compressed, complex environment takes AV ride-hailing offerings to a new level. So, having reached this milestone, where do AVs now stand? Not where many of us expected two or three years ago. And they are heading in a different direction than many predicted. continue reading > Majesco Webinar Join us as we discuss Majesco’s P&C Core Suite and the newest, most innovative enhancements in Version 12 that deliver new, innovative capabilities across policy, billing and claims, including new AI/ML embedded models and integration with Digital Customer360 and Underwriter360 that are changing the insurance game. Register Now SIX THINGS How Automation Adds to Need for Humans by Mark Breading Automation does not mean industry professionals will be left out in the cold. In fact, the opposite may be true. Read More 5 Tips for Finding an RPA Solution by Jeff Hiegert Robotic process automation can manage workflows, improve accuracy, reduce operational costs and meet growing IT needs. Read More Tackling the Growing Problem of Insurance Fraud Sponsored by Daisy Intelligence This eBook explains trends in insurance fraud, the reinforcement learning approach, keys to successfully embracing AI and how to save millions in fraudulent claims payments. Read More Need for Scalable Response Teams by  Greg Hanover When disasters strike, insurers can become overwhelmed with calls and claims. They need to be able to scale their response teams quickly. Read More You Get the Results You Reward by Kevin Trokey Reward high performers the same way you reward average performers, and you will soon find yourself with a whole bunch of average. Read More Aduhelm: Case Study on Paying for Health by Paul Seegert As the controversial Alzheimer's drug shows, the only solution to our broken healthcare payment model is the free market. Read More AI and the Risk Management Pro by Shameek Kundu Managing risks from poor-quality AI is too important to leave purely to technical specialists. An organization-wide perspective is needed. Read More The Right Way to Engage Customers Sponsored by Statflo The right way to engage with customers is, of course, whatever they say it is – which likely means much more texting than you’re doing now. Watch Now MORE FROM ITL November Focus: Telematics In all my years covering all manner of technology, telematics may have caught me off-guard the most. When I first wrote about Progressive’s auto telematics program, Snapshot, in 1998, it seemed like a slam dunk. Of course, it made sense to monitor how people drove and to price their insurance accordingly. Or not. Read More Making the World More Resilient In this webinar, ITL Editor-in-Chief Paul Carroll sits down with Chris Wei, Chairman of the Executive Council of the International Insurance Society and a longtime senior executive at Aviva. In advance of the IIS annual forum on Sept. 27-29, they explore how the industry can help drive a sustainable global recovery.   Watch Now Partner with ITL to create expert thought leadership content. Custom Content Promoted Content Display Advertising Custom Webinars Monthly Topic Sponsorships ITL Partner Packages and more Learn more and get the 2021 Media Kit GET INVOLVED Write for Us Our authors are what set Insurance Thought Leadership apart. Get Started SPREAD THE WORD Share Share Tweet Forward SUBSCRIBE TO SIX THINGS

 

Driverless vehicles reached a milestone last week when General Motors' Cruise subsidiary began offering fully autonomous rides (as in, without a safety driver) in San Francisco. While Google's Waymo has been offering fully autonomous rides in the East Valley of Phoenix for more than a year, operating in San Francisco's compressed, complex environment takes AV ride-hailing offerings to a new level.

So, having reached this milestone, where do AVs now stand?

Not where many of us expected two or three years ago. And they are heading in a different direction than many predicted.

In particular, it's now clear that Uber-like ride-sharing services using AVs aren't going to suddenly pop up everywhere, and, as a result, won't soon usher in personal ownership of AVs. Instead AVs will be used in environments that can be carefully circumscribed, such as for shuttles on college campuses on a fixed route. And the first fully driverless car you see on the road may be... a truck.

Yes, urban driving and ride-sharing services such as those operated by Waymo, Cruise and Aurora have made extraordinary technological strides, but the difficulties of fitting in with human drivers, cyclists and pedestrians have proved to be much trickier than expected. So, having AVs roaming everywhere, in all kinds of weather, at all hours of the day and night simply isn't yet practical and won't be soon, especially because the public doesn't just expect AVs to be safer than human drivers; the public expects AVs to be flawless, or at least awfully close.

As a result, AVs that focus on passengers will show up for now in "geo-fenced" parts of cities that are fully mapped and well-understood and on set routes on corporate and college campuses, where conditions can be controlled. You may also see small autonomous delivery vehicles like this one, which are being designed to operate at slow speed on sidewalks -- college kids need to get late night snacks and beer somehow, right?

In addition, Amazon is experimenting with AVs that could deliver its ever-growing array of goods -- though the AVs will have to negotiate a host of different environments full of human drivers, cyclists and pedestrians and will have to deal with the complexities of the final delivery. After all, somebody or something has to be there to take an item out of the AV.

Walmart is using AVs to shuttle online orders from a "dark store" to a retail outlet, where consumers can pick them up.

All those gains matter, and amassing experience with enough use cases will, over time, allow for the sort of broad rollout of AVs that many have been predicting.

In the meantime, though, many of the AV ventures are pivoting to trucking because the issues with pedestrians and cyclists go away and the traffic is far simpler to navigate. These ventures will avoid cities when possible and just focus on going hub to hub on the outskirts, according to my longtime colleague Chunka Mui, who has been my go-to on autonomous vehicles since he arranged a ride for us in a Google AV in the early 2010s and who is expert in the field.

He says the CEO of one well-funded company told him he could build an autonomous trucking business just within Texas because it's 800 miles from El Paso to Texarkana, and interstate all the way. Chunka also notes that Atlanta to Chicago is a 700-mile corridor with massive truck traffic "and only something like seven turns."

Imagine how much cargo could be transported from and to shipping centers on the outskirts of cities without the need for human drivers and without the limits of a 14-hour day that they must abide by for safety reasons. And imagine how much incentive there is for businesses to capture all that business.

The whole transportation sector would benefit because the reduction in the need for drivers on long-haul trucking routes -- even a modest number of them -- would do a massive amount to address the current shortage of truck drivers, which the American Trucking Association puts at 80,000 in the U.S. AVs would free the long-haul drivers for other tasks -- typically closer to home, where drivers would rather be, anyway.

At the other end of the spectrum, on the shortest of short hauls, autonomous trucks could help resolve one of the issues that currently has the supply chain snarled. Ports are so backed up that drivers may have to sit for hours to pick up a load -- and they don't get paid while they sit. What driver just wants to sit at a port, unpaid, especially while the clock is ticking on the 14-hour maximum they can spend in the cab in a day? Well, an autonomous truck would have no issue sitting at a port. It could inch through the port for however long it took, have a container hoisted onto the chassis by a crane and inch its way out of the port, where a human driver could pick it up. Just being autonomous while inside the port boundary would represent enormous progress.

Now, a fair amount of infrastructure would have to be developed to accommodate this hub-based approach to autonomous trucking. You'd need to build centers on the outskirts of cities. You'd need to adapt truck stops -- an autonomous truck isn't going to refuel itself, and you wouldn't need nearly as many showers or as much coffee and snacks. And the drivers, as well as the many systems that coordinate their activities, would have to fundamentally switch to a model where drivers shuttle trucks from those hubs outside the cities to and from their final destinations rather than going on the road for days or weeks at a time.

From an insurance standpoint, the trend away from ride-sharing and personal ownership relieves the pressure on auto insurers to rethink their whole model. Although it had seemed that personal ownership of cars might end in the foreseeable future -- meaning the end of the need for personal auto insurance and a shift to fleet-based insurance or to a product liability approach for the makers of the hardware and software and to the operators -- the old model now seems likely to persist for many years.

At the same time, the move toward autonomous trucking on a piecemeal basis will roil that market, creating threats for some and opportunities for many.

Cheers,

Paul

P.S. If you're interested in more on the trend toward autonomous trucking and on how AVs will likely play out in general, check out a book that Chunka and I published in September along with another longtime colleague, Tim Andrews. We lay out a timeline for the next 30 years for transportation, among other technologies, based on the notion that the best way to predict the future is to invent it. The book is "A Brief History of a Perfect Future: Inventing the World We Can Proudly Leave Our Kids by 2050."

P.P.S. I go all the way back to the late 1960s with driverless vehicles and, along the way, have seen how long developments can take and how unpredictable they can be -- but have also seen real progress.

The connection comes because, when I was a kid growing up in Pittsburgh, my father was the chief spokesman for Westinghouse, which built a prototype of what it hoped would be a driverless mass transit system. What was called Skybus operated on a two-mile stretch of raised roadway in a park near the suburb where we lived, and my dad used to take us kids out there from time to time to ride it. There wasn't much to it. You walked into what looked like a bus and rode it two miles to the end of the track. The bus stopped, then took you back. But there was no driver or other Skybus representative on board -- the Skybus was operated remotely -- and this was more than 50 years ago, so the experience was still pretty wild.

Skybus never had a chance as a mass transit system. It was much too expensive to build the dedicated roadway, and there just wasn't enough saving from not needing a driver in the vehicle. But Skybus did turn out to be a precursor to the sorts of driverless airport trams we've all ridden in Dallas and many other cities, including Pittsburgh.

My dad also got a Picturephone when AT&T debuted the service in Pittsburgh in the summer of 1970, so I'm thinking he was a much cooler guy than we kids realized at the time. But the history of phones is another story for another day.

 

Many agencies are at a complete loss as to why they aren’t getting the results they need. The frustration builds when they can’t get their team to change behaviors necessary to produce those results. Figuring out why they don’t change isn’t rocket science, my friends.

Like I always say, "Any organization that rewards its high performers the same way it rewards average performers will, very soon, find itself with a whole bunch of average."

So look no further than your compensation model(s). You must reward (financially) the behaviors that drive the results you need.

Align results and rewards

It is a misaligned reward system that causes most agencies to struggle with growth. You must reward the right behaviors at the right time in the right way to ensure you achieve your desired outcomes.

I appreciated a story I came across that illustrates this idea in practice. The story took place at a campground.

There was an older couple already set up at camp. As they were sitting around the campfire enjoying themselves, a young family rolled in in an SUV.

The father had barely stopped the car when three young children jumped out with an incredible sense of urgency. One child hurriedly unloaded coolers, backpacks and other camping equipment. With equally impressive speed, the other two children set up the tents.

Beyond impressed, the older couple later commented to the young parents, “Wow, you all sure well work well as a team!”

To which the mother responded, “Thanks! We learned a long time ago how important it is to have the right reward system in place. And, in our family, nobody gets to go to the bathroom until camp has been set up.” 😂

Talk about rewarding the right behaviors at the right time in the right way! Insurance agencies would find a more predictable path to growth if they followed this example.

See also: How Social Selling Can Boost Results

Compensation consistency

The job salespeople do is difficult. This is one of the reasons salespeople are paid so well.

There aren’t many who are bold enough to face so much rejection daily. Picking up the phone and calling a stranger is intimidating for most. Being skilled enough to show buyers a path to better results takes practice, knowledge and excellent communication skills.

It is a rare gift that salespeople possess.

Too often, salespeople leverage this ability until something "unfortunate" happens; they are successful and become comfortable and complacent. At this point, too many move into maintenance mode, making just enough new sales to maintain the size of their book of business and their income level.

Don't get comfortable

Many of you won't agree with me on my next point. This is inexcusable. In my opinion, salespeople should not be allowed to stop producing once they become comfortable. Salespeople are hired to sell, and they should be expected to always sell.

I feel so strongly about this because the issue isn’t only about them and their income. The entire organization depends on them doing their job. The owners and leaders of the agency can’t be confident in making new investments or hiring additional staff if there isn’t predictable growth.

Maybe worst of all, the rest of the non-production team members' opportunity to get raises and bonuses and have an evolving professional career depends on the salespeople doing their job of selling.

It’s the compensation formula, stupid

Again, it isn’t hard to figure out why this happens.

Agencies tend to pay producers the same commission percentage on accounts they don't lose (renewals) as they do for going out and adding a brand-new client. This is even though there is a whole support team in place to service that existing account.

How do you think the producer's behaviors would change if they were paid significantly more for a new account than for a retained account? They would be more focused on writing new business.

Those same agencies will pay the exact commission percentages to a producer who only stumbles on to one or two micro accounts a year as they do to a producer who consistently rings the bell with accounts that fit the agency's target profile.

How do you feel the producer’s behavior would change if they had a graduated commission schedule that increased with the size and frequency of new accounts added? The producer would be more consistent in writing new business and looking for larger opportunities.

And another thing

Speaking of servicing existing accounts...service team members are usually paid a flat salary regardless of the size of the books they service or the rate at which they retain the clients in that book.

Do you think you would have a more motivated service team if their compensation grew (at least partially) along with the book of business they service? I suspect you would.

I know many of you won’t agree with me, but I believe most agencies should:

• Pay higher producer commission for new business than they do currently
• Also, pay lower commission on renewals than they are now
• Provide significant, over-the-top, bonus opportunities when a producer has over-the-top new business production
• Tie a small percentage of the service team's compensation to the size of the book they handle

Create alignment

The behaviors you tolerate become the behaviors you promote, and the behaviors you reward become the habits of your team.

See also: Managing Your Personal Brand

No one compensation model is perfect for everyone. But you must build the compensation model that is right for you.

Don't make doing so more complicated than it needs to be:

1. Determine the results you need from each position.
2. Identify the behaviors that drive those results.
3. Build a compensation plan that rewards those behaviors.

I understand that changing existing compensation models isn't easy; I've done it before myself. However, what is even more difficult is allowing your current model to hold everyone back.

When you hire the right people for the right job and reward them in the right way – it’s magic for everyone.

You can find the article originally published here.

Looking toward 2022, health insurers are going to be wrestling with all the ways COVID has transformed the health insurance industry and what it means for coverage, pricing and patient care for years to come. 

Some positive things have come from the response to the pandemic — the rise of telemedicine and a blunted cold and flu season both come to mind. But, more than anything, the pandemic has brought uncertainty that is going to take months, if not years, to completely work through, including within the health insurance industry. 

Telehealth

Before COVID-19, telehealth made up a sleepy corner of the health care delivery system. 

Held back by uneven reimbursement schedules, telehealth served as a niche solution for just a few healthcare problems. 

But as social distancing and government-imposed lockdowns swept the country, many people gave telehealth a fresh look. Perhaps more importantly, federal regulators changed how Medicare and Medicaid reimbursed telehealth appointments within their programs. 

A recent assessment by McKinsey showed a 38-fold increase of telehealth appointments during the core of the pandemic. And it makes sense. Patients were looking for ways to stay away from other people, but they still needed healthcare. Seeing a doctor from the comfort of their own couch was a great solution. 

But many patients also embraced the new healthcare delivery for other reasons. People with transportation challenges flocked to telemedicine as a way to avoid the commute to the doctor, and parents used telemedicine to help solve child care dilemmas. Plus, telemedicine was a convenient way for professionals to see a doctor from their cubicle during their lunch break. 

So, what started as a pandemic workaround looks like it may be here to stay. 

The question mark when it comes to telemedicine is whether the more generous reimbursements offered to providers during the pandemic will continue into the future. If insurers or federal regulators change back reimbursement schedules, many providers may pull back on virtual appointments, even if their patients are still asking for them. 

See also: On COVID Vaccine: Do the Math

Mental Health

One of the areas of healthcare that has thrived during the pandemic, including via telemedicine, is mental health. Therapy appointments don’t rely on physical evaluations, so they seem to be a natural for telemedicine technology. 

That still doesn’t mean that every patient who was looking for mental health services could find it, even though it is covered by all Affordable Care Act-compliant plans. An October 2021 report published on insurancequotes.com cited data from the National Alliance on Mental Health, which found that as many as 55% of psychiatrists are not accepting new patients, and that a third of people who want to find a mental health provider say they cannot find someone who would accept their insurance.

The lack of availability is bad news. According to the Kaiser Family Foundation, four in 10 adults reported anxiety or depression during the pandemic, up from one in 10 before. 36% reported having difficulty sleeping, 32% reported changes in eating patterns and 12% reported an increase in alcohol or substance use. 

Some industry analysts hope that innovations in telemedicine may continue to ease the bottleneck, but a shortage of mental health providers is likely to continue into the foreseeable future.

Pricing

COVID-19 has thrown a major wrench into the normally well-oiled policy pricing system. Because premiums are priced according to past years’ experience periods, the past two years pose a problem. 

For one, COVID-19 disrupted normal care patterns. Early in the pandemic, people avoided routine care, and many of those who did contract the virus faced astronomical ICU costs. Pandemic surges also forced some overburdened hospitals to delay elective procedures. 

In addition, most insurers have now stopped waiving patient shares of COVID treatment, and there is very little in the way of reliable pricing from the recent past to use to set future premiums. 

Other major challenges include the uncertainty about whether there will be future COVID waves, whether a relaxation of masking and social distancing will cause cold and flu cases to again surge and how two years’ worth of deferred or avoided care could affect morbidity when it comes to chronic conditions. 

With all of that, insurers run the twin risk of either over- or undercharging premiums for 2022. 

Political influences

Discussions of health policy and COVID cannot be had in a political vacuum. Whether the conversation is about vaccine hesitancy or employer vaccine mandates, tempers flare. 

The biggest question for health insurance providers is how the courts are going to handle so-called COVID surcharges. While the Affordable Care Act mandates that different premiums cannot be charged to similar people based on their health history, many employers are charging unvaccinated employees surcharges on their health costs. Employers are taking different routes, ranging from wellness programs to EEOC-endorsed incentive programs, but, no matter the legal justification, the issue is almost certain to land in federal court. 

Navigating the political waters is going to be a challenge for every health insurer for the year to come. 

See also: Mental Health in Post-COVID Era

Conclusion

COVID-19 will have a lasting impact on the healthcare industry. Navigating pricing, the future of telehealth and the political uncertainty is going to take a careful hand. 

But, for companies that respond deftly, 2022 also has the potential to offer a cautious return to normalcy, even amid massive uncertainty. 

The P&C industry has been on an automation path for many years. When the pandemic hit, it became a catalyst for accelerating automation and digital transformation. Straight-through processing, self-service portals, virtual inspections and digital payments are just a few of the areas that insurers put a sharper focus on. But automating tasks and workflows does not mean that machines will take over and leave industry professionals out in the cold. In fact, the opposite may be true. I believe that a case can be made that automation initiatives will increase the need for skilled professionals with deep industry domain knowledge.

All the automation occurring is good for the industry. And anyone who knows me knows that I am certainly not a Luddite or anti-technology. However, I believe there is one dimension of tech progress in the P&C industry that is being overlooked – skilled individuals. I’ve written extensively about how automation and AI will elevate the role of industry professionals and how relationships are still vital in the industry, especially in commercial lines. But in this blog, I turn my attention to another implication of task automation – the need to manage it. Several examples expose the challenges.

• Bots: Chatbots to automate interactions, robotic process automation to automate tasks and voice bots to respond to phone calls all take the burden of simple, repeatable tasks away from humans and speed up the process. Bots of these types are sweeping through the industry, and some insurers have deployed thousands. On balance, this is a good thing. Companies are realizing ROI on their investments and improving process flows. But many are now experiencing maintenance headaches. How should the inventory of thousands of bots be managed? What happens when a bot breaks? How are bots updated to comply with the latest regulations? These are important questions that must be addressed.  
• APIs: It’s an API world. You’ve probably heard that phrase. Even CEOs talk about APIs (application programming interfaces), and, again, it’s a great thing. APIs standardize and improve connections between systems and make integrations faster and easier. After all, integrations and data exchanges between systems have been some of the big challenges for the industry for a long time. But once again, as the number of APIs expands, there emerges a need to manage the hundreds or even thousands of APIs that might be relevant for a given insurer.
• Models: Rules-based or AI-based models are widespread in P&C, and their number and the variety of use cases continue to expand. Done well, they are helping improve product design, risk selection, pricing, profitability, claims processing and many other parts of the business. Model management is now becoming a discipline in its own right, and there is a need for strategy, governance and hands-on management of the models. And, in the case of models, the most important human contributions are in designing the models to address specific business opportunities, interpreting the models and then taking action.

Over all of this, layer the complexities of the insurance business, the trend toward more specialization and the evolving risk landscape: The picture gets even more complicated. The state-by-state regulation regime in the U.S., coupled with the variations by line, introduce multiple dimensions that must be managed for new tech solutions in automation. As customer risks become more complex (as in middle-market and large commercial accounts, specialty lines and workers’ comp), the intricacies of the business create challenges.

See also: Insurers Turn to Automation

Automation and leveraging AI for insights are good for the P&C insurance industry. But there will still be a need for industry experts who understand how to execute tasks that comply with evolving regulations, who can exercise judgment based on experience and who can manage all the automation activities. Some of that automation management will demand IT experts, but much of it requires an understanding of how business is conducted, the details of different customer segments and insurance products and the requirements imposed by the many regulatory bodies involved.

Will there be increasing levels of straight-through processing, bots and other automation in P&C? Of course! But does this mean that the machines will be in control? I emphatically say no! People and their experience and expertise in the industry will remain at the heart of the business.

In July, I wrote an article that criticized the newly authorized Alzheimer’s drug Aduhelm. Six months later, the market response is heartening and, in my opinion, a case study in what it will take to fix the way that we pay for healthcare in America. 

A review of the problem

The FDA approved the first new drug to treat Alzheimer’s in June. Of 11 scientists who reviewed the research and science behind the new treatment for the FDA, 10 voted against approval, and one was undecided. The FDA approved Aduhelm despite the lack of evidence that it either cures or slows the progression of the Alzheimer’s and has given the company nine years to conduct a confirmatory trial. Three of the scientists resigned as a result. The head of the FDA also took the very unusual step of asking for an investigation into unusual/informal contacts between the manufacturer and people at the FDA.

The drug price is set at a whopping $56,000 per year, and the real price tag is more like $100,000 when you include the cost of performing the infusion in a provider’s office, testing to monitor for brain bleeds, etc. With 6 million Alzheimer’s patients in America today, having just one in six get a prescription would drive costs of around $100 billion into the system. Total outpatient Medicare drug spending with pharmacy prescriptions was $136 billion for 2019.

A review of the last six months

Biogen and other analysts projected sales of $103 million this year, about $1 billion in 2022 and $5 billion-plus in 2023. However, the market has responded in a very encouraging way. Sales have just totaled $2 million thus far.

What happened? The Veterans Administration, several Blue Cross Blue Shield companies and most notably Medicare are not yet paying for the treatment. Highly respected medical institutions like Cleveland Clinic and NY City’s Mount Sinai have also chosen not to administer the drug. So have many well-managed, large employer health plans. All are waiting for real evidence the drug is effective in either slowing the development of or in curing Alzheimer’s disease. 

See also: How Synthetic Data Aids in Healthcare

How we will make real progress

The free market is the only viable solution -- if we can get to one in the way that we pay for healthcare.

I am often asked when we will see real progress in our insurance payment model. I typically laugh and say, “As soon as lobbying is no longer effective.” But that is not the end of the story. I more seriously share that we are seeing the problem get solved one employer at a time (another way of saying it will be solved by the free market). When employers build a health plan with a consultant that provides transparency around the actual cost of care and then build their plan to reward good consumption, it is amazing how quickly they can get to a place, where costs go down and quality goes up. 

For change that will affect the system more broadly, we need government to ensure that we have rules in place that require transparency. Until that happens, we will be stuck handling the problem one employer at a time.

Robotic process automation (RPA) can be used to automate manual, high-volume and repetitive data tasks — especially those where human touch does not add value. Think of all the needlessly manual data entry involved in your underwriting and claims processes. RPA can help automate those tasks to mitigate the risk of human error and return your staff’s focus to high-value work while increasing efficiency and speeds process completion.

As part of a larger content services strategy, RPA can be invaluable in solving business challenges by effectively managing digital workflows, improving process efficiency and accuracy, reducing operational costs and meeting growing IT needs.

Robotic process automation has been tried and tested, and it can deliver a quick return on investment with relatively little effort. But there is really no such thing as a one-size-fits-all RPA solution. How can you define the right strategy and find the most compatible RPA provider for your organization? What considerations should you take into account?

The following five tips can get you started on targeting the right solution — and vendor — for you:

1. Define your needs: Piecemeal or end-to-end RPA software provider?

Before you can start evaluating solutions and vendors, you need to understand the extent to which you can automate your business processes. Are there currently just a few high-priority tasks, or are you planning to automate more processes across business units in the future? Will a standard solution suffice, or do you need a tailor-made solution?

If your organization has relatively straightforward automation needs, implementing an off-the-shelf RPA tool can be the right choice. The same is true for upscaling simple processes.

When it comes to addressing larger and more complex processes – like underwriting and claims – you’ll likely want a more robust RPA solution with a comprehensive suite of tools, from process analysis to bot management. Additionally, that solution needs to be paired with a vendor that has a holistic automation approach and history of helping insurance organizations transform their processes. 

If your organization is looking to implement in-house automation in the future, it is important that your RPA provider can equip you with intuitive software so you can automate processes independently, preferably with a simplified deployment structure without extensive coding and customization to reduce reliance on IT.

2. Start small, think big: Interpret scalability for the use of bots

Starting your automation journey can be a relatively small and inexpensive endeavor, but to truly gain a competitive edge you need to think about scaling options well in advance. This is where a feasibility check would be wise. Ask potential RPA providers: What are the success stories when it comes to scalability (i.e., is it feasible to substantially increase the number of bots)?

Expanding RPA to more processes across your organization can help you leverage economies of scale and reap the holistic potential of RPA. However, not all RPA tools make this easy to do. It is essential for your organization to have the ability to easily scale and centrally manage your RPA solution in-house.

See also: What’s Beyond Robotic Process Automation

3. Extending RPA: Check integration options and complementary capabilities

Robotic process automation technologies don’t work in a vacuum. Most RPA deployments involve other systems from the start and expand to other departments and processes over time. Therefore, when selecting an RPA platform, it is important to consider its capabilities for integrating with your other systems, both those in the initial scope and those likely to be in-scope soon.

Additionally, you can often enhance the value of RPA with complementary capabilities. Intelligent automation technologies like advanced data capture or customer communications management (CCM) can not only take your process automation to the next level but can also dramatically improve user and customer experiences. To increase your chance of automation success, check the capabilities of available RPA software extensions and align them with your requirements and objectives.

4. Don’t overlook data security and compliance

By reducing human contact with your customers’ sensitive information, robotic process automation actually helps your organization reduce security risks and improve compliance with new regulations like General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). However, for this to happen, the RPA software itself needs to be secure.

Look for a vendor that adheres to a stringent secure development lifecycle methodology, resulting in hardened software with fewer vulnerabilities. Some vendors also invest in outside security audits and certifications of their products and may provide specialized solutions and best practices that help with your specific industry regulations.

5. Embrace the future of process automation

Self-learning bots are the future of RPA. The integration of artificial intelligence (AI), especially machine learning, ensures that your system learns from previous decisions, so it can handle rule-based processes independently.

See also: Here Comes Robotic Process Automation

A vendor that integrates intelligent technologies such as AI and machine learning can meet a wider range of business needs and minimize the need for bot maintenance.

Insurance, like most other industries, is loaded with tasks and processes that are unique to each organization. Robotic process automation can provide the flexible toolset you need to meet your specific needs. The key is determining those needs first.

As part of this month’s ITL Focus on telematics, we spoke with Dave Wechsler, vice president of growth initiatives at Hippo Insurance, on how far telematics has come—and where it goes from here.

ITL:

Given that you’ve been involved with telematics a lot longer than I have, could you start us out with a bit of history, to explain how we got to where we are today?

Wechsler:

There’s a huge opportunity for the insurance industry to move toward proactively caring for customers, helping beyond just indemnification. The insurance application of telematics has become integral in bringing us closer to creating a more protected future. For example, here at Hippo, we partner with our customers to help them avoid a loss in the first place by offering Smart Home devices alongside new policies.

The evolution of auto telematics in insurance is a great example of what will happen across the industry. Until recently, there was limited adoption by insurance companies due to price point, limited technology and concerns over consumer adoption. In the early days, auto telematics systems were expensive black boxes installed in an auto body shop for thousands of dollars. But with time, the technology transformed into a device that a driver could buy in a store and self-install in their car. Over that period, wireless networks significantly improved and became less expensive, which allowed for real-time data transfer. Ultimately, consumers became more comfortable with datasets coming from devices that they own, leading to the rise of usage-based, or “pay-per-mile,” insurance.

Just like with any other technology, when the adoption curve accelerates, prices drop and features improve. And as telematics technology improved, cell phone manufacturers began to install it into phones. Suddenly, a mobile phone was a powerful substitute to the installed equipment, and a no-cost app could be downloaded to monitor driving and enroll in a safe driver program.

ITL:

It feels like we’ve moved a fair ways up the learning curve, too, in terms of what people value. I was struck, speaking at a telematics conference a few years ago, that insurers were just learning that there were real issues with human behavior that they hadn't understood. Customers, for instance, were more inclined to value something like free roadside service free than they were a 5% discount. The roadside assistance actually cost the insurers less than the discounts they were providing – so insurers were paying more to give customers something they valued less.

Wechsler:

Leading with a discount is not the only way to attract customers - it’s the protection proposition that I think the industry needs to embrace. Telematics should be a part of a productive partnership that helps the customer decrease their anxiety and ensures they are aware that we are on their side. These are the right benefits for participation when our goals are aligned with the customer.

From a regulatory perspective, we need to be open-minded. Regulators are there to ensure that consumers are benefiting. So, start off by saying, “Well, here are other benefits that we can bring into the market that are received better by consumers and, in fact, give them more protection than a small discount on the policy.” I think there is a lot of openness right now as to what’s the best approach as we all learn together.

ITL:

From your current role with Hippo, you can see the uses of telematics in insurance expanding beyond cars, in particular into homes. How do you frame that opportunity?

Wechsler:

A few years ago, only very basic sensors were available for the home. And these products were both expensive and not particularly effective. Like auto telematics, these devices have matured, and prices have come down materially. We now have the potential for actual loss-avoidance at a feasible price point.

We have to understand that this is still new for the consumer. Realizing the full potential means enabling customers and educating them on where they can be protected and how they can protect themselves. It's about giving customers the tools - not only equipment but installation, professional monitoring or other services as needed. It's about understanding the power of sensory data to identify risks in the house and creating better technology to avoid loss.

We're seeing all these trends now accelerate, where the quality of the technology is much better, the price is much lower and the service offering to support telematics in the home is becoming self-evident. Most of all, customers are excited.

ITL:  

How close are we to being able to argue for wide deployment of sensors in homes on the grounds that the losses prevented will exceed the cost of deployment?

Wechsler:

Early systems were expensive, but prices are dropping and features are improving. Detecting water leaks with basic sensors is a good start, in my opinion. The automatic shutoff valves that these sensors can trigger used to cost thousands of dollars and required a plumber for installation. Today, you can find DIY home shutoff valves for as low as $150, and it’s doable for the homeowner to set one up themselves.

Insurance companies like Hippo can spur the market in terms of adoption by enabling and educating on the loss-avoidance benefits. Here at Hippo, we are focused on meeting the customer where they are, which is why we offer a variety of solutions, from self-monitored to professionally monitored smart systems. If you want a basic smart home system, great, we'd love to give you a range of sensors. If you want something very sophisticated, fantastic, you're an ideal customer for us as we aim to be a partner to our customers to protect their homes.

ITL:

I assume that, over time, a lot of safety features will be built into homes, as well, so there will be no need to retrofit.

Wechsler:

Our goal is to provide our customers with more proactive protection options. This includes looking at the structure and systems within the home itself. For instance, Lennar, one of the nation’s leading home builders, is installing a whole-home water shutoff water valve in every home that’s WiFi-enabled. These systems can work in partnership with our program at Hippo to reward customers with deeper discounts on their home insurance policy.

ITL:

How much of a help will the widespread adoption of 5G wireless be?

Wechsler:

It's almost impossible to imagine a home without connectivity at this point, and we're excited about the extra protection connected devices can provide. The biggest problem, in my opinion, is that most customers don't understand the impact of damage done from what can appear to be minor issues due to water leaks or small fires, until they dig into the situation themselves. You have to get the consumer to understand the benefits, which is our focus at Hippo.

Insurers can be the catalyst through discounts or through better services, whatever it might be. And a rising tide lifts all boats. Hippo is leading the industry in smart home integrations, but I hope to see the entire ecosystem improve so consumers can become aware that these devices protect their homes.

ITL:

To wind us up, I’ll ask you to blue sky things a bit. If you look out five or 10 years, what do you think the smart home could look like?

Wechsler:

We are on the cusp of an incredibly exciting time in the next chapter of smart home as it becomes more deeply married with home insurance products. What I’m most excited about in joining Hippo is that we’re trying to be a different kind of home insurance company. Through devices, data and services, we envision a more proactive future that challenges the traditional model and offers customers a new level of preventative care for their home.

ITL:

Thanks so much. This has been great.

Wechsler:

Thank you!

NOVEMBER 2021 FOCUS OF THE MONTH

Telematics

FROM THE EDITOR

In all my years covering all manner of technology, telematics may have caught me off-guard the most. When I first wrote about Progressive's auto telematics program, Snapshot, in 1998, it seemed like a slam dunk. Of course, it made sense to monitor how people drove and to price their insurance accordingly.

Or not.

It turns out that the devices didn't provide as much insight as expected -- was that a good hard brake, because someone did something stupid in front of you and you reacted quickly, or was that a bad hard brake because you were distracted and didn't see something you should have? I also underestimated how much people would be put off by even the simple process of installing a Snapshot device and how little people would respond to a discount in their premiums. 

I often tell people that my favorite line from my Silicon Valley days is, "Never confuse a clear view with a short distance" -- and I surely made that mistake with telematics. (I sometimes think I keep using that line as a reminder to myself to not make that mistake again.)

The good news is that things you can see clearly eventually come to pass, and that's happening with telematics. The analysis of driving is becoming more sophisticated. So are the sensors put into cars (which may now include cameras). Understanding of human behavior has progressed, and carriers are finding incentives that matter more than modest discounts. The inconvenience of installation has diminished, as many now use their cellphones as sensors rather than having to plug something into the car. 

Telematics have moved well beyond the car, too -- in particular, for insurance purposes, into the home. Sensors can now monitor for water leaks and other problems that can produce expensive losses and claims. 

As you'll see in the articles and the interview that follow, as part of this month's ITL Focus, we've come a long way since 1998, and there's a clear path forward. 

Not necessarily a short path, mind you, but a clear one that will deliver benefits to clients and to those insurers that figure out how best to help them. 

Cheers,

Paul Carroll, ITL’s Editor-in-Chief

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INTERVIEW WITH DAVID WECHSLER OF HIPPO INSURANCE

As part of this month’s ITL Focus on telematics, we spoke with Dave Wechsler, vice president of growth initiatives at Hippo Insurance, on how far telematics has come—and where it goes from here.

“Telematics should be a part of a productive partnership that helps the customer decrease their anxiety and ensures they are aware that we are on their side.”

David Wechsler

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WHAT TO READ

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WHO TO KNOW

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