This article originally ran here, at Insurance Journal.

Insurtech was once the Wild West of the insurance industry. Many of insurtech’s early players came from outside insurance after observing the industry struggle to deliver what was, in their view, a competitive customer experience.

Led by ambitious entrepreneurs from outside insurance, backed by Silicon Valley and focused on industry disruption, early insurtech promised to displace incumbents and usher in a new era of insurance offerings and tech-driven solutions.

Nearly 10 years since its inception, the reality of insurtech has evolved.

The messaging about supplanting industry giants is gone. In its place is a more collaborative environment led by insurance industry leaders partnering with tech solution providers. The simple reality is that technology cannot do everything. The integration of experienced insurance professionals and tech is needed to manage across the insurance value chain.

There are powerful drivers of change toward greater automation: insurance professionals aging out of the industry, consumer expectations changing, the transformation of risk itself through the Internet of Things, the continued fragmentation of the industry and legacy systems that don’t talk to each other. Startups and incumbents alike are embracing these challenges through innovative methods designed to drive change across the value chain. Customer journey mapping, design thinking, lean process mapping and intelligent automation all have become increasingly part of the industry’s response to evolving customer service needs.

The new promise — the modern concept of insurtech — is the embrace of a strategy driven by collaboration and innovation rather than disruption.

The Era of M&A Is Here

Currently, insurtech is creating buzz through mergers and acquisitions, further integrating innovative technologies with insurance industry leaders.

Last year’s acquisition of Indio Technologies by Applied Systems is one such example. Applied saw the acquisition as an opportunity to bring Indio’s digitized commercial insurance application and renewal process to Applied’s agency management system, Epic, which serves thousands of agency and brokerage customers.

According to Applied CEO Taylor Rhodes, the integration of Indio reduced double entry for customers at the point of renewal or application within the company’s Epic system. It also allowed for a more productive application of Applied personnel elsewhere in the renewal and application process while improving customer experience.

Another example of this M&A era is the 2017 deal between Vertafore and RiskMatch. The latter is a business intelligence and analytics company serving insurance brokers and carriers. The deal allowed Vertafore, an insurance technology firm, to better compete with competitors like Applied Systems for analytics and risk placement services by substantially enhancing Vertafore’s data and market insights to improve efficiency and profitability.

See also: 5 Hurdles to Insurtech Success

In both examples, as seen elsewhere across the industry, standalone technology solution companies are either being acquired or are partnering with industry leaders to apply those tech solutions to operational capabilities with existing reach into the insurance space in an effort to reduce complexity, create efficiencies and maximize the productivity of insurance professionals. And the numbers back up this assertion.

Deloitte Center for Financial Services reported in September that insurtech investments for the first half of 2019 were on the rise at $2.2 billion, while the number of insurtech startups had declined. (Editor’s Note: In a recent update, Deloitte reported an increased figure of $3.3 billion.) Additional examples of big carriers investing in digital platforms that support their core and ancillary business markets are ample, such as Chubb’s 2018 investment in Bunker, Munich Re’s 2016 partnership with Slice Labs and Prudential’s $2.35 billion acquisition of Assurance IQ. There is a veritable laundry list of insurance leaders investing in or partnering with technology startups to apply digital solutions to their established processes to maximize the customer experience.

The Challenge

The reality is simple: Technology alone will not fully eliminate the challenges that surround key processes like claims, which is the foremost area the insurance industry is moving to address.

The combination of innovative technology solutions and startups with more established industry players offers exciting promise for the industry — assuming we don’t lose sight of the need to ensure that a solution that serves humans must also be driven and populated by humans.

Put simply, there is no general artificial intelligence (AI).

Algorithms, bots and other technologies are not end-to-end solutions. These tools are highly localized and offer a narrow focus.

As part of a process, they offer greater efficiency and a streamlined manner to consumer data analytics. However, as the insurance industry’s past has proven, technology alone is not a solution. In fact, adoption of technology without an underlying strategy can create tremendous inefficiency to insurance processes, adding complexity and creating more costly issues for companies in terms of time, personnel and customer service.

There is tremendous emotion around claims and losses. Technology can help in managing the claims process, but humans with customer service skills will remain a critical part of the process, allowing for insight, empathy and creative thinking that no algorithm can yet replicate.

With a hard market on the horizon, the complexity of applications and claims will grow. As this more complex situation evolves, standalone AI solutions will likely fail to adapt, while integrated technology solutions driven and overseen by insurance professionals who have lived through prior hard markets and know what to expect can help best guide their companies and their customer service experiences.

Advice for the Future

Companies that will succeed in this new industry landscape will be those whose leaders think big but start small. The temptation is to chase the big, shiny objects. This was an early mistake of many insurtech startups. The reality is that so much can be gained from small, incremental improvements.

Start by taking a close look at existing processes through the eyes of the customer. Design thinking and customer journey mapping ought to be part of the daily conversation of management looking to insurtech for solutions. Insurtech is the culmination of a lot of these things. Look outside of the insurance industry for inspiration.

Look for companies that can help alleviate some of the more complex pieces of digital transformation. Some of the most successful advances in insurtech to date have come from organizations that took an honest look at their tech and innovation deficits and identified an effective partner to maximize what they do best with new thinking and processes. By freeing time to focus on the core business pieces, they seek to drive growth and success.

See also: A Quarantine Dispatch on the Insurtech Trio

As we move into a harder market, additional burdens will be placed on agents and carriers to manage submission flow, markets will become more restrictive and submission volume will go up, along with exceptions and exclusions. Insurtech alone cannot solve for these realities.

In the hard market to come, there will be a premium on customer service and customer satisfaction. Technology can certainly help mitigate some of the burden agents and carriers will face. Addressing coverage needs and solving claims challenges, however, is a big part of what will be needed.

This will require both a tech-based and a human-centric solution.

Confronted with a new, remote working world, customer service programs have undergone enormous transformations to processes and tools. At the same time, the programs have handled huge increases in customer inquiries, which as of June 2020 are up an average of 48% across business sectors. For the insurance industry, in particular, meeting increased customer demands with excellent service requires the right combination of technology and training. By implementing more automated and virtual processes, insurance companies can set remote teams up for success. 

Ensuring representatives are prepared for the new environment

The pandemic has demonstrated that "virtualizing" the customer experience (CX) is no longer an option but a necessity. Insurance companies need to equip and train representatives to use necessary technology while at home. Companies should lend headsets, laptops and other equipment to employees. Maintaining an excellent CX program may also require new digital technologies—such as chat and video— which representatives need to be fully proficient in. Keep in mind, a well-trained representative can better personalize the customer experience, resolving issues faster and with better customer satisfaction.

Meeting your customers on the right channel at the right time

Customer experience often acts as the differentiator when it comes to the crowded markets of health, home, auto and travel insurance. Now that teams are working off-site and traditional support interactions have shifted to be primarily virtual, it’s imperative to use every customer inquiry as an opportunity to strengthen their loyalty. A successful relationship relies on open communication, and that means the ability for the policy holder to reach the provider when needed. Insurance companies, especially ones with a global footprint in different time zones, can no longer rely on nine-to-five service hours. Their clientele, when faced with an unexpected catastrophe, will reach out expecting fast and accessible support. 

As demand for 24/7 service grows, customers are turning toward varying platforms such as intermediaries, service centers or digital channels to reach their insurers. Since the end of February, there has been a global increase in digital channels being used to contact customer service, with WhatsApp up 148%, texting up 26% and direct messaging over Facebook and Twitter up by 21%. These shifts reinforce the need for insurance companies to virtualize their customer service and meet customers on increasingly diverse channels.  

See also: Why Customer Journey Mapping Is Crucial

With new communication forms on social media and online, it’s critical to meet customers on the platforms that are comfortable and accessible for them. For insurance companies, this ease of access comes in the form of offering personalized service supported across communication channels. If a policy holder poses a claim question via an online customer service chat, the information shared should be reflected in the person's online account and accessible across all other channels. It’s a matter of ensuring that customers don’t need to repeat their question or information and that they get the same quality of response across channels. 

Relying on AI-based technology 

For many years, a digitized customer relationship has been key for creating a successful CX journey in the insurance world. If you have the technology, use it. AI-based technology has been proven to address customer inquiries more rapidly. If simple customer requests around account updates, such as resetting a password, are handled by an automated system, representatives are free to spend the bulk of their time addressing more complex problems. This simple redirection of workflow allows resources to be redistributed in a more efficient and effective way. 

While insurance CX teams are no stranger to chatbots and other technologies, the newly remote environment requires their increased use to maintain policy holder satisfaction and loyalty. Insurance companies should be evaluating which tools can best support virtualized customer service teams by considering the following: 

• Predicting problems: Chatbots and AI can help you anticipate customer needs and dissatisfaction. 
• Helping your workforce: Representatives are dealing with a higher volume of complex interactions. Can tools such as text-based messaging help ease their workloads by quickly handling simpler tasks? 
• Connecting with customers: Prospective policy holders are increasingly seeking insurers that offer a more personalized experience. Can adopting new technology help you deliver more tailored information? 

Final thoughts

Insurance companies have the opportunity to lead in the new world of remote customer service – one in which increased virtualization enables better experiences with insurance. By virtualizing the customer experience, insurers can make service and support accessible across diverse channels. For this to happen, representatives must be enabled to use the right tools and rely on AI-based technology whenever possible. This game-changing combination of technology and training will give representatives the support they need to deliver excellent customer service across channels. 

If necessity is the mother of invention, the insurance industry can proudly say that, in the face of COVID-19, necessity also became the mother of innovation. 

Kudos to the Insurance Industry

From repositioning hundreds of thousands of employees from offices to a fully effective remote work-from-home format in less than a month to quickly implementing technologies enabling them to continue to offer products, services and support, barely missing a beat, the industry rose to the challenge.

These accomplishments did not just happen. It took decisive leadership, starting in the C-suites of the industry, and focused, well-articulated action plans that flowed down into middle management and out to the front lines.  It also took increased investment, some of which was unexpected and unbudgeted. Marshaling the capital required a compelling justification, and in business there is no more convincing target than results and outcomes, which are measured by a variety of metrics beyond just financial results, including customer experience and satisfaction, retention, market share growth, reputation management, credibility and competitive strength. 

More Work to Do

But this transformation is far from over and will no doubt continue long after the pandemic recedes. There is a sense of urgency not evident prior to March 2020. Events over the past few months have forced C-suite leaders to realize that their digital transformation efforts need to be expanded and accelerated to light speed. It is now broadly accepted that a comprehensive digital strategy and implementation plan is critical to carriers that are serious about becoming digital insurers. 

Immediate, Enterprise-Wide Digitization Now Job #1  

Unfortunately, not all carriers will succeed in this journey. The survivors will be innovative, nimble and fiercely customer-centric. They will be committed to enterprise-wide conversion to digitization. Investments in mission-critical technology will need to be prioritized. Speed to market will be mandatory. The hallmarks of successful carriers will include leveraging high-powered transformational technologies, including IoT, telematics, sensors and more. These same market leaders will learn to find and engage with traditionally unreachable customers and convert them into their brand ambassadors. And these leaders will adopt digital technology as a strategic priority and achieve automation efficiency by arming their companies with the very latest in client communications, finance processes, digital and touchless claims processes and digital marketing.

See also: COVID-19: Technology, Investment, Innovation

According to Reuters Events’ Connected Insurance 2020 Report, in 2019, 63% of insurance carriers rated the development of new digital products and services as a key expected outcome over the next 12 months. In a post-pandemic world, it is likely that figure will be nearer 100%.

We need to take every opportunity to listen and learn from our industry leaders, who understand what it takes to survive this challenging period and emerge even stronger.

This theme will be explored in depth in the Reuters Events webinar titled “CNA, Nationwide and Quadient: A C-Suite Take on Results Driven Technology” on Sept. 3, 2020. Register here. This webinar is being run in conjunction with The Future of Insurance USA 2020, which takes place online Nov. 16–18.

Since the stay-at-home orders first started in March, chief information security officers (CISOs) have been sharing both their horror stories and how they’ve shifted priorities to keep their companies safe. These CISOs work in a wide variety of companies, and the anecdotes we’ve been hearing run the gamut. 

Changes are happening in how CISOs make decisions, so, in line with Arceo’s mission of driving comprehensive cybersecurity management, we wanted to look at how the rapid expansion of remote work is affecting cybersecurity business decisions directly.

We collected one of the first sets of quantitative data on how CISOs’ priorities have changed since many businesses started moving to work from home. With our research partner, Wakefield, we surveyed 250 CISOs at companies with $250 million to $2 billion in annual revenue. We asked them about their current and changing approach to cybersecurity risk management. Below is a synopsis of some of the results we found most interesting; the full report is available on our website.

Many CISOs say they need more options and coverage for cybersecurity insurance. However, they aren’t getting the coverage they need or the post-breach services required to recover from certain incidents. Almost four-in-five (77%) reported that there are incidents they feel they need coverage for, but that they are unable to get it. 

Additionally, nearly all (96%) of the CISOs surveyed want additional coverage for the increased vulnerabilities resulting from the work-from-home surge. This means that almost every CISO out there is worried -- likely because the security practices followed when working remotely are laxer than those followed in the office, leading to a higher risk of attack. In fact, over 40% of CISOs said that cloud usage (49%), personal devices usage (45%) and unvetted apps or platforms (41%) usage posed the biggest threats during this work-from-home period.

The overwhelming majority (88%) of CISOs are not completely satisfied with the performance of their company’s primary insurance brokerage. Additionally, CISOs want more help when they need it most. Nearly all CISOs (98%) want additional support from their cyber insurance provider after a serious incident. 

Nearly half of all CISOs (48%) report they have experienced a security breach. Insurers and brokers need to step up and are likely in a position to play a bigger role in the prevention and the aftermath of a breach because nine in 10 CISOs are open to purchasing cybersecurity tools along with cyber insurance from the same company. 

See also: COVID-19: The Long Slog Ahead

Now more than ever it seems CISOs seem to be concerned about disruption to continuity, which is a greater risk as staff works from home. More than half of CISOs want cyber insurance to cover business email compromise (56%), loss of electronic data (55%), cyber extortion (53%) and ransomware (52%). 

CISOs recognize they need more influence, and nearly all CISOs (97%) agree that the opportunity to interact with the board is crucial to their success as a CISO. 

Check out the full “Quantitative Analysis of Unmet Insurance Needs and Cyber Security Tools Among CISOs” report to find out more about how CISOs view the changing landscape and how cyber insurance needs to adjust to fit their needs.

Although 2020 kept dishing out pain last week -- the pandemic, the economic crisis, the protests and counter-protests on racism, our crazy politics and even wildfires and hurricanes -- one event wasn't as absolutely awful as it could have been.

It was still awful: Hurricane Laura caused billions of dollars of damage and killed 14 people in Louisiana and Texas. But the hurricane didn't cause nearly as much damage as initially feared.

That suggests that people are starting to take the sorts of precautions that will be increasingly important as we have to adapt to the changing climate. Those precautionary principles also represent a key opportunity in front of the insurance industry: to go from indemnifying customers after a loss to helping them avoid those losses in the first place.

Now, some of what happened with Hurricane Laura was just good fortune. The hurricane pretty much threaded the needle between New Orleans and Houston, so it hit mostly rural areas, not the dense populations and expensive properties in those metropolises. The hurricane moved inland quickly, rather than sitting over an area and dumping tens of inches of rain, as Hurricane Harvey did to Houston in 2017. The storm surge, predicted to be as high as 20 feet, peaked at about 11 feet -- still an almost inconceivable wall of water washing inland, of course.

But, as this New York Times article details, people mitigated the damage because they learned lessons from Hurricane Rita, which hit Louisiana and Texas in 2005. Rita killed 120 people and did some $25 billion in damage (measured in today's dollars), including business interruption. Because of Rita, building codes have become much stricter, and structures more resilient. Some houses near the coast, for instance, are now on stilts 15 feet high. Partly as a result, while Laura's winds were even stronger than Rita's when the hurricanes made landfall (150 mph vs. 130 mph), the early estimates are that Laura did about $20 billion of damage while killing those 14 unfortunate souls.

Again, the storm was a catastrophe. I grieve for those 14 people, for their families and for all those who are now having to try to knit their lives back together after suffering $20 billion -- $20 billion! -- of damage. But, assuming that the difference between Rita and Laura wasn't just 2020 finally cutting us some slack, there has been considerable improvement in the resilience of those in the hurricanes' path, and I vote for more resilience, with the insurance industry helping as much as possible.

Technology should help. With Laura, the National Hurricane Center got the time of landfall precisely right, more than 3 1/2 days in advance, and was only a mile off in its prediction of the location of landfall. Predictions will only get better, giving people more time to evacuate or find shelter.

The industry can also mine its data for insights that will help people prepare better. For instance, of the 14 people who died in Hurricane Laura, more than half succumbed to carbon monoxide poisoning emitted by emergency generators. With that pattern identified, carbon monoxide poisoning seems like a danger that can be reduced or even eliminated through better inspection or education for those using generators.

Government will need to play a role, too, as climate change intensifies storms and raises the level of the oceans, endangering coastal communities. The Federal Emergency Management Agency (FEMA) has already funded "buyouts" of 43,000 homeowners in the U.S. who chose to relocate rather than continue to fight nature in places such as Isle de Jean Charles, in Louisiana, which has been 98% swallowed by the Gulf of Mexico.

We're still not out of the woods even on this year's hurricane season, let alone on everything else that 2020 is throwing at us, but maybe we can take a lesson from Rita and Laura. Maybe we can learn how to be even smarter and more resilient, and maybe the insurance industry can lead the way.

Stay safe.

Paul

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

3 Big Opportunities From AI and ML

Machine learning can speed underwriting while reducing costs and providing valuable information on why certain proposals fail.

How CISOs Are Responding to COVID

77% of chief information security officers identified incidents that they feel they need cyber coverage for and report being unable to get it.

COVID-19: What Buyers Want Now

Insurers must examine customer pain points and life changes and accelerate digital adoption.

New Sense of Urgency on Going Digital

Events have forced C-suite leaders to realize that their digital transformation efforts need to be expanded and accelerated to light speed.

The Missing Tool for Cyber Resilience

With AI able to assess cyber risk, cyber insurance no longer has to be a long, drawn-out and complicated process.

Payments at the Speed of Light

Insurers and solution providers are making significant advancements to speed delivery of payments and expand digital payment options.

Any consumer-serving organization knows how important both its customer experience (CX) and product development teams are. What the organization must also remember is how important the synergy between the two is.

There are many departments that keep an organization running smoothly, but two that must be in sync are your customer experience (CX) and product development teams. Your CX team has the most insight into your customers and, therefore, understands the challenges they face and that the product could solve. The most successful companies are the ones whose product teams leverage the CX team’s customer insights and drive brand loyalty. 

Steve Jobs is quoted as saying, “You’ve got to start with the customer experience and work backward to the technology.”

Here are a few tips to ensure that your CX and product teams can work together efficiently.

Align on a common goal

Despite being two different departments and playing different roles in the company, the CX and product teams must align on a common goal: to solve customer problems and create an engaging customer experience by working together.

Having a shared goal leads to more efficient teamwork and guides fluidity across teams. 

Have each other on speed dial

The CX and product teams must be in constant communication, filling in one another daily about how the customer is experiencing the product.

It’s a good idea for the two departments to connect regularly so that the CX team can share the insights they’ve gathered from customers, what drives customers to contact the company and what the general customer sentiment is when they contact the company. 

Likewise, the product team must share details about product updates that are in the pipeline. This knowledge empowers CX teams to respond to answer customer questions, troubleshoot and retain customer trust.

See also: 3 Ways to Improve Customer Experience

Focus on the feedback loop

The feedback loop is a process in which customers’ experiences with the product are analyzed and shared with the product team to create a product that better meets needs.  

The CX team must first develop a scalable system to granularly track and aggregate data about what drives customers to contact the company.

Although communicating with the customer opens a door of opportunity to improve their perception of the brand, most of the time, when a customer contacts you, it’s because the company or product has failed omehow. This failure point is where the feedback loop starts.

It is then up to CX team members to not only identify the underpinning reasons why customers contacted the company but to also provide such delightful experiences that customers feel more connected to the company than they did before. A great way to measure the latter is to request customer satisfaction ratings of that experience, taking particular note of the response rate to that survey itself. The customers who are most wowed by their customer experience (whether positively or negatively) are the ones who will take the time to respond to your survey. 

The final part of the feedback loop is for the CX team to regularly share which parts of the product could be updated, to both reduce customer servicing costs and help inform and prioritize the product development road map.

Encourage a humanistic approach to business

Make sure your customer advocates embody empathy. They are the ones who are communicating with the customers and responding to their needs. Therefore, they must have the people skills to make the support interaction as pleasant as possible. 

Entrepreneur Tony Allessandra puts this astutely, “Being on par in terms of price and quality only gets you into the game. Service wins the game.” Customer advocates are the face of the company and the first stop for your customers when something goes awry. It’s critical that they know how valuable their role is and that the company empowers them to genuinely meet customer needs.

Your customers’ expectations of their support experiences are different and may vary. Therefore, it’s critical to provide customers with various options. This can involve allowing them to connect with you through different channels, such as chat, email or phone.

See also: Elon Musk and Your Feedback Loop

As for the product team, they must continually look for ways to improve the product experience and recognize the expertise that the CX team has. This will ensure that they’re continuously learning and expanding both their product and customer expertise. 

There are many benefits when your CX and product development teams are aligned on the type of customer experience the company aims to provide. Although the two teams have different day-to-day roles, they both play an important role in helping one another create a customer experience that inspires brand loyalty.

Cyber attacks have been on the rise for years, but many organizations are unaware of just how costly cyber incidents can be and what protective measures are most effective in mitigating loss not “if” an attack will happen, but “when.” In fact, a report by Cybersecurity Ventures estimates that global ransomware damage, which includes loss of data, lost productivity, reputation damage and more, will cost organizations $20 billion by 2021.  

Many companies are still skeptical of what cyber insurance actually covers and are oftentimes unsure of which policy best suits their needs. According to Advisen’s 2019 Cyber Insurance: The Market’s View survey, “not understanding exposures” (73%), “not understanding coverage” (63%) and “cost” (46%) remain the top three identified obstacles to writing and issuing cyber insurance.

But thanks to recent developments, including the use of AI to assess cyber risk for an organization’s cyber posture, cyber insurance no longer has to be a long, drawn-out and complicated process. In other words, we can treat cyber insurance like another important tool in an organization's cyber resilience toolkit, alongside endpoint security, securing networks and the like. 

See also: 5 Things Here to Stay, Post-Pandemic

Here is how business owners can ensure they are purchasing a comprehensive cyber insurance policy, unique to their business: 

Choose a Carrier With Expertise in Technology

While many in the cybersecurity sector argue that cyber insurance isn’t effective and that prevention is the only solution, when executed correctly cyber insurance can save organizations big money and repair reputational damage. Insurance providers with expertise in cybersecurity know that policies should be specifically designed for cyber risk exposure — not associated with other lines of coverage. The most thorough policies to safeguard against cyber threats take into consideration security, cloud, compliance and other security best practices. 

As the digital landscape evolves and malicious cyber criminals find new ways to wreak havoc, cyber insurers must go beyond data breach coverage and offer policies that cover all forms of cyber incidents -- ransomware, cyber extortion, social engineering,  business interruption due to distributed denial of service (DDoS) attacks and more. Ransomware-as-a-Service, for example, is now a business in itself, with bounties doubling or tripling during 2019 and forcing the insurance industry to rethink how it approaches coverage and limits. 

Prioritize Education and Analysis

When selecting a cyber insurance policy, organizations should not only want to protect themselves but also educate themselves. The ideal policy offers dynamic, automated, insurable cyber risk assessments, providing businesses with real-time insights into insurable risks. There should be full transparency for all stakeholders: Policyholders, brokers, agents, insurers and reinsurers should have the same access and visibility to risk data.

Manage Risk Aggressively

An effective cyber insurance policy should cover the cost of a security team in the midst of a cyber attack as part of the breach response. The security team would then determine how to upgrade systems to ensure maximum privacy. From a technology standpoint, cyber insurers must anticipate possible threats and continuously evaluate underwriting practices. Another key element in risk management is evaluating the time and cost of recovery. Companies with precise plans on how to get back on their feet after a cyber catastrophe will, without a doubt, be most prepared.

See also: An Inconvenient Sales Truth

When purchasing a cyber insurance policy, you are not just paying for cyber insurance but also all of the services that go along with it. Outside of paying claims, cyber insurers must focus on providing customers with tools that empower them to learn more about the cyber landscape and better protect their businesses.

With many organizations looking to cut costs during COVID-19, some may be quick to axe security spending. Defending against cyber threats that have the power to damage entire corporations and livelihoods, however, is not an area to skimp on. Other assets in our lives are no-brainers to protect,  such as our homes, health and vehicles; there’s insurance for that. There’s no reason that companies shouldn’t add cyber insurance to their resiliency plans to prevent financial and reputational ruin.

In 2020, we find ourselves living in a world that demands a real-time shopping experience. Brands like Amazon make this experience as easy as possible by providing the option to compare one product against another product(s). The comparisons include price, features and the length of time it will take for the product to arrive. Furthermore, we can see recommended products based on buying behavior patterns, as well as related products that can be purchased to maximize the overall value. Each of these factors weigh into how, when and from whom we purchase.

Behind the scenes of Amazon’s user experience are two key technologies driving innovation: artificial intelligence (AI) and machine learning (ML). These terms are not often tossed around when referring to the current group insurance shopping experience, although there is certainly much room for carriers to integrate these innovations to their benefit. The McKinsey Global Institute reports that up to 60% of insurance sales and distribution tasks could be automated, as well as up to 35% of underwriting tasks.

Herein lie three major machine learning opportunities to unlock a better user experience for all stakeholders in the purchasing process, from sales representatives and underwriters to brokers, employers and employees. 

1. Automating Broker Emails and Required Quoting Documents

Imagine if Amazon required you to email a request every time you wanted to purchase a product, without knowing when the product would arrive, how much it would cost or whether it would even be shipped at all until three to five days after sending the original email. 

In many cases, this is the experience today for brokers who email a request for proposal (RFP) to a group insurance carrier. And so we arrive at our first opportunity for machine learning; speeding up the quote turnaround time (TAT) by automating the setup of broker emails and documents required to quote. As we peel back the onion to see how most life and disability and worksite group carriers receive and process quote requests today, it is clear how manual the current process is. This process often entails inputting data twice; once in a CRM such as Salesforce, and a second time in a quoting and underwriting engine, or spreadsheet on macro steroids.

Much of this process can be automated by leveraging machine learning to train a model that runs through thousands of previous broker email RFPs to understand broker requests, the differences between brokers and what information is required to quote the desired products. Oftentimes, brokers do not provide all the information necessary for quoting, which today is handled by placing the group “on hold.” The RFP intake specialist then has to manually email the broker back and ask for the missing information to proceed with the quote request. Machine learning can help to quickly identify what is missing, and automatically reply to the broker requesting this information and drive to completion.

See also: COVID: How Carriers Can Recover

2. Automating Plan Design(s) to Quote

Many times the RFP includes a current coverage contract or booklet that could be anywhere from 30 to 50 pages. This document contains all the clues as to which plan design should be quoted to compete with the carrier currently in force. The foundational plan design to quote starts with matching up the exact benefits for each product line and, you guessed it, going line-by-line through that 50-page contract booklet to manually hand-stitch a plan design to quote. As you can imagine, this is not the most efficient experience for the RFP intake specialist, nor the broker who ends up receiving a quote riddled with manual errors and plans that do not match up with the customer's current coverage.

In this case, a machine learning model can be trained to extract all the plan design elements from any incoming file that contains current coverage details. This ML model would be able to decipher the current carrier’s format structures and benefit naming conventions, and subsequently translate them into the quoting carrier’s structure. Of course, there are instances in which a customer's current plan design is not able to be quoted, sold and administered. In this case, a machine learning model would be able to flag any benefits that aren’t able to be translated and accounted for. To get the maximum value, this use case assumes an API integration with a quoting engine to automate plans to quote.

3. Analyzing Closed-Won and Closed-Lost Proposals 

At the moment, once a case has been either sold or lost, most carriers are not harnessing the true power of the resulting data (i.e. the insights and components required to make a winning proposal.) Carriers tend to look more closely at closed-won proposals because they have to use this data to implement policies and sold rates. But even here, the data currently being captured and tracked leaves much room for improvement.

Machine learning and AI models can be used here to better analyze which RFPs are the most likely to win based on a variety of factors. For example, an ML model could track the current carriers and rates on incoming RFPs and gather won/lost data once the sale has closed. This data can be used to inform which future RFPs are most likely to win based on the customer's current carrier.

On the flip side, closed-lost proposal data (that now typically ends up in an abyss far from any BI visualization tools) could be used to show key factors as to why the case was lost. A national life and disability carrier focused on the small group sector may have around 100,000 RFPs a year. If the close ratio is 9%, that means 91,000 proposals were lost. These thousands of proposals could be fed into a machine learning model to analyze their ingredients, in the hopes of adjusting the sales recipe to increase future close ratios.

A More Profitable Future  

Opportunities for ML and AI implementation within the group industry are evident, and these use cases will ultimately enhance the user experience as well as service policies, manage billing, process claims and handle renewals. 46% of AI vendors in insurance offer solutions for claims, and 43% have solutions for underwriting; the solutions have been far more widely used within the home and auto industry than in the group insurance sector. One important part of this approach is to identify where the "lowest hanging fruit" use cases exist, which can be implemented in a proof-of-concept fashion.

See also: How Machine Learning Halts Data Breaches

The implementations can either be achieved with internal teams or by working with insurtech partner solutions. The first and second ML opportunities outlined both exist within the RFP intake process, which can provide direct operating savings ROI, whereas the third may take longer to actualize as close ratios gradually increase. To move toward a more profitable future, it is essential that group carriers notice and take full advantage of the advancements being made in machine learning technology today.