The premise is simple: Risk mitigation happens when people take everyday actions that promote their safety for the long term. In the realm of health, life and auto insurance, where such everyday actions constitute much of a policyholder’s risk profile, motivating behavioral change through financial and psychological incentives can dramatically improve outcomes.

That’s the power of behavioral science in insurance. It explains how economic, social and psychological factors influence the way we make decisions. Over the past decade, those insights have been revolutionizing the way insurers approach pricing, underwriting and customer experience.

Encouraging positive lifestyle changes doesn’t just make for healthier policyholders – it’s a symbiotic relationship. Insurance providers can leverage behavioral incentives to increase brand engagement, improve underwriting accuracy and lower costs.

Coupled with tech advances that enable better risk assessment, behavioral science could just be insurers’ silver bullet in a period of stagnant growth and financial strain from the pandemic. Here’s how it works:

Step 1: Focus on Risk Prevention by Encouraging Healthy Behaviors

Over the past 10 or so years, major insurance carriers have begun to incorporate wellness programs into their policies. That’s because prevention is always better than cure.

Serious illnesses that make up the leading causes of death in the U.S. – including heart disease and cancer – result in millions of expensive claims every year. Faced with this troubling reality, insurers asked: Which everyday behaviors do we have the power to encourage that can improve health outcomes and reduce costs?

For many patients, diseases are preventable through lifestyle changes and early risk detection. While not directly involved with policyholders’ medical care and lifestyle activities, insurers realized they could add an incentive to build healthy habits by lowering insurance rates as a reward.

Through partnerships with wellness companies and technology providers, many insurers now encourage healthy behaviors by offering lower premiums:

• Life insurers track your daily steps. A handful of life insurers have partnered with Apple Watch and Fitbit to create step-tracking programs that decrease rates for frequent walkers. Walking more increases life expectancy, which means fewer payouts.
• Medical insurers make it cheaper to go to the gym. A number of medical insurers now provide gym membership discounts and lower premiums when policyholders log their gym visits.
• Medical insurers encourage routine screenings. Insurers lower premiums when customers with genetic risk factors for diseases like cancer and diabetes attend annual screenings and checkups.
• Auto insurers use telematics to encourage safe driving behaviors. Perhaps the best-known example of a prevention model in insurance is the use of telematics to reward more responsible drivers with lower premiums.

See also: 3 Tips for Increasing Customer Engagement

Step 2: Boost Engagement Through Experience Gamification and Brand Touchpoints

Financial incentives aren’t the only powerful motivators in human behavior. Insurers can motivate healthy lifestyle decisions – and enhance the customer experience – by gamifying their products.

The insurance industry has often struggled to build brand loyalty and customer satisfaction because its product is, by nature, easy to ignore. As many as 44% of customers have had no interactions with their insurers during the last 18 months. Unless policyholders have a very negative interaction with their insurer, they’re unlikely to have a memorable brand experience, or even remember the name of their carrier.

Wellness and prevention models are appealing because they're fun. People love games and gratification: It’s triply rewarding when, after going to the gym, policyholders know they’ve not only done something good for their health and their wallet, but they can earn more points on their app.

A gamified product is also an opportunity for more digital brand touchpoints. By creating apps and online platforms for tracking wellness behaviors, insurers can create a stronger brand relationship with their policyholders – and ultimately improve the customer experience.

Step 3: Leverage Data to Price and Underwrite More Accurately and More Efficiently

Encouraging policyholders to take certain actions is only one piece of the puzzle. Once insurers change the way people behave for the better, how can they translate that into tangible business benefits?

The insurance industry has been headed toward digital transformation for the past several years. The increased adoption of tools like artificial intelligence, automation and machine learning has made dynamic behavioral risk assessment models possible. 

Insurers collect data upon data on their policyholders’ risk profiles and behavioral patterns. To convert that data into cost savings for their business, insurers will need to leverage tech to write policies on the back end. 

By digitizing and automating the pricing and underwriting process, insurers can efficiently and accurately provide fair rates based on healthy habits. A life insurer can assess FitBit data to deliver a lower premium, or an auto insurer can analyze telematics data to determine whether a premium should decrease based on safe driving practices.

At Beam Dental, for example, we underwrite tens of thousands of policies exclusively via AI and ML. This allows us to compare new policyholders against historical claims data to precisely predict pricing and suitable dental plans. And by offering a connected electric toothbrush that tracks daily brushing, we can offer policyholders with good dental habits lower premiums.

See also: How Will Strategies Change in 2021?

Better Health Outcomes, Better Savings, Better Customer Experience

The insurance industry has long needed a jolt of innovation. COVID-19 may be the tipping point in the digital transformation that was already underway.

Now that more and more insurers have access to cutting-edge tech that supports better risk assessment and digital experiences, they have the tools necessary to encourage, track and reward behaviors that reduce risk. Technology is the means, behavioral science is the roadmap and better outcomes for insurers and policyholders alike are the outcome.

To say that 2020 was a whirlwind would be an understatement. Our world was completely rocked by the impact of COVID-19, quarantine and adjusting to the reality of working remotely from home. And it wasn’t just people who were forced to adjust; businesses were also burdened with having to quickly change course, some with little direction and few resources.

Take independent agents (IAs) -- we recently conducted a survey on the state of the independent agent landscape, and a resounding 60% of agents said that they were unprepared to move their businesses to a fully remote structure, which strained client relationships and led to struggles with retention. Agents reportedly saw an average 38% drop in revenue and sales due to COVID-19. In hindsight, 57% of IAs wish they had better technology to assist them and their businesses during the pandemic. The pandemic taught IAs quite a few hard-fought lessons, which they will need to keep in mind as they begin the work of recovering their businesses.

Here are my top four predictions for what will most help IAs with this process.  

1. 2021 will be the year independent agents take the lead on technology investment 

The time to invest in digital solutions is now -- but independent agents themselves acknowledge that they tend to pivot slowly, with 91% agreeing that IAs have traditionally been slow to adopt new technology. The pandemic was a much-needed reality check for IAs. Three-quarters believe that technology investment will be crucial for them to remain a vital part of the insurance ecosystem. 73% of agents say that increased investment in digital solutions will help them attract new clients, while 80% believe it will help maintain and retain current relationships. Agents also believe that technology will inevitably make them more valuable to their carriers, with three-quarters saying that better technology would allow them to be stronger business partners. 59% agree that a continued focus on innovation will be crucial. 

2. While digital demands are here to stay, human touch points remain vital 

When it comes to increasing investment in technology, agents cannot simply think about themselves. Customers are also on the hunt for the newest and latest digital tools and solutions. In fact, 48% of agents say that providing customers with digital access to products and services is a key way for them to provide value. Nearly all (93%) said customer expectations are evolving. COVID-19 created a sense of urgency for IAs as consumers increasingly insisted on interacting exclusively online. Today, agents report an increase in customer expectations surrounding automated processes (76%) and digital tools (75%) -- and agents are now 23% more likely to say they are looking out for digital solutions than they were before the pandemic. 

However, while digital demands will continue to rise in the post-COVID world, that does not negate the fact that customers still have an appetite for personal interaction with agents. In fact, 91% of agents say that they have seen an increase in their customers wanting to speak with them when they have questions, with seven in 10 saying they have seen an increase in customers wanting to meet in-person. Three-quarters of agents say that they have noticed a rise in their customers both valuing and following their advice. Customer expectations have forever changed, and IAs willing to implement a hybrid approach to addressing evolving consumer needs will be best set up for success. 

3. Adjacencies and affinity groups will be the go-to source for lead generation 

When it comes to generating sales leads, the tried-and-true method for agents has historically been word of mouth and referrals. While those are still vital channels, affinity groups can provide agents with thousands of prospects they might not have come across otherwise -- and, when working to rebuild a business, you need all the customers you can get. 81% of our agents say affinity groups have been a strong driver of leads, with employers, financial institutions, real estate agents, car dealers and alumni associations being the top partners. The key is to partner with local affiliates of those trusted sources and have all of the modern tools required to serve a partner’s constituents in a seamless, omni-channel manner. 

See also: Of Independent Agents, Heirloom Tomatoes

4. More investment and support from carriers

Insurance companies have truly stepped up to the plate to support both agents and their customers. Insurers have provided customers low-driving discounts and payment flexibility throughout the pandemic. For agents, insurance companies have provided financial support, including advanced commissions and early contingency payments. Many increased investment in digital tools and solutions for agents, and we can expect to see this trend continue in 2021. The independent agent channel is crucial to carriers, and they will continue to invest in helping IAs modernize. 

Independent agents undoubtedly have some work to do as they begin to rebound from all COVID-19 has thrown at them, but the promise of coming back bigger and stronger is there. Business as usual is a thing of the past, and agents must be open to adopting new technologies into their business practices. The purchasing landscape is evolving -- and those unwilling to adapt will be left in the dust.

Individuals with strategy and planning roles have had a busy time in 2020 adapting to the evolving realities of the pandemic and economic uncertainties. 2021 is likely to be more of the same for people in these roles. Entering into 2020, personal lines insurers were on a transformation path. Innovative and bold strategies and headline-grabbing news about new initiatives were becoming common. Every insurer recognized the need to build a strong foundation with a modern core, accelerate digital transformation and become more aggressive in areas like expanding distribution and improving the customer agent/experience. Many had moved toward parallel transformation paths – operationalizing strategies and new target operating models to optimize the business while simultaneously driving breakthrough innovation with new products, new business models and new distribution approaches. However, the events of 2020 caused many to change course.

SMA's recent research report, 2021 Strategic Initiatives: P&C Personal Lines, provides insights into how strategies are shifting. All indications are that the transformation that began several years ago will continue in 2021. However, some significant changes are occurring in strategies as insurers consider the new realities of the business environment, risk landscape and workforce shifts. Some of the big themes for 2021 include: 

• Cost management and optimization dominate: In uncertain times, the first reaction is often to double down on expense management and operational efficiencies. To a certain extent, these areas are always a part of the equation. But in 2021, they will play a larger role as companies position for the post-pandemic environment.
• The leveraging of transformational technologies forges ahead: It may seem counter-intuitive that companies are going back to the basics, yet at the same time are looking to implement new technologies like machine learning, bots and computer vision. But these technologies have the potential to contribute to operational efficiencies as well as provide insights to improve profitability.
• Foundational initiatives like core modernization and business intelligence (BI) remain vital: All signs point to a constant level of high activity as personal lines insurers advance their core and BI projects. These large, mission-critical projects become even more important as companies recognize the need to have a strong foundation.

It would be erroneous to imply that innovation and "big news" type events will not occur in 2021. Even during this pandemic year, we have seen astounding IPOs, acquisitions, new products and new partnerships. Leaders will never stop innovating and looking for advantage. This will probably be the case throughout 2021, as well. In fact, bold leaders often see times like these as an opportunity to position for the next wave of growth and get even further ahead of their competitors. However, it is just as likely that most mainstream companies in the industry will be laser-focused on cost management, business optimization and successfully completing and executing projects that are already in motion. One thing is sure: Entering into 2021, personal lines insurers will continue to closely monitor development related to COVID-19, the economy, customer behavior patterns and many other dimensions that affect risk, claims and business opportunities. It will not be surprising to see adjustments to strategic initiatives happening throughout the year.

See also: Best AI Tech for P&C Personal Lines

You may have noticed that the word “ecosystem” has crept into the insurance industry vernacular. Consequently, we risk turning an important concept into a cliché, one so overused outside of its original context that its impact and meaning become fuzzy and  eventually lost.

To be clear, I am not suggesting that “ecosystem” does not apply or is not fundamental to the transformation of the insurance industry – quite the opposite, actually. But we should understand its origin, respect its meaning and use it appropriately.

The word "ecosystem" derives from the Greek words oikos, meaning "home," and systema, or "system." It was first used in 1935 in a publication by British ecologist Arthur Tansley to draw attention to the importance of transfers of materials between organisms and their environment. In the early 1990s, James F. Moore originated the strategic planning concept of a business ecosystem, now widely adopted in the high-tech community. The basic definition comes from Moore's book, “The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems.”

Using biological ecology as a metaphor, Moore reveals how today's business environment parallels the natural world and how, just like organisms in nature, companies must coexist and coevolve within their own business ecosystems. He identified radically new cooperative and competitive relationships and provided a comprehensive framework that businesses can use to enhance their own collaborations with their customers, suppliers, investors and communities.

Insurance Platforms and Ecosystems

Powerful and exciting insurance industry ecosystems have emerged – and continue to evolve like living organisms – as connected sets of services in a single integrated experience. Platforms enable and support ecosystems in that they connect offerings from cross-industry and inter-industry players in P&C, life, health and accident.

Platforms and the ecosystems they support will increasingly enable insurers to turn strategic visions into realities. Today, insurers succeed by offering products. In the future, insurers will win by providing access to risk prevention and assistance services — and by offering the right product to the right customer at the right time.

McKinsey research found that ecosystems will generate $60 trillion in revenue by 2025 — which will constitute 30% of global sales in that year. Consequently, many insurance executives are looking beyond industry borders to understand the growing opportunities and threats that come from new partners and competitors in the ecosystems relevant to them, from mobility to healthcare and beyond.

Platform businesses are the most efficient value creators, compared with other types of businesses, because they harness the power of distributed supply and network effects. The network effect is a phenomenon whereby increased numbers of people or participants rapidly improve the value of a product or service.

See also: Ecosystem-Based Business Models

Purpose-Built Insurance Ecosystems

The P&C insurance industry has already developed ecosystems to support specific business functions and continues to do so. Some examples date back to 1980 when information providers built platforms linking auto insurers to collision repair facilities to streamline the repair process. These ecosystems quickly expanded to include independent appraisers and adjusters, auto glass and car rental vendors, salvage pool and towing operators, parts providers and others. Today the ecosystems are beginning to include telematics service providers and auto manufacturers and dealers.

New property claims ecosystems are emerging to include a full suite of contractors, inspection technology, digital payments and other service providers, enabling insurers to resolve claims in hours instead of days or weeks. According to Paul Carroll, editor in chief of Insurance Thought Leadership, "Innovation will focus less on bells and whistles and more on improvements across entire processes and organizations. But incumbents must start preparing."

Future Insurance Ecosystems

Look no further for a brilliant and powerful new ecosystem extension than the recent announcement that Credit Karma, a unit of Intuit, has partnered with Progressive Insurance to offer usage-based auto insurance to Credit Karma’s millions of financial service smartphone app members, using its integration with DMVs to obtain instant driver and vehicle information.

And as if on cue, in her “11 insurtech predictions for 2021,” Martha Notaras, managing partner, Brewer Lane Ventures, predicts that "insurance will be embedded in every financial and retail transaction." 

“It is not a matter of if, but when, the insurance industry will have to adopt an ecosystem approach. The industry is not immune to the changing demands of the market,” says Dr. Geoffrey Parker, professor of engineering at Dartmouth College and a visiting scholar and fellow at the MIT Initiative on the Digital Economy.

It is hard to believe, even for insurance industry professionals, that first notice of loss (FNL) is the beginning of the P&C insurance claim management process.

But that is too myopic a perspective.

The beginning of the P&C insurance claim management process is the underwriting process that determines acceptance or rejection of a risk (or set of risks).

No, that still isn’t the beginning of the P&C insurance claim management process.

The beginning of the P&C insurance claim management process is the process to create products or enhance existing products.

No, that still isn’t the beginning of the P&C insurance claim management process.

The beginning of the P&C insurance claim management process is the creation of the insurance carrier’s strategy to manage the changing risk landscape.

That seems reasonable to me.

The P&C insurance claims management process is not an island onto itself. It is an integral, and critical, component of an insurance carrier’s contribution to society of managing or otherwise mitigating risk (through the use of legal contracts that stipulate the terms, conditions and restrictions defining which risks, or parts of risks, will be paid and which risks, or parts of risks, will not be paid.)

See also: P&C Commercial Lines in 2021

From an insurance business/operational systems viewpoint, there is only limited value in an insurance carrier having a claims management system that is not part and parcel of the other core administrative systems required to keep the insurance carrier operating.

I suggest that if the entire set of core administrative systems is not part of a communications and collaboration system that encompasses the entire portfolio of systems of record, systems of engagement and systems of insight, the carrier is hobbled in any attempts to compete.

This article was first published here.

At a time when consumers and business owners are focused on cost efficiency more than ever, telematics solutions offered by insurance carriers present a prime opportunity for customers to leverage their driving data’s potential to enable discounts and operational savings. 

Nationwide’s latest Agent Authority survey found that 65% of consumers would be willing to allow telematics to capture their data if it provided an insurance premium discount, but an overall lack of knowledge on the solutions and benefits available to them is a major hurdle. On the flip side, middle market business owners demonstrated a high level of awareness of telematics and support for investing in the technology due to its safety and operational impacts but could use more guidance on which solutions fit their needs and how insurance ties in. 

The results emphasize the important role carriers play in offering innovative but easy-to-implement solutions, in tandem with robust sales and marketing resources for distribution partners like agents and brokers, to help drive home the benefits and instill confidence in customers in using telematics.

Lack of telematics knowledge a barrier for consumers

Just over a quarter of consumers (27%) surveyed say they know what telematics is and over half agree lack of knowledge is a key barrier to using the devices. They’re also fairly split on how much they think telematics could save them each month. 

Notably, while 67% of consumers have not discussed telematics with an insurance agent, it’s clear that they’d greatly benefit from an agent’s counsel. Consumers who say they don’t use telematics were likely to also hold key misconceptions about costs with using the devices. A quarter (24%) said they believe there’s an added cost to using telematics, and more than half (57%) believe using a device could make their rates go up. 

In fact, in 2020, drivers enrolled in our usage-based insurance programs are saving an average of more than 20% compared with a traditional policy. By 2025, we project usage-based programs will account for 70% of personal lines new business. 

Through innovative partnerships with companies like Cambridge Mobile Telematics, Nationwide is also delivering new features like monitoring and informing drivers of their distracted driving risks – a major concern of 42% of consumers. 

Telematics can solve business owner challenges

In addition to managing their business, many middle market business owners face added concerns related to the safety of their drivers and fleet vehicles. They also experience 7.5 accidents per year with their fleets, so it’s not surprising their top concerns include distracted driving among employees (83%), rising cost of insurance for fleet vehicles (82%), safety of drivers and accidents with business vehicles (81%) and knowing the location of their vehicles (76%). 

Interestingly, business owners may overestimate difficulties of implementing telematics. Many cited the costs of investing in telematics (35%) and the time it would take to install the devices (21%) as top barriers for using the solutions. The majority of respondents don’t see costs as an issue, however, with 52% of business owners saying they’d pay $30 or more a month per vehicle to ensure safer driving and 87% saying the benefits outweigh the financial costs. 

See also: The Evolution of Telematics Programs

Telematics can address many of fleet owners’ concerns, and the opportunity is ripe for carriers and agents to change conversations with customers about telematics from an "add-on" perk to what it really has become – an essential tool for managing a business. With nine-in-10 business owners agreeing telematics improves driver safety and improves operations, providing clear information can give them a full view of telematics’ advantages for their operation. 

Nationwide’s Vantage 360 Fleet program is available at no cost to small commercial auto customers and delivers valuable business insights based on a number of driving factors, including speed limits, hard braking and acceleration, phone distraction and location and trip history. The technology is simple and takes just a few minutes to install. Vantage 360 Premium Partner Program brings comprehensive fleet management and GPS tracking to middle market business customers.  

Consumers, businesses agree telematics benefits outweigh concerns

The survey found many consumers (25%) and business owners (37%) who don’t use telematics view data privacy as a barrier but agree that the advantages overshadow those concerns when they’re receiving some sort of discount. 

The results reiterate the need for today’s telematics programs to make it very clear to customers how data is being collected and used, and the benefits customers can gain. The driving data collected by Nationwide is used for insurance purposes only and never sold to any third-party entities. 

Carriers have an opportunity to step up in addressing these challenges with partners and customers, supplying expertise and resources to better educate drivers on how telematics data is tracked and used and arm partners with resources to help dispel common misconceptions customers may have about telematics. 

See also: Driving Into the Future of Telematics

About the study: 

Initiated in 2020, Nationwide’s Agent Authority research seeks to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty and find out the actions business owners and consumers have taken as a result of COVID-19 and the conversations they’re having with agents. Previous Agent Authority research reports include: Agent-customer relationship; Small business owner needs and challenges; Middle market business owner needs and challenges; Agents’ top concerns through the pandemic; Consumer and business owner cyber preparedness.

Just as personal lines have become commoditized and moved to a world of digital distribution, the online sales of small business and workers’ compensation insurance is fast increasing. There has been an explosion in online offerings — from online agents, to managing general agents (MGAs) to insurers. Because we were curious about whether direct-to-consumer would increase, we conducted a survey of small business insurance buyers.

We surveyed 190 small business owners about their practices, attitudes and preferences when it comes to purchasing insurance.

The rich data set from this research can guide insurers as they think through how to approach the acceleration of digital direct for small commercial. The key lessons drawn from the data are:

• No respondents currently purchase online. This was not by design; it was simply that, in the random solicitation, no respondents happen to buy direct. The direct-to-consumer market is still relatively nascent, and that was reflected in the response rate.
• Eighty-one percent use an independent agency that represents multiple insurers.
• More than half of small businesses are delighted with the process of insurance buying but wish that there were more comparison options available, that the coverage was less confusing and that the process was simpler and faster.
• Half of small businesses are not likely to buy commercial insurance online, with the biggest barriers being the lack of familiarity with insurance and the desire for an agent. But 33% say they would be likely to make their next purchase of commercial insurance online.
• Those who want an agent are looking for a personal relationship. They want advice on what coverages to purchase, someone who can answer their questions and someone who will intervene with the insurer, if needed.
• No surprise: Low price is the most important factor in the insurance buying process. By contrast, the least important factors — which include fast claims payment and fair claims payment — likely aren't priorities because small customers generally do not have many claims and do not expect to. Without other sources of value, price becomes the dominant feature.
• When presented with two value propositions, Concept One with a lower price and no agent and Concept Two with a stated higher price that includes an agent, we found that 61% chose the more expensive, agent-assisted option. However, one-third of small businesses preferred an online buying experience at a lower price even though none of them use that option today.
• The question for insurers is how they want to address this growing desire for purchasing commercial online. It is a potentially $20 billion market, by our calculation. Insurers can look at going after the online buyer — through a digital agency, by involving the agent or by selling direct themselves. Or they can focus their investments by supporting independent agents who want to keep buyers satisfied with the traditional process and avoid digital disintermediation.
• Regardless of the option chosen, we have identified a variety of strategic questions insurers should answer about the role of the agent and priorities to address in the online market. Depending on the approach, insurers may need to invest not only in new technologies but also in new internal processes to provide services for online buyers or to support agents in retaining those customers.

You can find the full report here.

As we close out a year that brought "Blursday" into the lexicon and that feels like it's been going on for decades, I'll actually stick with the prediction I made at the start of the year: that innovation is poised to accelerate greatly in the insurance industry.

As I wrote in Six Things on Jan. 7, I thought the industry had been focusing on innovation for long enough that it had begun to see what worked and what didn't and "will begin to get better at… getting better." I had no idea, of course, that a global pandemic would compress five years or so of digitization plans into one. But I don't think this year's phenomenal progress marks the end of a round of innovation. Rather, I think we're at the beginning. The structural pieces that were in place at the start of the year, because of our collective experience, are still there, and this year's progress creates lots of opportunities as we come out the other side of the crisis that has gripped us all.

We certainly have hard days still ahead of us. Vaccines won't inoculate enough people until perhaps May or June to let life even begin to return to normal, and an awful lot of people will die between now and then. Although the economy could be poised to snap back, many economists warn that the stimulus plan just passed by the U.S. Congress will soon need to be reinforced to sustain small businesses (and their many employees) until next summer. In normal circumstances, Washington, DC, could be expected to respond to the nation's needs, but the capital seems to be getting more dysfunctional these days, not less.

Still, needles are going into arms with COVID vaccines a month or two sooner than I had thought possible and with far higher effectiveness. Lots of good things can happen once the virus is vanquished.

I may be a tad biased as I write this -- I somehow always feel lighter when we pass the winter solstice and I know the days are getting longer, even if I won't feel the difference for a good while -- but I'm confident that insurers will be creative once employees start returning to offices, perhaps in new physical and temporal arrangements, and as customers' lives and businesses start to return to normal.

Customers can continue to be steered to online resources for much of the drudgery, such as supplying basic information, while agents will be able to provide more of the high-touch counseling that they're trained for and enjoy. Likewise, now that clients have become more accustomed to digital connections, companies will be able to expand on what they've been doing with automated and semi-automated customer service systems, such as chatbots that rely on artificial intelligence. Such systems not only lower costs but eliminate often-boring work while providing better service -- what customer wants to call in and wait on hold, listening to bad music or sales pitches, when she can just text the insurer and get an immediate response about the status of a payment?

With customers now used to avoiding personal contact when processing claims, insurers have license to continue developing the processes for no-touch or low-touch claims, especially in auto insurance but increasingly in homeowners insurance, too. Such processes, like AI-based communications, cut costs while speeding processing and making customers happier. What's not to like? And what now stands in the way?

Work processes can go to the next level, too. Much of the hard work of digitization has been done over the past several months. It's not as though people working remotely can share paper any more. You don't just casually walk a file upstairs to the coworker who is the next stop in the process, not with that coworker somewhere across town. So just about everything has at least been scanned and exists in digital form. Companies can now build on that digitization to optimize a host of processes. No more phone tag required, or even emailing in most cases. In optimized processes, documentation can take care of itself, making queries of data bases or of people when information is needed and then automatically moving on to the next stage of the process. AI can help manage the workload, using all this newly available digital information to prioritize where adjusters or underwriters should be allocating their attention.

We're still months away from relief from the COVID scourge, but at least we can all start planning, with confidence, for what comes next. And I'm betting that 2021 will see at least as much innovation as 2020 did.

In the meantime, I wish all of you a joyous -- and safe -- holiday season.

Cheers,

Paul

P.S. We'll send a year-end wrap-up of the most-read articles of 2020 next week. Six Things will return in early January.

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

Record Insurtech Fundraising in Q3

Relatively well-known but not particularly well-established insurtechs across the board could be about to face their toughest moment to date.

No More Apples-to-Apples Comparisons

Yes, insurance is complex, but such comparisons oversimplify insurance, make it a commodity and serve neither the client nor the agency.

Long-Overdue Change in Commercial Lines

Commercial insurers need to leap forward with a big vision for the future of underwriting, then reverse-engineer a holistic strategy to deliver on it.

Diversity and Respect: Best Insurance Policy

"Insurers must not only diversify their agent base but create and market plans that reward those living in areas they once punished.”

5 Risk Management Mistakes to Avoid

Because of the dynamic nature of markets, risk management programs need to be regularly updated or they, themselves, become at risk.

5 Things to Keep in Mind for Benefits in ’21

Insurance providers looking for a reset that strengthens relationships with customers and HR departments have a real opportunity here.

The sins of fathers, including the Founding Fathers, visit their iniquities upon the sons of multiple generations. The sins of the past endure throughout industries large and small, including the insurance industry. The sins exempt no one, while they are a chance for everyone to repair the breach: to learn from the past and earn the trust of African-Americans.

The history of racial discrimination is too long to summarize in a column and too indescribable, except to say healing starts when hearing begins; when insurers take the time to listen to African-Americans; when listening translates into action — by and for African-Americans — so communication can flourish and insurers can succeed.

That insurers have a duty to listen, that African-Americans also have a right to a hearing, that the two intersect is reason to proceed with the hard work of reconciliation. Hard though it may be, and difficult though it will be to hear of hardships borne by innocents, insurers cannot overcome the sins of the past unless they understand how innocents continue to bear the burdens of other people’s sins.

According to Dennis Ross of StoryConnex.com:

“Very little is monolithic in the African-American community, with one exception. The memories of abuse by insurance agents who barged into the homes of elderly grandmothers to sell policies nearly by force. Today, while homes receive a knock, ZIP codes signal higher interest rates and premiums. Insurers must not only diversify their agent base but create and market plans that reward those living in areas they once punished.” 

Ross speaks of what he knows, not because he opposes insurers, but because he supports those insurers with a commitment to diversity and respect. He invites the insurance industry to lead by example, so other industries may act without delay.

Ross speaks of the need to speak truth not only to power but through the empowerment of African-Americans. He also speaks to a need — an inchoate sense among the decent and just — to do better; to expect better; to receive (and reciprocate) acts of betterment.

Insurers should follow Ross’s advice, so the industry may communicate with greater respect toward African-Americans. The diversity of communication, from marketing to advertising to recruiting to hiring, can change a relationship for the better.

See also: State of Diversity, Inclusion in Insurance

For insurers and African-Americans to come together is a chance to right the wrongs of the past. Together, the two can work to undo attempts to erase the past. Together, the two can bring some modicum of justice to the past. Together, the two can improve the present and work to make the future better than the present.

Insurers must lead with acts, not intentions.

Insurers must show that what is necessary is also doable.

Insurers must pursue excellence, so unity may thrive where diversity lives; so the lives of African-Americans may advance in harmony with liberty and justice; so all Americans may live in freedom.

Honoring these goals will bring honor to insurers.