The coronavirus pandemic and its sweeping impact have been unexpected and swift. For most businesses, survival has been predicated on how nimble the organization can be in the moment — this is true for small companies and massive industries. The ability to pivot to support new ways to work has been key to sustaining operations. 

Restaurants, for example, have spun up digital payments and text-enabled curbside delivery protocols that are so well-orchestrated that we may never want to get out of our cars to pick up and pay for food again. Telemedicine ramped quickly, with online appointments growing 50%, ensuring routine and non-urgent appointments can be kept during stay-at-home orders. 

Within our industry, the adoption of mobile and AI-based technologies allowed customers to submit claims and insurers to process them without physical interaction. Photo-enabled estimating more than doubled from January to April 2020, and some carriers report photo estimates now represent more than half of their total claims volume.

It’s unlikely these experiences will revert back to pre-COVID-19 norms. If history is any guide, consumer changes during economic upheavals frequently take hold, setting a new standard and expectation. 

For example, research shows 68% of new grocery ecommerce shoppers will continue to shop online in the future, and sales for click-and-collect services, those identified as being ordered online and picked up curbside – via locker, or some other hub – are expected to increase 60% this year. Insurers can expect their consumers to continue to look for mobile claim services as well, with 84% of adults responding to a CCC survey about their recent auto claim saying they would use photo technology again to initiate a claim, citing an overall better and faster experience.    

These examples, and a host of others, demonstrate that companies responding to the pandemic by fast-tracking their technology adoption cycles and process have been rewarded with business continuity and increased customer satisfaction. 

COVID-19 is not our only challenge 

Responding to a global pandemic is – let's hope – a rare experience. But, in the insurance business, crises happen more regularly. And while some of these may be predictable, responses will need to evolve because of COVID-19. 

For example, each year billions of dollars are spent responding to and helping policyholders recover from weather-related events. The 2020 hurricane season is underway, off to a fast start and expected to see above-average activity, with more named storms. Combine this with recent spikes in the number of coronavirus cases – especially in Atlantic states where hurricanes could hit hard – and disaster response will be especially challenging. CAT teams will face social distancing protocols and travel limitations.

Fraud gives us another example. 

Unemployment rates, while trending down, remain over 11%, and unemployment insurance claims through mid-June are estimated at 33 million. While it is impossible to know what’s going to happen next, data shows that fraud increases during severe economic downturns. 

In our new world, one gripped by an unrelenting pandemic, mounting financial pressures and rapidly changing stay-at-home orders, insurers need to continue to find new ways to be efficient and effective in their approach to service delivery and policyholder satisfaction. Embracing smart, digital tools – like those successfully employed in response to COVID-19 – can prepare insurers for the seen and unforeseen that lie ahead. 

See also: How to Lead in the COVID-19 Crisis

Innovation is the best preparation

A hurricane touches down near southern Florida, and thousands of policyholders are left dealing with house damage, potential injuries, auto damage and more. The typical response is to dispatch CAT response teams, set up triage centers and begin the business of damage assessment and claim management. Social distancing will render this response nearly impossible.  

What is possible? Equipping policyholders with a self-service mobile app that will guide them through the process of capturing a series of vehicle damage photos and answering specific CAT-related questions. Remote appraisers can quickly assess these vehicle damage photos, make near-instant total loss versus repair decisions and move the process forward without any in-person interactions. And, for vehicles declared a total loss, technology can seamlessly connect insurers and automotive lenders to expedite loss resolution and keep parties informed of the status of the claim. 

These same enabling technologies can also help insurers mitigate risk associated with prior damage claims, which can cost billions of dollars each year and affect more than 30% of policies. 

Policyholders using their smartphone camera can easily capture and share vehicle photos. AI, geo-location and damage detection heat maps work together to allow insurers to assess vehicle condition and verify location. Photos are digitally tagged and integrated into an insurer’s claims workflow for easy reference should a claim for that vehicle be filed. Inconsistent vehicle details shared at the point of a future claim – knowingly or unknowingly – are flagged for closer review. 

As we look to the future with some uncertainty, what is becoming clear is that those businesses or industries that can quickly embrace or evolve their innovation strategies are best positioned to respond to the unknown. In an era of social distancing, which is unlikely to change any time soon, digital solutions support and advance businesses while respecting calls for personal space.

We’ve certainly learned a lot from the COVID-19 and virus response. An insurer’s ability to take decisive action and advance technology decisions to support customers and employees has made the difference – can we make this a "new normal" and stand ready for anything that comes next?

This is part 2 in a series.

An increasingly volatile recipe of climate change and urbanization means that the past is no longer representative of the future when it comes to wildfire risk. Insurers can’t rely on previous wildfire seasons or events to inform future strategy. Just as every wildfire is unique, there simply is no one-size-fits-all approach to underwriting this risk. If you're going to write wildfire risk in the U.S., and particularly in the West, then not only must you concede to assuming some level of risk but you must implement a more strategic approach. Savvy insurers know this, and that’s why they’re reaching out to solutions providers, brokers and data companies to help them develop a new game plan for a risk that’s 90% caused by humans and 100% variable. 

Back-to-back years of catastrophic wildfires raise the question: When will wildfires cease to be historic on an annual basis? According to GenRe, the severity of wildfire events is likely to continue. Its research reveals that it’s not so much the frequency of events (with the number of wildfires being fairly consistent since the 1980s), but the size of the event, with megafires an emerging trend: 

“Thinking of 2017 and 2018 as ‘1 in 20’ events may seem extreme; thinking of them as ‘1 in 5’ is almost too frightening to accept. No one knows the right answer, but we believe that long-term historical answers are unlikely to be the right ones.” -- Ira Kaplan, GenRe 

So, how can insurers confidently underwrite wildfire risk when the cards seem stacked against them? Answer: By implementing a more innovative and strategic underwriting approach. 

My role as director of data products for Insurity’s SpatialKey solutions focuses on helping insurers explore new avenues to reduce wildfire risk and identify opportunities by applying smarter data and analytics. Our data partners continue to push the envelope by developing savvier ways to analyze risk by examining past behavior. For example, California’s megafires, including Tubbs, Thomas and of course the Camp Fire, which devasted the town of Paradise, have brought to light a few strategic considerations:

A single score is not the be-all-end-all

“It’s all about finding good risks in bad areas,” according to Clark Woodward, CEO and founder of RedZone, an innovative wildfire modeling company. “Wildfire is difficult to model because there are so many factors such as urbanization, a rapidly changing climate, increasingly intense fire behavior and the unpredictability of where fires ignite. This means insurers need to move away from a single score, which does not accurately encompass the complexities of fire risk. You’re going to be much more likely to be surprised if you are relying on a single number.”  

We’re seeing more of our partners, such as RedZone and Willis Re, bring data to market that tells a more complete story. For example, RedZone’s “correlated risk zones” data supports both underwriting and portfolio-level analysis by enabling risk analysts to identify communities or regions that may be many miles apart but could be affected by the same event. These regions, statistically, burn together even though they are separated by natural breaks (i.e. highways, ridgetops, rivers). The zones help insurers identify risk based on fire behavior and characteristics.

Reinsurance broker Willis Re is applying an innovative wildfire risk score underwriting methodology that also helps clients understand areas that are driving up probable maximum losses (PML) to help diversify portfolios and drive reinsurance costs down. This solution enables carrier clients to make more informed rating decisions while considering the hazard level of the new locations and the associated impact. As Vaughn Jensen, executive vice president at Willis Re, explains, “California’s recent wildfires illuminated that many carriers do not have a good handle on their wildfire risk, in no small part because existing industry models do not accurately represent the hazard.”

See also: Wildfire Season Off to Perilous Start

More data points need to be taken into consideration 

Layering HazardHub data, such as distance-to-fire-station and distance-to-hydrant, with another wildfire model can provide insurers with a more comprehensive understanding of wildfire risk, especially when visualized within a geospatial analytics solution that provides contextualization of the surrounding landscape. For example, visualizing wildfire risk in combination with data points that answer the following questions is critical to understanding the big picture: 

• What’s the proximity to the nearest fire hydrant?
• What’s the proximity to the nearest fire station? 
• What’s the proximity/access to the nearest road(s)? 
• Is there evidence of active tree clearing and mitigation efforts surrounding the structure(s)? 
• What’s the loss type (i.e. direct, embers, smoke) and intensity?
• What’s the construction type and year built (likeliness to burn)?

The above underwriting report includes critical fire station data from HazardHub along with the relative risk score of the peril itself from Willis Re. This combination of data points helps to contextualize and price risk in a single view.

Bringing it all together for a more strategic and informed view of wildfire risk

Multiple data points, and even multiple models, should be used collectively for more informed and strategic wildfire risk assessment at the point of underwriting. It’s imperative that wildfire risk isn’t assessed with a single model or single score, which is why I’m dedicated to facilitating a more open ecosystem where our P&C clients have access to multiple sources of expert data.

Equally important to leveraging new data sources is the ability to readily access them and use them to make informed underwriting decisions based on your risk appetite and in the context of your existing portfolio data. Making data easily accessible to decision-makers, along with enhanced analytics, will be the defining difference between companies that succeed with wildfire risk and those that fail.

"Social inflation," an on-again, off-again issue for the insurance industry for more than four decades, is on again as a major factor in insurance claims and, thus, rates. The issue, related to beliefs and trends that lead people to expect ever-higher compensation and for juries to grant it, has been growing for several years and seems to have accelerated since last summer.

The pandemic and the economic crisis that resulted may exacerbate the problem for insurers -- or may mute it. There are arguments on both sides. Some see social inflation being dampened as financially strapped people and businesses become more willing to settle a claim and as the logistical complications that come with less face-to-face interaction drag out negotiations and judicial proceedings. Some see social inflation increasing as people feel wronged and try to take out their anger on those that they distrust and that have enough assets to make them tempting targets -- read, insurers (among others).

Me? I see the pandemic boosting social inflation.

The term goes back at least to 1977, when Warren Buffett used it in his annual letter to shareholders of Berkshire Hathaway. The issue is often described in extreme terms -- like the guy who sued for $67 million over a $10 dry cleaning bill -- but shows up in all sorts of more pedestrian ways. People increasingly are inclined to bring the lawyers in, rather than take the settlement offer from an insurer, and claimants insist on higher amounts. The problem builds on itself -- this is the "social" part of the inflation -- because who wants to take what feels like a lowball offer when others have been receiving more in similar situations? (The dry cleaning plaintiff lost his suit and had to pay court costs, but no one seems to remember that part of the story.)

The issue surfaced from time to time in the decades since Buffett used the term, then steadily increased starting five or six years ago, according to this white paper from The Institutes. The paper notes that, from 2013 through 2018, commercial auto claim losses increased at an annualized rate of 10.9%, compared with a 1.0% annualized rate in the prior six years. The trends were similar in personal auto and medical malpractice. In product liability, incurred losses grew at an annualized rate of 17% from 2014 through 2018, after decreasing at an annualized rate of 7.1% in the prior five years. 

These trends became very public last fall when Travelers added hundreds of millions of dollars to reserves and cited social inflation.

To understand where we go from here, it may help to look at what The Institutes' white paper lists as the main drivers of social inflation. I'll quote from the paper and address each issue, or group of issues, in turn.

"Changes in underlying beliefs about the appropriateness of filing lawsuits and expectations of higher compensation"

Although it's hard to predict what will drive "underlying beliefs," the white paper says that income inequality has driven many people to demand more and notes a general distrust of corporations. The result is anger.

The paper says: "In its 2019 annual report on emotional states around the world, Gallup reported that 22% of Americans reported feeling angry 'during a lot of the day yesterday' — the highest level of anger measured by Gallup in more than a decade."

Although Gallup didn't ask people to identify the source of their anger, I'm sure we can all imagine some reasons, and I'd guess that anger has risen, not dropped, in the crazy year that is 2020.

So, I suppose it's possible that financially strapped people and businesses will be more inclined to settle, but I don't, in general, expect that people will become less litigious or demanding of compensation.

"Rollbacks of previously enacted tort reforms intended to control costs"

"Legislative actions to retroactively extend or repeal statutes of limitations"

If we project those factors forward to imagine the likely effect of the pandemic, it's hard to see legislatures taking any actions on tort reforms or statutes of limitations that would reduce social inflation. State legislatures have been moving in the other direction, with many trying to find ways to make insurers liable for costs of the pandemic even when business interruption policies don't cover such costs. And, if people remain angry, well, legislators who want to be reelected (as in, all of them) tend to react to anger among citizens.

"Increased attorney advertising and increased attorney involvement in liability claims"

"The emergence and growth of third-party litigation financing"

"Increasing numbers of very large jury verdicts, reflecting an increase in juries’ sympathy toward plaintiffs and in their willingness to punish those who cause injury to others"

"Proliferation of class-action lawsuits"

If people do somehow change their underlying beliefs about filing lawsuits and about seeking big awards, then, yes, these drivers of social inflation will fade. But history suggests that it's wrong to expect society to become less litigious. When Thomas More was chancellor of England under King Henry VIII in the 1530s, he often had no cases on his docket. When John Jay was the first chief justice of the U.S. Supreme Court, he heard only four cases and resigned after six years, in 1795; he was elected governor of New York and thought that position was more important. As for litigation today....

Lawyers have made loads of money through advertising and "litigation financing" -- having third parties provide funds so plaintiffs can afford to continue a court fight much longer than they could have on their own -- so lawyers won't back off unless there's a huge change in public attitudes.

Lawyers have also become more effective at winning "nuclear verdicts" -- judgments that are at least $10 million and that can reach the billions of dollars -- by tapping into what is referred to as the "reptile brain" of jurors. The strategy tries to trigger the "fight or flight" response in people, using techniques to make them so scared of the defendant that they react in a highly instinctive, emotional way that overwhelms rational arguments.

If the approach is working -- and it certainly seems to be producing bigger jury verdicts -- why would lawyers back off?

While the pandemic has made all of us humbler about our ability to predict, I just don't see any reason to expect social inflation to abate because I don't see any of the pressures going away. I think that the pandemic will encourage cash-strapped people and businesses to ask for bigger settlements and that sympathetic juries will be inclined to go along.

Stay safe.

Paul

P.S. Following my own advice from last week's Six Things about the need to find a devil's advocate to challenge your thinking, I found a very different take on social inflation. Here is a consumer group, affiliated with a law school, arguing that insurers manufacture social inflation claims to justify rate increases.

P.P.S. Here are the six articles I'll highlight from the past week:

The Real Disruption of Insurance

The future of insurance isn't incremental change: Technology is enabling direct threats to carriers, not just their partners and providers.

Expanding Options for Communications

Messaging and platforms, business texting, chatbots, voice and even augmented reality can help customers--while cutting costs.

How to Thrive Using Emerging Tech

A survey finds that 75% believe AI can provide a competitive advantage through better decision-making, and early adopters report gains.

Optimizing Experience for Life Beneficiaries

Focusing on beneficiaries can not only help facilitate the claims process but also provide life insurers with opportunities for growth.

4 Keys to Agency Modernization

Agencies must modernize to survive, but where do you start? Here are four guideposts that can help.

COVID-19: Next Steps in Construction

As more projects resume, contractors can draw lessons from areas where work was never halted to reduce risks and rebuild momentum.

Mental health is in the forefront as an impact of the coronavirus pandemic. A new article in The Atlantic discusses widespread increases of anxiety, depression and substance abuse since the onset of COVID-19. A Kaiser Family Foundation survey found that this public health crisis has hurt the mental health of 56% of adults. The manifestations of post-traumatic stress - from spontaneous conflicts in retail stores to healthcare workers taking their own lives - have become common on the daily news.

Now, more than ever, the mental health of employees in the workplace is an immediate concern for employers. The impacts on productivity, quality control and business continuity are there alongside the health and safety of all workers. Financial insecurity and lost jobs raise concerns over workplace violence. For many workers, their home has become their new workplace, and adverse impacts of domestic and child abuse are emerging with disturbing frequency.

A variety of mental illness factors cost American employers more than half a trillion dollars annually. Investment in improving employee mental health and alleviating some of the stresses causing anxiety and depression yield valuable human and economic returns. Employers can take concrete actions to help their employees get the assistance they need.

Remove the Stigma of Mental Illness — Although it has been almost 25 years since passage of the Mental Health Parity Act, which considers mental illness on the same basis as any other illness, the stigma of mental health hangs on. Mental illness is too often viewed as a weakness, those who suffer from it characterized as "disturbed," or worse, and the troubles it causes as "all being in your head." The truth is that mental illness is real illness and requires treatment in the same way that cancer, diabetes or pneumonia does. By communicating supportively and offering real help for employees' mental health, employers can break down the stigma and encourage early treatment before mental health issues become a crisis.

See also: 6 Life, Health Trends in the Pandemic

Communication That Educates — Employers that deal with workplace mental health realistically are doing more than just eliminating negative attitudes about mental illness. They are educating employees on how mental health affects their work, teaching them valuable skills for managing stress and resolving the kind of issues that lead to depression, anxiety or burnout. Resources for educating the workforce in stress reduction, conflict management and personal resiliency are among the training available through Keenan SafeSchools/Keenan SafeColleges/Keenan SafePersonnel platforms.

Supervisors Who Are On Board — Your supervisory and management team are the front line who work directly with the most employees. Just as important as general employee education on mental health, educating supervisors about mental health and supporting their employees helps mitigate the impact of mental illness in the workplace. An empathetic relationship between supervisors and their employees is a key success factor in addressing potential mental health issues early and encouraging the use of available mental health resources.

Professional Assistance Through Employee Benefits — Mental health benefits are vital to employees getting the treatment they need for mental health conditions. As one of the Essential Health Benefits provided under the Affordable Care Act (ACA), employer-sponsored health plans generally provide the range of treatments to address workplace mental health. In addition, an Employee Assistance Program (EAP) is effective for intervention for many immediate issues and response to major crises. These benefits make a real difference in people getting help without creating a financial burden or forgoing treatment altogether.

Employers bear a significant amount of the impacts of mental health. Confronting the challenges of workplace mental health compassionately and realistically, employers can also go a long way to reduce those impacts. While improving the vitality and safety of their facilities, they are also enriching the lives of their employees.

The life insurance industry hasn’t adequately supported the beneficiary largely because the industry has focused on supporting the sales channel and the insured.

In general, life insurance companies haven’t considered beneficiaries as key stakeholders. If companies don’t offer the proper experience to this group, carriers risk disappointing potential customers, damaging their brand’s reputation and, ultimately, hurting sales.

The beneficiaries of a life insurance policy require a dramatically different experience than that provided to the insured. The claims experience in life insurance is very different than for any other type of policy. Instead of the insured filing the claim, it might be their children or caregivers doing so. And the person filing the claim will be grieving, in addition to dealing with financial and logistical challenges. Many beneficiaries need emotional support, so it is essential for carriers to provide an optimal experience by using a variety of different contact and support options that offer the right combination of choice, guidance and advice. 

Provide Varied and Personalized Capabilities

Today, it’s important that life insurers offer automated self-service capabilities. However, life insurers can’t eliminate the human element, which is sometimes just as important as quickly delivering the claims check.

To expedite the claims process, one insurer that also owned a bank set up an account for the beneficiary and provided an account number and instructions on how to get the settlement funds. But this approach, while efficient, didn’t create the right experience for the beneficiary, who may have needed guidance in a time of need. The approach also eliminated the most important touchpoint for the salesperson, who wants to be involved in delivering the promise he sold long ago. Life insurers need to offer the right advice and hand-holding at the right moments. When there’s a death in the family, the survivors typically aren’t in the right state of mind to make important financial decisions.

See also: Reigniting Growth in U.S. Life Insurance

On the other hand, neglecting to offer digital capabilities can also be a mistake. Many long-term-care insurance companies, for instance, make the mistake of thinking that their customers will not use online and digital capabilities, given their age. However, the insured is not always the one making the claims. It’s usually their caregivers, who tend to be the insured's digitally savvy children and who prefer to take a picture with their phone to submit a claim rather than stay on the phone with a claims contact-center representative.

Therefore, life insurers need to provide multi-channel access, because each channel can suit different needs of their customers. Limiting services or focusing on one to the exclusion of others can create a customer experience that simply does not work in all situations and for all people.  

Starting the claims process

To kick off the claims process, a life insurer should reach out to the beneficiary with a call from a contact center representative. A salesperson might not be the best fit to make the call, but a trained representative can provide comfort, offer help and support or even just serve as a sympathetic listener. The representative can ask how he or she can help, outline the multiple choices the beneficiary has in terms of next steps to the claims process and stress that all actions will happen on the beneficiary’s timeline. You want to make the customer feel special, that you’re taking care of him or her. That’s why the industry exists.

By offering a great claimant experience, insurers may even see beneficiaries turn into lifetime customers. Life insurance, as an industry, is seeing growth that is flat to low, at best, having traditionally been restricted to the upper-middle class and affluent groups, while the lower and middle-income groups have proven to be a challenge for the industry to reach. By offering the right experience and educating beneficiaries of the value of life and annuities products early in their lives, insurers can better position themselves to deliver their products and service to those groups. 

Stay in Touch

Life insurers can engage with the insured and the beneficiaries well before a claim to foster a relationship. Insurers can leverage an engagement platform like Life.io, a digital platform that educates, engages and rewards policyholders throughout their customer journey. Combined with the right experience and the right digital capabilities, such an approach to staying in touch could be a game-changer for the industry.

See also: Will COVID-19 Spur Life Insurance Sales?

Life carriers must connect with beneficiaries as often as possible. It’s important to capture beneficiary email addresses and phone numbers early, updating the information continually and using tools and technologies to keep in touch. The data will be very valuable for insurers in creating their products as well as evolving service models.

Improving the beneficiary experience with an omni-channel approach, fostering a relationship and focusing on this key stakeholder can not only help facilitate the claims process but also provide life insurers with opportunities for growth.

Digital transformation has been a strategic goal across the insurance industry for years, and, thanks to  recent events, there’s never been a better time to make it an urgent priority. With both customers and agents shifting toward digital tools for nearly every need over the last few months, independent agencies are starting to fully recognize the potential of modernization to improve efficiency, service and profitability. 

In fact, new evidence shows agencies that adopt a suite of best-practice technologies in four key areas of modernization see up to 3X higher revenue growth compared with the industry average. That represents a huge potential for even the smallest independent agencies to increase profitability, expand to new markets and services and re-invest in agency growth.

See also: The Rules of Digital Transformation

For agencies that are ready to make the move but are unsure where to start, here are four areas of agency modernization that should be your first priorities:

1. Delivering a modern digital experience for clients. There’s an app for everything these days, and consumers have come to expect the convenience, 24/7 access and self-service capabilities that digital options provide. Agencies that offer online and mobile app access to policy data, transactions, documents and more can give their customers the timely, streamlined experience they expect when it fits their schedule—without having to wait until business hours or playing phone tag with the agent. 

Even better, aside from making your customers’ life easier with digital access, you can make your job easier, too. Providing a DIY service eliminates the time your agents have to spend mailing policy ID cards, processing payments and performing other routine tasks. This gives them more time to spend working directly with clients providing consultation and risk advisory services. 

2. Efficient agency management. Most agencies have an agency management system (AMS), but are you fully taking advantage of it? Many don’t keep up with training on new features or get new agents formally trained on their platform of record, instead taking a learn-while-doing approach. That means you could be missing out on some of the most valuable efficiency and productivity tools available. 

Meanwhile, there are also some great workflow automation and document management systems that can help to further streamline processes and improve client service. Tools like automated carrier downloads and multi-carrier submissions processes can substantially improve agent productivity, once again freeing them to spend more time working directly with clients.

3. Streamlined market connectivity. One of the challenges agencies face in delivering the best service to clients is a lack of real-time data on carrier appetite, pricing and efficient submissions. As the market shows signs of hardening and prices start inching up, your clients may begin shopping around. Agencies that can reach out to more markets faster to get the best coverage options for the best price will win their business.

Tools like comparative rating and electronic submissions platforms allow agencies to streamline the process of gathering client information and get that data to underwriters faster. For example, instead of separate individual submissions, an agent could input all the data about a new client once and get results back from multiple carriers at once. And with more efficient systems for submitting risks, agents can quickly identify which carriers have an appetite for that business and secure the best protection for their clients.

4. Unlock the power of data. Individually, many agencies are likely sitting on an untapped treasure trove of data, and the industry as a whole has been slow to leverage data analytics to drive business growth. There have been a number of hurdles to bringing data and analytics into daily agency business practices, including:

• Unstructured data trapped in PDF documents,
• The lack of a standardized data model for the industry,
• Little investment in analytics resources, and 
• A fear that “data science” will get in the way of the personal touch the insurance industry is built around

But recently we’ve seen substantial progress in overcoming these challenges, including technologies that put cross-sell and upsell opportunities directly in front of agents within the tools they already use every day. By incorporating user-friendly data analytics into your agency workflows, agents can quickly act on opportunities to grow sales, prevent churn and deliver better, more insightful service to clients.

See also: Strategic Planning in the COVID-19 Era

With agency consolidation, market evolution and increasing client and employee expectations, independent agencies are feeling the pressure to change. But an ever-broadening field of technology options can make the process feel daunting and overwhelming. Starting with these four key areas of modernization and focusing on integrated solutions that work together, you can chart a course to a more service-oriented, productive and profitable agency.

Most P&C insurers have gradually expanded their options for digitally communicating with prospects, policyholders, producers and employees. As the industry moves beyond the web, portals and email, there is a growing recognition that a whole new world of digital communications options can be applied in insurance. Messaging and collaboration platforms, business texting, chatbots, voice, personalized interactive video and even augmented/virtual reality are now on the palette. Add these communication options to the zillion different ways to make or receive a payment, and a great thing happens. These options often simultaneously improve the customer experience while reducing expenses!

Technology options and solution providers are plentiful, but the big question for insurers is how to leverage the right mix of these across the enterprise. There are three really important components for successfully leveraging the new communications options: 1) a digital communications strategy, 2) digital content capture and creation and 3) content management and e-delivery.

Digital Communications Strategy: The methods of communications have often been driven by the requirements of specific areas of the business. Marketing uses a variety of tools and approaches to reach prospects and customers. Distribution uses another set to interact with agents and other partners. Claims has many types of external participants to communicate with during the claims life cycle. Underwriting and other areas of the business have their own needs and favorite technologies. But, now that digital transformation is accelerating, a comprehensive digital communications strategy is needed to determine how and where to best leverage capabilities like chatbots, messaging platforms and other tools. The capabilities for delivering customer documents and communications via email, portals and other traditional methods will continue to be equally vital.

See also: Will COVID-19 Be Digital Tipping Point?

Digital Content Capture and Creation: Inbound communications, such as submissions or first notice of loss, benefit from intelligent capture solutions that can efficiently gather and organize the information sent to insurers. Also, the ability to create and manage forms, documents and customer correspondence is essential. Communications that are created must adhere to branding guidelines, enable regulatory compliance, provide a modern customer experience and have the flexibility to support today’s array of outbound channels (including print and digital channels).

Digital Content Management and E-Delivery: Managing the digital content used for customer communications is an important capability. Insurers must be able to efficiently create, store and (re)use content objects such as visual branding elements, signatures, text blocks and the templates that they support. Moreover, in a world of many digital delivery options, the digital communications platform must support the delivery to the recipient through any technology option or channel, including messaging platforms, business texting solutions and chatbots, as well as traditional print, email, the web or mobile.  

Traditional options for communicating (such as portals, email and even print/mail) are not going away. But establishing a digital communications strategy and implementing a platform solution for creating and managing those communications is even more important in an era where the world is more rapidly shifting to digital due to the pandemic and work-from-home environments.

The expert panel explains how AI can:

• let you identify the right provider for a case and steer the injured worker to that provider
• help busy adjusters easily spot potentially troublesome cases and manage them better, from start to finish
• continuously optimize your network of providers, so you can be sure to have the right provider working with the right worker at the right time.

This panel consists of: Gary Hagmueller, CEO of CLARA analytics; veteran adjuster Nicole Corey; and CLARA analytics Chief Medical Officer Paul Kim. The panel is moderated by Paul Carroll, Editor-in-Chief of Insurance Thought Leadership.

Don't miss this free on demand panel discussion. Space is limited, so register today!

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Presenters:

Construction never stopped in some cities and states during the height of the COVID-19 outbreak — and some airport and public works projects, in fact, gained some efficiencies because of fewer travelers and passers-by on the periphery of job sites.

Where work continued, contractors adjusted on the fly to help reduce coronavirus health risks to their crews. Now, as more construction projects are permitted to resume, contractors can incorporate lessons learned so far and factor in new variables to help manage risks and rebuild momentum in a world transformed by COVID-19.

Contractors deal with unexpected challenges frequently, often weather-related. That experience will serve the industry well as it adjusts to new safety requirements along with complexities of returning to sites where work perhaps started but then was halted.

Costs may increase, and schedules may stretch to compensate for additional steps that must be taken each day before hammer meets nail. Simply doing what’s compulsory shouldn’t be the focus.

See also: How Risk Managers Must Adapt to COVID

Contractors should develop and refine a comprehensive COVID-19 exposure control plan, which may include:

• Appointing a COVID-19 officer at every job site, even if it’s not mandatory.
• Integrating COVID protocols into a virtual or online training program for workers.
• Adjusting management procedures to avoid communication gaps, given that project managers and other personnel may continue to work remotely.

Two key issues: Temperature screening and face coverings

You will need a high level of detail in COVID-related operating procedures. Take temperature screening at job site gates:

• How will you take temperatures so as to avoid breaching the six feet of social distance?
• Will workers be trained to take temperatures using no-contact thermometers, or will a third-party medical service or portable testing centers be brought in?
• What temperature threshold will send a worker away?
• What documentation, if any, will be kept of workers’ test results, and how will confidentiality be preserved?
• Do workers need to arrive earlier than in the past, and does that have ramifications for overtime?

There are lots of decisions — and that’s just for temperature screening.

The protocols for face coverings require similarly detailed decision making as well as awareness of state and local mandates. Are face coverings required at all times, or only when it’s not possible to keep six feet of social distance? Are cloth face coverings sufficient, or are respirators approved by the National Institute for Occupational Safety and Health (NIOSH) mandated in certain circumstances?

Note that these new protocols may lead to new risks, such as fogging of eye protection and creation of blind spots. Consider applying anti-fog solution to the lenses, or use helmets with face shields, if appropriate.

This planning may seem daunting, but establishing protocols and communications materials now will make it much less onerous to enforce going forward.

Review financial and supply chain status

Contractors who complete a post-shutdown risk register or hazard analysis should expand their focus beyond health issues. It’s wise to ensure financing, permits and insurance policies have not expired. Consider requalifying subcontractors to check financial status. If there are red flags, consider using joint checks to ensure that lower-tier subcontractors and suppliers receive payment. And is your own cash flow sufficient to make payroll, or have you made other arrangements?

Note that some supply chain and labor issues resulting from the shutdown have not yet been resolved. Make sure you have the materials and crew you need to keep the sequence of work on target.

New reasons to adopt emerging technology

In the hierarchy of technology adoption, many contractors are starting by converting to virtual training and orientation to enable social distancing. Make sure you adequately test your technology and distribute clear instructions to help your workers adjust to using it.

Next, consider the use of technology such as wearables that allow contact tracing, which could help ensure that workers are complying with social distancing guidelines. Wearables for construction are being modified so that, for example, a worker could receive an alert when less than six feet from another worker. Some systems also allow you to identify what workers may have come in contact with an infected worker, should someone later test positive.

There also are opportunities to increase your use of offsite and onsite prefabrication, in part to reduce the number of people on a site at one time and possibly to contribute to efficiency.

Finally, this may be a great time to experiment with emerging technology, such as using robots to do floor layout, which has the potential to improve accuracy as well as reduce the number of people on a job site at one time.

There are some silver linings

No one would have invited coronavirus into the world, but new protocols to reduce health hazards may produce additional benefits.

Limiting the use of elevators to materials and creating one-way pathways for personnel may not only assist in social distancing but also contribute to increased productivity.

See also: 4 Post-COVID-19 Trends for Insurers

These steps could become a best practice worth keeping, along with many other new procedures.

It’s too soon to gauge the net impact of the coronavirus pandemic. But in terms of the business outlook, potential positive developments could include:

• Construction opportunities increasing in sectors such as healthcare, infrastructure, warehousing (which was already going strong) and manufacturing.
• Growth in modular, off-site construction, in part because it can help reduce the number of people on a job site at one time.
• More U.S. manufacturing of construction materials, in response to coronavirus-related supply chain delays associated with offshore providers.
• Regional population shifts in response to the hardships endured during the pandemic. These may result in increased residential construction in areas of growth, followed by additional commercial and infrastructure development.

In the near term, some projects will be under pressure to accelerate to get back on schedule. But COVID-related mandates may force a slowing of the process, which could enhance overall site safety and quality of work.

Vigilance, as always, is key — and not just about coronavirus. We need to remain attentive to typical construction-related injuries and issues such as heat-related illnesses. Caring for people will help us take care of business now and during the months of recovery ahead.

Visit Zurich’s COVID-19 Resource Hub for more information.

Early adopters of artificial intelligence (AI) and machine learning (ML) are able to sift through massive amounts of data and use it to enable various capabilities. These range from making decisions about how to triage a claim using algorithms to improving a customer’s overall claims experience using more data and sources automatically pulled in from AI and ML methodologies. 

But where does the rest of the industry stand with these new capabilities? We released a study around how the top 100 U.S. carriers are benefiting from AI and ML and the challenges and opportunities for an AI-driven future. We found that 75% believe proper implementation of AI can provide carriers with a competitive advantage through better decision-making. 

While only 62% say the carrier they work for is already applying, piloting or planning AI and ML initiatives, these early adopters are already seeing significant AI and ML benefits. In terms of improving the experience for existing customers, insurers are experiencing advantages with faster claims settlements (88%), improved fraud detection (87%) and better risk scoring (85%). On the prospecting side, AI and ML are enabling early adopting insurers more customized and targeted opportunities for cross- and upselling (88%). 

Of the survey respondents representing insurers that are early adopters, most come from the 20 largest U.S. carriers, but adoption across the remaining top 100 U.S. carriers is also rapidly increasing.

While carriers are generally positive about their use of AI and ML, implementation does come with its own set of challenges surrounding staffing, data and compliance. 

The challenges around AI and ML adoption 

Insurance carriers are largely positive about the value of their AI and ML initiatives, but the study identified the challenges they will need to overcome. Staffing challenges are a major concern. According to the study, nearly half of the respondents (49%) said that AI and ML implementation has already affected their staffing plans today. Insurers need people who can understand the inputs and outputs of the applications, and who can explain them to the business. They need knowledge managers who can speak in both technical and non-technical languages and link the dialogue between parties.

See also: Stop Being Scared of Artificial Intelligence

Another major concern is the ability to access high-quality, trustworthy data. The three main issues with data that survey respondents mentioned include their ability to manage the volume and security of the data; linking and normalizing data across different data sources; and ensuring access to the data. Adopters clearly see the value of third-party data, as a majority of the adopters (82%) say their organizations have or will buy external data for their AI and ML initiatives. 

The third concern we found is around compliance and regulatory challenges with insurers’ use of AI and ML. Adopters worry that regulators and legal bodies may not understand AI and ML applications and could possibly block or limit them. Nearly three-quarters (74%) of adopters also have concerns about data privacy, security and ownership issues, anticipating increased regulatory scrutiny as more data sources are accessed and modeled.

Although the COVID-19 pandemic has slowed things, 95% of personal lines insurers are moving forward with their overall technology plans and investments, with only 5% retrenching, according to Strategy Meets Action (SMA). Meanwhile, 75% of commercial lines insurers are moving forward with their overall technology plans and investments, with only 25% retrenching or pausing. 

See also: Step 1 to Your After-COVID Future

Despite these challenges, the early adopters of AI and ML are already seeing benefits. Faster claims settlement, more targeted cross-selling and upselling, improvement in fraud detection and better risk scoring are just a few advantages that insurers are leveraging. As insurance carriers look to implement emerging technology, they should find a technology partner that has a deep understanding of the data, analytics and insurance industry to help them maximize their AI and ML initiatives. In particular, they should look to find a partner with a demonstrated expertise in building models that leverage advanced analytics and that have extensive experience in managing, normalizing and analyzing increasing volumes of data. By this time next year, only those insurance carriers that are fully embracing and implementing AI and ML capabilities now will have that competitive advantage.

For additional insights and data from our study, you can turn to our white paper, The State of Artificial Intelligence and Machine Learning in the Insurance Industry.