Every real estate closing is a beginning, an exchange of deeds and a chance to do good works — if real estate agents and insurers come together. If both groups unite on behalf of homeowners, offering life insurance with mortgage protection to homeowners, the result is a boon for all homeowners. 

The proof is not only on paper, in the papers that insurers issue, but in the peace of mind that homeowners enjoy: knowing that loss of property will not follow loss of life, that devastation among the living will not follow burial of the dead, that foreclosure will not follow a tragedy without closure. 

We can eliminate the fear of foreclosure by deputizing real estate agents, making them advocates of life insurance or insurance agents outright. Either way, everyone wins. Real estate agents earn additional income, insurers underwrite additional policies and homeowners receive additional protection. No one wins, however, when no one communicates. 

Failure to communicate is the cause of our problem. 

We have it in our power to fix this problem: to correct it by working with real estate agents. But before we can get real estate agents to talk to homeowners, we must set our own house in order. 

We must recognize that practice is a prerequisite to preaching, just as attentiveness — people’s willingness to listen to a speaker — is a perquisite of having a calling, of answering the call to spread the word. We must do as we say, and have something to say, replacing silence with words of soundness; converting a stutter of hesitancy into a score of certainty; turning applause into action. We must give real estate agents reason to believe.

Belief does not require faith, not when evidence will suffice. 

That insurers have a wealth of evidence, that the evidence is translatable, that insurers have a duty to translate the evidence into that which is intelligible to real estate agents and homeowners, that insurers know how to translate the evidence is reason to believe in what the evidence proves.

See also: Life Insurance With Mortgage Protection

The proof is in the value real estate agents can provide, in addition to the credibility they possess and the clients they advise. The proof is in the freedom — the freedoms — real estate agents and insurers can deliver. The proof is in freedom from fear of foreclosure. The proof is in freedom from want, allowing families to have the financial strength to live. The proof is in the freedom to recover, giving homeowners the added value of time. 

Time to grieve permits time to rest; time to heal contains time to learn; time to think begets time to do.

Preaching the value of time is a virtue. 

Adopting this value guarantees continuity; applying this guarantee secures the value of a family’s greatest asset; providing this security is a great and invaluable act of goodness.

Real estate agents and insurers share these values.

Homeowners deserve the protection these values afford, which is the protection they welcome; which is the protection they shall receive.

When the pandemic struck early last year, insurers had a wake-up call when it came to digital transformation. A report by Accenture revealed that the lack of digital, agile systems was evident in the industry’s response to COVID-19 when “insurers struggled to pivot to remote work and to continue meeting demands for sales and service.” However, things have changed for the better. A 2020 PwC report shows that core technology transformation (51%) and cloud technology (28%) are key priorities for insurers.

At the same time as these digital changes are happening, the industry is seeing more regulations pop up. Depending on their specialty, insurers already had to adhere to healthcare, financial and consumer privacy regulations. More recently, Maine and North Dakota adopted the National Association of Insurance Commissioners (NAIC) data security model law, which seeks to establish data security standards for regulators and insurers to mitigate the potential damage of a data breach. They join at least seven other states that have already adopted similar laws.

With the shift toward cloud infrastructure and applications well underway, minimizing risk and protecting data integrity and privacy become all the more important. Those in the insurance field need to balance new digital transformation efforts with increasing compliance requirements. Data ownership can help with both – here’s how.

Keep Compliance Top of Mind

When important data starts to move from legacy systems into mission-critical cloud or SaaS (software as a service) apps, like Salesforce, it can complicate regulatory compliance. While many insurers may believe they own the data within these apps, they don’t have the control over it that ownership would typically convey. And yet, they can still be held liable should something happen to a client’s data within the SaaS app.

Additionally, because insurers may also need to access SaaS data for analytic purposes, they’re likely to download, make their own copies and store it in their own folders and systems, creating data sprawl. Not only does this increase potential access points and vulnerabilities within an organization, but it can also cause other problems for insurers. From inaccuracies caused by data being changed in one version of copied data and not others, to the more straightforward issue of not knowing everywhere data is stored – and who is accessing it – data sprawl can be dangerous, especially where regulations are concerned.

See also: The Rules of Digital Transformation

To better ensure compliance and avoid these pitfalls, insurers should back up and own their data. Where data is stored is critical to how accessible, secure and auditable it is – which is why organizations should store data in the cloud infrastructure they’re already using, such as AWS or Azure, instead of keeping it in SaaS vendors’ — or backup vendors’ — environment.

Storing historical data in this fashion can help insurance companies in several ways. First, it decreases the surface area of exposure. The more copies of data floating around an organization — whether the insurer’s or the backup vendor’s — the more potential touchpoints, meaning there’s greater opportunity for unauthorized access, and it becomes harder to trace any changes. These issues can put an organization at risk for breaches, intentional and inadvertent data corruption and penalties when auditors come knocking. However, when data is in your organization’s own cloud data lake and can be streamed into business intelligence or analytics tools from a single source of truth, it reduces the number of copies needed, helping to ensure data integrity and maintain compliance.

Likewise, storing data in an insurer’s own cloud means the organization can set controls over who touches it and where it goes in the organization. This makes it easier to maintain a digital chain of custody – and trace when, where and who made changes. Many new regulations require audit trails that capture this information, something that gets increasingly difficult when data is stored and retained over time in third-party applications.

Data ownership as a key to growth

Data ownership not only helps insurers decrease risk and liability, it can also propel organizational growth.

Many insurers have already been tapping into historical data for predictive analytics, when it comes to policy writing, for example. By incorporating this new pool of SaaS backup data – which captures every change made – those models can become more accurate. Insurers get access to even more information that can lead to better insights and be used to improve everything from underwriting, pricing and risk assessment to recommendations about insurance plans and strategic marketing decisions – all of which affect an insurer’s bottom line.

As insurers begin to cross the digital divide, they need to be aware of compliance necessities that accompany digital change. With a sound data strategy, insurers can reap the benefits of creating a digitally driven enterprise while adhering to regulations and setting themselves up for continued success.

Identity management has been an obstacle for commercial insurance companies for a very long time. Many thought that problems would dissipate or at least become easier to correct by moving to digital systems, but, in reality, identity management has only grown more complex. It is obvious that we need a better way.

Now, there is fresh hope that identity management will become much easier to wrangle. Artificial intelligence (AI) is progressing rapidly, to the point where it could become a tremendous tool in identifying and cleaning up inaccurate data as well as linking the right providers to the correct claims.

Let's take a step back and examine the key issues in identity management today to understand how AI could be used to shore up existing gaps and move the industry forward.

The Data Problem

First of all, by identity management, as it is applied to insurance, I am referring to a special case of entity resolution, i.e., the process of linking references to providers in claims, bills and other data to a single flesh-and-blood provider — the so called “single belly button.” This is facilitated by maintaining a dataset of the actual providers working all over the country, with their names, addresses, specialties and networks — essentially all the data associated with them for billing purposes. These “golden sets” also are available for attorneys in the claims space, functioning nearly the same way. Still, for the sake of clarity, I'll focus on medical providers in this article. These lists are available through a handful of third-party vendors (and certainly some organizations have developed their own), and they must be constantly updated as the ground truth evolves.

See also: Intersection of AI and Cyber Insurance

The Missing Link

Currently, numerous different golden sets have varying degrees of accuracy and cleanliness. While this is certainly problematic, the real challenge in identity management is the linkage process itself. This is because much of the provider references in the claims, bills and other data can be considered stale or dirty.

There are myriad reasons for stale and dirty data. Doctors change their name through marriage or for other reasons; they move to other cities; they might add a specialty or change focus, Joe Smith might become Josephine Smith. All of these things and more make the process of linking these references to the correct provider very difficult. In many cases, today’s systems lack the ability to link references in claims to golden sets; instead, linking falls to claims representatives. One of the biggest identity management tasks remaining today is the ability to uniquely and accurately link a claim to the right provider with the correct billing information.

Many companies try to build their own link, but it has not been smooth sailing. Developing such functionality is an expensive, time-consuming, complex endeavor. Without clean, accurate, linked datasets, claims can go wildly off track. But there is hope.

AI Will Fill the Gap

AI has shown its effectiveness in improving claims operations processes, pulling out key insights to resolve claims quickly without attorney involvement. Now AI could be applied to solve the linkage problem as well.

AI systems that aggregate data from actual anonymized claims, bills and other data throughout the industry could be used to read massive volumes of data, recognize pattern and find the links between specific providers and claims. Systems could be trained to identify and update records, managing identities persistently and in real time.

Imagine just for a moment that you had a very high threshold of confidence in identifying the correct provider for a claim and that the provider automatically would be issued a unique ID (in the U.S., that of course is the National Provider Identifier, or NPI) that stays with him or her throughout the life of the claim so that every time a change is made — a note filed, a bill paid — the correct provider at the correct location automatically comes up. No detective work, no guesswork.

This is now possible from a technological standpoint, as we have seen in creating CLARA's solution. I can attest that it requires a significant investment of time, effort and intellectual property to build in-house. Given the rate of AI advancement, market adoption and pressing industry need, there is no doubt that it won't be long before nearly all identity management systems are powered by AI and machine learning technologies.

See also: Insurance Outlook for 2021

As I hope I have shown, the data available to the industry today is nowhere near sufficient. The bar for identity management — and therefore the level of investment, skill and innovation applied to this problem — will continue to increase. Those organizations that prepare to embrace new applications of AI for identity management will be the ones that thrive and modernize claims, driving down costs and increasing efficiency. The companies that resist this transformation will get left behind as they struggle to sift through their dirty, messy data.

As first published in Digital Insurance.

As the CEO of an identity security company, I share a perspective with many cyber insurers: Cybercrime is frequent and widespread and can happen to anyone. With cyber risk increasing with every data breach, phishing scam and identity threat, it’s time that digital health is taken as seriously as physical health. 

So, what does it mean to stay digitally healthy today? The world is just too complicated for a silver bullet strategy. Digital health is a set of offensive and defensive actions that, layered together, form a new picture of safety. 

Cyber insurance is a critical piece of the puzzle, and one we think is becoming increasingly important for both small businesses and individuals – often underserved markets. Complacency is no longer an option.

A Complex New Landscape 

In just a few short years, we went from using our smartphones to primarily stay caught up on email and social media to now managing almost every aspect of our increasingly digital personal and professional lives on our phones. As the technology landscape has evolved, so too has the threat landscape. At the same time, individuals and small business’ ability to manage all the risk hasn’t kept up.

A global pandemic has driven digital transactions even higher, and more organizations than ever are storing personal information and using technology providers to help manage and deliver the digital services people need and expect. Most people nowadays have no idea which, and how many, technology providers have their personal information. Even consumers with excellent digital literacy and hygiene simply don’t know what they don’t know when it comes to how their sensitive personal information is being exposed and potentially misused.

Cyber threats can come from anywhere and are fueled by forces that are difficult to control. Cyber attacks and the resulting data breaches happen with alarming regularity, but remaining vigilant and knowing what to do is an extremely difficult task when there are no universal best practices around data breach notifications.

Most people do not realize how vulnerable they are, and, despite the evidence to the contrary, think a cyber attack won’t happen to them. In today’s complex and rapidly evolving landscape, more insurers will need to act as educators and ensure that the cyber policies they are selling reflect the myriad of modern risks. In the interest of both the client and the insurer, cyber insurance should be combined with other solutions for a comprehensive approach.

See also: Does Cyber Insurance Add to Ransomware?

Personal and Organizational Security Risks Are Linked

The online risk that each person carries follows them through life. It doesn’t just threaten their personal financial accounts – which is bad enough – but the businesses and organizations they work for, too. More sophisticated cyber attacks now target individuals with convincing email and phishing scams that are used to gain access to enterprise systems, or to trick them into becoming unwilling accomplices in fraud. Cyber risks flow in all directions: from organization to individuals, who introduce it back into stakeholder organizations.

So even when a small business has robust cybersecurity defenses in place, each individual introduces their own set of vulnerabilities to the organization. And, for the complicated reasons mentioned above, these risks go largely unaddressed. 

It’s time to understand and accept that the problem of online security has grown too complex for most to manage alone. Individual security and organizational security are inextricably linked, so it’s in everyone’s interest to combat the modern challenges with robust protections.

Cyber insurers can help stem the tide of cybercrime – and protect their own interests in the process – by helping more organizations play a role keeping individuals protected. This involves looking at all audiences that could be affected by a cyber attack on the organization, from prospects to customers to employees and vendor partners. If insurers help educate organizational customers on the complex and related cyber risks, they can move the needle of protection forward meaningfully with appropriate cyber coverages

The question of total digital health is constantly evolving, and the solutions must be as dynamic as the problem. Cyber insurance has an important part to play in helping people manage – and master – the risks introduced daily by the technology that plays a starring role in life today.

Finally, a bit of good news on ransomware: Federal investigators said Monday that they had recovered millions of dollars of the ransom that Colonial Pipeline paid to Russian hackers following their recent attack, which disrupted gasoline supplies up and down the East Coast.

The news may discourage ransomware hackers by showing them that they aren't as invincible as they think -- while they operate from countries that aren't likely to cooperate with international enforcement and take payment in cryptocurrency, U.S. investigators tracked the Colonial Pipeline ransom to a digital wallet and recovered much of it. The news also underscores FBI Director Christopher Wray's statement last week that ransomware attacks should be seen as terrorist activity that warrants a heavy response from law enforcement, suggesting that potential corporate targets and their insurers may receive much-needed help.

To understand where ransomware attacks and cyber insurance go from here, I sat down recently with Brian Brown, principal and consulting actuary at Milliman, and Paul Miskovich, consultant who has been working with Milliman on cyber issues. As you'll see, they offered a modicum of optimism but raised some tricky issues that both insurers and corporate clients will face -- and laid out some cyber threats that lie ahead even if ransomware starts to come under control.

Here is the conversation:

ITL:

When we started planning this conversation, there had just been a high-profile ransomware attack, the one that shut down Colonial Pipeline and greatly restricted the availability of gasoline on the East Coast for days. We’ve since had an attack on JBS, which is the world’s largest meat seller and which provides a quarter of the beef and a fifth of the pork consumed in the U.S. Now that awareness is finally rising for this long-festering problem, what happens next?

Paul Miskovich:

For companies and clients, the attacks will drive investment in cyber resiliency.

The guidance from U.S. regulators and law enforcement, which has been very consistent, is that paying ransoms encourages bad actors to accelerate crimes involving ransomware. The Office of Foreign Assets Control and the Financial Crimes Enforcement Network released advisories in October that warned of sanctions for victims who make ransomware payments. So, you're in a Catch-22 if you’re attacked. If you choose to pay, you may have to pay penalties. If you choose not to pay, you could suffer reputational harm and other financial losses from being shut down. So, the only correct thing to do is to invest more in cyber resiliency.

ITL:

My thesis has been that the insurance companies should play a major advisory role because they are experts or at least more expert than the individual clients, based on all the cases they are seeing. Is that a reasonable thought?

Paul Miskovich:

It is, but there are issues.

Insurance companies are also affected by the OFAC advisory, and they have issues in making payments. They will need to start investing in technology partners to be able to make ransomware payments, which typically are done in cryptocurrencies. Insurers will also have to work more closely with law enforcement, to avoid sanctions and penalties. With respect to clients, insurers are going to have to work much more closely on prevention and resiliency.

And then you end up with other issues. Hackers will use AI and algorithms that accelerate the pace of the attack and could release confidential information, meaning that victims need to pay the ransom fast. So, insurance companies are going to have to figure out assessment and payment methodologies that work a lot faster than they work now.

ITL:

Can intelligence and law-enforcement agencies like the FBI do more to spot attacks potentially coming from overseas and maybe even shut them down?

Paul Miskovich:

Agencies are going to have to increase their scale, because they don't have the necessary resources to address the growing cyber threat. There’s a whole criminal network behind ransomware that’s exchanging money in the form of cryptocurrencies, so law enforcement has to get to a level of sophistication that it can use blockchain and other technologies to track the flow and disrupt the perpetrators.

ITL:

What are all these threats doing to insurers and to rates?

Brian Brown:

From 2015 to 2020, premium growth for cyber insurance has been in excess of 25% a year, and the current cyber premium is about $2.3 billion a year. It’s possible that's understated, because carriers may not be reporting all of the cyber premium. Also, this is just premium written by U.S. domestic companies.

We started to see a big tick up in claims in 2019. The 2019-2020 claim activity has been more than double 2017.

Loss ratios were pretty favorable for stand-alone cyber policies from 2015 to 2018, below or close to 50%. But in 2020 the loss ratio was 73%. That's assuming that the carriers are perfectly reserving the exposure. We've looked at some other data for policies just written in 2020, and the indicated loss ratios, early on, may be much higher than 73%.

A lot of big companies have pretty tight security plans; the medium-sized companies not as much. So, there may be much heavier rate activity for the medium-sized companies. But the fundamental issue is, which insurers can determine new more robust variables that predict the likelihood of a cyber loss.

And, if you're insuring somebody, you want to provide risk management services to reduce their probability of a cyber event, whether that's providing courses to employees or software to IT departments to measure cyber resilience. You also really need a qualified staff to handle claims.

The predictions are that premiums will continue to grow well in excess of 25% annually for years to come. So, I think we're on the cutting edge of a great opportunity for a lot of insurance companies, if they're able to do it right.

ITL:

Do you want to speculate a bit on what the next threat will be, beyond ransomware?

Paul Miskovich:

I see three. The first one, undeniably, is the exploitation of cloud computing vulnerabilities. Next are the cyber security breaches originating from vulnerabilities in ecosystems, where the victim is provided services, especially web applications, through a third-party offsite server. That area of exposure is going to continue to increase. The other one is that the sophistication of exploits is increasing with artificial intelligence and self-learning algorithms. Denial of service attacks are becoming especially dynamic. The algorithms are quicker and more effective. The algorithm chooses one or more methods of attack using behavioral analysis of the network to try to figure out how to get through the defenses.

ITL:

On the theory that we should fight the next war, not the last one (as generals famously are said to do), are there particular things you would recommend that anyone in this ecosystem -- the clients, the insurers, the regulators or the investigative agencies -- should do to prepare us better for those next threats?

Paul Miskovich:

I feel that Congress should establish federal minimum cyber security standards for private businesses. And law enforcement and regulators should put forth information campaigns educating the public. Together, they will set a common basis of knowledge and preparation and will drive investment in cyber resiliency, while improving private companies’ responsiveness to quickly evolving threats.

As for critical infrastructure -- energy, transportation and healthcare -- I think they require much, much deeper resiliency planning.

We don't really know what the next attack will be, but if we all have the same baseline through training and standards, and we’re all sharing information, then our responses can be more effective.

Brian Brown:

We’re seeing a hard market now, but if we were to get one or several large events, in the $100 million to $1 billion range, we'd see an extremely hard market, and quite possibly capacity issues. So, some are looking at alternative capital sources to provide cyber coverage. We’re also seeing some MGAs and insurtechs actually doing the underwriting, which is likely to be a growing trend.

Paul Miskovich:

Many of the later entrants in the cyber market think it's more efficient to use specifically targeted, talented teams coming out of MGAs.

Brian Brown:

There are some additional benefits from the MGA relationship, because, if you're not happy with the performance of the portfolio, it's easier to exit. So, it's a quicker ramp up and an easier exit.

ITL:

Thanks to you both. This has been a great discussion.

Cheers,

Paul

P.S. Here are the articles I'd like to highlight from the past week:

Behavioral Science and Life Insurance

Carriers must fully grasp human biases and behaviors and harness technologies to improve health.

Ready for the Fully Connected Future?

The key for insurers is to think beyond a single transaction and be “partnership-ready,” which also means becoming “ecosystem-ready.”

The Promise of Predictive Models

Big data and AI will uncover insights that allow smart carriers to acquire the most profitable clients and avoid the worst.

Key to Transformation for Auto Claims

AI is critical to processing and assessing all inputs and removing friction. Yet AI alone cannot deliver transformation.

Auto Insurers Prep for Summer Driving

By taking steps now to update, optimize and digitize processes, insurers will be prepared to help customers through this likely difficult time.

Different Flavors of Transformation

Transformation and improvement are not the same, and insurers should use different approaches to the two types of innovation.

Customer experience is quickly becoming the new battleground for insurance companies. The pandemic has changed the way customers interact with insurers; companies that don’t digitize their delivery, service, and communication channels will fall behind in this increasingly technology-centric world.

As this Deloitte article titled Future of Claims explains, customer retention and loyalty are at the heart of the insurance industry transformation - and both are largely driven by how the customer interacts with their insurers, specifically when it comes to the claims experience. Innovating the claims experience and using technology to implement a low-touch claims process will differentiate companies from their competition.

Though it is evident that customer engagement is a critical piece of the customer satisfaction puzzle, most companies still don’t have a concrete outreach plan in place. In fact, according to this article by EY, 44% of customers have had no interactions with their insurers during the prior 18 months. Additionally, the Elevating the insurance customer experience study by IBM reports that 60% of insurance executives agree their organization is lacking in CX strategy.

Today’s consumers are informed consumers - they carefully scrutinize all aspects of the service and compare CX not only against other insurers but against CX from other industries they interact with. And if this wasn’t enough pressure, there is an additional obstacle to creating a good customer experience in the insurance industry - interactions between insurers and customers are issue-driven. Customers only reach out to insurers when they face a problem and are already frustrated. That has a significant impact on how they rate the whole transaction. So it’s important for insurance providers to maintain a good relationship with customers throughout the whole journey, instead of only interacting with them when tensions are already running high.

Companies that regularly engage with their customers and deliver on great CX reap rewards in the form of increased net profit. According to a McKinsey study titled The growth engine: Superior customer experience in insurance, in the past five years, US auto insurance carriers that have provided customers with consistently best-in-class experiences have generated two to four times more growth in new business and about 30 percent higher profitability than firms with an inconsistent customer focus. The report suggests that this is partly because satisfied customers are 80 percent more likely to renew their policies than unsatisfied ones.

Fostering Connected Experiences

Insurtech was gaining momentum even before the pandemic accelerated digitization. According to Quarterly InsurTech Briefing, Willis Towers Watson, investments in insurtechs worldwide grew from $0.3 billion in 2003 to $5.8 billion in 2019. That means insurers are no longer only competing with other insurers - they are competing with insurtechs, fintechs, and other digital service providers. To stand out from the crowd, there’s a need for digital innovation and transformation of client experience.

The fact that 80% of customers are willing to use digital and remote channel options for different tasks and transactions shows that insurance leaders need to be equipped to evaluate and revamp their existing infrastructure. As an industry that’s traditionally been dependent on in-person interactions, it’s challenging to transition to an all-digital customer engagement process overnight. Hence, the ideal approach is to start by digitizing the most critical parts of the journey - namely claims and underwriting.

Increased technical fluency and technology-based delivery in the claims and underwriting processes are non-negotiable for the success of insurance companies. It’s no longer about starting and completing the transaction within the framework of any singular channel.  Customers demand easy access to solutions and services across multiple channels and expect a seamless transition from one platform to the other.

In fact, McKinsey’s study titled The Multi-access (r)evolution in Insurance Sales identifies multi-access customers as the fastest-growing insurance segment in recent years—in 2019, every second customer was multi-access. According to the same report, the share of purely offline customers is expected to decrease from six out of ten in 2012 to just over two out of ten in 2024.

Four Tenets of CX Transformation in Insurance

1.   Make it personalized, easy, and instant

The buzzwords for serving today’s customers are personalized, easy, and instant. These are the new CX standards customers measure insurers against. Let’s dive into them one by one:

Personalization is the key to delivering a stellar customer experience consistently. It implies that companies understand the needs of the customer and know how to address their concerns. One-to-one communication is the expectation of consumers across all industries, and the insurance sector is no exception. According to the Elevating the insurance customer experience study by IBM, 64% of consumers want their insurers to understand them well. The ability to tailor experiences and messaging gives providers a competitive advantage over their contemporaries. At Statflo, we help insurance companies build one-to-one relationships with their customers by integrating with their sales and marketing platforms to display customer data from any app or software. This provides customer-facing teams with a complete view of the customer’s history with the company and helps create hyper-localized campaigns to personalize customer outreach.

Ease of access is another deciding factor that plays an important role in shaping consumer opinion. As we talked about it before, when customers of insurance providers reach out to the company, they are usually frustrated. Asking them to jump through hoops in such a mindset will only create a negative impression. Making the claims filing process as low-touch and as straightforward as possible will make all the difference.

Make it instant is the last and perhaps the most crucial buzzword that affects customer experience in insurance. Its importance is highlighted by the Deloitte report titled 2021 Insurance Outlook that suggests that prospects are 20% more likely to purchase a life policy as the underwriting and application process gets closer to real-time. Any technology that can make communication instantaneous during the claims and underwriting processes is the best investment insurers can make right now.

Some of the areas that can be upgraded to make the process more real-time are using e-signatures and e-forms, leveraging instant communication channels like text message and WhatsApp, putting processes in place for digital document uploads, and making appointment scheduling accessible across all platforms. One of the features that Statflo’s one-to-one text messaging platform offers is Rich Content Experiences or Sendables. Sendables operate like a headless Content Management System and allow users to embed the best of the web in every conversation. Our clients can request payments, e-signatures, as well as send secure links, images, appointment reminders, and even start live review sessions without having to change a single tab.

2.   Keep it compliant

When it comes to highly regulated industries like insurance, compliance and data security are of paramount importance. When evaluating new technology or processes, insurers are hesitant to make the switch for the fear of violating regulations. 42% of respondents in the New Horizon Report maintain that complex regulatory requirements are the biggest barrier to digitization in their insurance companies. Statflo’s compliant business text messaging platform helps companies communicate with their clients without having to worry about adherence to legal statutes as we manage opt-outs and DNCs across all channels. Our intelligent filtering feature ensures brand compliance by blocking undesirable content from being sent or received by your frontline team. Additionally, Statflo is SOC 2 Type II compliant, which means we have established protocols and met standards around data security. 

3.   Choose no code/less code solutions

Little to no code development IT tools allow insurers to unload some of the data security and compliance tasks to third-party providers without worrying about privacy, and compliance regulations.

Jeff Wargin, chief product officer of P&C insurance platform Duck Creek noted in one of his articles, “Low-code configuration tools allow business stakeholders – not just IT professionals – to update and manage apps and software using an intuitive, user-friendly drag and drop functionality. With moderate or even elementary app and software experience, insurers will be able to quickly implement new and different user interface (UI) features that customers demand, in a fraction of the time usually required.”

Platforms like Statflo that leverage API integrations and SDKs help insurance companies embrace new technologies without going through the hassle of extensive reconfiguration or re-coding of existing tools and systems. 

4.   Use automation responsibly

Insurance companies need to identify areas that are sufficiently structured to be automated. Blindly integrating AI or machine learning in every part of the process without understanding how it will impact customer experience is going to create more problems than solve. If there’s no proper strategy in place, automation can lead to technical glitches and a lack of personalization. Setting up proper workflows, sequences, and triggers is essential for the success of any automated process.

The pandemic has accelerated the adoption of virtual channels for communication and transactions. Industries traditionally dependent upon in-person interactions have been forced to adapt according to the changing consumer expectations and upgrade their technology stack to drive great CX.

Statflo helps insurance companies and retail banks foster one-to-one relationships with their customers through personalized and proactive customer outreach. Businesses leverage our compliant text messaging platform to shorten their sales cycles, effectively cross-sell/up-sell customers, and engage their customer base. For more information on how we help insurance providers personalize their customer outreach, book a demo with us!

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Digital Transformation of Client Experience in Financial Services

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A client recently asked me to explain the differences between innovation, transformation and improvement and to suggest how they might drive innovation, transformation and improvement in their own business.

Although I’ve helped insurers with all three of these on multiple occasions, I’d never really taken the time to figure out the distinctions, or how the terms fit together. So I did some research and thought a bit and came up with an answer.

I certainly don’t think this is the only way of looking at the issue, but it certainly helped me once I’d figured out my version of the answer. And, having now clarified matters in my own mind, I thought it might be helpful to share.

Definitions

Having hunted around, it seems there are no universally accepted definitions of innovation, transformation or improvement within a business context.

For me, business innovation is the delivery of something new with the intention of improving business outcomes. And that "something" can cover a wide range of territory, including products, services, distribution channels, processes, operating models, technology, and culture – indeed, any aspect of the insurer’s business whatsoever.  

I then find it helpful to distinguish two broad types of business innovation (and I’m indebted to the Digital Insurer’s TDI Academy for this, as it’s a distinction we teach on their ADI Program):

• Business Transformation is the large-scale reinvention of the whole business or a material subset of the business (such as a business unit or function); whereas
• Business Improvement is focused on smaller-scale changes, typically in only one element of the value chain or within a single team. It is more about improving today than inventing tomorrow.

There is no hard-and-fast boundary between the two, but, given the definitions I’ve just offered, the primary differentiators are:

• The scope of the innovation; and
• The scale of the insurer’s ambition.

Approaches to Design and Delivery

If there’s no hard-and-fast boundary between business transformation and business improvement, then why bother to distinguish them at all?

Because, based on my experience of dozens of insurance innovation programs and projects, I believe insurers should use different approaches to the two different types of innovation.

See also: It’s Time for Next Phase of Innovation

Designing and Delivering Business Transformation

I’ve shared my tried-and-tested approach to business transformation before, within the context of digital transformation:

Given the broad scope and ambitious scale of this type of innovation, it’s not surprising that the approach is very much rooted in the needs of the customer and in the business’s overall strategy. Building on these critical foundations, the insurer then needs to:

• Paint a vision for what will be achieved;
• Drill that down to a deliverable design;
• Establish the capabilities required;
• Create a road map to bridge the gaps;
• Deliver what’s on the road map;
• Review achievements, reassessing as needed;
• Wrap the transformation with strong change management; and
• Apply good governance throughout.

Designing and Delivering Business Improvement

So how should the (somewhat less-ambitious, narrower scope) business improvement projects be handled?

As I considered all of the insurance improvement programs and projects I’ve been involved in over the years, I recalled multiple different methodologies that I’ve used at one time or another.

These methodologies typically varied according to the different problems they were trying to solve, or the different opportunities they were looking to pursue.

But as I thought about the different approaches I realized that, despite linguistic differences, they had many characteristics in common. Indeed, it was possible to see all of them as particular flavors of an overall approach that could fruitfully be used for any business improvement project.

For obvious reasons, I call it "5-I."

The 5-I model delivers, and sustains, the desired business improvement in five steps:

• Initiate: Frame the problem to be solved, or the opportunity to be pursued, and launch the project.
• Investigate: Analyze the problem or opportunity to understand it fully, including root causes and implications.
• Ideate: Generate possible solutions or take advantage of the opportunity. Then analyze the alternatives and agree on which one(s) will be taken forward to delivery.
• Implement: Deliver the solution(s) and manage the change(s) to ensure the improvement is embedded and sustainable.
• Inspect: Review what’s been done, asking whether the insurer has solved the problem or is realizing the expected benefits. If not, iterate as needed. Otherwise, close the project.

See also: Adversity Breeds Innovation

Granted, there will be nuances between projects at the next level down, but I’m struggling to come up with a business improvement project this approach doesn’t fit.

 

Traffic volume in the U.S. is often worse during the summer months, with sunny skies and warmer temperatures bringing people out of their homes and into their cars. This year, in particular, as pandemic restrictions ease across the country and Americans feel more comfortable traveling, we’re likely to see traffic volumes surge. In turn, this will mean increased potential for vehicle breakdowns and accidents. Auto insurers would be wise to prepare for a busier than normal season.

What will the surge look like?

While it can be difficult to pinpoint exactly how many vehicles will require assistance over the next few months, we have a few predictions:

• We’re already seeing breakdown volume bounce back from 2020 lows, and it is likely volume will increase beyond 2019 pre-pandemic figures. 
• Rather than growing in a spike that starts – and ends – quickly, summer volume will be consistently high beginning from late June through early September.  
• Fourth of July will represent a significant peak.

See also: Key to Transformation for Auto Claims

How can insurers prepare?

In many cases, roadside breakdowns or accidents are a policyholder’s first – perhaps only – interaction with their insurer. These events therefore constitute a tremendous opportunity for insurers to please and impress their customers. Ensuring these events go as smoothly and efficiently as possible, particularly if a driver is frustrated, worried or nervous, is important. Managing these events can always be complex, and factoring in the scale at which these events will be handled in summer 2021 can make for some additional difficulties. The best way to be prepared is for insurers to optimize processes and systems now: 

1. Offer seamless, self-service communications: Consumers increasingly want easy-to-use digital options to engage service – think requesting a Lyft or ordering pizza on the Dominos app. This interest is extending into breakdowns, disablement and accidents, where help request channels like buttons within a branded mobile app, mobile web pages or web applications can deliver a fast, convenient experience for those who want it (trained agents can also be available via toll-free number or an “out” provided within the digital channel). These capabilities also open up agent time, allowing them to support more complex cases. Mobile web and web app options can be easily stood up so that digital options are ready to go by the time volume really starts to pick up.

2. Consider a digital-first accident management process: Accident management is typically an expensive process, but an early-response digital and cloud solution can improve efficiency and responsiveness. More importantly, digitization can enable insurers to remain nimble and agile, quickly and easily ramping up accident-related services and allowing them to focus more effort on other aspects of the business. When done right, digitization can save insurers millions of dollars in claims loss costs annually. An example would be an accident platform that can provide transparency to all authorized employees, allowing them to conduct self-service activities such as reporting, checking status, entering a new accident claim case, etc. The ability for agents to digitally request an accident tow, either a primary tow from the accident scene or a secondary tow from storage, will also greatly reduce reliance on oftentimes lengthy logistical calls with contact center agents. 

3. Leverage digital photo-enabled claims: The accumulated cost of vehicle storage fees, rental days and a secondary tow following an accident can add up to as much as $1,050. By using images of the vehicle captured at the scene of the accident, claims processers can identify damages earlier. This speeds the decision-making process on whether the disabled vehicle should be sent to a repair facility or a salvage yard, helping to avoiding costs. With the right tools, photos can be easily channeled into an insurer’s method of inspection for expedited appraisal. 

4. Streamline vehicle tow and storage release: If a vehicle involved in an accident is towed to a storage location, negotiating the release can require significant knowledge about local regulations, processes and market rates. As accident volume ramps up, insurers should consider augmentating their current platforms and workforce with a partner that can provide a dedicated team of agents – armed with robust data – that are experienced at identifying opportunities to negotiate and decrease vehicle storage fees. These agents should be able to manage every aspect of the release process, including reducing checkpoint and approval calls, conducting cost-trend analysis, handling payments directly with the storage yard and managing tow-out service. 

See also: Don’t Look Now, but Here Come Autonomous Trucks

A summer driving, breakdown and accident surge is right around the corner. Agero’s recent research shows that the way in which these disablement events are handled has a significant impact on policyholder loyalty. By taking steps now to update, optimize and digitize processes for maximum efficiency, insurers will be prepared to more effectively help their customers through this likely difficult time.

Alarmed by the results of the 2019 employee/manager FMLA Knowledge Gap survey with regard to the lack of understanding of leave regulations and the employee and compliance challenges due to it, we decided to follow up in 2020 in the hopes of seeing a significant improvement. Leave administration may not be a top of mind or a requirement detailed in most managers’ jobs, but nearly 50% of those surveyed indicated they are asked to educate their employees about leave options — specifically Family and Medical Leave Act (FMLA) and state-mandated family and medical leaves.  Additionally, managers are required to notify employees of their eligibility for these specific leave benefits. Easy enough, right?

Say you are a manager for a New York-based employer and have an employee whose father has suffered a stroke. The employee informs you they’ll need to be out of work for at least two weeks while they take care of him. You tell them that, unfortunately, they only have seven days of paid time off remaining this year, so they’ll need to return to work when their PTO is up.

Not so fast. You’ve failed to provide notice requirements to this employee relating to the other leave benefits available to them for taking time off work to care for a parent who has a serious health condition. As a New York state employee of a company with more than 50 employees, they’re entitled to job protection under the FMLA. Additionally, they are entitled to apply for New York Paid Family Leave that would provide wage replacement for their time out of work. By not advising this employee of their rights and responsibilities under these leave laws, you have inadvertently violated these laws, and as a manager you may be held personally liable.

Remember, you made him come back to work during a critical time in his father’s life. Perhaps he chose not to come back and took unpaid time? Perhaps you issued attendance points? You have now critically violated his FMLA rights.

And this scenario is just for one state. Each state has its own regulations, with state paid family leave becomingly increasingly common but, of course, still not available to employees in most states. With so many companies now moving to either permanent or hybrid models of work from home, employees can live and work from anywhere, complicating how you manage leaves of absence. 

An Alarming Knowledge Gap Among Managers

For the second straight year, we surveyed front-line managers to better understand how well they grasp the federal Family and Medical Leave Act (FMLA) as well as state paid family leave (PFL), provided they live in one of the states currently offering PFL. Though we slightly tweaked some of our questions from our initial research in 2019 — limiting the direct comparisons from 2020 to 2019 — the numbers continued to paint a bleak picture for managers’ understanding, creating operational and business risk for them and the company.

To be deemed “knowledgeable,” managers were required to answer our three questions on FMLA correctly. Of the 435 managers surveyed, just 11% answered all three basic questions correctly, reflecting a significant knowledge gap!

For PFL, we asked two questions to test managers’ knowledge, and just 17% of these managers were able to correctly identify the benefits eligible under PFL, including whether they live in a state currently offering PFL.

It would be one thing if these managers weren’t tasked with any responsibility with leave administration at their company, but that’s not the case. The graphic below shows that nearly 50% of managers said they are responsible for educating their employees on these leave benefits and notifying them of their eligibility.

Figure 1: Managers’ responsibilities in leave administration at their employer

Considering that 30% of managers in the study thought that FMLA provided insurance coverage to pay medical bills while on leave and 32% indicated FMLA provided replacement of lost salary/wage, it is easy to be concerned about having these managers responsible for educating employees on these leave options and benefits. Adding to the complexity and risk for the company is that having one of your managers treat their direct reports differently than another relating to the FMLA is also an FMLA violation. If one manager thinks FMLA can be taken for a family vacation, and another doesn’t, you have a significant compliance issue!

See also: The Key to Agency Management Systems

Figure 2: Employees’ and managers’ responses to the benefits provided by FMLA. Note: Respondents could select multiple answers.

We speculated after 2019’s report — in which we did not ask questions about whether managers had received FMLA training — that a lack of training was a major factor in the knowledge gap. Yet, after collecting training data from respondents in 2020, we found the knowledge gap among managers was virtually the same, regardless of whether the manager had formal training.

While this is yet another red flag, we did identify some benefits from training. Managers who had received FMLA training were significantly more likely to agree that as managers of employees, they could be sued for FMLA and ADA violations. They were also significantly more likely to agree they are responsible for helping with compliance at their organization.

What Role Does Technology Play in Educating Managers and Employees?

Customer portals are becoming commonplace for large employers as well as insurance companies — recent Majesco research found that insurers are heavily focused on customer self-service capabilities and portals, with 41% to 61% of companies saying they are implementing or have already implemented these.

While these portals can be used for a multitude of reasons, they can be a tremendous resource for employees and managers when it comes to tracking and reporting absences. Our research found that self-service company portals are employees’ preferred method of obtaining answers to the number of days they’ve been absent and the days they have remaining. But when it comes to more detailed questions, such as the type of state of federally offered leaves available, employees are more apt to seek out this answer by contacting their HR department.

Figure 3: Where do employees go for their leave questions?

The benefits of an effective and informative self-service portal are substantial. Having a devoted platform where employees and managers can access this information 24/7 could play a pivotal role in ensuring both employees and managers are well-educated in the state and federal leaves available to them. Paired with software that can automatically determine an employee’s eligibility for these leaves based on built-in regulations is the type of error-proof compliance solution needed in the market. Hence the rising demand in absence and accommodation management software that employers can use or insurance companies can provide as a “value added service” to their employer customers. 

Insurance companies that are providing this offering, or are enhancing their portal, are well-positioned to be a go-to solution for helping employers mitigate their compliance risk and improve their leave management offering.

How Should Employers Address This Knowledge Gap?

As you might expect, there’s no silver bullet for solving this knowledge gap. For some companies, the gap may not be as substantial. And the approach to address this gap for one employer may not work for another. Take employer size and location. An employer with more than 10,000 employees that has offices all across the U.S. is going to have a much more complicated workforce than a 200-person company operating in a single state will. And, as noted, the rising acceptance of work from home will accelerate this complexity. 

Balancing multiple state paid family leaves alongside other local, state and federal leave laws, and any corporate leaves, is a lot for anyone whose full-time job is absence management. While no one is expecting these managers to have the same knowledge as those individuals, it probably doesn’t come as a surprise that managers who have a substantial list of their own day-to-day duties are struggling to correctly identify FMLA and PFL details. Simply allowing these managers to continue to play a role in leave administration without proper education isn’t the answer, though.

While our study found the existing training structure isn’t effective for educating managers, we heard through interviews with them that these training sessions were infrequent and covered a wide range of topics — they weren’t specific to leaves such as FMLA. Evaluating whether the existing training at your company is focused enough and effective with your staff is a great starting point.

For some employers, though, part of the answer may be to look to an insurance carrier or third-party administrator for a new “value added” service. Although it doesn’t absolve your managers of responsibility, outsourcing leave administration to insurers or TPAs is becoming increasingly common among employers. Insurance companies and TPAs have the resources and technology to optimize the business process and ensure compliance with these laws.

For a complete picture of the FMLA and PFL Knowledge Gap in 2020, you can download the report here.

Don’t Look Now, but Here Come Autonomous Trucks Paul Carroll, Editor-in-Chief of ITL While the focus for years has been on autonomous cars and on what they’ll do for safety, for auto insurance, for our lifestyles and more, a disruption is taking shape in the nearer term: autonomous trucks. The fear factor has obscured that vision. While it is odd enough to drive down a street in Phoenix and see a Waymo minivan next to you without a driver, it’s hard to imagine anyone setting loose on a highway an 18-wheeler carrying 50,000 pounds without anyone at the wheel. But we’re close... continue reading > DIGITAL INSURANCE: THE INFLECTION POINT New Majesco research highlights how digital is shaping today’s competitive landscape, why insurers are prioritizing digital capabilities and how a 360 view of customers can create growth opportunities. Download Now SIX THINGS The Finish Line Keeps Moving by Mark Breading Improving customer experience in P&C was already a marathon--now, the pandemic and other events have changed the race in significant ways. Read More 4 Questions That Scare Salespeople by Kevin Trokey I can appreciate the job's difficulty. But I swear, at times, it seems like salespeople are intentionally making their job harder. Read More Elevating the Capability of Employees with AI based Fraud Detection Delivers Significant Financial Results sponsored by Daisy Intelligence AI done right will deliver significant cost savings in claims operations, satisfy customers and make the difficult job of fraud detection and claims processing easier.  Read More Life Insurance With Mortgage Protection by Jason Mandel Life insurance with mortgage protection allows families to shelter at home—to stay in their homes—rather than sheltering in place. Read More Building Healthy Workplaces by RJ Frasca Emerging HR technologies can attract and retain motivated talent, bolster culture, decrease spending and improve business operations. Read More What SPACS Mean for D&O Exposure by Jason Remsen Although many of the risk exposures remain the same as those in traditional M&A deals, lack of historical data has fueled uncertainty. Read More Vaping, Compliance and Rewarding Safety by Michael Shaw If insurers care about improving the safety of vaping, they should insist on the wholesale adoption of existing rules by the vaping industry. Read More MORE FROM ITL The Alarming Surge in Ransomware Attacks Ransomware and business email compromise (BEC) attacks are soaring, and ransom demands have gone from an average of $10,000 to well north of $100,000 – demands sometimes reach the tens of millions of dollars. In this interview, we discuss what is causing the surge – and what businesses can do to protect themselves.  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