For insurance carriers, customer retention relies on trusted communication between the company and its customers—often by way of representatives like brokers and agents. Developing and maintaining that trust depends heavily on the quality of policyholder communications: knowing and understanding your customers and presenting your brand in such a way that customers feel they know and understand you. While this seems a simple concept, in this era of digital communications it requires—and customers expect—the intimacy of personal interaction distributed through sophisticated and varied media channels and devices. 

The customer communication management (CCM) systems that many insurers employ today are able to create communications to be delivered via the various channels that customers prefer. However, modern CCM systems are capable of even more personalized and relevant interactions. And there’s the problem: Many insurers have been in business long enough to experience evolving generations of communications systems. This has resulted in valuable content and customer communications being stored in various silos throughout the organization—one for marketing, another for billing, another for claims and so on—and often in near-obsolete formats or systems. 

For customer service representatives, claims adjusters, brokers or agents, finding the right template can be problematic and time-consuming. Then, creating an appropriate response with approved content is yet another hurdle. Ideally, every insurer today should have a CCM system that is able to draw on the accumulation of content from customer communications from all internal departments, then assist business users in using that information to create a fitting response. If that is not possible in your organization, a more robust CCM system needs to become a priority for the sake of your staff and to satisfy increasing customer expectations. 

Moving to a better system

If the necessary content and customer information required for a new CCM system are still housed in disparate silos and legacy systems, the question becomes, where do you begin? When considering migrating to a modern CCM system, we recommend starting with a communications assessment to get a realistic idea of the scope of the task you’re undertaking. Consider the volume of the materials you have, where they are located in your organization—again, they may be distributed among several departments and systems—and your priorities. What will your future omni-channel customer experience look like? This understanding will help determine what kind of CCM system best suits your requirements, the plan needed for migrating to a new system and the costs involved.

Traditionally, the only way to migrate legacy content was manually. That meant getting staff to look at the tens of thousands or hundreds of thousands of documents and content messages in your files, then sort them into various piles, labeled as "obsolete," say, or "excellent explanation," or "good introductory paragraph," or "Connecticut doesn't require this any more." Depending on the volume of communications and associated content objects in your archives, this process would likely mean a major investment that could include hiring and training many more people and allowing them months or even years to sift through everything. Add to that the potential for human error, and you can see what a painstaking, expensive and fraught task this is. One alternative is to "lift and shift" all content from your old systems into a new one. Unfortunately, this move won’t deliver the change you are looking for as it just recreates the chaos of your old systems in the new platform.

See also: AI Ends Guesswork in Uncertain World

One answer is to apply more advanced technology to review and sort out your existing customer communication files. Modern technologies, such as artificial intelligence (AI), machine learning (ML) and natural language processing (NLP) are increasingly being used to significantly accelerate content migration and optimization processes. To begin with, AI can be a powerful tool to automate the ingestion and metadata tagging of legacy content from various file formats and systems. In addition, AI,  ML and NLP can analyze content and communications to identify outdated, off-brand, duplicate or similar content, as well as inconsistencies or non-compliant branding, reading levels and sentiment. This content can then be optimized prior to importing it into a content hub for use in future communications. Applications with these kinds of built-in AI and ML functions have been known to reduce the time required to modernize and optimize your existing customer files by as much as 99%.

Putting it all together

The aim of this process is to then to house the content in a centralized content management system or “content hub.” This enables your content authors to centrally control content and provide customer-facing teams with access to approved communications regardless of the channel (print or digital). This content hub should include documents like disclosures, policy statements and explanations of benefits, standard customer correspondence templates for claims responses, account servicing and billing to enable servicing teams to build relevant and personalized correspondence. The right hub will also help to automate the application of the required regulatory and compliance language for different states and jurisdictions. The AI-powered content hub would offer nearly all the pieces needed to put together a customized and relevant reply to a customer query via the preferred channel of communication. 

These systems empower your customer-facing teams, ensuring they use the latest, approved content and enabling them to add relevant, personalized messaging based on real-time information. AI embedded within these systems can provide guardrails to ensure communications stay within brand, reading level and sentiment guidelines. This not only helps to protect brand equity, but it also assists the organization overall in driving toward a more consistent, cohesive customer experience across various touchpoints and channels. 

As insurers have expanded customer touchpoints across new digital channels, delivering consistent and relevant communications presents new challenges. Increasingly, both existing and prospective customers expect prompt and appropriate answers to their queries via the channel of their choice, or they may look to your competitors. With a solid communications strategy and a CCM system that supports it, you will find new ways to create, manage and deliver an array of complex insurance communications with consistency and efficiency, which can be a significant factor in winning — and keeping — your customers.

An all too common theme within a work environment is the mounds of work that people have on their plates at any given time. If this is something that you are experiencing, you’re not alone! This is a systemic issue that spans industries around the globe. In this article, I’ll break down:

1. The effects of an overflowing plate of work
2. The state that we should aspire toward
3. The formula that will help you right-size your workload and get closer to the desired state

The adverse effects of an overflowing plate

How did we even get to this point of overload? It usually starts when multiple deliverables are weighted the same in terms of value and urgency, which can lead to a sense of a lack of control over commitments.

Because it is impossible to complete everything with the same level of urgency, a general feeling of failure sets in; quality is compromised; and speed to completion is reduced.

What does the desired state look like?

What we all long for is a life where we feel in control, where we deliver high-quality work, where we are improving the world around us and feel fulfilled.

The question is: What can we do to lean more into this desired state and regain greater control? 

The three-step formula that will help you right-size your workload

Oftentimes, employees struggling with work overload also tend to work in environments that overuse meetings and place a high value on tasks.

Recognizing that part of the issue could be the environment itself, I’ll share a formula that will be able to stand on its own and one that may also help to improve the DNA of the organization.

Step 1: Prioritization

Ruthless prioritization is the first step toward regaining control. One technique that we use is a 3x3 matrix that compares High vs. Medium vs. Low Value against Urgency. Here are the steps to take to make this work:

1. Get clear on your definition of value. 
2. Discuss how you would define High vs Medium vs Low Value. 

Urgency means: the speed at which the value that you hope to gain will diminish if you do not work on an issue now. As you can see, the consideration of urgency controls bias and motivation.

1. Repeat steps 1 and 2 for Urgency.
2. Take inventory of the work on your plate.
3. Map each item on your list(s) to the various sections on the matrix. Scrutinize where you are ranking your work items. Whether you are creating a physical representation of this exercise in your office or using a collaboration tool, once you plot your work your matrix may look something like this: 

4. Take the necessary steps to eliminate the “low” and “very low” items from their plate. 

See also: How to Pursue Innovation in a Crisis

Step 2: Visualization

1. Start by creating a board with four columns and title each: Backlog, Next, To Do and Done. This exercise may be done physically or virtually.
2. In the Backlog column, add your Very High, High and Medium work items.
3. Once everything is in your backlog, move the highest-priority items into the “Next” column. (Remember how I color-coded the “very high” items differently from the others? This helps illustrate that these items will be prioritized and worked on first, before anything else.) 
4. Here is where the biggest mindset shift happens (and why we titled this article, “The Power of One”): Move only ONE of the items from your “Next” column, into your “To Do” column. This will be the item that you will focus on immediately.

Reducing your Work in Progress (or WIP) to one feels uncomfortable and counterintuitive, in part because further work decomposition may need to be done. Here’s the reality:

• Multitasking is not real. 
• Dividing your time and attention across multiple items results in lower throughput and a higher lead time to completion.
• The collateral damage to a higher WIP is always some combination of poor quality, longer lead times, stakeholder disappointments, etc. 
• Lowering your WIP wherever possible results in higher throughput, faster lead times, a huge shift in focus and a gratifying sense of completion.

Step 3: Conservation

To keep this system alive, establish policies and cadences for yourself. Are there any items that can supersede anything in your existing hierarchy? How often will you review and prioritize your work? How often will you replenish your backlog? Getting clear on questions like these will help keep you grounded, focused and in control and keep your system intact.

Bonus Step 4: Pause, Reflect and Celebrate!!

Breathe it in and celebrate all your hard work with your team.

Thirteen years after Progressive launched Snapshot, its usage-based insurance (UBI) rewards program, telematics-based policies represent a modest part of personal and commercial lines insurance. Bullish estimates of double-digit adoption by 2020 haven’t materialized, but it’s clear that telematics-based products appeal to a need within the market. Adoption will likely continue to grow. Insurers should consider telematics strategically, whether they expect to enter the space or not.

Adoption: Modest but Real

Insurer telematics activity in recent years has split into rough thirds: About a third of property/casualty insurers are actively engaged, a third are monitoring the space but not yet acting and a third feel telematics don’t apply to them.

Overall, Novarica estimates the penetration of telematics programs at around 6% to 8% of insurers’ overall books, based on industry research and conversations with insurers. These numbers vary substantially from carrier to carrier. At some, telematics-backed policies can be more than 30% of their books, while, at others, it can be as little as 1%. 

Applications: Increasing in Variety

Insurers predominantly use telematics for underwriting and actuarial or product design. This approach aligns with the stereotypical UBI offering, where insurers rate drivers based on telematics data and offer retention discounts to those who prove to be safe risks. More insurers are also providing pay-per-mile offerings (such as Liberty Mutual’s ByMile and Nationwide’s SmartMiles), which charge customers based on the actual amount they drive.

Applications in other insurance functions are less common, but this is changing as both insurers and vendors innovate to offer new types of coverages and programs, like rewards programs to generate regular customer engagement or teen driving programs that can leverage telematics to create speed alerts. These offerings align with broader industry trends toward creating richer digital experiences, particularly in personal lines.

Insurers should also understand that getting the most out of these advanced features requires technological and business support beyond the telematics offering itself. For example, to support a feature like automatic first notice of loss (FNOL), insurers will need quality data, and they’ll need to be able to move it between systems across the enterprise. A comprehensive rewards program may require focused effort from marketing and customer service to stay on-message and deliver a seamless experience.

See also: Driving Into the Future of Telematics

Program Design: Essential for Success

The variety of telematics capabilities and offerings in the market means that insurers should design or expand their telematics programs with care and forethought. As with any technology initiative, the point of telematics-based insurance offerings is to better manage risk, reduce costs or create a superior customer experience.

For telematics, that means that insurers need to consider a number of factors to guide the features of their offerings. These include the target market segment, the channel through which the offering will be distributed, the services offered and how all of these elements align with existing technological capabilities and processes. There’s no one answer, and anything from a basic UBI product to an engaging rewards program could be the right fit, depending on what an insurer wants to accomplish.

Fortunately for insurers that have taken a wait-and-see approach, there are a number of products available in the marketplace, from turnkey telematics solutions to book-of-business analysis from a variety of telematics service providers and data brokers. Although early adopters like Progressive procured and managed their own telematics devices, insurers don’t have to do this anymore. Carriers that are new to the space shouldn’t spend time replicating technology that already exists.

Telematics Beyond 2020

Telematics adoption will likely continue to increase slowly but steadily over the next several years. Depending on the rate of growth, telematics-based policies could make up between $22 billion and $32 billion of the personal lines auto market by 2025.

COVID-19 will be a major factor in that growth. Anecdotally, Novarica has heard from both insurers and vendors that interest in pay-as-you-drive or pay-per-mile policies has increased in 2020 as more Americans are working from home. How long the pandemic lasts and whether widespread remote work becomes normalized could speed adoption for both insurers and policyholders.

Auto manufacturers have also been active in the space, with a number of recently announced partnerships to share driving data from connected vehicles with insurance companies. This, too, could speed telematics expansion by lowering the initial barrier to entry. 

Telematics-based insurance offerings are a small but real portion of the personal and commercial auto markets that will continue to grow. Telematics isn’t going away, but it also won’t dominate the auto insurance industry in the next five to 10 years.

At the same time, telematics doesn’t have to become dominant to affect consumer expectations around price, convenience and service. Insurers should consider potential impact now so that no matter what decision they make, it’s a strategic one.

To learn more about how insurers are using telematics, read Novarica’s full report Telematics in Insurance: Overview and Key Issues.

Fundamentally, paying claims is what insurers do. For P&C insurers, for instance, claims typically amount to 60% 80% of costs.

The simplicity of this premise masks a great deal of complexity, of course, and insurers need to balance three desires that are often in opposition to each other:

• Contain payments losses – pay what’s appropriate, and only what’s appropriate
• Maintain customer satisfaction – customers generally don’t have much contact with their insurers except in a claims situation, which is the “moment of truth”
• Hold down the cost of claims administration

While it’s perhaps easy enough to balance two of these, any combination often comes at the expense of the third. You can keep customers happy and administrative costs near zero by paying every claim in full; however, your loss ratio, the key performance indicator (KPI), will go through the roof. Alternatively, you can manually process each claim, establishing with absolute certainty that you are paying only those you should: Your payment losses KPI will be superb, but you’ll have high costs and unhappy customers.

Getting the balance right has been the industry’s challenge since its inception, with two out of three the best it could do – until now. Technology is remaking the claims pay-out space.

First, pay up

At Accenture, we’ve long sought to help clients industrialize the claims management process, making it operate like a factory with only as much time spent on claims as is necessary to pay what’s right. That approach means automating the claims processes, then branching out only if needed. The constant goal is to optimize the balance between time spent and the impact on the pay-out outcome.

AI and analytics have revolutionized what’s possible. In China, for instance, the scale of the market means insurers were forced to pursue a digital route. As a result, they have become global leaders in the use of data, artificial intelligence (AI) and analytics – streamlining the full range of insurance processes, from underwriting to paying claims. Today, some Chinese insurers have inverted the claims process: Their default is to pay, allowing them to balance all three aspects. Here’s how they do it: 

The key is to build a straight-through-payment process as the default, for which technology has provided progressively better solutions. However, this requires a cultural shift, with insurers changing their mindset from finding any reason not to pay, and instead paying every claim quickly except for those where there is a sound reason to delay or stop payment.

Step one is to implement more sophisticated workflow solutions so that, instead of escalating all claims above, say, $10,000, to a supervisor, the approach is to check only those claims that deviate from a predefined approach, i.e. those that raise data-analytics flags. Indeed, our studies show that “leakage” (the costs incurred administering or paying out claims) is proportionally higher with small, high-volume claims that are “uninteresting” than it is with the large ones that typically are scrutinized.

The second step is to use analytics to compare each claim’s data against its peers, looking for outliers. Why does this windscreen replacement cost three times the average? Why is this insured person making a third claim between the same two people in a year? There might be good reasons, but there might not be. This use of analytics is better than fixed rules systems, as they are too generic. (One client, for example, saw 80% of claims red-flagged, with operators consequently clicking away every flag as they hadn’t time to see whether they were valid.)

The third step is to use AI at key decision points – as Ping An does with damage recognition, where the insured sends photographs of the car after an accident, and the system estimates the likely cost. This approach is also helpful for more complex areas like hospital claims. Critical illness insurer Xiang Hu Bao, for example, has fully automated its claims adjudication system, leveraging AI and blockchain to enable digital evidence submission. 

AI and predictive analytics can be used at other decision points to enable automated standard-path payment or to stop the process. These points include coverage match, liability assessment, fraud detection and final payment decision.

See also: Property Claims: It’s Time for Innovation

Lessons for all

Insurers elsewhere can learn from the approach pioneered by Chinese insurers to increase claims accuracy, reduce leakage and boost customer satisfaction.

Data is crucial. Many insurers try to integrate multiple systems, paper reports and information held on external databases. That’s close to impossible at scale without the technological tools that pull data from different sources and place it in structured databases – for example, using AI and optical character recognition (OCR) to extract data from written documents and feed it into structured databases, or to analyze legal documents or police reports of accidents.

However, once that data is in place, insurers can apply AI and analytics to drive automation, making pay-outs the default, and ensuring that claims adjusters spend their time more valuably and have more interesting work.

Insurers can also use technology to boost the second element – customer satisfaction.

As I got set to write this post on Sunday night, I saw a tweet recommending that I go to bed early and get plenty of rest so I can wake up early and do my part in what may be the least productive week at least in American history, if not the world's.

Maybe we'll get lucky, and the contours of the results from the U.S. presidential election on Tuesday will be clear enough, quickly enough, that we'll be able to focus on normal activities and not be distracted by legal fights and protests, but I'm not counting on it. My younger daughter, in her third year of law school in DC, got an email from the administration over the weekend recommending that she stock up on food, medicines and any other essential supplies as though she were going to be snowed in for a week. That feels about right.

With the world perhaps about to go on hold, I'll just lob in one, quick thought in this week's Six Things and hope I get to you before we all disappear into Twitter and cable news for however long it takes to sort out the results of the election. The thought is this: While autonomous vehicles have faded from the discussion since an Uber killed pedestrian Elaine Herzberg in March 2018, AVs are being positioned for a resurgence.

Some of the positioning is official and from the rock-solid actors in the autonomous space. Google's Waymo unit announced last month that it will begin offering fully driverless service (as in, with no safety driver behind the wheel) to customers of its ride-hailing operation in Phoenix. General Motors said that its Cruise unit will begin operating fully driverless vehicles in San Francisco by the end of the year.

Some of the positioning is more speculative. Tesla followed Google/Waymo and GM/Cruise by announcing that it has begun rolling out to customers what it calls Full Self-Driving as part of a beta test that will lead to a general rollout perhaps by year-end. This would be enormous news, if everything goes as advertised, but Elon Musk has long claimed self-driving capabilities that go beyond what his cars can actually do. With the latest announcement, Musk is claiming that his cars will be able to operate autonomously without access to the sort of carefully calibrated maps that Waymo, Cruise and others prepare before letting their vehicles operate in an area and believe are crucial. Musk is also planning to go live even though he doesn't seem to have done the kind of extensive on-road testing that Waymo and Cruise emphasize. Many in the industry still doubt that Tesla's basic technology is up to the task of providing full autonomy; conventional wisdom is that autonomous vehicles require lidar -- essentially, a laser-based form of radar -- while Musk uses cameras but no lidar.

Some of the positioning is subtle -- and this is the part that interests me the most, because I think it may have the biggest impact in the long term. In the wake of the accident that killed Herzberg 2 1/2 years ago, AV companies seemed to fall back and regroup. Now, having done far more rigorous testing, AV companies are starting to resurface with the sort of data that could sell the public on the safety of letting a car drive them around with no one sitting behind the wheel.

Waymo, as usual, led the way, with a report last week on the performance of its driverless cars from the beginning of 2019 through the third quarter of 2020 -- and the data is impressive. The vehicles were extremely safe, and -- importantly, for building long-term trust -- Waymo got specific about its record, using National Highway Traffic Safety Administration standards and going well beyond the press release treatment that usually obscures what actually happened.

Waymo reported 6.1 million miles of automated driving, including 65,000 with no safety driver, and 47 "contact events" -- consisting of 18 actual collisions and 29 incidents where a safety driver intervened to prevent a collision and where Waymo then simulated what would have happened without a safety driver. That's one contact every 130,000 miles, in case you're scoring at home and want to see how your experience compares with that of the Waymo cars.

Thirty of the 47 "events" resulted in no injuries (or were projected to produce none). None produced "severe" or "life-threatening" injuries (or were projected to in the simulations). While the report wasn't specific in assigning blame, it said that "virtually all" incidents resulted from an error by a human driver in the other car or by a pedestrian/cyclist. In the eight "most severe or potentially severe" incidents -- including a car running a red light at 36 mph and T-boning a Waymo vehicle -- Waymo said mildly that "road rule violations" by other drivers contributed.

In the one event where blame likely would have been assigned to Waymo, because it would have rear-ended the car in front of its vehicle, the report suggests that the human driver of the other car was instigating the collision -- its driver swerved in front of the Waymo car, then slammed on its brakes, the sort of behavior that is often reported about drivers showing resentment of AVs. In any case, the safety driver saw what was happening and prevented a collision, which simulation showed would have occurred at 1mph.

There's still a long way to go on AVs, but the announcements by Waymo, Cruise and Telsa show that companies are pressing ahead, and the report by Waymo starts to lay the intellectual groundwork for what I think will be a strong claim for public trust. In any case, after 2 1/2 years of lying low, the AV companies are back to making public arguments for themselves, and the insurance industry will have to react -- next week, or the week after, or the week after that, once the craziness from the election settles down.

Stay safe.

Paul

P.S. Speaking of public trust, if you haven't voted already, please do so. We're better as a people, as a nation, the closer we get to 100% participation by eligible voters.

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

Property Claims: It’s Time for Innovation

Those that solve for the dynamics of the many opportunities are likely to be the future industry leaders.

Driving Into the Future of Telematics

Connected vehicles, and their shared language of data delivered through an exchange, are the future of telematics.

The Future of Underwriting

A survey finds that nearly everyone expects big changes in underwriting. But what will different look and feel like? And how ready are we?

Asia: Latest Source of Opportunities

Think of giants like Ping An; innovations such as TenCent's Waterdrop; and ecosystem plays such as Rakuten.

State of Commercial Insurance Market

Every company today is different than it was six months ago. All risk profiles have likely changed.

Best AI Tech for P&C Personal Lines

The value rankings indicate that user interaction technologies fueled by AI are at the top of the list for personal lines insurers.

We often get asked where you should go when you want to be inspired by insurance innovations. We always answer that people should look at Asia more seriously.

Think of giants like Ping An and Zhong An leading the way. Think of innovative solutions in the health sector such as Ping An’s Good Doctor and Tencent’s Waterdrop. Or ecosystem plays such as Rakuten, Grab and GoJek.

An important catalyst in developing the Asian insurance market is Invest Hong Kong. Hong Kong is one of the world’s leading fintech and insurtech hubs. Hong Kong has 165 authorized insurers (as of August 2020), and the total gross premiums of the industry was $74.4 billion in 2019 (9.1% growth compared with 2018). With 34 insurers having their regional headquarters in Hong Kong, the city serves as a breeding ground for fintechs and insurtechs that aim to conquer Asia. InvestHK plays an instrumental role in making all of that happen. That is why we sat down with Stephen Phillips, director-general of investment promotion at InvestHK, and King Leung, head of fintech at InvestHK, to have them share their thoughts on the flourishing insurance industry of Asia.

In your view, why is Asia taking the lead in accelerating digital transformation in the insurance industry?

Stephen Phillips: “The Asia-Pacific region is home to nearly one-third of the world’s population and several of the fastest-growing economies. Because of the sheer population size and growth, Asia is already playing a key role in shaping the future of insurance. More importantly, insurance penetration is less than 5% in India, Indonesia, mainland China and Malaysia, signaling a significant amount of unmet demand in Asia-Pacific’s developing markets. In Asia, the insurance industry is all about an inclusive growth mind-set, customer relevance and speed. Growth is established by expansion beyond the traditional distribution channels, product innovation and building new business ecosystems. Regarding customer relevance, in Asia, insurance is not seen as a compulsory product but as a primary product for savings and protection, playing a very relevant role in the lives of clients. Customer expectations in the Asia-Pacific region are the highest in the world, especially around digital interaction and experiences. Because of the growth mind-set, insurance markets in Asia are evolving quickly. To stay on top of fast-changing customer needs and market landscape, Asian insurers have learned to make decisions fast.”

Let’s talk about the Greater Bay Area, set up by the Chinese government to integrate Hong Kong, Shenzhen, Macau and eight southern mainland cities into a 72 million population market and a leading hub for innovation and economic growth. Can you share a bit more?

Stephen Phillips: “The Greater Bay Area (GBA) Initiative encourages further internationalization of China, where mainland Chinese customers can access more international financial products through Hong Kong. Likewise, overseas companies can access financial products and RMB assets from China. In May this year, the People’s Bank of China and the mainland Chinese regulators have announced an updated framework of four core areas and 26 specific segments of financial services where different extents of opening up and transformation among the 11 cities in GBA are encouraged going forward. With a GDP of $1.68 trillion in 2019, the GBA would be the 11^th largest economy in the world, just behind Canada and ahead of Russia. There are endless possibilities in this exciting development!”

Which role will Cyberport play in the development of the startup ecosystem in Hong Kong?

King Leung: “Cyberport functions as Hong Kong’s digital technology community. It is home to about 1,400 digital tech companies, including more than 380 fintechs. It is the largest fintech and insurtech community in the city. This community also consists of many startups, including several of the newly licensed virtual banks, as well as established enterprises such as insurtech unicorn ZhongAn, AWS and Microsoft. These tech companies focus on several areas: AI, blockchain, big data, cybersecurity, insurtech, wealthtech, etc. Cyberport also runs its own Cyberport Macro Fund, where it co-invests in promising companies with other private investors.”

We’ve been there. It’s huge. Almost a city quarter.

King Leung: “Yes – it’s a big business park consisting of four office buildings, a hotel and a retail entertainment complex. Cyberport is wholly owned by the Hong Kong government. The mission is to help youth, startups and entrepreneurs to grow in the digital industry. Cyberport is connecting them with investors and strategic partners such as local and international business partners, established insurance companies. Cyberport is Hong Kong’s flagship digital technology hub. It is committed to inspire innovation and accelerate digital adoption. We all believe in the importance of ecosystems. To develop and enhance the fintech and insurtech ecosystem, Cyberport provides local and overseas fintech companies a jump start to success, for instance, by offering full-range entrepreneurship support and value-added services.”

Apart from Cyberport, are there any other key stakeholders that help the overseas insurtech companies launching in Hong Kong?

Stephen Phillips: “The Insurance Authority (IA), the Hong Kong insurance regulator, has been closely monitoring the development and application of technology in the insurance industry and proactively assisting market participants to tackle insurtech-related regulatory issues. IA’s Fast Track program offers a dedicated channel for new authorization applications from insurers using solely digital distribution channels (i.e., without the involvement of intermediaries) to provide insurance products with a simple structure and high protection element. Between December 2018 and May 2020, IA has granted four digital insurance licenses (two life and two non-life). In addition, the IA launched an insurtech sandbox in September 2017 to facilitate a pilot run of innovative insurtech applications by authorized insurers to be applied in their business operations. In addition to IA, Hong Kong Science and Technology Park (HKSTP) also acts as an important facilitator to Hong Kong fintech businesses. Its Incu-App program, for instance, provides startup support to companies working on business innovation during their inception stage, with a full range of tailor-made support services and facilities that will help drive their business to the next level of development."

How will China’s insurance industry benefit from the flourishing insurtech ecosystem in Hong Kong?

Stephen Phillips: “The Greater Bay Area will introduce more and more opportunities. In May 2020, the People’s Bank of China and the leading regulators announced an updated blueprint for opening up the financial services sector in the GBA across four core areas and 26 financial services segments, including insurance. As the population in the Greater Bay Area has one of the highest GDP per capita in China and are more aware of insurance, demand for insurance will naturally increase. This trend will lead to more insurance companies setting up and expanding their presence in GBA. As more international competitors enter the market, more choices are made available to the GBA customers. At the same time, the intensified competition will lead to more innovative digital features and better customer-centered solutions. To get a piece of China’s booming insurance industry, insurers must leverage technology. To ensure that insurers market growth and scalability, digital distribution channels become a crucial success element.”

The flourishing Asian markets are obviously attractive to fintechs and insurtechs …

King Leung: “Definitely. The Hong Kong fintech and insurtech scene has experienced incredible growth in recent years. As of 2019, more than 600 fintech companies have set up their businesses in the city, among which 53% see Hong Kong as a base for global expansion and 51% operate/plan to expand in the Greater Bay Area. The world-class capital and private investment market in Hong Kong also provide the necessary fuel to accelerate the growth opportunities. From 2014 to 2019, private investment in HK-based fintech companies reached a total of $1.5 billion. In addition, over $10 billion have been raised through fintech IPOs. In 2019, Hong Kong also invested $1.3 billion in nurturing local tech talent, and $64.1 million in attracting overseas tech talent. To support the fintech community on employment amid the COVID-19 pandemic and nurture talent, the government launched the Fintech Anti-epidemic Scheme for Talent development (FAST), where fintech companies will be entitled to a subsidy for talent recruitment. With a total funding amount of $15.4 million, the scheme is designed to create 1,000 fintech-related jobs. Hong Kong (and surrounding cities in the GBA) are home to a huge and diverse talent pool in finance and technology. The local education system is also internationally acclaimed; many universities and institutions have launched fintech-specific programs from BSc to PhD to online professional training in recent years. This talent pool equipped with the latest skills and knowledge in finance and technology provides Hong Kong with a strong foundation for further fintech development going forward.”

As a global city, Hong Kong is attracting people from all over the globe.

Stephen Phillips: “Hong Kong also enjoys an ideal geographical location in Asia. This enables businesses to seize opportunities in the Greater Bay Area and throughout the rest of the region. Many people are drawn to Hong Kong because of the vibrant lifestyle, beautiful scenery, convenience and welcoming international community. The international business community reflects this, allowing businesses of all types to thrive in the city. Hong Kong is also one of the safest cities in the world to live in due to its relatively crime-free society.”

Hong Kong has been recognized as one of the world’s most competitive economies. The ranking reflects Hong Kong’s consistent strides in building a favorable business environment. Can you describe the benefits of Hong Kong’s open business environment?

King Leung: “Opening businesses, for instance, is easy and remains inexpensive. Foreigners can be sole directors or shareholders in a Hong Kong company. There are no restrictions of nationality. InvestHK makes it easy for companies to open up their offices in Hong Kong with all sorts of free facilitation services. InvestHK assists with opening bank accounts, arranging work visas and work permits, helping you find the most optimal office space, etc. and introducing you to the key insurtech stakeholders. We also just kicked off a Global Fast Track program in mid-August for startups around the world as a key element of our flagship annual Hong Kong Fintech Week event on Nov. 2 to 6. We invite fintechs from around the world to participate in the FastTrack program, where we offer support from government funding for business matching with financial services institutions and private fintech investors. The Hong Kong government also encourages business development by providing one of the most tax-friendly systems in the world. And, most importantly, business opportunities can be maximized by taking advantage of the business infrastructure in place. People are open to do business. We’re more than happy to help make the right connections and help you succeed in Hong Kong.”

About InvestHK

Invest Hong Kong (InvestHK) is a department of the Hong Kong Special Administrative Region Government tasked with attracting foreign direct investment to Hong Kong and providing overseas and mainland companies and entrepreneurs with information, advice and services they need to succeed in the city. It works with companies of all sizes, from startups and SMEs to multinationals, and it supports them in every stage from planning, setting up to promotion and expansion.

The staff stationed in 32 offices in key markets worldwide reach out to potential investors and work to strengthen and promote Hong Kong’s status as Asia’s premier investment destination. All of the services are free, customized and confidential and based on the core values of passion, integrity and professionalism. InvestHK strives to provide the best customer service combined with business friendliness and responsiveness.

When the Hong Kong government decided to step up the focus on fintech and insurtech promotion, InvestHK set up a dedicated fintech team with physical presence in Hong Kong, Guangdong-Hong Kong-Macao Greater Bay Area, London and San Francisco to engage with fintech and insurtech companies to raise the profile of Hong Kong as a fintech and insurtech hub. With their vast network in the private sector, they are a conduit for business.

Written by Roger Peverelli and Reggy de Feniks, Founder of The DIA Community. Originally published here.

Law firms and accounting firms alike have complex and often rigorous conflicts and intake processes to vet new business and determine the worthiness of accepting and representing clients. These processes need to consider many different ethical and compliance considerations, depending on the type of work and the jurisdiction(s) the work will reside in. Internally, there are often multiple approvals that must be obtained before representing a new client, and the intake requests often must pass through multiple teams for review and input. While firms have, at times, bolted on additional functions and ad hoc workflows to accommodate new or growing needs, it is not common for these processes to get routinely reviewed for improvements and adjustments. That was until COVID-19.

The COVID-19 pandemic has influenced firms to pause and review three key areas: conflicts and intake processes, technology investments and personnel. Considering conflicts and intake are the initial gateways for all business coming into a firm, and a way to provide a first impression for how a potential client’s firm operates, firms should assess every aspect of their processes to ensure the resources involved can seamlessly adapt to the challenges a pandemic creates, such as using a distributed workforce and a greater need for more mobile technology functionality.

Processes

Firms should use this challenging time to take a deep dive into reviewing their conflicts and intake processes and make these reviews an annual exercise. Create a small team responsible for this annual review. Review all procedures starting at each process stage and the correlating micro-level inputs and outputs, and then learn where the efficiency gaps are. Often, these gaps are caused by a bottleneck at a process stage because this particular step takes more time, and there are not enough resources to handle the volume, or the manual steps are not automated. An effective way to identify this bottleneck is to create quick, easy and routine internal surveys of users’ thoughts on the processes. Include all users that touch these processes, including partners, executive assistants, conflicts and intake staff and departments with overlapping interests or information sharing needs, such as billing, HR, marketing, and IT-support personnel. These annual reviews of the current conflicts and intake processes will help to identify and prioritize areas of improvement. Use the information gathered in the reviews as the building blocks to execute the necessary changes. Performing these reviews annually will help transform a firm from reactive to proactive, which will help firms be more agile as they pivot to address challenges and needs now, and in the future before those challenges and needs become a problem for the firm.  

Technology

The COVID-19 pandemic has also forced firms to review their technology investments, and it is prudent to do so while reviewing the current conflicts and intake technology contracts. There are resources and tools already paid for to help review technology investments that may not be utilized. Reach out to each vendor to find out if there are any new or additional mobile features associated with the product’s use. Finally, ask each technology vendor what its future road map holds for innovation, as well as additional features and functionality. By reviewing conflicts and intake related technology and associated contracts, a firm may realize additional value, features and functionality from their existing technology. A review can also shine a light on potential inadequacies of existing technology and help firms start researching and moving to a better solution. 

See also: 3 Silver Linings From COVID-19

Personnel 

As important as reviewing the conflicts and intake processes is, as well as evaluating what technology investments are, it is equally important to check in on the people who perform these functions. The COVID-19 pandemic has generally resulted in the conflicts and intake staff working from home. This situation can create an environment where collaboration and teamwork could decrease because the workforce is distributed rather than being centralized. To avoid problems, consider cross-training personnel so they learn new skills and can serve the firm in other capacities. Cross-training also creates collaboration and teamwork among the conflicts and intake teams. These efforts will enrich the personnel’s skill sets, increase social interaction with each team and create contingency options for times when a need for a certain position, role or responsibility arises due to changing circumstances. This will also help a firm adapt to situations, such as a pandemic, without missing a beat.   

The COVID-19 pandemic has shown the importance of preparedness and review. A continuous review of a firm’s conflicts and intake processes, technology and personnel should help firms improve in agility and efficiency while also strengthening risk management. Use the COVID-19 pandemic as an opportunity to create a refreshed conflicts and intake process by coupling a firm’s internal resources with an external, independent practitioner skilled in the conflicts and intake arena. Clients, partners and staff will reap the benefits immediately and in the future.

Roadblocks exist for a reason. While often viewed as an obstacle or a challenge, in fact they’re an opportunity to find a solution that’s right in front of you. Take the notion of a mass market telematics programs. In early ideation, telematics was proposed to be a grand, value-generating asset to businesses across multiple lines that consumers would flock to.

Fast forward to today, and we still see some roadblocks and a sluggish adoption rate. But why?

The response that is often given to any question about a relationship involving multiple people or entities applies here – it’s complex. And if someone tries to tell you otherwise, the person simply isn’t looking at the big picture.

Let’s look at that big picture to understand why telematics adoption is complex. The table is set with several players: insurers, automakers and consumers. Each has an inherent and specific limitation that can only be corrected by working together. The question that follows is, how do we move forward? The answer, in short, is looking back to the challenges and how those roadblocks came to be present and applying both innovative thinking and solutions in kind.

Cost and Distribution or Execution

Originally, the main barriers that insurers faced with telematics were cost and execution. In-vehicle devices or black boxes and OBD2 devices discouraged most from participating, and program success was very reliant on consumer day-to day-engagement to make sure the device was functioning properly. Many insurers held off their telematics programs, or stopped and started them.

Today, apps have made telematics easier to execute, evolving to deliver driving behavior data for underwriting and lead generation programs. In addition to feedback, consumers can receive discounts, participate in safe driving reward programs or tap into other value-added services. Connected vehicles, aka connected cars, also make the use of telematics more cost-effective and easier, through taking advantage of the data created by the consumer’s own vehicle. Connected vehicles also open up avenues for the use of telematics data, such as at the point of new business.

Many-to-Many Challenge

Another challenge has been the sheer size of the ecosystem itself and the number of players. Automakers have tried one-to-one relationships with insurers, and some are still pursuing them today. Those past programs were met with varying degrees of success, and time will tell whether the current ones ultimately deliver on expectations. By contrast, insurer-led programs have been more successful, and there are several notable programs in the market today. However, they suffer some limitations in consumer experience, namely that the consumer’s data is really limited to the confines of a particular carrier’s program, and that consumers (and insurers) typically do not see significant benefits from telematics until after the monitoring period is completed (which can be upward of six months).

The good news is that both automakers and insurers are looking to data providers as potential partners to help them. This aligns automakers to both large and small insurance organizations and helps automakers meet their business objectives of increased monetization, data management and, most importantly, improved consumer experience through telematics programs. The arrival of telematics data exchanges changes everything by offering a neutral space for incoming consumer-consented driving behavior data to be normalized and easily incorporated into insurers’ workflows. By giving the customer the opportunity to consent to share data with insurers via the exchange, automakers deliver their owners a better overall experience through opportunities for reduced total cost of  ownership, data portability and improving driving behavior. Insurers that leverage this shift in mindset and take advantage of what I like to call "bridging the gap" are already ahead.

See also: Will COVID-19 Give Telematics New Life?

The Importance of Normalization

Because no data set is alike across organizations, another way of looking at this complex set of relationships is through the lens of linguistics. Imagine three people in a room who don’t have a shared language but are filling the room with indistinct conversation. Sounds hectic, right? However, with a competent translator, the interplay of sound and meaning can be translated into a common language. Applying that analogy to the context of connected cars, the data (language) from any automaker or any other driving data source can be normalized through a telematics exchange and delivered in one easy-to-understand transcript to be used in multiple points – think marketing or lead generation, underwriting and claims – within the insurance process.

Sticking with that analogy, that interpretation of conversation between vehicle and insurer once took an extended period to process for the benefit of an effective usage-based insurance (UBI) program. Today, we are able to harness that power of a comprehensive telematics exchange (translation) in a new fashion. With the recent LexisNexis Telematics OnDemand solution, carriers now have the ability to deliver those same UBI benefits and savings now at the point of quote. This is a game-changer for insurers and consumers alike, who can now forego any trial or initial monitoring periods and offer/receive safe driving discounts and program rewards in real time.

The Appropriate Path

One of the biggest misconceptions we continue to debunk is whether an insurer has to choose one approach and stick with it. The answer is that you don’t have to pick one approach versus another. If you currently have an app-based solution, you can easily participate in a vehicle telematics exchange, as well. The beauty is that, regardless of data collection method, once filtered and normalized the data should tell you the same story. Both approaches can be useful and done in parallel. An app program can help build a relationship with an individual consumer, which can then be kept going no matter the device or vehicle. An exchange partnership allows the insurer to know that consumer's driving behavior from the first moment they meet and offers the consumer benefit of their driving behavior no matter who the participating insurer may be.

Driving Behavior Changes

Now more than ever with the changing environment around driving behavior and volumes dramatically reduced due to the pandemic, the competency around “real time” is something that will become increasingly important across the board, as initial reports outline a potential spur in increased shopping growth rates. Consumers are starting to understand the benefits as well and indicated that they think telematics and driving behavior data are among the fairest ways to set a price for insurance; they will share data if they perceive a benefit.

Exchange models open that data to everyone. Imagine if you knew what to do with a consumer’s driving behavior data; you could offer a fully mature discount and could outprice the competition. The data can be pulled in from an exchange at the point of new business or at renewal. For many of your customers, you may already get their driving behavior data. But they might get a better offer from other insurers, and knowing more can give you a significant edge.

Where to go from here

We can call telematics the “newest old product” because the industry has been testing telematics-driven UBI programs for years, and, from our internal estimates, market adoption remains at approximately 5% of policies. What excites me, though, is that more and more insurers are acknowledging that it’s real and beginning to tap top tier data partners going forward.

See also: 3 Ways AI, Telematics Revolutionize Claims

Now that telematics data from connected vehicles is real and available at the point of quote and renewal, we can see how it becomes part of the fiber of all policies moving forward. And while the automotive OEM and auto insurance industries are going to continue to evolve separately, the opportunity an exchange creates is the ability to deliver the best customer experience with programs that focus on true value - a new lens on retention and loyalty and overall satisfaction of their shared customers.

Complementing experience is having a better understanding of driving behavior to provide a more complete picture of the individual, better risk assessment and better pricing, accordingly. Those insurers that are already adopting telematics data into their organizations and related workflows are on the edge of the market. App solutions make it easy, but connected vehicles and their shared language of data delivered through an exchange are the future. That’s the connected road ahead.