When insurance industry observers think of the channel strategies for personal lines, the picture can appear to be fairly simple. More of the business is moving to direct distribution, whether that is through call centers or the web. Furthermore, there is a clear movement to digital, straight-through processing. Comparative raters continue to exert significant influence on submissions flow. And, finally, the rich get richer – with tier one direct carriers continuing to gain share. These have been the trends for the last few years. But a closer look reveals that the evolution of distribution in personal lines is more complicated.

New research by SMA reveals several developments that must be added into the channel evolution picture.

1. Relationships with affinity groups are a growing distribution choice: A significant percentage of personal lines insurers plan to increase their emphasis on business with affinity groups or establish partnerships with new affinity groups or companies outside of insurance.
2. Insurtech distribution partnerships are vital: There is already substantial partnership activity underway between carriers and insurtech digital agents or distribution platforms. The new distribution platforms are more than comparative raters, providing increased capabilities to support fully digital, straight-through processing operations. 
3. MGAs are a growing part of the landscape: MGAs play a major role for commercial lines distribution but are not always considered to be a significant channel for personal lines. That may be changing as insurers create more new/customized products for consumers and seek access to preferred segments.

Last, but definitely not least, independent agent distribution continues to flourish. The IA market landscape is shifting dramatically through M&A and the role of platform agencies. Insurers are adjusting to the new realities of partnering with sophisticated distribution partners that have scale and advanced tech. At the same time, many insurers are deploying very focused appointment strategies. Rather than scaling back on appointing new IA partners, in many cases, the opposite is occurring. Couple that with the enhanced tech capabilities being provided to distribution partners and the increased connections with intermediary distribution platforms, and it is clear that the independent channel will still be a critical part of personal lines distribution for years to come.

See also: The Digital Journey in Personal Lines

The result of all this activity in channel strategies is a move toward more omni-channel capabilities, with carriers offering prospects, producers and policyholders a variety of ways to interact. And in five years, the channel environment is likely to be even more complicated than it is today. But it is unlikely that any one channel will dominate.

For more information on commercial lines distribution expansion strategies, see our recent research report, “Channel Strategies and Plans for P&C Personal Lines: A View of Today’s Environment and What’s to Come.”

From the 1980s through the early 2000s, many advisers and brokers dreamed of having more help with critical yet time-consuming tasks like proof of insurance and minor claims processing. We mused, “If only I had help with those tasks, I could spend more time focusing on high-touch customer service and sales.”

Today, digital innovations are streamlining much of the way carriers and their representatives conduct and generate business. These innovations are precisely the help we wished for.

So, why do many in our industry resist digital advances like customer self-service and apps?

Digital enables us to create deeper customer relationships

Digital technology is not going to replace us. The tech advances we have access to today are simply encouraging us to reposition our No. 1 asset—our people—to do the high-dollar, deeper-dive work with clients that we only dreamed about years ago.

Our industry is gaining exponential efficiency from the digitization of many of its processes and systems. Greater efficiency in other areas enables advisers to spend more time focusing on high-return activities like conducting annual reviews, offering comprehensive financial advice, handling complex service issues and increasing product sales and density.

Technology enables us to serve our customers more fully. It has created model distribution—an ecosystem of connected offerings from a variety of participating providers that makes it easier to fulfill multiple needs for our customers and provide an integrated user experience.

When we leverage this enhanced distribution model, we build deeper customer relationships, which, in turn, lead to increased product density and customer and adviser retention.

Technology is facilitating the evolution of distribution at all levels

The COVID-19 pandemic accelerated many carriers’ tech efforts. Unable to serve customers face to face, they found other ways to reach out to prospects and customers. But there is so much more we can do. 

According to a May 2021 report by DAIS, a platform focused on making modern technological advances in the insurance industry, artificial intelligence (AI) is the future of insurance. AI enhances our ability to hyper-personalize the customer experience, drive product innovation and automate routine tasks.

A 2021 Deloitte study echoes that claim. The study predicts that AI will evolve underwriters into customer portfolio managers and strategic analysts, advisers into specialized customer experts and ecosystem integrators, actuaries into strategic planners and cross-functional collaborators and claims officers into customer loyalty drivers and customer liability experts.

This is nirvana, isn’t it?

See also: Building Your Digital Sales Arsenal

Savvy companies use digital to drive leads and grow faster

A Liberty Mutual/Safeco Insurance study conducted in October 2020 introduced the inaugural Agent for the Future Index—a quantitative assessment of the state of digital transformation in the independent agent channel. Researchers divided the survey respondents into three groups: low, medium and high digital adopters.

The study revealed that high digital adopters improve the digital tools they have in place and use those tools to drive leads. Their top priorities are educating their customers about new ways of working with them and extending their online presence for marketing. 

The study finds that 47% of high digital adopters invested in digital capabilities in the past year, while only 18% of low adopters did so. And high digital adopters had a 60% greater increase in revenue than their less digitally savvy peers.

During the pandemic, all levels of the distribution chain were tasked with finding innovative ways to connect with their communities online. Leveraging digital technology simply requires expanding those efforts.

Digital enhancements don’t have to be complex

The concept of AI can seem complex and intimidating. Most of us have no idea how to implement machine learning or data cleansing into our systems. That’s OK; plenty of experts out there specialize in AI implementation. We can hire them once we make digital enhancement a priority for our companies.

Making your company easier to find online and easier to do business with doesn’t have to be complicated. During the pandemic, many carriers and agencies increased their outreach and customer engagement simply by enhancing their websites and stepping up their social media activity.

Three strategies to begin leveraging technology

A technology CEO and member of the Forbes Technology Council says that delivering an excellent experience is now a matter of survival. He writes, “From your website and your mobile app to your social media profiles and your email campaigns, insurers must always deliver the best customer experience. To build deeper relationships with customers throughout the entire customer journey from application to cross-selling, insurers must build engaging, personalized journeys at every step of the way. We are entering a new era of innovation and giant technological leaps in the insurance industry. These are the exciting times we are living in.”

So how can carriers and their advisers boost their digital capabilities? Here are three simple strategies to begin implementing immediately.

1. Leverage technology to gain new prospects and retain current customers

For decades, customers have remained loyal to their carriers and their advisers. Today, that loyalty is at risk of being replaced by a thirst for more options, faster access and better experiences. Customers are in complete control, and that’s the way it should be. The silver lining is that, when we differentiate ourselves by providing an exceptional customer experience, we can get prospects to at least consider us. Providing an exceptional experience will also strengthen our current customers’ loyalty.

How do we accomplish that? By changing the distribution model. This means allowing technology—an app, for example—to handle the low-return tasks like making ID cards available and processing transactions such as tow claims.

Don’t fight it; embrace it. Free of doing those routine tasks, your company and your advisers can focus on deepening customer relationships and personalizing solutions. They can discover novel ways to exceed their clients’ expectations and focus more on providing advice and guidance.

2. Make it easy for customers to find you, then engage them in other ways

Today’s consumers are accustomed to exploring their options online. Make your company easy to find and your offerings appealing, and people will seek more information. For example, we know that auto insurance is the product that will get most customers to consider us. Creating an engaging, easy-to-access auto insurance page on your website will draw customers in. Once they engage with you, then you can differentiate your company and your service.

Although many customers initially approach companies by seeking quotes for their basic protection needs, most also want expert advice on their overall financial health. Make it easy for them to discover that you offer a full array of insurance and financial services solutions.

For example, an advice relationship might begin with guidance about liability coverage. Customers might not realize that $500,000 limit in liability coverage isn’t sufficient if they cause an auto accident that results in several million dollars worth of injuries to a family. Advisers deliver exceptional value when they educate their customers about critical issues like this.

3. Continually improve your products and delivery mechanisms 

As commoditization in our industry continues to be the norm, carriers must continually improve their products and delivery mechanisms. Make sure your offerings provide not just perceived value but real value.

Product pricing is one example of the difference between perceived and real value. Years ago, advisers perceived some carriers as “the cheap companies.” Over time, as those companies attracted and retained more clients, advisers realized the companies aren’t cheap. They are serving the segment of the population shopping for affordable insurance. These companies offer good-quality products, make it easy to do business and deliver their products seamlessly. 

Avoid focusing only on price, but recognize that some clients are sensitive to pricing on certain types of insurance. Provide options for all price points and levels of service desired.

See also: Digital Future of Insurance Emerges

Build digital innovation into your budget

Remember when the internet first came on the scene? Many resisted the innovation, thinking it was just a fad. When they realized it was the way of the future, they had to prioritize establishing a presence on the web.

Our customers demand ease of use through digital and online technology. We must prioritize it, budget for it and implement it. Our survival depends on it, and our customers expect it.

A culture of worker well-being hinges on the understanding that a “whole worker” shows up at the jobsite each day. Fatigue in construction is not new. However, with fast-tracking, schedule compression and the growing complexity of projects, fatigue is becoming an increasingly big issue affecting the workforce. 

Fatigue doesn’t just affect workers from a physical standpoint, it also affects their mental well-being. As part of a sound risk management and safety strategy to prevent worker injury and mental health concerns, contractors need to develop a plan around managing worker fatigue and burnout.

Growing Risk of Fatigue

In 2019, Construction Executive shared information from the National Safety Council’s research-based, three-part special report on fatigue. This report continues to be a reliable resource for employers concerned about fatigue and considering how to counter the effects of fatigue. Part III of the NSC report highlighted some of the risks associated with employee fatigue, which affects the “ability to think clearly, slows reaction time, decreases attention and vigilance, and impacts short-term memory, judgment and other functions.” 

Consequences of Fatigue

The consequences of worker fatigue affect construction operations by increasing incidents and issues in key performance areas, including:

• “near hits”;
• minor/first-aid injuries, serious/debilitating injuries and fatalities;
• quality defects leading to rework, cost impacts and schedule delays;
• equipment and property damage resulting in increased operating costs; and
• increased overtime and reduced productivity resulting in profit fade.

The Job Site Is Only One Factor That Contributes to Fatigue

One of the issues that contractors need to understand is that the workers’ total time spent on work does not start when the worker arrives at the job site. The total workday includes the worker’s roundtrip commute and needs to be an integral part of assessing worker fatigue. Many construction workers commute more than an hour each way. Why is this important? Commuting can add as much as 10 to 15 hours per workweek. Not only do the workers’ hours and commute time need to be understood, but contractors also need to understand that workers have personal and family lives. If a worker works 12-hour days, commutes two hours and takes three to four hours of personal/family life, that leaves six to seven hours or less of sleep each night. This daily pattern compounds the “total worker fatigue impact.”

The Risk of "Presenteeism"

There is a growing challenge with worker fatigue and burnout. “Presenteeism” is when a worker is on the job site but is not fully engaged due to a lack of focus or concentration. There can be many possible causes of presenteeism and sources of distraction, including:

• stressors at home, including relationship issues, caregiving for children or relatives, unexpected expenses and financial pressures and legal concerns;
• physical illness or underlying mental health condition;
• sleep deprivation;
• working through an injury or the nagging effects of chronic pain; and
• a known or suspected impairment from recent or continuing alcohol or substance misuse. 

See also: Long-Haul COVID-19 Claims and WC

Cultural Change for Contractors to Counter Fatigue

Construction company owners, executives and project leaders need to recognize the hidden costs that worker fatigue can have on the overall profitability of a project. Construction leaders need to understand that worker fatigue doesn’t just happen and that, through their actions or inactions, fatigue becomes a growing, unmeasured worker health problem. Contractors need to take a close look at how projects are staffed, supervised, scheduled and resourced to reduce the potential impact of fatigue on productivity, quality, risk management and safety performance. 

The starting point for meaningful and lasting change is recognition that a challenge exists and confirmation that it needs to be addressed. Contractors need to challenge the status quo and the cultural acceptance of fatigue as a necessary evil of a demanding industry. Company leaders need to reject the notion that there is little that can be done to reduce the competing demands that lead to worker fatigue. Fatigue should not be viewed as a badge of honor but as a sign that the system needs to be modified. The adage of “making hay while the sun is shining” is being replaced with a longer-term perspective of building a sustainable workforce for tomorrow. 

Strategies to Combat Fatigue

Strategies to combat fatigue include:

1. Have honest conversations with project owners about the industry’s existing shortage of skilled workers and the impact of aggressive schedules on the well-being of the workforce. 
2. Embrace lean construction methods to adjust schedules and sequences based on realistic availability of all trades.
3. Improve management reporting to capture real-time field data showing a true picture of labor hours and costs vs. construction progress schedules. To shed light on a company’s potential for worker and crew fatigue, contractors should develop reports that analyze:
   • consecutive days worked. Look at trends of workers who routinely work consecutive days without time off from the job site.
   • total weekly hours worked. Analyze trends of workers who work high numbers of hours each week.
4. Reduce the frequency of unscheduled overtime and the overall maximum amount of overtime required of crews. Alternatively, evaluate if there is flexibility in the schedule to provide a weekend free from work to provide for adequate rest.
5. Analyze the amount of night work that is scheduled and the impact this has on scheduling the remaining projects. Does the night work require the company to schedule workers for back-to-back work shifts without allowing for a proper rest period? 

The May 2021 National Construction Safety Week focused on the theme of “Committed to Holistic Safety” with an emphasis on worker mental health, well-being and fatigue. The industry knows the impact on job-site culture, teamwork, safety, quality and productivity when a crew is saddled with chronic tardiness or absenteeism. It is a noteworthy cultural shift that the industry is responding to the rising concern about physical and mental well-being of the workforce. 

This article was written by Cal Beyer and Scott Staffon.

Over the last year, many communities have faced large riots and protests that destroyed public and private property and resulted in hundreds of injuries. While these events carry a certain amount of unpredictability, an organization’s planning and response to these events can minimize losses and, most importantly, keep people safe. 

The latest Out Front Ideas with Kimberly and Mark webinar included a panel discussing the risk management challenges associated with civil unrest. Our guests were:

• Anas Al-Hamwi – senior director, occupational health and injury management, Walgreens
• Renata Elias – senior vice president, consulting solutions, Marsh
• Barry Scott – deputy director of finance, risk manager, city of Philadelphia
• Thomas Simoncic – president, Property Americas, Sedgwick

Protect, Prepare and Partner

No response is effective without proper planning and preparedness measures. Employers should consider their situational readiness by identifying tools that exist within their infrastructure, particularly their partnerships. Engaging industry peers, local community leaders and municipalities creates a network of advisers to assist with early communications to all stakeholders. If there are multiple operations locations, empower your leaders at each site to make the right decisions by giving them the tools they need to execute proper procedures. 

In planning, public entities need to adapt to allow and protect First Amendment activities while also ensuring lives are protected. While the balance can be tricky, partnering with federal, state and local governments can forecast any potential issues. First responders and police units need to be in constant communication to respond to any event rapidly. Including everyone from fire units to public transit employees ensures a collaborative effort. Keeping communities informed with timely messages keeps both the public and employees safe.

Having a crisis management capability within your organization helps senior leadership respond both quickly and appropriately. Formalize your crisis management plan with reporting incidents, escalation to senior leadership, defining the criteria for an escalation, incident screening and notification and activation of the senior leadership. Once you have buy-in and collaboration, you can align and integrate with all stakeholders to ensure the process is trained and exercised for capabilities.

Property Loss 

While civil unrest is not a natural disaster, like hurricanes, these events carry similar characteristics in that they are widespread, occur over different dates and cause varying levels of damage and business interruption. Understanding what your policy covers and does not cover is critical to preparation. Reach out to your partners within your carrier and broker relationships to fully assess your needs. Understanding the definition of occurrence in a policy can determine whether multiple days of civil unrest are considered one deductible. Establishing a timeline is necessary so your partners can scale and meet your needs while finding escalation and remediation points.

While protecting property is critical to restoring business activity, protecting people and their livelihood should always be a priority. Does your business continuity plan include details directing employees where to go if a specific location cannot operate? Will your vendors or suppliers know where to make deliveries? Where will your critical processes take place? All of these items should be addressed to ensure all stakeholders are prepared for a crisis. Mobilization with partners and vendors before an occurrence can affect response time, enabling an organization to get back to business faster.

See also: Did You Use the COVID Down Time?

Prioritize Your People

As you strategize for potential events and develop a continuity plan, people should be your priority. In keeping your employees and the community safe, communication and preparedness are key. Internal communications should be aligned with your strategies to ensure a coordinated response, and making appropriate connections with media partners can assist with disseminating external communications to the community. 

Civil unrest training, developed specifically for regions, can help employers establish preparedness measures for their workers. It forms a basic knowledge of staying safe in a crisis while also keeping people informed of the business continuity plan. Communicate with federal agencies and local municipalities to make sure your protocols meet their standards. Make sure your workers have resources like an employee assistance program to address their mental health throughout a crisis. Property can always be replaced, but human lives cannot, so people should always be the starting point when developing your plan.

Lessons Learned

The last year has served as a lesson in crisis for many organizations, especially those experiencing the aftermath of civil unrest for the first time. Responding to the next event requires careful consideration of what was missing in your initial response. Perform internal debriefs and post-incident reviews to highlight any gaps and bridge the silos. And when determining risks, consider all the external factors currently, like labor shortages, logistical supply chain and inventory issues and rising inflation. These can all add to the costs associated with property repairs. Lastly, this past year has taught us that truly anything can happen, so go forward humbly and be prepared for what you do not expect.

With much of the world beginning to reopen and global economies beginning to recover, there are many reasons to feel confident in the direction that the global economy is heading, including successful immunization campaigns in advanced economies and promising projections for global GDP and trade, which our latest research predicts will see global 5.5% and 7.7%  growth respectively. Despite these positive trends, there are potential cracks in the armor that every business leader should be aware of as we continue to grapple with the world’s grand re-opening. 

Vaccine Security 

The first and perhaps most obvious risk factor the economic research team at Euler Hermes has identified is vaccine security. While advanced economies delivered on immunization campaigns, under-vaccination in Asia and other emerging markets may cause desynchronized growth paths. Avoiding the vaccination fatigue trap will be key for a sustainable reopening as demand side hurdles (such as vaccine hesitancy) are now following the supply-side ones. In the meantime, under-vaccination in Asia and in emerging markets may desync growth paths. Stop-and-go government strategies to cope with the increase in new cases – albeit more moderate than previous waves -- are likely to continue and could hinder economic recoveries in these markets. 

Inflation 

Every economy’s biggest boogie man is inflation. While it’s often spoken about as a risk factor, we are seeing signs that, this time around, it could pose a real threat. Bottlenecks in terms of supply (raw materials, transportation capacity and workers) will likely keep inflation above normal until the end of 2021. Global inflationary pressures are indeed at record highs, but the good news is that they are mainly driven by energy prices and temporary disruptions of global supply chains. In 2022, pressures from labor shortages should reduce along with the rise in input prices, but businesses should exercise caution and watch inflation closely in the interim. 

See also: 4 Stages to Recovery and ‘Future of Work’

Also contributing to inflation fears is the average household’s pent-up demand. We estimate pent-up consumption at 3% of GDP in the U.S. and U.K. in 2021 and at around 1.5% in most European countries. Consumption will lead the recovery, but hoarding behaviors (such as putting stimulus money directly into savings accounts) remain, and that could complicate policy choices down the road. Still, we expect around 40% of the excess cash from households and companies (currently at more than 10% of GDP in both the U.S. and Europe) will morph into spending by year-end, thanks to high pent-up demand.

Business Insolvency

Massive state interventions helped suppress a significant wave of insolvencies in 2020, with the year ending with a 12% drop globally rather than a 40% surge, which we predict would have been seen without government assistance. What now becomes tricky is how global governments can phase out these assistance programs without causing a renewed fiscal crisis.

U.S. Politics 

This one won’t come as a shock to most economic observers. The U.S. has launched a wave of global and multilateral initiatives for climate change and tax policies. Such a revival in international engagement does not necessarily mean unselective multilateralism: so far in 2021, the U.S. has been the most active with trade protectionist measures, which could complicate the recovery of a global supply chain.

The economic picture is improving, but business leaders must remain vigilant and consider all possible risk prevention solutions to best mitigate downturns and protect their balance sheets.

In the past 18 months, COVID-19 has affected nearly every aspect of our lives, with the most severe impact having been the tragic death and sickness of so many. COVID-19 also has affected where we work, who we see and when we go out. Yet, one of the most understated but outsized effects of the pandemic has been on individuals’ cyber risks.  

According to Chubb’s 2021 Personal Cyber Risk Survey, which examines Americans’ new cyber concerns and their overall behavior, most individuals have not taken the necessary action needed to protect themselves against cyber-attacks. 

For a copy of the full Executive Summary, click here. Survey key findings and further details are below.

Staying Connected

To stay connected during the quarantine, individuals quickly shifted to life online, often with a new electronic device. According to the survey, 86% of Americans have either purchased or been given a new device in the past year. Regardless of the device, those who did not properly secure their devices within a timely manner could have exposed themselves to cyber risks.  

Furthermore, 83% of respondents say they access the internet several times a day, with 30% of individuals estimating they share their data at least 10 times a day. Being “plugged in” means understanding what data we are sharing and how we are protecting our information. For example, sharing personal information, (e.g., birthdate, pet names, favorite TV shows) and then using that information to build passwords, can allow bad actors to “guess” log-in credentials to access accounts. 

Cyber Vulnerabilities at Home

During the COVID-19 pandemic, many individuals were able to work from home. Forty-four percent of respondents chose to relocate to work at a remote location. However, the ease of remote work often comes with cyber vulnerabilities. For example, connecting to an unsecure, public network or with out-of-date software while changing locations due to remote working can put individuals at risk. 

Small Businesses and Entrepreneurs

With many Americans expecting to work remotely throughout the rest of 2021, it’s important for businesses and entrepreneurs to implement best practices for employee and company security against bad actors. 

In fact, small businesses are frequently targeted, as they have fewer resources to protect themselves against a cyber-attack. According to the Chubb Cyber Claims Index, global cyber incidents have grown by 981% for small businesses with revenues under $25 million. 

See also: Cyber Risk Impact of Working From Home

Cyber Vulnerability of Medical Data

Nowadays, one’s COVID-19 vaccination status has been top-of-mind for many individuals. Most individuals (63%) feel as though people should share their vaccination status, while a similar majority (57%) are concerned with having to share their vaccination status with others.

Although survey respondents show apprehension about the privacy of their vaccination status, only 24% of them are concerned with the cyber vulnerability of other medical data, which is alarming because medical records often contain extremely sensitive information. 

Protecting Data

Despite broad cyber exposure, just 12% of Americans have purchased a personal cyber insurance policy. The good news is that there are ways for individuals to protect themselves from cyber threats such as changing passwords regularly, keeping software up-to-date, using a private VPN, and purchasing cyber insurance.  

The Sensor Revolution Paul Carroll, Editor-in-Chief of ITL An announcement by Google and insurtech BlueZoo last week signals the next level of deployment of sensors, a development that will not only let insurers price risk more accurately but will help them counsel clients on how to avoid those risks in the first place. continue reading > Majesco Digital Customer360 for P&C Find out how Majesco is partnering with KPMG to deliver a next-generation customer experience that goes beyond traditional transactions. Learn More SIX THINGS Past, Present, Future of Telematics, UBI by Harry Huberty and Matteo Carbone Mobile-based data collection has vastly increased the reach of telematics programs by simplifying the sign-up. Read More Aviation Risk Trends Post-COVID by Dave Warfel In April 2020, two-thirds of the global commercial aviation fleet sat idle on the tarmac. Today, the aviation industry is slowly rebounding. Read More True Evolution in Insurance? Not Yet by Mark Watson Disruption won’t occur until 80 cents out of every dollar in premium is given back to the policy holder, instead of the 50 or 60 cents given back now. Read More Embedded Insurance — Both Old and New by Bill Suneson Embedded insurance has been around for a long while in the form of affinity groups, but it still creates opportunities that smart agents will exploit. Read More Managing Your Personal Brand by Kevin Trokey Whether you like it or not, you have a personal brand. A powerful one differentiation you and creates an emotional connection with your audience. Read More Did You Use the COVID Down Time? by Denise Garth COVID and its digital pressures have compressed previous time assumptions. Even if you didn't respond, your competitors surely did. Read More MORE FROM ITL JULY FOCUS: Customer Experience This month sponsored by Statflo Insurance companies are finding that they have to reinvent chunks of their businesses to really get the customer experience right. Yes, they have to focus on the ways that they touch customers, through agents and brokers, through call centers, through adjusters and through an increasingly broad array of electronic means. But a customer doesn’t just experience a company through a direct communication. Customers also experience, for instance, how long and painful an underwriting process or a claim is. And here’s the thing: This emphasis on customer experience requires a revolution for companies. Keep Reading A Conversation on Corporate Strategy, with Amy Radin With the pace of digitization increasing, people talk a lot about new business models, new products and new technologies that can transform sales and customer service, claims, underwriting and more — but seldom about how the approach to formulating strategy must evolve. In this webinar, Amy Radin makes a strong case for starting by reassessing what the customer needs in these changing times, both from a rational and from an emotional standpoint.  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

An announcement by Google and insurtech BlueZoo last week signals the next level of deployment of sensors, a development that will not only let insurers price risk more accurately but will help them counsel clients on how to avoid those risks in the first place.

The announcement involves BlueZoo installing sensors in buildings that detect cellphones looking for WiFi signals. At the moment, rules of thumb tend to be used to generate estimates for the occupancy for restaurants, bars, ballrooms, etc. The BlueZoo approach, essentially counting cellphones, will be much more accurate. Unlike with traditional methods for estimating, the BlueZoo sensors will also be able to monitor constantly, letting insurers and building owners know about issues such as surges in occupancy.

Those surges can be correlated with risk and even used to alert the manager of, say, a bar that everyone should be alert to the possibility of a slip and fall in the bathrooms.

As intriguing as the Google-BlueZoo announcement could be for the insurance industry, it's actually just the latest in a series of developments that will make essentially all information available on any issue at zero marginal cost. That's because sensors can -- and will be -- everywhere. Sensors won't need to be connected to the electric grid or to the WiFi networks that BlueZoo is using. They'll be able to draw power even in remote locations, from tiny solar panels and batteries, and to connect to the cloud via cellular networks or satellites. Nowhere will be out of reach.

Lots of information will increasingly become available just because we're all carrying sensors with us, in the form of our smartphones. Those sensors have been informing traffic management for decades now -- when you see red show up on the route in front of you, you aren't actually seeing cars slowing down, you're seeing the phones in the cars slowing down. They'll generate all kinds of other useful information, too, far beyond what BlueZoo and Google are using.

Other sensors will increasingly envelope us and map our world. While the recent fuss about space travel has been jaunts by billionaires, the far more consequential story is that SpaceX has carried nearly 900 satellites to space already this year. Those satellites will augment the world's communication network while also providing continual updates with more more detailed images of the Earth than are now available. Those images will let insurers -- among many others, including governments -- track vulnerabilities to natural disasters, spot erosion and other developing risks and generally have a map of the entire Earth that they can monitor every day.

Cameras will continue to spread on Earth, too. We've all seen what the adoption of body cams by police officers has meant, and are now surprised when some public event isn't caught on some camera somewhere. These days, cameras are just a lens plus a bit of battery and some memory, so they can be put just about anywhere at almost no cost and be connected to the cloud via WiFi or satellite. Even just the increased use of cameras on cars will capture massive amounts of new information as they drive around, and that information can be put to good use. (To bad use, too, but I'll focus on the good for the moment.) Other types of sensors, notably lidar, will also be mounted increasingly on cars, especially as autonomous vehicles spread, and will generate huge amounts of new data, not just on traffic but on everything they pass.

Sensors will be built into just about every device, so they can warn owners before they break down, can sense water leaks and can provide any other sort of warning or information that might be useful. Sensors will increasingly even move into our bodies. Having them on our wrists has been helpful, but we're not far away from being able to swallow sensors the size of a grain of rice that would provide real-time information on blood pressure, blood sugar and other measures that matter much more than how many steps we take in a day.

Add up all the ways that sensors, including cameras, will spread, and you have a full-on revolution in the information available to all of us, including insurers, to better monitor and manage our world.

You'll note that I haven't said when I think all this magic will happen. That's both because it won't be a single event -- it's already been happening for decades -- and because a firm prediction is hard. I can tell you that two colleagues and I have written a book coming out this fall that refers to the infinite availability of information at no marginal cost as a Law of Zero that we argue will be firmly in place by 2050, with many of the benefits appearing well before then.

I'll tell you more about the book as we get closer to the publishing date and, thus, more about the Laws of Zero, including the one on ubiquitous information. For now, it's enough to start pondering where sensors can go in the short to medium term, how to harvest the information from the new sensors and from existing ones such as smartphones and how to analyze information in ways that improve decisions by insurers and many others.

There will be a ton of work involved -- but profound improvements will result.

Cheers,

Paul

As part of this month's ITL FOCUS on customer experience, we spoke with Scott McArthur, chief revenue officer, Statflo, about the impact of digitization on customer interactions.

---

ITL: There's been lots of talk about how the pandemic has accelerated the digitization of the insurance industry. How does that look from your perspective?

McArthur: Over a lot of different verticals, this whole concept of digital transformation, which has been a theme for the last four or five years, just accelerated over the last 14 months. Insurance brokers and bank and telco representatives had to find different ways to communicate with customers as long as they couldn’t meet face-to-face.

There’s a stat: 70% of consumers want to have the ability to securely text or message with their insurance company. And I think insurance companies are finally starting to take notice. They are introducing other means of communication, other channels, to interact with customers. 71% of customers want to be able to fill out documents and send documents digitally rather than go old school and have to sign a piece of paper, then bring it back to the office.

Companies need to maintain local customer interaction but do it through different forms of communication.

ITL: I always find it painful how slow things are to change. I wrote an article for The Wall Street Journal nearly 30 years ago on electronic forms and how they were going to take over the world, and a lot of insurance companies still have fax machines….

Do you think the change in behavior because of the pandemic is permanent?

McArthur: I think it is. When Statflo started out four or five years ago, we had to educate the market around the value of having one-to-one, local interactions with customers through text, and volume has accelerated tenfold in the last couple of years. People crave one-to-one interactions. They crave simplicity and efficiency.

Increasingly, insurance customers prefer using digital channels when they're looking for product information or are updating their data. Instead of having to call the broker to say, “I just moved, or whatever,” customers can go online and update as they see fit. If you need to do something quickly, you message the broker, maybe do an online chat or just do something through the broker’s website.

ITL: What are the most common things you see people wanting to do via text?

McArthur: It’s really across the whole customer journey: when you’re engaging them because they've recently signed up for something new, when you’re sending documents on their insurance plan for the year or when you’re letting customers know about new products and services or reaching out to them when their insurance is up for renewal.

ITL: If you project out over say the next five years, how do you see interaction with customers developing?

McArthur: I think we can start to know what customers want before they want it. We can be where customers are shopping and looking and surface the right information for them at the right time.

Companies can do the sort of thing that Amazon or Google does, keying off searches, and tailor messaging or curate products and services that are useful to their customer base. If you do that, customers will be more likely to interact with you. They’ll think, “Wow, ABC Insurance Company really gets me and understands what my needs are.”

ITL: Do you have examples of companies that you think are doing an especially good job of reinventing the customer experience?

McArthur: We look at the different industries we work in. And, as much as a lot of people have pain and suffering with their mobile providers, some are providing customers the right information at the right time about the right products and services. That is not the spray-and-pray of blasting out messages to everybody. The carriers focus on specific products and services that a customer might want. A handful of Canadian carriers are doing a great job.

Nordstrom is another example. We've hired a few folks from Nordstrom, where associates keep “black books” on their customers about their preferences on makeup, clothing or sunglasses, whatever it might be. Associates are empowered to reach out to those customers to let them know about some sale that may be coming up or about a new shipment from a favorite brand.

I'm a big Nike guy. I love Nike shoes. Over the last 14 or 15 months, Nike has done a great job at kind of reinventing how they go to market. They've created this level of exclusivity in sneakers with an app that provides “members” the ability to see the latest and greatest with limited edition shoes. They’ve done a great job at creating curated content.

Thanks, Scott!

---

The pandemic led to a burst of home remodeling, and some insurers have likewise found themselves in the middle of a dramatic remodeling project. Choices must be made. Which remodeling projects will modernize and optimize the business, and which ones will create a whole new business next door? COVID and its digital pressures have compressed previous time assumptions. Many initiatives and investments that were set for a three - to five-year path are now moved to 18 months or less.

For decades, the creation and evolution of insurance markets and products unfolded at a slow and steady pace. Insurers’ technology, data and processes were adapted to take advantage of these opportunities – sometimes through technology updates, extensive customization or through new technology. The result of this approach was highly customized and costly systems that did not adapt quickly to market changes. They became increasingly unresponsive to market shifts or opportunities. Companies managed and lived with slow transformation because everyone was in a similar position — new products took 9 -18 months or more to build and launch. Adding new distribution channels could take 6-12 months. These long timeframes slowed and limited market, revenue and growth opportunities because not only were they long but expensive.

But the market is much different now. The pace is significantly different. The types of change have expanded. The constantly changing risks, customer behaviors and expectations, technology-driven capabilities, new sources of data, and blurring market boundaries have increased insurance market demands for new products and services that the old technology cannot support. Today, insurers must be able to launch new products in weeks, new capabilities in days, new channels in weeks or days, and new rates or rules in hours. 

Majesco’s recent Strategic Priorities 2021 report looked at both “traditional” market trends and new and emerging market trends. Insurers continue to show the highest levels of action in the “traditional” market trends, where Cyber risk/data security and Creating value-added services moved past the Planning/Piloting stage and into implementation. Most continue to plan and pilot the use of New data sources for pricing and underwriting, something insurance customers, especially Gen Z and Millennials, want based on our consumer and SMB research.

Encouragingly, strong advances in Creating new insurance business models were made in the Planning/Piloting stage with the strongest year-over-year jump of all the trends (see Figure 1). 

Lower Activity Among Emerging Trends

Within the newer or emerging trends, insurers continue to consider offerings for the Sharing/gig economy, Embedded insurance, and On-demand insurance, maintaining similar levels of activity as last year. Microinsurance and Parametric insurance show the lowest levels of interest. While low this year, we suspect that parametric insurance will see a rise next year due to an increased interest in UBI insurance as a result of changed behaviors and less driving.

Figure 1: Insurers’ responses to opportunities created by technology and market trends

The concern with these low levels of activity is that they represent blind spots for insurers as compared to the market potential and customer demand. 

Embedded insurance, which is estimated to account for 25% of the worldwide market by 2030 with $700B in GWP, shows significant gaps between customers and insurers. (See Figure 2.) Only 13% of insurers offer or are implementing embedded insurance and only 38% are considering or planning/piloting it. The 60% gap between customer demand and insurer offering for Gen Z and Millennials reflects a major blind spot and market opportunity for those who can respond quickly. Offering what their parents bought and have is not necessarily what they want or need! 

See also: The Rules of Digital Transformation

These blind spots reflect the challenge for insurers to respond to a new generation of buyers who want different products via different channels to meet a new era of customer needs and expectations. 

Figure 2: Customer-Insurer gaps in embedded and on-demand insurance

Fortunately, some insurers are actively taking advantage of these opportunities. While likely offering traditional products as well, insurers offering new products lead significantly over others who are not. The only trend that is aligned between traditional and new is Cyber risk/data security and it isthe only trend where those who only offer P&C products do not come in last or second to last compared to those who offer new products, L&A/Group products, or multiline products. 

This highlights the risk for the P&C-only segment. If they remain focused on only traditional products they will lose out on new and rapidly growing market opportunities.

Platform Technologies

When it comes to the specific technologies that power the insurance platform, we’re seeing the strongest and most consistent adoption of mobile and Cloud/SaaS, while Digital Experience Platforms made a sizable jump year-over-year (see Figure 3). The results we’ve seen for Cloud/SaaS in our research are consistent with the trend SMA has also found: in their 2019 P&C Core Systems Purchasing Trends report, they noted that 84% of core system deals were deployed in the Cloud, and 32% of these cloud deployments were multi-tenant SaaS.

APIs and AI/Machine Learning are entering the Planning/Piloting phase, the tipping point for more widespread implementation and adoption. Microservices and Low Code/No Code Platforms are still in the early stage of adoption. These two critical components give the insurance platform its unique ability to adapt quickly to new market opportunities by making changes to components of insurance processes (microservices), rather than having to change an entire siloed process, and by opening up configurations to a wider audience of citizen developers (low code/no code).

Figure 3: Insurers’ levels of activity in adding platform technologies

All three Customer Engagement technologies – Digital Payments, Social and Chatbots – saw significant year-over-year increases in activity, driven by the sudden need to implement effective self-service capabilities in response to COVID. In particular, the increase in digital payments highlights the acceleration to open banking and innovative payment technology companies. 

In a recent InsurTech Forum article, it was noted that open banking has encouraged competition and innovation by requiring banks to share data with third parties such as payment technology companies and by creating customized payment methods through new apps and data streams that will be difficult for companies (sellers like insurance) to ignore. The interest in advanced data-supported digital payments comes from customers’ increased comfort with online banking and shopping during COVID. 

Knowing how and why this concerns insurers is of vital importance.

1. Customers are quickly developing their own foundation for how they pay for services and move money — choosing those methods that are easiest and that gain them the most points or benefits.
2. If speed, ease and familiarity trump research, product strength or even pricing, then open banking and open platforms in general will allow any market-savvy company to generate insurance business. Companies with massive customer bases, like Walmart, Tesla, PetCo, Ikea and Amazon stand to win simply because of their placement within customer lifestyles.
3. The end result is that not integrating a technology (such as IoT devices or Telematics) may harm an insurer’s ability to embed their products, offer their own new products through new partnerships, or capture a new line of business quickly.

Not surprisingly, companies in the New Products line of business segment lead all others in 11 of the 16 technologies covered by the survey, including the key platform technologies of Cloud/SaaS, APIs, AI/Machine Learning and Microservices.­­ These same companies are in lock step with the Multiline Products segment for two other platform technologies, Digital Experience Platform and Low Code/No Code Platform.

Most importantly, those companies making the strategic decision to adopt these key platform technologies that outpace others are innovating with new products and services and adopting the viewpoint that they are “technology companies providing insurance” as opposed to “insurance companies using technology.”

Digital Capabilities

Insurers’ digital transformation is underpinned by increasing customer expectations for new experiences. In their response, insurers are heavily focused on customer self-service applications and portals, with 41% to 61% of companies saying they are implementing or have already implemented these.

Self-service tools and portals have been around for some time, but they do not meet the shift in the desire for personalized, holistic experiences because “out of the box” portals are functionally focused … i.e. a claims app or quote app. In contrast, digital insurance platforms transform these older approaches from siloed, separate transactions into more satisfying, holistic experiences for customers, channel partners and employees as we noted in our life and auto customer research.

Encouragingly, about a third of insurers are implementing or have implemented digital capabilities for intelligent claims intake, intelligent underwriting, intelligent digital marketing and market segmentation, and for reporting, modeling or compliance, with over 40% planning or piloting these, highlighting the acceleration of their digital capabilities.

While the overall high interest in these digital capabilities is encouraging, some very significant differences between business and IT must be resolved to maintain and accelerate momentum.

Business’ ratings were higher than IT for:

• +95%: Innovative, personalized products (3.7 vs 1.9) — This disconnect reflects the increased decision making by business leaders to use new SaaS core and digital platforms to launch new products rapidly, rather than on the existing systems or traditional process. In some cases, IT is not even needed.
• +42%: Digital employee benefits onboarding and engagement (3.4 vs 2.4) — The expansion of voluntary benefits and the complexity of signing up employees as well as keeping them informed is increasingly critical in winning the customer. 
• +32%: Agent onboarding, servicing, management platform (3.3 vs 2.5) — Agents felt the impact the most during COVID with the lack of digital capabilities beyond the traditional quote portal or upload/download for AMS systems. Increased M&A with agencies puts pressure on the business to respond to keep and attract agents. 
• +18%: Customer self-service portal (3.9 vs 3.3) — This has been a constant area of focus, but is shifting to expand beyond the traditional portal on websites to a much more personalized and sophisticated experience. 

See also: Culture Side of Digital Transformation

Finally, multiline carriers are very active in establishing digital capabilities. Driven by the complexity of multiple products, they want to digitalize, simplify processes, and provide self-service capabilities for customers, employees and agents (see Figure 4).

Figure 4: Insurers’ levels of activity in adding digital capabilities by lines of business

So the question for each insurer is: What are you doing with your idle time during COVID? We can tell you the competition is taking advantage of this idle time!