So many gurus and their ilk are looking for, hoping for, any technology or group of technologies to "disrupt" or otherwise upend the insurance industry. One of the latest hopes for transforming the insurance industry is IoT: the Internet of Things. Unlike mobility, social media, cloud computing, big data and associated data science-driven analytics, or blockchain, IoT will definitely upend the insurance industry. The IP-enabled sensors will help people stop or reduce losses before they occur or soon after the losses occur. Traditional insurers will run for the hills because their industry will be in shambles. Shambles, I tell you ! Nirvana achieved! The reality is uglier, of course There certainly are an expanding number of IoT devices appearing in homes throughout the country. A veritable panoply of devices popping up in the basement, the attic and every room in between. Even the front door bell ! (BTW, is anyone with an IoT door lock looking forward to the day when the cloud service maintaining the door lock goes down? Perhaps when you have bags of groceries in your arms or after a long day at work, and you just want to get into your OWN HOME?) The reality is a tad uglier, of course, than the gurus tell us, as reality always is. The IoT-laden Pom Pom wavers neglect to pay as much attention to the ugly realities. Don’t you just want to tell them what they can do with their Pom Poms? Ugly realities of IoT The panoply of IoT devices is actually an expanding zoo of varied species that are blind to the existence of the other species in the zoo. The IoT devices don’t ‘talk to each other.’ There are no standards, including data standards that would enable the IoT devices to actually be …., well, useful. (Yes, I know that Apple, Amazon and Google are working on this issue – but today's situation is like cooking some hot dogs and finding out that the mustard is on the shopping list but that none is actually in your refrigerator.) Beyond not being part of a coherent integrated whole for the homeowner, each of the IoT devices represents a wonderful opportunity for hackers to spy on the family, and the devices create opportunities for distributed denial of service (DDoS) attacks on other targets by using the IoT devices as cyber-zombies or for other sorts of havoc (if the IoT device can alert the homeowner about water leaking, why can’t a hacker cause the IoT device to actually start the water leaking?) This brings us to another superb attribute of the IoT devices: Their security truly sucks. (That’s the technical term, folks; what can I tell you?) Can you (easily) reset the password on each of your IoT devices? Will the IoT device use two-factor authentication? See also: Insurance and the Internet of Things   Big Tech is coming (NOT) But, hey, insurers should still fear the Big Tech companies coming into the loss-prevention space, right? Why not fear these non-insurance players? Assuming security, privacy and trust become commonplace with each and every IoT device (and how many decades before that happens?), the firms offering loss prevention bundled with the IoT device (i.e.. warranty on steroids) only have to, at a minimum:

• Augment their devices with networks of vendors that can repair/replace the IoT device OR the appliance itself
• Ensure the vendors are bonded or have other insurance in case they don’t show up when they say they will or don’t actually do the repair/replace job the homeowner expects
• Instill confidence in the homeowners that the vendors can be trusted to come into their homes in the first place

I imagine there might be Big Tech or platform players who want to get into the loss-prevention business. (OK, I can’t.) They might erroneously believe that setting up a FAQ web site will do the trick. Have a problem with the IoT device/appliance? Not a problem – click to this FAQ web site. And let us know if the FAQ page(s) were helpful. Oh, and augment that FAQ web site with voice-recognition units (VRUs) or chatbots that stick to their scripts. Yup, that’s the ticket: Make it hard for someone with a broken IoT device/appliance to actually talk to a human. That will endear the customer to the firms providing the service. Moreover, I hope that firms realize that if anything goes wrong repairing/replacing the IoT device/appliance, they will be sued. Oh, wait, that’s another opportunity for traditional insurance – these firms will need to purchase liability insurance (drat it all). Why not upend the insurance industry? What has the insurance industry ever done except keep society, families, individuals and businesses operating in times of war, famine, plague and recessions? What a horrendous societal effect: helping clients manage or mitigate risk in a legal, regulatory manner through the centuries of civilization. See also: Global Trend Map No. 7: Internet of Things   Don’t insurers realize that an integral part of their value-add is helping VCs and other investors (and conference organizers) to generate revenue off the insurance industry? Why can’t the insurance industry accept that even these human vampires have a right to exist and profit? Oh, why?? What will happen? Really? Will IoT upend the current insurance industry? Will being able to prevent losses upend the current insurance industry? No. The league tables of P&C insurers (whether personal or commercial P&C) will remain as they are for many, many, many decades to come. I believe that traditional insurers will create or strengthen their own networks of vendors to repair/replace either IoT devices or appliances and potentially bundle lower premiums (where insurance regulators allow). So, sorry … no upending or disrupting of the insurance industry. Not an iota of upending. This article was originally published on Rabkin's Opinions.

When shopping for an auto insurance policy, consumers have greater access than ever to a quick and easy quote. Insurers continue to invest in improving the consumer experience, particularly the digital experience; a consumer can now get a quote from a mobile device while waiting in line at the grocery store! With the majority of insurers making improvements, it has become challenging for insurers to adequately compete for attention, let alone new customers. The secret is to understand and execute on a strategy that aligns with the shopping and switching habits and preferences of today’s customers. Shopping Habits During Renewal Windows A 2019 analysis of the U.S. auto insurance market by LexisNexis Risk Solutions has revealed that as many as 62% of policies are shopped off-cycle or outside the traditional renewal window. At every consumer’s fingertips is access to a slew of carriers’ price-comparison tools, mobile apps and websites that prepopulate with consumer data to expedite the quote process. With consumers empowered to shop for a better deal, it’s no surprise that 40% of U.S. auto insurance policies were shopped in the past year, and that 78% of policyholders have shopped their insurance within the past five years. See also: 3 Reasons to Use Online Marketplaces   To complement the LexisNexis Risk Solutions proprietary market insights, we recently commissioned a national study of over 2,000 auto insurance policyholders to better determine motivations for why consumers are shopping. The respondents were classified into three categories based on their auto insurance shopping habits over the past year – recent non-shoppers, shoppers and switchers. There were significant shopping differences among the respondent groups in how they research and purchase insurance. Recent Shoppers vs. Non-Shoppers:

• Recent non-shoppers said they only pay some attention to their coverage and price at time of renewal and are more likely to research in-person, purchase through an agent and renew their policy automatically.
• Shoppers, on the other hand, said they are more likely to review coverage and price very closely, research online, contact independent agents, purchase their policy online and renew their policy within 30 days of receiving notice.

These stark differences underscore why carriers need to pay attention to these behaviors and adapt their strategy to address these shopping and switching patterns to make sure they can retain their existing customer base. Price Is King and Tops Loyalty When it comes to insurance shopping, price was cited as the No. 1 reason consumers decided to switch insurance carriers, and the price difference doesn’t have to be as large as one might expect; a savings of $100 or less was enough incentive for 45% of all switchers across income levels. Even if a carrier offers a competitive price this year, it doesn’t mean the consumer will remain loyal. Half of shoppers in the study told us that they expect to shop again in the next year, with one in five expecting to switch carriers when they do shop. This data illustrates the impulse consumers have to shop to make sure that they’re getting the best deal. It’s only a matter of time before a consumer makes the jump to a carrier offering a better rate or easier application process. Knowledge Is Power If carriers don’t identify these behaviors and adapt their strategy to address these shopping and switching patterns, they will struggle to retain their customer base. We know price is the primary motivation for consumers to shop and switch, but carriers have an opportunity to use the data available to them about a consumer’s life events to engage and retain their valuable policyholders before they shop. Life events that generally have the most influence on auto insurance shopping include: adding or removing a driver, buying or leasing a vehicle, decreasing household income, buying a house, getting married or divorced and moving. With 65% of consumers expecting a life event to occur within the next one to two years, now is the time for carriers to review their book of business and monitor and anticipate when consumers are shopping. See also: The Insurance Lead Ecosystem   Carriers that implement data-driven solutions that monitor and anticipate key events can engage consumers at the right time and in the appropriate context to better accommodate their new or changing coverage needs. Without a robust, active risk management process, you may only know that a policyholder is shopping when it’s too late. An insights-based approach helps create opportunities to deepen loyalty and retention, even in a price-based, commoditized market. Consumer insights can put you in the driver’s seat with both prioritizing your most valuable policyholders for retention outreach and creating revenue opportunities with existing and potential customers. Download the Insurance Shopology Report here.

Insurance is rooted in data innovation. Wide swaths of modern statistics and probability were first devised to accurately price, predict and manage risk. But insurance’s pioneering position has faltered in recent years. While today’s economy is ablaze with revolutionary advancements in big data and computation, the insurance industry has been uneven in its adoption and application of cutting-edge data technologies. One study found that just 20% of the data collected by insurance companies is usable for strategic analysis. Attempts to incorporate big data and machine learning into insurance products tend to occur on an in-house and ad hoc basis. High financial stakes and strict regulations already complicate adoption of big data. The lack of a formalized system or computer language for interfacing with the available tools, technologies and data can also obstruct progress. This is why the life insurance industry as a whole, and actuaries, in particular, are in dire need of their own unified, dedicated programming language. As the CTO of a startup working with big life insurance companies, my team recognized this pressing need and committed ourselves to writing a programming language to help fill the gap. To understand the distinct challenges of applying technical innovations to the insurance industry, it is essential to first peel back the complex layers behind computer applications in general. Computers have come a long way since their earliest days as room-sized mainframes with punch-card readouts. But, at their core, all modern computers still reflect this hard-wired legacy. Graphical interfaces and polished applications might make today’s computers more user-friendly, but every action and instruction must still be translated and abstracted into binary machine code to be computed on. See also: A Game Changer for Digital Innovation   Now, this is not to say that developers sit typing their code as zeroes and ones. Rather, modern programming languages use their own, distinct shorthand, which is then compiled into code readable by hardware. However, the particular output logic required varies by computer architecture. GPUs operate differently than CPUs, which operate differently than cloud computing frameworks. Therefore, the trend has been to write general purpose languages (GPL) that focus on accommodating the widest range of uses to a particular machine or architecture. Instead of optimizing for a specific problem or use-case, GPLs ask the programmer to learn a new language and apply it to their given domain. The unique contours of the life insurance industry add a layer of difficulty. Regulations governing insurance are among the strictest and most byzantine of any industry. And beyond the issues of compliance come the extraordinary financial and social stakes riding on the integrity of insurance products. Core pillars of the private and public sector are propped up by the accurate, reliable management of risk. Insurance models running on shaky code could turn a tiny software bug into tens of millions of dollars in losses, the eventuality of which is amplified by the enormous complexity of accurately calculating risk five, 10 or even 25 years into the future. Seeing these issues firsthand inspired development of the Atidot LIA (Language for Insurance and Actuaries). What my team and I realized when approaching this challenge was that what initially looked like one problem was actually three distinct but related issues. The first issue was the substantial technical demands of carrying out the tasks that actuaries would demand of big data. Cleaning and anonymizing raw data, modeling it properly, testing and executing on a laptop or workstation and ensuring all code passed formal verification – these intricate operations would be a baseline requirement of any function. After addressing the fundamental complexity of insurance operations, the next issue was simplifying the syntax and optimizing legibility for domain experts who might not be professional developers. By building in insurance-specific entities, data models and analytics models for several use-cases, LIA allows actuaries to speak the language of insurance instead of memorizing the arbitrary variables of Python, Visual Basic or C++. Lastly, the unification of all necessary functionality into a syntactically legible framework would enable frictionless integration with machine learning models and accelerate time-to-market for new actuarial products. In other words, actuaries could write, debug and deploy big data in terms they could easily understand. Harmonizing function and syntax would help resolve some of the major roadblocks facing data integration. The current tension between the enormous promise of big data for the life insurance industry and the difficulty of developing dedicated software contribute to a compromise worse than the sum of its downsides. Today, actuaries looking to incorporate big data or machine learning are forced to cobble together homegrown solutions using a patchwork of languages and tools. Otherwise, they must rely on dedicated developers who lack the domain expertise to fluently translate actuarial needs into proper code. This disconnect creates friction and stilts progress. See also: The Opportunities in Blockchain   However, by empowering actuaries to translate their domain expertise into instructions usable by cutting-edge technologies, a dedicated programming language will help align the existing talent in the industry with the untapped potential of data innovation. Modeling insurance is increasingly becoming a multi-disciplinary challenge, and a more precise, specialized programming language will help foster collaboration and jump-start innovation. In other words, our vision is to help big data and life insurance finally speak the same language

The insurance industry has undergone a transformation over the past five years. Once manual and paper-based, insurance professionals now recognize the overwhelmingly positive impact technology has had on efficiency and customer relationships. We can expect the acceleration of tech-enabled customer experiences that promote dynamic customer interactions and empower the insurance industry to deliver tailored solutions and products to meet customers’ personal risk advisory needs. Here are a few of the innovations we will see take off in 2020.

• Pay-as-you-go car insurance. This unique approach to car insurance is especially appealing for urban consumers who own a car but rarely drive it. Rather than forcing occasional drivers to spend money on the same caliber of coverage as someone who drives every day, on-demand insurance means car owners can activate coverage only when they need it or pay per mile. The program requires a significant investment in technology that provides direct, self-service options for consumers, but we’ve already seen Liberty Mutual and Metromile offer this flexibility. We can expect many of the larger brands to begin offering similar options.
• Self-service capabilities. Sometimes it’s just not feasible to call an agent when a need or question arises. Modern consumers increasingly want the convenience of DIY options to allow them to secure coverage or access information on their own schedule. To meet that demand, we’ll see self-service portals offer a wider range of features, including risk rating, on-demand premium quotes, home inventory solutions and claims processing. There’s also a growing demand for virtual adjuster technology and drone/satellite integration that help speed claims processes. Many agencies aren’t aware that their carrier partners even offer these tools, so be sure to ask.
• Smart home claim avoidance/prevention tech. You’re probably already familiar with tools that track driving habits and offer discounts on auto insurance. A similar tech is emerging to help homeowners head off costly insurance claims on some of the most common mishaps. For example, a large portion of claims are related to water damage, such as a pipe bursting or an old water heater that fails. By implementing smart home sensors, automated controls and other Internet of Things devices, insurers can help homeowners mitigate the damage. For example, a sensor installed on a water heater can help monitor its structural integrity and remaining useful life, giving homeowners a heads up if it looks like a leak is imminent. In addition to offering premium discounts for participating in such a program, carriers might also provide incentives for replacing risky appliances ahead of time to avoid the risk of claim. Other solutions might involve installing a flood sensor or automated water control valve, which would send a mobile notification if a pipe bursts while no one is home, or even automatically shut off the water to prevent major damage. Some carriers already offer smart home kits for free to avoid these types of claims, and, while some homeowners might be a little concerned about privacy issues at first, I expect we’ll see this become table stakes soon.
• Deeper data insights to drive business growth. With threats of a potential economic slowdown beginning to percolate, we’re starting to see signs of a hardening of the market in commercial lines. In many cases, premiums are rising, and business customers are looking at all options to save money and reduce costs. Agencies need quantifiable data and insights from smart analytics to help commercial customers strike the right balance of risk, coverage and cost.

That means the demand for industry-wide data analysis will grow substantially, as agents and carriers need measurable and accurate insight into what’s going on across industries — what customers in similar business sectors are buying, what the risks are and what are any potential gaps in coverage. Combined with their experience and knowledge, comprehensive industry analysis tools will enable agents to see the big picture and give business customers data-backed recommendations to ensure they receive just-right coverage. See also: Is Insurtech a Game Changer? It Sure Is   The future is tech-enabled In the coming year and well beyond, consumers will increasingly demand greater transparency, a higher level of service, and on-demand solutions from their insurance carriers and agents. This means adopting innovative technology will become a norm rather than a novelty as the industry digitizes to provide a more modern experience. The good news: A wide array of insurtech solutions are now available, providing accessible and affordable tools for even the smallest independent agencies. Adopting insurtech solutions can not only improve agency efficiency, allowing agents to spend more time with customers, but also help agencies spot opportunities for growth. This powerful combination can deliver substantial ROI for investment and position your agency as a modern, tech-savvy partner for both consumer and commercial customers.

Technology adoption in personal lines has been going on for a long time. Because of the early advent of personal auto data standards, technology adoption has been fairly easy (always a relative term). Many insurers have staked their industry competitive advantage on data and analytics – Progressive comes to mind. Others have been early adopters of advanced payment technologies – USAA is a great example. So, is it time for transformational technology adoption to plateau or even dip in the personal lines segment? SMA has been conducting a survey on this very topic over the past decade. As one would expect, early results showed a good deal of learning and strategizing, with cautious investment. Over time, investment ramped up, as did implementations. But what about current results? Is the hype wearing down conviction? Without reservation, we can state that adoption is not losing steam. The recently released SMA report Transformational Technologies in P&C Lines: Insurer Progress, Plans and Projections reveals that transformative technology interest and application is strong. In particular:

• New user interaction (UI) – Chatbot technology and text messaging technology are keeping this area high on everyone’s list.
• Artificial intelligence (AI) – Given all the iterations of AI in the marketplace, the possibilities for adoption are almost limitless, and insurers are definitely keeping initiatives in motion.

Now, I don’t think that anyone reading this blog is stunned that UI and AI are still rolling in personal lines. They both will be for a long time due to the opportunities that keep arising and the strong bottom-line impact. However, the survey does show some noteworthy things – and not for their “rolling along” status.

• There is a good news/bad news scenario developing in the UI/AI results. Many insurers are putting all their investment eggs into these two baskets and ignoring – or at best shortchanging – other transformational technologies. It is very hard not to run toward one or two areas that are delivering early value. However, insurers need to have an even view of all the transformational technologies that affect customers.
• The SMA survey asks responders to identify the business areas that transformational technologies will affect. One of the choices is claims. Anyone who has read my recent blog Claims – Caught Between a Rock and a Hard Place – No More! will understand that I am a huge fan of claims workers. They have a super-hard job, one that is at the very heart of what insurance companies are all about. The troublesome thing is that survey results show that claims impact was sometimes fairly low in areas where it should not be.

See also: Commercial Lines Embracing Change   In all, the personal lines transformational technology report covers 11 technologies. It also provides a view of the impact of these technologies on 12 business areas. The trick is keeping the technologies and business impact areas in balance in terms of strategies and investment. Not every insurer will find business value in all 11 technologies; the key to keeping inertia at bay will be making conscious and well-considered decisions.

The pace of technical innovation continues to be top of mind in the insurance industry. About 96% of insurance executives say innovation at their companies has increased over the past three years. And global investment in insurtechs hit a record $3.26 billion through the first three quarters of 2019, according to Deloitte. It’s clear 2020 will see a continuation of technology advancement within the industry. Following are four trends we are seeing on the horizon: 1. User Experience — Carriers, agents and consumers all want the same thing: for the insurance buying process to be fast and easy. Consumers want to research plans, compare options and buy insurance products when they need them on the device(s) they choose, often on their mobile phone (more than half of all search queries in 2019 came from mobile, Google says). And consumers prefer a tailored experience. According to Accenture, 90% of insurance executives say that integration of customization and real-time delivery is the next big wave and competitive advantage. Additionally, nine out of 10 insurance executives believe a tailored approach will give companies a competitive edge. The firm says the ability to fulfill consumers’ needs at the "speed of now" will be the way to stay competitive, with the world available at consumers’ fingertips via smartphones. Digital expectations have evolved, and there’s an opportunity to deliver a much better customer experience in the insurance industry. Technology has enabled a world of extreme customized and on-demand experiences. The insurance industry must harness this technology to deliver the superior customer experience that consumers are quickly coming to expect, to stay competitive. This mobile-first, real-time delivery approach has influenced our marketing, design and development teams to focus on a highly mobile-optimized user experience in every aspect of our operation. We expect a mobile-focused push for the insurance industry in 2020, from both the carrier and broker/agent sides. See also: Insurance Innovation’s Growth Challenge   2. Analytics — Data analytics is growing across industries, given its potential to help businesses get ahead. Data-driven organizations are 23 times more likely to acquire customers, six times more likely to retain them and 19 times more likely to be profitable, McKinsey Global Institute says. The insurance industry is no different. The one constant across all our largest and most successful partners is their obsession with data and reliance on specialized technology. One such example is with customer relationship management (CRM) companies. CRM companies (Salesforce, and others) are developing industry-specific integrations, such as conversion endpoints, to track performance metrics, allowing for more real-time recording of important metrics. Insurance companies that take advantage of these tools have a major competitive advantage over those that do not, due to their ability to accurately measure and track important metrics like customer long-term-value (LTV), conversion rates of lead data and marketing return on investment (ROI). 3. Sales Enablement — Increasingly, carriers and agents are seeking more information, content and tools to engage buyers and help them to move to purchase, as well as address future needs post-purchase. Use of sales-enablement tools is on the rise, with only 20% of organizations reporting using them in 2013 and over 60% using them in 2019, according to CSO Insights. Agents want to understand who the lead is, what the person needs and how agents can best help drive more effective communications and fuel analytics and future programs. Agents also need these systems to work with other technologies—from mobile app, to CRM—to enable access to real-time information and a more seamless process. 4. Compliance — Compliance will and should remain a top priority for the industry. As consumer data protection becomes more of a focus in the media, we can expect to see more states moving toward a more European GDPR type data protection policy. California is one of the first states to adopt such a policy with the recently adopted California Consumer Privacy Act (CCPA), which came into effect Jan. 1, 2020. With more legislation focused on protecting consumers, we expect a stronger push toward industry-standard software to verify a company’s right to contact consumers. See also: Blurring Boundaries Drive Innovation   In a world that is moving toward better technology solutions daily, it is important for carriers, brokers and agents to keep up with these changes and constantly look for ways to interact the way that digitally savvy consumers want to interact.

I bought a new mountain bike this summer. I already had two perfectly good bicycles in the garage, but there’s nothing like a new toy to get you motivated. Hitting the trails these days involves monitoring my data. I’m interested to test myself using Personalized Activity Intelligence (PAI), a health score that measures cardiorespiratory fitness (CRF). PAI draws heart rate activity from wearables, such as Fitbit and Apple Watch. It uses that information, along with self-reported data, to guide me toward the most beneficial amount of exercise for my body. Using all that data, the weekly effort I put into physical activity is translated into a single PAI score. Maintaining 100 PAI reduces my risk of cardiovascular disease and early death. I might like to live longer now that I’ve spent EUR2,500 on this new bike…. PAI takes account of my resting and maximum heart rate over a seven-day rolling period, adjusted for exercise intensity to reflect my VO2 max, a measure of CRF. Cycling should increase my heart rate above a threshold, and into the CRF training zone, generating PAI points. Consistently maintaining 100 PAI will derive the health benefits. PAI requires several weeks of activity data to properly attune to my VO2 max, but my first five rides provide an indication of what’s to come (see Figure below). PAI uses the first ride data to begin calibrating the algorithm to me -- the score is irrelevant. My second ride ends abruptly with a puncture and a fall, but by ride four I’m back in the zone, and by ride five back in the woods. My average heart rate dropped over the first four rides, which suggests that my fitness reserve was decent and that I’ve quickly added some heart health to the equation. Although my average speed was consistent, the effort involved measured by heart rate and, ultimately, the points earned, trend downward. See also: How to Link Heart Health to Insurance   It’s clear that longer duration coupled with higher attained heart rate scores more points. I must up my game because the algorithm calibrates to my personal heart effort. With PAI, very low-intensity exercise doesn’t contribute to increased levels of CRF, while fitter people with higher heart rate reserve face a tougher threshold to accumulate PAI points. Now the PAI algorithm is adjusting to my profile, and I’m discovering the effort required to earn a protective score. I go back out on the bike for ride five and earn 75 points; the maximum possible in one day. This isn’t a surprise. The route is longer and more challenging, and I ride harder because I’m already feeling fitter (see Figure below). The algorithm will continue to adjust to my exercise behavior over the next few months. As my CRF increases, I will discover that running on a treadmill for 30 minutes is less fun and nets me fewer points. I will find that my daily brisk walking and average of 6,000 steps contribute but do not raise my heart effort enough to strongly influence my CRF. Running and walking will supplement my PAI score, but to score 100 -- enough to affect my long-term health and get good value out of this bike -- well, that simply requires greater effort. For further background. read my blog Heart Health - Why Linking It to Insurance Is a Winning Formula.

Whether you’re browsing an article about the latest trends in insurtech or listening to a panel of insurance industry disrupters discussing customer acquisition strategies, it’s hard to avoid references about emerging technologies such as machine learning, artificial intelligence, chatbots and data analytics. But, have these digital advancements truly transformed the experience for customers shopping for insurance? Are insurers, agencies and consumers benefiting from such enhancements in technology? Arguably, the answer is yes. The insurance buying experience has evolved dramatically in the last decade, and insurers, their agents and consumers have all benefited. However, when we examine the underlying products and the various touchpoints throughout the customer journey, we can see there are significant opportunities for improvement. Insurance Shopping: Consumer shopping patterns and expectations have changed in all industries, and insurance is no exception. The enormous dollars spent by top insurers are pushing more consumers to start their shopping process in a digital format, where speed and accuracy are paramount in keeping customers engaged. Consumers have become accustomed to choosing from multiple product options and to one-click shopping, but replicating an Amazon experience in the insurance industry is extremely challenging. For one thing, insurance products are highly complex and regulated, and premiums can change based on a multitude of variables that are not immediately transparent to consumers. Variables such as: age, coverage limits, credit, driving history, prior claims or age of home can dramatically affect eligibility or policy premium. And while these factors are key data points for underwriting, verification of these inputs often leads to lengthy question sets and inaccuracies in pricing at point of sale and beyond. Then there are the costs associated with verifying reports such as credit, MVR, CLUE and prior carrier through third party vendors, which add friction and cost in the shopping process. These are among the challenges that a few digitally focused, independent insurance agencies such as Gabi Insurance are aiming to overcome. Such digital platforms can simplify the quote process while representing both traditional carriers and newer entrants to the market like Clearcover. Digital agencies stay engaged with the customer throughout the life of the policy and may help reduce the cost of third-party reports, which are currently passed on to consumers. See also: Is Insurtech a Game Changer? It Sure Is   Beyond the Quote: While the point-of-sale experience is critical in effective customer acquisition, the entire customer journey -- meaning all the touchpoints along the way -- help maintain customer loyalty. Digital distribution channels that leverage emerging technologies can track customer interaction and use the data to identify improvement opportunities up- or downstream. While some insurers have made significant improvements in their frontline underwriting and product design, most still rely on products that were designed for traditional distribution channels (brick and mortar) and require some level of post-sale verification of policy attributes. As a result, customer experience can quickly shift from digital to paper-intensive, snail mail and the requirements can vary based on the type of products purchased. Consumers may be required to send proof of discounts, photos or evidence of insurance that were unverified at the time of the quote. In such cases, digital agencies like Gabi may be better equipped to quickly engage customers via text, chat or email and expedite requirements on behalf of their insurance partners while contributing to higher net promoter scores (NPS) and improved overall retention. Ultimately, to create an optimal insurance shopping experience that’s more aligned with customer expectations, insurers need to invest in revamping their products and processes for digital distribution channels. That’s easier said than done, as bringing products to market takes multiple years to deploy and millions of dollars in investment. Large, established insurers may require additional investment in core technologies, rebranding and potentially cultural and ideological transformation, while new insurers such as Clearcover, Hippo and Lemonade are not encumbered by legacy systems. Adopting the entire digital transformation ecosystem is difficult and costly for insurers and involves multiple departments within an organization, which often have competing objectives and operate in silos. Insurers may have much to gain from partnering with digital agencies as their distribution models provide growth opportunities and turnkey access to customers who are less likely to buy from brick and mortar agencies. Further, insurers can gain valuable insight into customer demographics and behavior that are unique to online shoppers and use this information in future product development and process improvement strategies.

Insurers sell products that consumers need but are loath to buy and have traditionally depended on an army of salespeople and agents and massive ad budgets. This old order is disappearing, but customer relationships need not be a casualty. Digital-first companies like Metromile, Lemonade, Slice and many others are experts at manipulating ones and zeros to acquire customers without actually talking to them. Now, even traditional insurance companies take a page from the insurtech playbook, prioritizing digital customer acquisition without human intervention. It’s becoming the norm to buy a policy and complete a claim completely online, even right from your phone. Digital insurance experiences take less time and require less pain. But as insurance companies look to increase profitability by reducing the number of human contacts required to bind policies, they would be wise to not completely abandon their relationship-building abilities by hiding phone number on their websites. See also: 3 Steps to Achieve a Digital Architecture Insurance companies can leverage analytics to maintain relationships. By reconceiving and rebuilding digital relationships, companies can enhance customer engagements and acquire more digital customers at scale. Here are three ways to do that: 1. Engage all of your customers contextually at scale. A big trend you see in customer service today is to have an “omni-channel engagement strategy.” This usually means employing a bevy of live-engagement channels on tap for your customer to pick from. Usually on your Contact Us page, you include everything from Chat to Email to SMS to phone. Providing more contact options may seem like a win for customers, but, when it comes to acquiring customers, an omni-channel contact strategy is really doubling down on a losing proposition; it requires expensive agents who can typically be available to only about 1% of customers online. Adding more channels increases costs and robs profit instead of increasing it. The reality is that, no matter how well you design your site, some customers will always need help, but they do not always know when they are struggling or hesitating. You can’t count on them en masse to reach out for help when they need it. When you have terms that need demystifying, or coverages that need explaining, the best solution is to act early and often – before your customers get stuck, abandon your digital channel or cost you a lot of money with a phone call. By leveraging real-time analytics to anticipate when they’re struggling, you can offer next-best actions: automated tips, explainer videos, buying guides and other helpful bits of content that have a high likelihood of being helpful. Because customers don’t require a live agent, these engagements can be served up to anyone and everyone who needs the help all for about 1% of the cost of a live engagement. Moreover, contextual guidance can boost conversion rates anywhere from 25% to 400%. 2. Leverage your relationship to nudge them forward: E-commerce companies, including banks and insurers, typically do a really bad job of showing that they understand their relationship with you. Sites often look and behave the same on the 300th visit as they did on the first, and don’t tailor the experience to fit individual customer needs other than offering to remember login names. But it doesn’t need to be this way. Many companies have started to realize that a customer may not complete a quote or bind a policy all in one visit; these companies have started to offer the ability to save and later retrieve a quote. That’s a step in the right direction. If you combine that functionality with the guidance described above, you can take things to the next level. When a customer saves a quote, leaves to comparison shop and then returns in a few hours or a few days (all typical behaviors), engage them contextually and offer to take them back to where they left off. Offer a greeting like “Welcome back! We see you saved a quote with us last time. Click here to pick up where you left off.” This way, you can take them right back to where they were last time, instead of waiting for them to relearn your UI. Don’t require customers to remember what they were doing last time or to find their way be back all on their own. 3. Have long-term relationship goals to continue to build life-time value. E-commerce operations can be notoriously transactional in how they look at the world. If a customer abandons a single visit, companies may think that they’ve lost that customer. Similarly, when a customer completes an online transaction, a company may assume that the battle has been won. What we really want to do is have a strategy to build value for and grow revenue from a customer over the long term. Bringing all the techniques together, a long-term relationship strategy may look like this:

• Use real-time analytics to help customers’ get through historical hesitation and struggle points.
• Tailor an engagement strategy to link multiple customer visits into one, short, efficient transactional journey.
• Come up with a profile for the typical customer and have goals for the full complement of target products and services that you want them to acquire over the long term. Then deploy engagements to feature and cross-sell complementary products and multi-line discounts when these customers visit for policy servicing or to file a claim.

See also: 3 Phases to Digital Transformation   At its best, an insurance relationship can resemble the one I have with my doctor – a trusted friend or professional who is truly looking out for me, and less like a painful necessity that must be endured. At first, the path to increased digital profitability built around talking to customers less may seem like quite a sacrifice. Yet the reality is that analytics, AI and customer engagement have matured to the point that they can revolutionize digital relationship-building better than an entire call center of humans could ever hope to.

The modern workers’ compensation system was devised to provide a guarantee of care and medical treatment to injured workers from their employers. Organizations also are expected to offer guidance on the resources available to injured workers as well as how to navigate issues such as finding the right doctor and taking time off work. In short, organizations are expected to be compassionate toward their injured workers and get them back to a productive and motivated state as soon as possible. The reality, however, is that we’ve shifted very far away from these principles. Today, claims teams are overwhelmed by the number of cases they are expected to handle, which often hamstrings their ability to service injured workers the way they would like. Additionally, skepticism has crept into the claims process, establishing a more adversarial relationship between organizations and injured workers. Feeling neglected or disrespected, many injured workers then turn to litigation for a remedy. According to a report by the Workers Compensation Research Institute (WCRI), some states now see attorney involvement in more than 50% of workers’ comp claims, which can add significant costs and duration to claims. This is a broken system for everyone — workers, organizations and the claims agents caught in between. So, how do we get out of the present situation? The Human Element The claims process has eroded because of a lack of compassion and awareness. Claims are filed by real human beings — often at their most vulnerable. These are people who are physically hurt, so they are already in pain. They also face the prospect of being away from a job they need to pay their bills and are uncertain of when or how much they will be paid while out of work. Tack on the fear, whether warranted or not, that someone will replace them if they are gone from their position too long, as well as the complications of the claims process. If they don’t hear back from the claims agent handling their case or if bills are taking too long to process, injured workers will turn elsewhere. At the same time, no one goes into claims adjustment (or at least they shouldn’t) thinking, “I want to make this person’s life as difficult as I can. I want to prove they are trying to milk the system and, therefore, will hold up their claim as long as possible.” Absolutely not. The average claims adjuster likely is dealing with a massive caseload as well as imposed processes and questions that are not geared toward moving claims forward. That is not to say that corporations are evil. They want their workers back on the job as quickly and safely as possible. See also: Untapped Potential of Artificial Intelligence   To remove the distrust and frustration experienced by each constituent in the claims process, recognition of humanity must be present, and compassion needs to be injected. You may be thinking something along the lines of: It’s easy to handle a claim with compassion on an isolated basis. A handful of claims in an agent’s caseload may capture more personal attention, but there is no way to address every claim with such care. I would argue that, even as the number of claims rise, with the next generation of tools it is now possible to provide compassionate care at scale. The Role of Artificial Intelligence As odd as it may sound, the way to insert more humanity into claims is by using machines. New technologies, such as machine learning and artificial intelligence (AI), can transform the system. The end goal of AI is to create the best experience, efficiently and at scale. To do so, AI must be given a precise purpose. In the case of claims, AI can be charged with removing very specific hurdles that get in the way of care. AI is not about replacing humans with robots. In this case, it is about removing the robot from humans. By automating the mundane pieces of claims management, AI frees agents to address emotional needs. In doing so, AI opens the door for a new model of “scalable compassion.” Scalable Compassion Until now, it’s been impossible for teams to deliver compassion at scale without breaking the bank. If AI automates significant portions of claims processing — whether it’s finding the right physician, helping to calculate an MSA, or signaling claims that raise red flags — adjustors can dive much deeper into the details that matter. They can weigh various factors based on data and predictive models to provide better answers to questions and make more informed decisions on a case-by-case basis. This results in a much smoother, happier experience for both injured workers and claims representatives who can spend time engaging with people and using their minds in positive ways. The scalable compassion model works for businesses, too. If you provide the right experience to claimants, the economics will follow. With strategic use of AI-based technology, claims representatives can help get injured workers to the best doctors right from the beginning. When injured workers get in to see a doctor ranked in the top 50%, companies see a 26% reduction in the overall cost of the claim, even if the upfront costs appear higher. This is because the best doctors expedite recovery. Getting it right from the beginning limits the need for additional procedures and continuing doctor or physical therapy appointments. Employees who receive the right care early in the life of their claim also return to work faster, minimizing problems for both the organization and the worker. And the increased personal attention and seamless delivery of care dramatically reduce litigation costs — which can account for $35,000 to $50,000 per claim if an attorney gets involved. Scalable compassion ultimately may save companies thousands to millions of dollars each year, while improving relations with and loyalty from workers who feel cared for in their time of need. See also: The Best Workers’ Comp Claims Teams   Today, workers’ comp sits at a critical junction. Something must be done to reform the system before it collapses. By implementing new intelligent technologies while embracing the role of advocate instead of adversary, a model of “scalable compassion” makes it possible to finally deliver on the intent and vision for workers’ comp. It represents a bold step forward but one well worth taking. As first published in Claims Journal.