It seems there are more insurtech predictions than ever for P&C insurance in the new year. Some of my favorites include; rise of the ecosystems, embedded insurance (in just about every product and service) and big strides for AI and telematics.

Ever since the insurtech wave began, massive disruption has been anticipated. Several startups have done just that. Some have enabled efficiency gains through automation. Others have made the customer experience easier and faster, from shop to quote to bind and everything in-between. Usage-based insurance solutions are changing how insurance is consumed through pricing based on usage amounts or personalized degree of risk. All sorts of new companies are simplifying insurance policy language or organizing information in one place. Many intend to create insurance-as-a-service, or proactive insurance.

Despite all of these advances, the insurance model itself still remains reactive. The claims model is probably the most reactive part of insurance; services generally do not begin until after a claim is made. And there is a five-day average lag from time of loss until a customer initiates first notice of loss (FNOL). The promise of telematics crash detection is beginning to change this dynamic, allowing for immediate claim services. GM’s recent OnStar automatic crash response is one of numerous telematics concepts that detect and engage proactively. However, adoption rates and insurer activation are currently very low.

Should insurance prevent, detect and mitigate losses proactively?  

Smart home sensor technology offers a similar promise by detecting and preventing losses. Water shut-off and leak detection systems can both identify and prevent damages. Distracted driver prevention and driver coaching technologies can avoid accidents altogether.

So, should insurance go beyond traditional reactionary services and serve to prevent, detect and mitigate losses proactively? The short answer is usually a resounding, yes. After all, fewer losses are of mutual benefit to both customers and insurers alike, not to mention for society at large. There are some pockets where insurers are already helping mitigate losses, but there are several barriers to broader prevention and detection remaining.

Barriers to proactive insurance models

Loss control is a well-leveraged capability by insurers mainly in commercial lines. Safe work places for workers compensation claim avoidance, fire safety prevention and fleet driver programs are a few examples. In contrast, personal lines have been underserved because safety programs are costly to administer. Loss prevention for personal lines has been centered on risk selection and pricing, thus underwriting. Home and auto lines loss prevention efforts have paled in comparison, focused on issues such as FAQs or free replacement of washing machine supply hoses. Such efforts have not demonstrated meaningful benefit.

Insurance company discounts have not kept pace with customer expectations for smart home sensors. Costs to install are another barrier. Although usage-based insurance can generate significant savings, much of the marketing attention is devoted to switch-and-save or attracting new customers. This may be just one reason for low adoption rates, often around 5% of an insurer's portfolio. Tackling the issues of discounting, promoting or explaining technologies and addressing privacy concerns could go a long way to achieving higher adoption. And advancing technologies like telematics to coach and guide drivers to prevent accidents calls for much more customer engagement.

See also: How to Accelerate Innovation: Pairing

The road to claims-as-a-service has some deeper issues to resolve. Crash alerts can only bring value once false positive alerts are screened and customers are thoughtfully and carefully engaged following a detected incident to ensure that making a claim is warranted. Meanwhile, FNOL contact centers are designed and staffed for inbound phone calls, dispensing only generalized information while gathering information until a licensed adjuster is ultimately assigned – which can be a day after FNOL or longer. Even though loss intake can happen around the clock, getting access to decision makers is often sequenced to the dissatisfaction of customers. 

Insurance claims processes actually limit the degree of guidance and advice due to risk concerns. Yet, a proactive model calls for addressing urgent and emergency needs regardless of reporting an FNOL. So, there are a host of risk tolerance, structural, skill and mindset barriers for incumbent insurers to resolve.

What’s next?

The future of insurance as-a-service, especially for claims, requires an action-based model that leverages on-demand support vs. generalists, guidance vs. unbridled options, rapid response vs. assignment hand-offs and on-demand experts vs. sequenced specialists – all of which are inherent in today’s claim process. Discounts, technical support and expert care will go a long way to increase adoption, and some are beginning to materialize, which is good news.

Perhaps 2021 will be the year for insurance-as-a-service to take another step forward.

If you think insurers have issues with their mishmash of legacy technology platforms, take a look at the rat's nest of letters, emails and other documents that languish in an array of systems and formats.

As insurers deal with the fallout from COVID and dedicate themselves to improving the customer experience, many still shy away from refreshing their correspondence because they worry it takes too much time, effort and money. Artificial intelligence can now solve the problem by using "content intelligence" to quickly sort through even ad hoc correspondence. AI lets firms modernize their correspondence with messages and branding that are consistent and with the right reading comprehension level, no matter how the company touches a customer -- pleasing customers while lowering costs.

Join Kaspar Roos, CEO and founder of Aspire, and Patrick Kehoe, EVP Product Management at Messagepoint, to learn how organizations can overcome the challenge of transforming communications by combining best practices and AI-powered approaches.

Watch this webinar and learn how to:

• Automate key steps to reduce the time required to migrate and tag content by 99%
• Identify outdated, duplicate, and similar content for refresh and consolidation
• Optimize legacy communications for brand, reading levels, and sentiment

Don't miss this free on-demand webinar.

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After a decade of criticism from me (here on ITL, in particular) and a growing number of others, workplace wellness died last week. It had been on life support since Jan. 7. 

The bottom line: Brokers and advisers should now be aware both of the professional risks they are taking by pitching clinical wellness programs and of the career risk they are subjecting their clients to by encouraging use of the programs. Most clinical wellness programs now technically violate the Americans with Disabilities Act (ADA). 

You might be wondering why this is the first you are hearing of it. That’s because this is new news, as of last Thursday. Here is a timeline:

• Jan. 16, 2018: Federal court case “vacates” the expansive, corporate-friendly EEOC rules allowing large incentives and penalties used in clinical wellness programs and directs the EEOC to write new rules accordingly.
• July 16, 2019: AARP and unionized Yale employees sue Yale for imposing such penalties. 
• Jan. 7, 2021: The EEOC finally writes the new rules. As directed by the court, these rules no longer allow employers to subject employees to large forfeitures (penalties or foregone incentives) for refusing to submit to clinical wellness programs. The three Republican commissioners, at the request of the U.S. Chamber of Commerce and Business Roundtable, carve out a large loophole for increasingly unpopular and possibly harmful outcomes-based programs. (Those are the programs where you get heavily fined for not losing weight.)
• Jan. 8-20, 2021: The dog doesn’t bark in the nighttime: The Federal Register does not publish the proposed rules for public comment. The absence of this routine step suggests these rules are already generating blowback.
• Jan, 21, 2021: The Biden administration shakes up the EEOC, promoting the two Obama appointees, both of whom have strong pro-employee biases, and demoting the Republicans.
• Jan. 21, 2021: The Biden administration freezes all proposed rules from every agency from publication for comment in the Federal Register. This indicates a thorough realignment of priorities is in the works.

Here are three ways to know that this timeline means the end of programs that, like most, focus exclusively on risk assessments, screens and coaching.

First, the ADA requires that clinical inquiries and exams be “voluntary.” Absent rules defining “voluntary,” incentives can’t be imposed. Very few employees would voluntarily allow their employers to hire unlicensed wellness vendors to “play doctor,” especially with no law proscribing the vendors’ use of that data. (HIPAA does not apply to standalone wellness companies.)

Second, the new EEOC leadership alignment eliminates the chance that the EEOC will re-publish the existing rules. If indeed the EEOC publishes new rules once new rules are green-lighted for publication in general, the agency will specifically allow only minimal incentives. Penalties? No way.

See also: 3 Tips for Increasing Customer Engagement

Third, that 2019 Yale lawsuit has yet to be decided. The judge has been sitting on the summary judgment briefs for more than a year now, presumably waiting for the rules to be promulgated. With no rules, Yale is now in clear violation of the ADA, so the decision should come down within weeks -- in favor of the plaintiff employees. This decision will resonate with class action attorneys everywhere, as punitive programs will be “low-hanging fruit” for them. The decision will unleash a flood of claims by 2022.

Here’s how to keep your clinical program intact

The rules – and the EEOC’s jurisdiction in general – apply only to clinical programs. You can still offer activity-based programs and still tie up to 30% of insurance dollars to those programs. The reason? Activity-based programs are governed by the Affordable Care Act (ACA) only, not the ADA. They include physical and mental activities, as well as seminars, quizzes, volunteer work and more.

The difference between the two program types is best illustrated by an example: You can make employees wear FitBits to track their steps, but you can’t track their pulses. (It turns out tracking steps doesn’t accomplish anything anyway.)

There is a way to maintain your clinical programs. (Why anyone would want to is a different issue, covered at length here.) You can offer them side-by-side with your activity programs but allow employees to fully satisfy program requirements and earn the full incentive (or avoid the penalty) without submitting to any clinical test or inquiry. 

Suppose an employee needs 500 “wellness points,” and a risk assessment and a screen are worth 250 apiece. “Lunch ‘n’ learn” nutrition seminars are worth 50 points each, but employees are currently capped at 5 such seminars. That program would be noncompliant. Raising the cap to 10 or upping each seminar to 100 points solves the entire problem by allowing employees to earn the full incentive by sitting through all those sessions.

Employers concerned about the time commitment for something like that could offer health literacy quizzes instead. [Note: My company offers those.] This simple one-page flyer checks the ADA/EEOC compliance box by offering both quizzes and conventional screenings. It also encourages the highest-risk employees to choose screens, while a large majority of employees would learn more about health, healthcare and health benefits through quizzes.

As a belt-and-suspenders protection against EEOC exposure, Quizzify also provides indemnification to employers. With or without health literacy, your own wellness vendor should reconfigure its program to both comply with the ADA and to indemnify you and your client if it doesn't. 

Especially with indemnification, expanding the number of activity-based offerings to allow employees to hit their points target while avoiding clinical programs solves this new problem. The challenge will be to make those non-clinical activities useful.

If you want to explore this topic further, Insurance Thought Leadership is co-sponsoring a seminar on this very topic on Monday, Feb. 1 at 1pm EST. You can register here.

After the roller coaster of 2020, it’s a brave soul who’s willing to commit to what 2021 will look like. But running a global network of talented and successful people means that Robin Merttens and I have been able to dip into the collective wisdom of 20 of our friends and supporters from InsTech London.

In an hour-long Zoom call, we were able to crowdsource what is top of mind from 20 of the best people to predict the year ahead – those who are part of making it happen.

One investor, two reinsurers, three consultants, five Lloyd’s syndicates, six growing insurtechs and three others – all that was missing was the partridge and the pear tree.

You can now get the audio highlights (scrubbed and polished to perfection by the ever patient Peter Roach), and my match commentary, of the event on the InsTech London podcast episode 118. What follows are the dominant themes affecting risk and insurance that our panelists recommend you look out for -- and why. We agree with Robert Lumley of Insurtech Gateway, though – the skill of making good predictions is about following the direction of travel.

Here it comes - from some of the sharpest minds at PKF, Munich Re, Swiss Re, EY, PWC, Deloitte, Brit, Talbot, Convex, Wakam, Chaucer, Concirrus, CyberCube, Blink, Riskbook, Flock, Zego, Insurtech Gateway, Voice of Insurance, Miller and FintechOS

Insurers must regain trust -- consumers want more certainty

Charlie Burgess runs Munich Re international specialty business, and his responsibilities now include Munich Re Digital Partners. A major issue for Charlie is that trust in insurance has been dealt a double blow in 2020 -- and resolving that must be a priority in 2021. The rejection of COVID-related claims has accelerated the need for people wanting more certainty between their loss and receiving a payout. This, according to Charlie, will drive more interest in new types of insurance such as parametric. We agree, and wrote at length on this in our October report "Parametric Insurance - 2021 outlook and the companies watch."

The use of "price walking," the practice by which insurers charge their existing customers more than their new customers, has also undermined confidence in the market. Look out, Charlie says, for a “short-term rush to offer great deals by insurers to win new customers before the new regulations come into place.”

Ultimately, though, the impact will go deeper, he predicts, fueling the rise of trusted brands from outside insurance stepping in to replace traditional insurance brands, particularly in personal lines insurance. 

We shouldn’t be too despondent, though. Nigel Walsh, partner at Deloitte, reminded us that the insurance industry did pay out billions of dollars in COVID-related claims in 2020. Nigel predicts (or should that be hopes?) that 2021 will be the year everyone starts to love insurance – and that the industry will finally fix its complicated wordings.

By the way, Nigel got his homework in early and has already published his predictions for 2021 - and I learned what gets Nigel going when we spoke earlier in 2020.

See also: 2021, We Can’t Wait to Get Going!

Better integration of technology, better standards and Lloyd’s Blueprint gets underway

By far the most popular prediction across our panelists was the rise of the platforms – our experts expect to see meaningful developments in the use of platforms, integration between technology and, in London, the progress and implementation of Lloyd’s Blueprint Two. John Needham, partner at PKF, and our sponsor for the night, is still hearing concerns from insurers he talks to about the lack of ability to integrate with the new tools that are available, and "frustration that they are having to choose a mainstream platform to play it safe." Could this change in 2021?

Charlie Burgess welcomes the direction Lloyd’s is taking with its Blueprint but warned that implementation will take longer than planned. Charlie expects "a flurry of automation or digitalization among the Lloyd’s of London market players, both addressing the plumbing and digitalization in whole or some of the more complex risk products."

Chris Payne, partner at EY, sees the development of a “more pronounced two-speed architecture model” as established companies grapple with overcoming legacy. According to Chris, people are “waking up and realizing that they want something leaner, where they can stand up new ideas or quickly test them, and then decide how they want to launch, whether through a new platform or more easily through their main platform."

Christian Kitchen, head of technology and innovation at broker Miller, is also bullish about Lloyd’s: "It's going to crack it this year. Blueprint Two is going to be exactly what we've always wanted. The core data record and the digital spine is going to be the framework that all of us build our new solutions on."

Christian went on: “Now will be the chance for the agile organizations out there, including some of the brokers, to take what Lloyd’s is doing and build out the solutions and the end-to-end journeys that we've all been waiting for." Christian is also optimistic about the opportunities this creates for what he refers to as the "real insurtech companies," to start focusing on "groundbreaking solutions" as opposed to continuing to try to find work-arounds for legacy systems. 

Karl Lawless, sales director at FintechOS, adds: “Five months of lockdown was five years of digital transformation, and I only see that accelerating next year." Karl believes the age of the large transformation project is over. "Rather than insurers committing to the traditional big-box solutions that cost tens of millions of pounds and take three to five years to deploy, there's now an opportunity to deploy best-of-breed digital components, going down the Lego block approach." Karl reckons we will start seeing components glued together with automation, giving a cutting-edge platform to those that use this approach.

Having spoken to Gary Hoberman, CEO and founder ,of Unqork earlier this year, I am sure low-code and no-code will be a big part of this. And with Unqork having attracted $365 million of funding, according to Crunchbase, clearly I'm not the only one to believe this.

Your platform will be arriving shortly...

Glynn Austen-Brown, partner at PWC, brought a global perspective to the predictions, with a reminder that we all expect technology to make things more convenient and to give us our time back. Insurance will be the next frontier for simplicity. “Look at what people are doing in China. Look at WeChat or Grab. We are going to be moving much closer toward that platform economy that is so prevalent in the Far East,” Glynn believes.

Mark Geoghegan, formerly editor of Insurance Insider and now the “Voice of Insurance” podcast host, advises us to look and see what technology choices the recently capitalized specialty insurers such as Inigo, Vantage and others make. Unlike the previous wave of start-ups 15 years ago these companies, with large amounts of investment, can choose to go with the new solutions and not rely on legacy. (But will they, I wonder?) Meanwhile, Mark predicts that “most of the insurance market is still going to be your friend because they're not so nimble. They decided that they wanted to digitize three or four years ago, and they're finally starting to get around to doing it."

Ben Rose, co-founder of new reinsurance platform RiskBook, picks up on something Christian Kitchen mentioned and says the challenger brokers will rise to prominence in 2021. With the Aon and Willis merger coming up, and the acquisition of JLT by Guy Carpenter that we’ve already seen, Ben reckons that the new breed of brokers, which he observes has been recruiting many star players in 2020, “is really good for reinsurance innovation.”

Ben's list of challenger brokers to look out for includes TigerRisk, Beach, Capsicum, Gallagher, Hyperion, Lockton, McGill, BMS - all are small compared with the big two. As Ben points out, they can't replicate what the two giants are doing, so they've got to think digitally and about how they can use innovation. “They can't afford the traditional six-person account team to look after a single client, so they are going to have to explore automation to handle those bigger deals and perform all the analytics expected of them with a much smaller team.”

Ben and co-founder Jerad Leigh are watching closely as these brokers start to move faster and spin up partnerships with start-ups to bring a digital service that's been missing from the reinsurance ecosystem for quite a while. This is a topic I discussed at length with Rod Fox, CEO and Co-founder of TigerRisk, and with Barnaby Rugge-Price, CEO of Hyperion. And you can learn more about RiskBook from Ben when he joined us for the London leg of the ITC global tour.

Data-powered customers and risk reduction

Jenny Williams from Convex picked up on the theme of data, and she is thinking about it from a platform perspective, too. Jenny pointed to the recent news that S&P has acquired IHS Markit, a company that provides financial services and many insurers with data, for $44 billion: “We'll see more partnerships and acquisitions in the data ecosystem space.” She added that “lots of different companies offer different variations of data on different assets and their risk and perils." Companies (and InsTech corporate members) such as e2value and Hazard Hub are doing well in the U.S.

The challenge, according to Jenny, is that each specific data set requires expertise to collect and curate. Jenny is looking out for “more of a one-stop shop, targeted partnerships that may help reduce the offering overlap, while expanding the breadth of useful data that's available to us.” We go deeper into this topic in my interview with WhenFresh CEO Mark Cunningham.

Christen Smith, head of sales at Flock, a growing insurtech company, echoes a point made by many others, that "customers and brokers aren't going to be happy with the old solutions or with the old way of doing things. UBI (usage-based insurance) won’t be good enough any more." Christen added that “we're going to have to take the next steps into exposure-based insurance and really move the needle to impact consumer behavior.” Flock has recently expanded beyond offering commercial drone operator insurance into broader commercial insurance, no surprise then that for them “it's going to be a big year for stepping things up a notch in the space of connected insurance, and really delivering for consumers and brokers in a new and different way than has been done before.” Watch this space. we say.

Glynn Austen-Brown picked up on an emerging but powerful theme around customers who are “looking for more services that are aimed at risk prevention and other value-add services, for example boiler servicing, energy bill usage reduction and help with home repairs.” Glynn also sees this theme as driving more partnerships and more embedded insurance -- “things like Uber and Airbnb partnerships will become much more prevalent in regards to services and products that insurers offer. Customer stickiness will be everything.”

Data-powered automated syndicates

Andy Yeoman, CEO of Concirrus, expects to see meaningful progress from companies using data and algorithms, what he refers to as “technology-fueled market entrants.” We’ve seen Brit insurance launch the Ki syndicate and gain £500 million investment this year (my discussion with James Birch and CEO Mark Allan of Ki has been one of our most popular podcasts). 

Andy expects the newcomers are “going to use those algorithms to replace the work, whether it be submissions or some of the underwriting decisions,” and their role will change: “We're going to see their use move from follow syndicates, to lead syndicates. And in doing so, all those organizations are going to create investable asset classes because they'll ultimately have a predictable yield.” This will make insurance attractive for more external capital, with “trillions of dollars of pension funds monies” coming into the market, maybe not in 2021, but soon after. You can learn more about Andy Yeoman and Concirrus from our discussion last year)

See also: 11 Insurtech Predictions for 2021

But we need to deal with the data-ingestion problem

Of course, all these great opportunities for using data will fail if insurers can’t get the data they need. Jenny Williams is hoping that 2021 will “see some real progress in the very difficult area -- submission and ingestion of data in commercial and specialty lines.” The problem that Jenny refers to is caused by the volumes of valuable data that is locked up in email attachments in non-standard forms that are received by underwriters. While the data may now be getting to the underwriters, it's hard or expensive to extract. Jenny explained why. “It’s not just about ingesting standard forms such as ISO or ACORD; we're talking about the really funky messy Excel spreadsheets with merged cells, multiple tabs and complex risk details that require real expert interpretation to identify the statements of values, loss runs, engineering reports, etc.”

Jenny is encouraged by some proof points from companies such as Eigen Technologies, Groundspeed, EY, Expert AI, that are among those she sees leading the way. There is more need for collaboration between the technology and insurance experts, but for Jenny it “feels like we're at a tipping point, and this might be seriously commercially viable next year.”

Sean Kevelighan, CEO of the Insurance Information Institute, said there was a moment in 2020 that was “touch and go” for the industry, in the face of the pandemic.

He and I were talking in advance of Thursday’s Joint Industry Forum, the III conference that is the first big event of the year and that sets an agenda for the industry (more on the forum in a bit), when he described how close the industry had come to being whacked with potentially hundreds of billions of dollars of business interruption claims. BI claims were obviously a potentially big deal, even though it was clear early on that few policies in the U.S. covered them, and I have seen that the issue faded, but I didn’t realize quite what a close call the industry had.

“The industry collaborated more than I’ve ever seen us do,” Kevelighan said. “Everyone has shown that the industry can come together and lead in a very disruptive time.”

Kevelighan said plaintiffs attorneys saw an opportunity early and won sympathy with state legislators, eager to help their small-business constituents. Some celebrity chefs formed a group to make the case publicly that they would go out of business if insurers didn’t cover their pandemic-related losses. Something called the Business Interruption Group even got businesses in Times Square to shut off their lights for a minute in May to dramatize the threat.

III countered with a campaign that made two main points. First, that the policies didn’t provide business interruption coverage for a pandemic and that rewriting contracts after the fact was unfair. Second, that a pandemic isn’t an insurable event. Yes, the industry had $800 billion in surplus, but covering all the potential BI claims would cost the industry $400 billion a month – so those small businesses could only be covered briefly by insurers, and then the money would be gone. Legislators would then have to face constituents who were hit by hurricanes, wildfires and so on and who had valid claims – but whose insurers couldn’t pay.

III got the word out through hundreds of media interviews, through email blasts to anyone who was in a position of influence and through a website. Kevelighan said the industry more than did its part as good citizens: providing more than $14 billion in rebates just in auto premiums, making $300 million in charitable contributions, paying claims in new and innovative ways and committing to keeping employees on the payroll. He says all parts of the industry are now hiring.

The situation was still touch and go until a hearing before a House subcommittee on May 21. But at the hearing, conducted via WebEx, the main plaintiff attorney didn’t even advance the idea that contracts should be rewritten to make insurers liable. Instead, he suggested that insurers could voluntarily cover business interruption and then, he hoped, be reimbursed by the federal government – an idea that went nowhere.

“Congressmen were very aggressive about defending their constituents – if a hurricane or wildfire hits, there needs to be money there,” Kevelighan said. “We all empathized with the customer. Sure, customers should be scared. But the response to a pandemic has to come from the federal government.”

He added that the quick mobilization in the face of such a threat “shows how nimble the industry can be.”

Building on that experience, Kevelighan said, the first panel at the Joint Industry Forum will comprise CEOs who will discuss other industrywide issues, including what the effects of the new Biden administration will be.

“You’re certainly going to see some things that were started in the last Democratic administration that kind of went by the wayside but that may well resurface,” Kevelighan said.

He cited the Federal Insurance Office and Consumer Financial Protection Bureau as potential examples. He added that “it’s been said that every part of the Biden administration has a climate change piece to it.

Kevelighan said the insurance industry can play a leading role on climate risk – which is the subject of the next panel at the Joint Industry Forum. He cited, for instance, a III project called the Resilience Accelerator, which is trying to drive behavioral change to reduce risks such as those from wildfires and floods.

“Risk never really comes into play in the property-buying process at the moment,” he said. “You go into the beautiful forests in California and decide you want to build there, but nobody talks to you about the wildfire risk. We’re trying to change that.”

He’ll close the brief event with a fireside chat with Richard P. Creedon, chairman and CEO of Utica National Insurance Group, that will, among other things, cover that old favorite: regulatory issues.

I’ve found these events to be very useful in the past and hope you’ll join me at this virtual event, then hope we’ll all see each other at what III expects will be an in-person event in Washington, DC, in June.

Stay safe.

Paul

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

20 Issues to Watch in 2021

Presumptions for COVID-19 show how the line between workers’ comp and group health continues to blur.

Crowdsourcing 6 Themes for 2021

Trust in insurance has been dealt a double blow in 2020 -- and resolving that must be a priority in 2021.

Despite COVID, Tech Investment Continues

Interest remains high in technologies like artificial intelligence and big data.

Did Biden Just Kill Wellness Programs?

Advisers need to be aware that many if not most clinical wellness programs now expose clients to employee EEOC actions.

What 2020 Taught Us on Selling Insurance

Insurance policies that are sold online need to be packaged and priced differently than those that rely on face-to-face sales.

Home Insurance for Those Needing It Most

Sugar, a startup in South Africa, provides home insurance even for shacks costing a few hundred dollars, and without a street address.

Insurers will continue to experiment with emerging technology in 2021, despite the challenges of 2020. When the COVID-19 pandemic hit, many insurers paused their 2020 innovation plans, emphasizing digital workflows and cost control at the expense of emerging technology pilots. Heading into 2021, technology priorities for many insurers, especially those in the property/casualty space, are similar to those of 2019.

The U.S. is still in the midst of the pandemic, and some insurers are anticipating lower premium revenues for the coming year. In spite of this, insurers are investing in technologies like artificial intelligence and big data, though some are narrowing the scope of their innovation efforts for the coming year.  

Understanding Emerging Technology Today

Insurers typically take a few main approaches to emerging technologies. Early adopters experiment with the technology, typically via a limited pilot. If the technology creates value, it’s moved into wider production. Insurers that have taken a “wait-and-see” approach may launch pilots of their own.

Novarica’s insights on insurers’ plans for emerging technology are drawn from our annual Research Council study, where CIOs from more than 100 insurers indicate their plans for new technologies in the coming year.

No insurer can test-drive every leading-edge technology at once, and every insurer’s priority is a result of its overall strategy and immediate pressures. Still, at a high level, several industry-wide trends are apparent:

There is big growth in RPA; chatbots continue to expand. More than half of all insurers have now deployed robotic process automation (RPA), compared with less than a quarter in 2018. Chatbots are less widely deployed but on a similar trajectory: from one in 10 in 2018 to one in four today.

AI and big data continue to receive significant investment. These technologies take time to mature, but it’s clear insurers believe in the value they can provide. More than one in five insurers have current or planned pilot programs in these areas for 2021.

Half of insurers have low-/no-code capabilities or pilots. These types of platforms are relatively new but have achieved substantial penetration in a short time. Early signs indicate they could become a durable tool for facilitating better collaboration between IT and business experts.

Despite continued tech investment, 2021 might be a more difficult year for innovation. Insurers’ technology priorities have generally reverted to the mean — more so for property/casualty than for life/annuity insurers — and technology budgets for 2021 are within historical norms. Still, some insurers are paring down pilot activity in less proven technologies, like wearables, to maintain their focus on areas like AI and big data. Technologies with substantial up-front costs, like telematics, may be harder to kick off in 2021. 

See also: Technology and the Agent of the Future

How Emerging Technology Grows

Emerging technologies have widely varying rates of experimentation, deployment and growth within the insurance sector. Their growth rates boil down to a few key related factors:

• How easily the technology is understood.
• How readily it can be deployed and integrated with existing processes.
• How clearly the value it creates can be measured and communicated.

At one end of the spectrum are technologies like RPA and chatbots. These technologies create clear value, are readily added to existing processes and are relatively easy to deploy. As a result, insurers have adopted them rapidly.

Artificial intelligence and big data technologies require longer learning periods; sometimes, they require business processes to be completely reengineered. The technologies create value for insurers but have grown more slowly because they take time to understand and integrate.

Drones, the Internet of Things (IoT) and telematics can create new kinds of insurance products or collect new kinds of information. These can also create value, but their growth remains slow because developing these technologies may require orchestration across several functional areas, and they can be costly to ramp up.

On the far end of the spectrum are technologies like augmented and virtual reality, blockchain, smart assistants and wearables. Most of these technologies don’t yet have established use cases that demonstrate clear value, so it remains to be seen whether they will be adopted more widely.

Using Emerging Technology

One key insight from Novarica’s study is that technologies that integrate readily to existing processes can grow more rapidly than technologies that require new workflows to fully use. This observation comes with a few caveats for both insurers and technology vendors.

Insurers sometimes fall into the trap of “repaving the cowpath” — they adopt new technologies but integrate them into their existing (inefficient) business processes. Doing so means they can’t get maximum value from their investment. Ironically, it’s usually the shortcomings of legacy technology that have made these processes cumbersome in the first place.

It’s easy to understand the value that technology creates when it integrates with an existing process and can be measured with the same key performance indicators (KPIs). It’s much harder to create a new process enabled by new capabilities, train employees to execute it and demonstrate that the new way is better than the old way. Yet getting the most out of emerging technologies often requires rethinking how business might be done.

See also: 2021’s Key Technology Trends

For their part, vendors should focus on the value their products create and the problems they solve, aligning them to insurer needs. It’s not enough to use a new technology for its own sake, and using new tools sub-optimally may make them seem less effective. Vendors should coach their insurer clients through best practices and help them understand how their tools can ease, change or make obsolete existing processes.

At its core, insurance is a simple industry focused on connecting those exposed to risk to capital that can defray potential losses. At the center of that value chain are insurers, that continue to explore new technologies to better understand their risks, sell more and operate more efficiently. Even in uncertain times, insurers are innovating.

Out Front Ideas with Kimberly and Mark kicks off every year with our popular 20 Issues to Watch webinar. While there are certainly more than 20 issues to discuss after the unprecedented events of 2020, we focused on the high-impact issues relating to workers’ compensation, healthcare and risk management. These are all important issues for every risk manager and insurance professional to monitor in 2021. 

1. Healthcare Watch

President Biden’s healthcare plan has been referred to as ACA 2.0, as his approach is expected to build on the Affordable Care Act. As a longtime supporter of public options, President Biden will likely give consumers access to Medicare-style health plans, along with an option to continue private insurance. In keeping with the ACA, expect to see the return of the individual mandate and associated penalty removed in 2017.

For most of 2020, there was a significant decrease in employer healthcare spending due to limited in-person care caused by COVID-19. Many employers spent less than in 2019, with average savings around .5% to 2%. Ambulatory care settings and hospital admissions accounted for the largest areas of decreased spending. However, pharmaceutical costs, as projected, increased roughly 6% due to the pandemic. 

Telehealth continues to rise in popularity, with its ever-increasing accessibility. Its long-term use remains unknown due to dependence on government regulations, but expect its continued use in the short term from health providers accustomed to its use. 

2. Political Polarization

With Democrats holding a narrow majority in the House and controlling the split Senate, it is uncertain whether there will be a sweeping or incremental change, especially because President Biden has historically been a political moderate. The secretary of Labor nominee, Marty Walsh, was a former union leader and strong supporter of organized labor, so expect potential Department of Labor policy changes, especially in Occupational Safety and Health Administration (OSHA) enforcement and independent contractor classification.

Political polarization has created continued conflicts for much of our history. There is much work to be done to restore public trust, reduce conflicts and provide a better path forward for our country. 

3. COVID-19 Vaccine Considerations for Employers

Employers are currently assessing their options for requiring employee vaccinations. While employers that primarily have employees working from home have fewer concerns than those working directly with the public, all employers have questions regarding a mandatory vaccine policy. Updated Equal Employment Opportunity Commission (EEOC) guidelines published Dec. 16 state that employers can require workers to be vaccinated, with some limitations, including:

• Title VII religious exemptions
• Americans with Disabilities Act accommodations 
• Any additional rights that apply to either EEO laws or federal, state and local authorities

Like all employment law, expect there may be litigation over employer mandates to require the vaccine. In developing policies, employers will be considering not only their workforce but the expectations from the general public they interact with. 

4. Supply Chain Diversification

COVID-19 caused significant disruption in the U.S. drug supply chain because 80% of the necessary components used in pharmaceutical manufacturing for the country come from China and India. China is also responsible for around 80% of the essential elements used in personal protective equipment (PPE), leading to a shortage during the start of the pandemic. 

These supply chain disruptions were widespread and illustrated the need to diversify sources and not rely on imported goods for critical components. Diversification will make companies more resilient to unexpected events such as natural disasters, political unrest, trade sanctions and other pandemics. 

5. Public Health Policy

Over the decades, public health achievements have included childhood vaccination programs, fluoridation of drinking water and the global commitment to eradicating HIV/AIDS. There are many public health services we should be able to rely on, including preparedness and response capabilities, addressing and diagnosing health hazards, informing and educating the public and strengthening and mobilizing communities, to name a few.

However, a lack of coordination between the federal government and state public health officials led to poor planning and response to the pandemic. Successful public health initiatives rely on people’s trust in public health, but poor communication, mixed messaging and inconsistency in applications and expectations only furthered challenges. 

Public health in the U.S. has generally struggled to make a clear and compelling case for prevention and non-medical approaches to health and well-being. Public health would benefit from leaders focusing on building trust and connecting with communities’ shared values, inspiring participation and active listening.

See also: Don’t Go Into Recovery Mode in 2021; Reset

6. COVID-19 Claims Development

The workers’ compensation industry has seen tens of thousands of COVID-19 claims. According to industry data, the vast majority of those claims are small, with average paid figures just over $1,000. However, the industry has also seen many claims over $1 million incurred on cases that resulted in death or had an extended ICU hospitalization. There could be additional development on these claims as long-term health consequences from COVID-19 become apparent.  

Businesses are seeing COVID-19 related litigation in other areas, including business interruption, employers’ liability, general liability, employment practices liability and even directors and officers coverage.

7. Evolving Employee Benefits

In 2021, expect more employer emphasis on addressing mental health and well-being in the workplace. There are more employer offerings with telehealth’s continued use, like mental health apps and videos with on-demand options. The Center for Workplace Mental Health provides a wealth of employer support for workplace well-being, like the new program Notice. Talk. Act, which offers training for company leaders to improve their understanding of mental health on employees and the organization.

Understanding financial health is a primary concern for employees across the country because the pandemic left many unemployed. Many employers have partnered with their 401K providers to provide webinars and online tools to assist their employees with budgeting and forecasting expenses. Group health solutions are also assisting employees in better understanding copays, deductibles and high-quality care options, ultimately driving down costs and improving healing times.

Flexible work schedules and time away programs are being altered for 2021. Split schedules or starting earlier or later are options many employers are adopting as workers are challenged with their children’s online learning needs or caregiving opportunities. Additionally, the pandemic has caused financial problems for many, adding to stress and anxiety for workers. Allowing and encouraging time away from work is necessary to create a healthier, more productive workforce.

8. Redefining Workers’ Compensation

Presumptions for COVID-19 are just the latest example of how workers’ compensation continues to expand beyond its original design of covering only traumatic accidents in the workplace. As more conditions and diseases are deemed work-related, and more presumption laws are passed, the line between workers’ compensation and group health continues to blur. 

9. COVID-19 as a Comorbidity

While we still know very little about the long-term effects of COVID-19, we know that there is an increasing number of patients experiencing new symptoms months after recovery. These symptoms range from blood clots to neurological symptoms, like brain fog and confusion, to continued respiratory challenges, like shortness of breath. There have also been reported psychosocial effects like anxiety, hopelessness, depression and post-traumatic stress disorder (PTSD), especially in healthcare workers and ICU patients. 

If a large percentage of COVID-19 patients develop long-term physical and mental side effects from the disease, it could increase claims for years to come and even have the potential to be comparable to existing comorbidities such as obesity or diabetes. 

10. Post-COVID-19 Analytics and Benchmarking

The insurance industry and risk managers rely heavily on actuarial models and benchmarks to analyze performance and predict future exposures. One of the core assumptions of analytics and benchmarking is that most analysis components are under conditions similar to the past. However, the pandemic introduced several variables into the analysis that raise questions about the validity of those models in the future. 

In workers’ compensation, frequency models have been disrupted, and there have been delays in medical treatment, litigation and return to work. Carriers are also having to develop new risk models that take into account the potential impact of future pandemics.

11. Employers Addressing Caregiving

Caregiving challenges were mounting for employers in advance of the pandemic. They were magnified because of work from home, school closures, after-school programs, day care and elder care programs. Supporting employees who are also caregivers means first understanding the impact of caregiving on your workforce, then implementing policies, programs and benefits that offer them tools to assist. These may include offerings to support balancing work and caregiving and case management support to coordinate or find caregivers. Employers that are advancing programs such as these use employee peer groups to partner with human resources and business leaders to create programs and offer a feedback loop regarding effectiveness.

12. Expanding Regulatory Burden

Amid the pandemic, regulators released new regulations regarding claims reporting, COVID-19 tracking, premium collection and job classifications. Systems had to be modified to collect the latest information, and already stretched resources needed to adjust to fulfill these additional requirements. 

All these regulatory changes were made with little input from stakeholders, and the increased requirements added additional administrative costs for everyone involved, including employers, third-party administrators (TPAs) and carriers. Temporary emergency rules and regulations are continually expanding and show no signs of letting up.

13. Workforce Evolution

Companies have adjusted their approach when addressing performance, productivity and workplace safety after a major shift to work from home in March 2020. Employee engagement and technology were just a few of the many impacts of this shift. Social distancing and office redesign coupled with consistent communication have proven successful for companies that brought their employees back to the office full- or part-time.

For companies opting to continue work from home policies, there are many unanswered questions regarding when to bring employees back. Whether or not employees are comfortable returning, if vaccines will be mandated or even just waiting until the surge subsides are all considerations for a potential return to the office. Regardless of when return to work becomes a viable option, expect the expansion of remote work opportunities post-pandemic.

14. Economic Recovery

The pandemic has caused significant unemployment increases, with lower-wage workers in service industries being affected the most. Brick-and-mortar retailers were already struggling before the pandemic, and 29 major retailers closed more than 10,000 stores nationwide in 2020. Industries like travel and hospitality are not expecting to see 2019 revenues return until at least 2022. Because these industries rely heavily on business travel, there may never be a full return, as companies are reevaluating the necessity of travel expenses.

While government aid packages could be expanded, they are a temporary fix. Ultimately, the economy will not fully recover until we get people back to work, meaning there will need to be widespread vaccine distribution, removal of government restrictions and new job opportunities for permanently displaced employees.

15. Insurance Innovation

New models for claims processing, including automation, will continue to emerge in 2021 and 2022, widening the gap between the innovators and legacy providers. The consumer journey and engagement will begin to evolve in a material way, driving on-demand tools and solutions. With an added emphasis on customer experience, organizations must rethink their design around support models to assist with consumer education, planning, decision-making and coordination of services. 

With the advancement of technology and the emergence of models not offered previously, expect pricing models to be adjusted. Early adopters wanting to engage in new models will help shape the learnings and performance of the innovation and engage in transparent discussions around value and pricing.

See also: 2021, We Can’t Wait to Get Going!

16. Insurance Market Challenges

In 2020, businesses saw significant price increases across multiple lines of coverage and carriers reducing policy limits in an attempt to reduce their exposure to losses that have been both historic and difficult to predict. Reinsurers reported significant price increases for 1/1 renewals with contract language changed to eliminate ambiguity around underwriting intent and reinforce exclusions. Exclusion of pandemic losses from workers’ compensation treaties means carriers will not have reinsurance available for those losses.

Workers’ compensation is the one line of commercial insurance that has been relatively stable in the last year. Due to drops in employer payroll, overall premiums and claims dropped in 2020. Several factors are putting pressure on carriers to adjust pricing, including historically low interest rates that lower carrier investment income and discounting on long-term claim payouts. There are also significant differences between the guaranteed cost market, which is drive by claim frequency, and the retention market, which is driven by claim severity. The costs of catastrophic injury claims has continued to climb at rates well above medical inflation.  

Risk managers should expect more of the same this year. As losses continue to grow in multiple lines of coverage, carriers are trying to find the correct pricing to make these lines profitable. Additionally, coverage gaps are developing as carriers tighten up policy language to avoid unintended claims. For example, many policies and reinsurance contracts added tight exclusions for infectious diseases, excluding coverage for conditions like Legionnaires disease, which had been previously available.

17. Cyber Risks

Deepfake videos, increased phishing and ransomware attacks and more vulnerable remote workforces have all contributed to record cyber threats. Any vulnerabilities could leave an organization open to million-dollar ransoms, data leaks and irreparable reputation damage. As hackers become more sophisticated and organized, it is vital to remain vigilant, and training employees cannot be overlooked.

18. Public Sector Challenges

The economic recession caused by the pandemic resulted in municipalities receiving significantly lower tax revenues from areas like sales tax, hotel taxes and income taxes. The public sector faced increased costs from public health expenses and the costs associated with operating in a pandemic environment. Additionally, civil unrest and riots in larger cities resulted in billions of dollars in public property damage and thousands of injuries to law enforcement officers. 

Law enforcement agencies face additional challenges due to decreased staffing and recruiting and an increase in retirements. Amid all of these obstacles, pensions remain significantly underfunded, and, as retirements accelerate, these pensions could run out. Ultimately, the events of 2020 will increase the costs faced by public entities, which will increase the burden on taxpayers to pay for all these costs.  

19. Lessons on Industry Engagement

In 2020, most conferences evolved to host their first virtual events. While many industry stakeholders have voiced concern with virtual fatigue and are anxious to get back to in-person events, the value of conferences before the pandemic is in question. As companies have adapted to online certifications, prospecting virtually and partnering with clients outside of these events, organizations question the return on investment of these conferences. While there will be a return to in-person events eventually, expect to see smaller booths, fewer attendees and a larger focus on local and regional participation. 

20. Litigation Management

Pandemic restrictions have forced courts across the country to postpone significant portions of their dockets, causing delays in litigation in both workers’ compensation administrative courts and civil litigation. These delays can cause claims exposures to escalate along with administrative costs associated with the litigation. In dealing with these delays, it may be best to be selective about what is litigated. 

To listen to the archive of our complete Issues to Watch webinar, please visit https://www.outfrontideas.com/. Follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about coming events and webinars.

After a year during which the U.S. insurance industry had to grapple with the global pandemic, the severe economic downturn and other factors such as political uncertainty, insurance deal activity in 2021 will be robust due to several factors:

• Increasing premium rates and a more optimistic outlook for most lines of business will make stronger market players more likely to look for growth opportunities through acquisitions, some of which may have been put on hold in 2020 due to the pandemic.
• The improving market conditions for insurers is also attracting more capital into the industry, which will help fund more deals. In addition, with interest rates at historic lows, buyers may look to tap cheap debt or deploy funds stored away during the pandemic to fund acquisitions.
• As the economy begins returning to a more stable state in 2021 — presumably after the widespread dissemination of COVID-19 vaccines — insurers will benefit from a reduction in both the regulatory and commercial uncertainty that resulted from the pandemic, which will allow for more focus on longer-term strategy and deal-making.
• For many large insurers and insurance intermediaries, the pandemic demonstrated a need to double down on efforts to adopt innovation into their existing business models and focus on a digital approach to customer experiences. Insurtech businesses were able to help insurers become more digitally focused and access new sources of data, technology and distribution channels despite the challenges of the pandemic. In 2021, insurers will target acquisitions of startups as a means of accessing novel technology platforms and new distribution channels; insurtech startups will be willing to consider being acquired by or partnering with large incumbents after having experienced the uncertainties of the pandemic and due to the need to allow for exits by early investors.

The new year has finally arrived. The holiday greetings that landed in my inbox last month all celebrated turning the page on 2020. The reality is we will continue to live with the effects of last year’s disruptions.

Approaching 2021 as a “recovery” year implies to some degree going back to where we were — and if that is where you put your efforts, you will miss the bigger opportunity, which is to hit the reset button and begin anew. Assume that we are not going back.

New beginnings require believing, thinking, imagining and acting with a new outlook. So, here are seven rules for breaking the rules as you pursue your organization’s reset in ways that might point you to a remarkably better year.

1. Rewrite the Rules for Today's Realities

The orthodoxies that were defined by the way things used to work are out of date. You may find that the rules defining policies, processes, metrics and structures for your business were developed in another time when the bases for assumptions were very different. They may now be outdated and hurting your progress and results.

A healthy question to ask is: “Where did those rules come from?” Be willing to ask this question and open the dialog with colleagues about where change can help the organization. We are in a new space, forced to operate on new terms. Don’t let tight adherence to the old rules become self-imposed constraints on your reset efforts.

2. Revalidate the Problems You Are Trying to Solve

The market has moved. Stakeholders have moved. Customers’ needs have shifted, intensified and been reordered. That means it’s time to make sure that the problems your company’s solutions address are completely aligned with all of these changes.

Are you a solutions-pusher or a problem-solver? The latter will capture more expansive opportunities to serve customers because their focus will naturally be on customer-centric problem statements. Don’t get stuck on your existing solutions. The compelling problems may now be elsewhere.

3. Shift From Talking About Innovation to Taking Action

There is always great interest in talking about innovation. When aspiring founders and intrapreneurs ask me where to begin the journey toward realizing their vision, I always begin with the same feedback: Just start. Do something. There is not an unambiguous rule book. Being in the game experimenting and learning is the best way to advance. Weight your innovation energy heavily toward execution of prototypes and understanding the business model, over sharing presentations and theories.

4. Be Clear on What you Mean by Innovation

Innovation is very easy to theorize about, harder to deliver. It’s a messy journey, one that confounds people whose comfort zone is defined by predictable, linear processes.

"Innovation" is also a word loaded with meaning, ranging from “cool stuff” to hard-working solutions to real problems. Be clear on what innovation means to your organization, how it connects to creating stakeholder value, what customers you want to serve and whose problems you want to solve with innovative answers. Gain alignment with colleagues so you can lock arms on where you want to head.

5. Embrace Uncertainty as Opportunity

Ambiguity, uncertainty and unpredictability are replacing the standards and rules. Acceptance that we will likely be operating in this new environment for some time opens up new possibilities. We are seeing this already in the expansion of home delivery offerings, B2B2C businesses moving to serve consumers directly, new approaches to supply chain management, the rapid growth in telemedicine and countless new digital services offerings.

There will be continued opportunity in the fallout of last year’s events. Within the messiness are massive new problems calling for answers, so shift energy from a focus on maintaining stability — where it may no longer even be possible — to embracing uncertainty as a source of opportunity.

See also: 11 Insurtech Predictions for 2021

6. Reevaluate Where Your Mindset and Skills can Have the Greatest Impact

To adapt quickly enough to new market circumstances, your core business partners may be newly open to engaging with you differently than in the past, tapping into your skill set and mindset to accelerate progress on pressing priorities. For example, there is now widespread focus on reinventing the employee experience, rethinking the configuration of the workplace and accelerating the digital transformation of the customer experience. Where can you dive in and assist where you may not have been viewed in the past as a valuable resource?

Recalculate the mix of short-term versus long-term initiatives on your project list. Are there challenges right now to the core business model that require unconventional solutions? Challenge your assumptions about where on the time horizon resources are being used. Transfer skills — speed, agility, collaboration tools, fit-for-purpose processes — that power new ways of executing. What have you learned this year that can be seeded throughout the business for obvious, tangible impact?

7. Reset Relationships With Your Internal Stakeholders

This is a time to build new partnerships with colleagues and be positioned to exploit what you do best for the benefit of your customers and the health of the business. To figure this out, follow the enduring first rule of marketing: answering “what’s in it for me?” Understand what drives your colleagues rationally and emotionally, how they define success and where, as a result, there are new points of alignment. Go on a listening tour in the organization to find out how stakeholders see the year unfolding, what they are worried about, what their hopes are for the year. Choose partners who already exhibit in their behaviors, actions and decisions the necessary growth-oriented mindset and ways of working.

Even with the new year underway, we will continue to face the challenge of being able to contribute in the midst of rapid transformation, to reshape how we can help customers, support employees and meet business goals. Doing so depends on our own ability to let go of old paradigms that no longer work, and to be willing to be constructive rule-breakers focused on solving the problems people never had before, but are struggling with now.

2020 was a year of accelerated digital transformation in insurance across all lines of business. Major purchases such as life insurance or financial products are increasingly bought and sold online, making the digital customer journey one of the top sales tools in the insurance business.

Effect of the COVID-19 crisis on insurance sales

The COVID-19 crisis had wide-reaching effects across all lines of business. Consumers drove less and, at the same time, shopped around for better deals in auto insurance coverage. Historic mortgage rate lows combined with a trend of fleeing big cities for suburbs, so home insurance sales also skyrocketed this year. When it comes to health, record unemployment and concerns about adequate plan coverage drove most of the insurance buying activity. Coupled with reduced doctor visits, profitability in health plans remained positive, although long-term ramifications are still to be seen.

Life insurance policies faced challenges, including Fed rate cuts and decreased return on carrier investment assets, making profitability a significant challenge. Medical exams became more difficult to complete, and delays and restrictions led to funnel breakage, leading to reduced sales amounts. Because life insurance is not a required policy, it is often the first to evaporate from the consideration set during the economic downturn.

What insurers need to change to succeed in 2021

2021 is the year of ultimate change - and not bad change, but change that will affect the entire insurance organization for the (digital) years to come.

The need to focus on the holistic experience

The way consumers research and buy insurance products has changed. Every interaction with a customer becomes a potential turning point, from a website visit to a call with a customer representative or a visit to an office branch. 

Purchases initiated through digital channels are likely to stay online. According to the J.D. Power 2017 Auto Insurance Study, customers who set up an account online with their insurer are two times as likely to also use an app to submit incident photos. In addition, they are three times more likely to report the first notice of loss online.

Still, most insurers lack a clear plan or holistic digital strategy, so their efforts often result in an incoherent patchwork of digital initiatives. Processes are not digitized end-to-end, and channels are not integrated. As a result, insurance companies’ digital endeavors are often not fully reflected in their top line, let alone their bottom line.

First, insurers must transform their digital channels by mirroring the success of big online retail platforms. Insurance policies that are sold online need to be packaged and priced differently than those that rely on face-to-face sales. 

Second, digital support goes hand-in-hand with sales. Given the complexity of insurance products, even those that are simplified to match the digital world, insurance agents must be armed with effective support tools. Support reps need to be supported with the tools that will help them sell on value and explain to the customers which product best matches their needs, smoothing the pass to up-and cross-selling.

See also: 2021, We Can’t Wait to Get Going!

Prioritizing digital customer journeys

Digital channels have been an important part of the insurance business for many years. But digital always played a supportive role. Today, the digital channel takes center stage, and it needs to be treated as the star of the show.

Instead of rushing to quickly release ad-hoc digital initiatives that do not have synergy with each other, digital leaders must strategically approach digital customer journeys.

The digital customer journey must be smooth, effective and seamless for the customer. Every interaction must be logged for further analysis on the back end, and manual actions must be automated to prevent delays, errors and backlogs. Integration between front-end and back-end technologies is key to achieving end-to-end digital journeys that are up to the challenge.

Empowering agents and brokers to deliver better service

Simply converting a decade-old rates calculator to a digital app will not do the trick. Insurers must support sales and service reps by providing them with all the tools and materials they need, attractively packaged and tailored to the digital world. 

Employee experience is as important as customer experience, as, after all, employees will be the ones guiding customers on their purchase path. 

Self-service, 24/7

The digital world is always on. Having a robust self-service capability that is on 24/7 is one of the requirements nowadays. Consumers are used to getting anything, any time, and expect an immediate reaction to their online actions.

Consumers expect insurers to use the data they already have to improve their experience further. A self-service portal that keeps asking existing customers for the information that the insurer already has elsewhere in their systems is going to cost the insurer its customers.

Automation and personalization of the digital journey are key here. End-to-end digital policy onboarding and claims handling have emerged as a key competency that consumers want and expect. But digital transformation also removes high costs from the onboarding and claims processes by eliminating manual work that used to be required.

Creating digital insurance journeys for 2021

Once you've understood and accepted your points of change, it's time to create the best digital insurance journeys. Here are the benefits that simply cannot be overlooked:

Scalability

Creating a single digital journey is no longer enough. Insurers must focus on automating customer journeys end-to-end, including both the transformation of the front end and back end. 

This requires scalability. Technologies that can amplify existing resources and create repeatable processes that can be implemented across the organization.

Time to market

Traditional enterprise development projects that take anywhere between six and 12 months are no longer fit for the fast-moving pace of the digital world. Agility and time to market are becoming key competitive advantages for digital-first insurers.

Increased efficiency and productivity

Digital is not only about the experience, but it is also about boosting the efficiency and productivity of your employees. Back-end processes that require a lot of manual handling create delays and waste your employee’s time. 

Improved data accuracy

Insurers gather a wealth of data on their customers. However, the access to this data must be democratized, as, currently, it is not accessible to every employee who needs it in an actionable format.

The right technology

Digital technology such as mobile, AI, no-code platforms and IoT plays a key role in a company’s ability to quickly respond to consumer actions or feedback as well as gather data on market conditions. Identifying which technologies are best suited to cater to the demanding digital customer is the key to success in 2021.

See also: 11 Insurtech Predictions for 2021

Insurance in the ‘new normal’

Insurers are faced with a difficult task,. Digitally savvy consumers, fast-moving technologies and the demands for personalization strain internal IT resources to the max. Using the right digital tools is necessary to ensure the ultimate success of the company and of course, the best customer experience out there.

Selling insurance in 2021 isn’t the same.