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.

McKinsey recently published a paper titled IT Modernization in insurance: Three paths to transformation, in which the report authors say: “Insurers too often treat systems transformations as IT projects rather than acknowledging them for what they are: overall business transformations.” For insurance, the transformation at hand is moving from a disconnected, product-centric sale to a hyper-connected, consumer-centric buying experience.

The challenges are well-known and include analog processes, siloed data and a distribution strategy -- consumer-adviser-insurer -- that has traditionally left carriers one step removed from their own customers. As McKinsey said, overcoming these challenges takes more than an IT project or two. Insurers need a framework for evaluating opportunities to modernize, and the best place to start is by taking a deep dive into the market drivers: customer acquisition and retention, as well as operational effectiveness and cost reduction.

Consumers Are the Key

This observation comes as a surprise to no one, yet a survey of insurance customers by Accenture found that declining loyalty and poor customer service has resulted in $470 billion in insurance premiums “up for grabs.” Clearly, our ability to meet modern consumer expectations is a business imperative.

There are two sets of consumers to keep top of mind as the insurance industry takes steps to modernize: the customers you already have and the consumers you are trying to convert. Both types are online (90% of adults in the U.S. use the internet, according to The Pew Research Center), so leveraging digital channels in our efforts to acquire and retain customers is a classic no-brainer.

Customer acquisition in the digital age presents an unprecedented opportunity to deliver an online, consumer-centric buying experience no matter what channel the sale converts through. In fact, agents continue to have a very important role to play in the insurance buying journey, so the more we can arm them with consumer data, collected from online interactions, the better. Moreover, by tracking client behavior and measuring conversion, companies are also learning about what works, and what doesn’t, which is increasingly imperative to maintaining competitiveness. Likewise, digital channels and data are critical to retaining customers and building brand relationships.

For example, car insurance companies track driver behavior, and health insurance companies are providing fitness trackers BECAUSE THEY WANT THE DATA to help manage and reduce risk. At the same time, these trackers are also enhancing customer relationships with the brand and potentially benefiting the customer by reducing rates based on behavior - a classic win win.

See also: Thinking Big for True Transformation  

When it comes to acquiring and retaining customers in the digital age, building relationships is critical, and data is how it’s done. Today’s consumers have different expectations, and there are typically many more touch points, resulting in more data that can be put to work in service of these relationships.

Operations: Managing Risk and Reducing Costs

Cost reduction and operational effectiveness are, for many businesses, the main driver for modernization, and the insurance industry is no different. When evaluating opportunities to modernize operations, consider where you are likely to get the biggest return. Insurance professionals are in the business of reducing risk, so it stands to reason that risk management is an integral part of the business of insurance as well as a great example of where modern technology can deliver meaningful ROI.

Data analytics makes it easier to identify riskier populations and customers, improve product development, targeting and underwriting and ultimately share risk more effectively. Data that isn’t available and actionable slows the pace of business, increases the chance of human error and limits the ability to make data-driven decisions.

Other opportunities to modernize and deliver savings include tackling distribution challenges, specifically reducing the cost of customer acquisition and improving agent efficiency. Another McKinsey report noted that the individual insurance companies that will outperform competitors over the next decade will do so, in part, by “using analytics to build competitive advantages in distribution.” Superior distribution networks enable insurers to reach new customers while keeping costs low to ensure profitability.

Next Steps

Perhaps you are on one (or more) of the three paths McKinsey describes: modernizing the legacy platform, building a proprietary platform or buying a standard software package. When the question is build vs. buy, conducting a thorough build-vs.-buy analysis is a great way to compare costs, timing, flexibility and user experience. It’s an effort, but worth it when you consider the cost of missed opportunities.

For example, insurtech disruptor Lemonade wrote $57 million in premiums in 2018 thanks to its consumer-centric buying experience -- a $57 million missed opportunities for carriers that sell renters and homeowners insurance. Another much larger example is the middle market opportunity, which Accenture estimates to be around $12 trillion in missing coverage potential and $12 billion in revenue to be gained by serving it.

See also: How to Evolve the Business Model  

For some companies, the build-vs.-buy choice is easy. Partnering with an insurtech to address critical opportunities is typically much faster and less risky than other approaches. Regardless of the modernization path you choose, start with your top business challenges and identify opportunities for quick wins. Remember, modernization isn’t an IT project. Meeting modern consumer expectations is a business imperative; exceeding them is how insurers can stay relevant and competitive.

As we close out the year (you have better things to do than hear from me on Christmas Eve and New Year's Eve, so we won't publish Six Things again until January), I found two recurring themes in this year's newsletters that I thought were worth highlighting as we start to turn our attention to 2020. 

One theme we kept coming back to concerned the growing number of natural disasters, as well as the need to work far harder on preventing losses, rather than just treating them as inevitable and reimbursing clients after they occur. 

As you might imagine, PG&E continued to be a four-letter word (three letters and a symbol?), especially for those of us who live in California. In November, in An Answer for California's Power Shutdowns, I highlighted the need to write policies that are updated to cover today's exigencies and to at least warn customers sooner of impending blackouts so they can avoid having food spoil, having weddings canceled at the last second, etc. That piece followed three earlier in the year on PG&E's travails: What PG&E Bankruptcy Means for the Rest of Us, PG&E: We're Not Gonna Take It Any More and Catastrophe Insurers Have a 'Pinto' Moment.

We sounded similar concerns back in June, in Bracing for Hurricanes, talking about how better tools can now help identify vulnerable properties and about how properties can be hardened more than they are currently  In April, our CEO, Wayne Allen, wrote a more optimistic piece, based on technologies and new thinking he'd seen at a conference (Some Hope in the Face of the Wildfire Threat), and I guess there was something in the water at ITL that month because I, too, wrote a less-than-dour piece about the prospects for having the pricing of flood risk start to head in the direction of reality (Flood Insurance: Are the Storm Clouds Finally Lifting?) In July, I also suggested ways for us to band together to tackle some of the biggest issues that disasters present: A Grand Challenge for the Insurance Industry.

Climate change suggests that the catastrophes will grow worse, not ease, so I suspect I'll be writing plenty about disasters in 2020, too, but I hope the industry is at least heading toward two key changes. First, we need to use our growing set of tools and data sources to price risks much better, so those in harm's way will get signals from the market and protect themselves much more effectively than in the past. Second, we need to focus on helping people during the catastrophes, such as by giving them enough warning to evacuate, rather than just swooping and handing out checks after the damage is done.

The second theme that surfaced repeatedly was the obvious one: the industry's two-steps-forward-one-step-back approach to innovation. The newsletters on the topic are too numerous to cite all of them here, but I'd highlight two. On the two-steps-forward side is: Maybe the Innovation Glass Is Half Full. On the one-step-back side is: The Hurdles Facing Innovators. 

Perhaps the most sobering reading comes if you compare two pieces. Toward the end of 2019, Wayne wrote one of our more popular pieces: 10 Tips That Your Innovation Program Is Failing. Leading into the year, I wrote a Six Things commentary last December (10 Signs You're Headed for Trouble in 2019) that, I'm sorry to say, had a list remarkable similar to Wayne's.

Here's hoping that, in 2020, we get past the old mistakes and find new ones to commit.

In the meantime, I hope you all enjoy the holiday season with friends and family and come back refreshed for what will surely be a fascinating New Year.

Cheers,

Paul Carroll
Editor-in-Chief

In the fast-moving world of insurtech, new technologies such as robotic process automation (RPA), intelligent automation, artificial intelligence (AI) and machine learning are making it easy for insurers to dream about transforming processes. However, too often they get lost on how to put those innovative technologies into use. For a risk-averse industry, we’re seeing more insurers open to using these modern technologies to improve processes and ultimately better serve their insured – the way they expect to be. Many insurers are building on proven and integral technology platforms, including content services and core insurance platforms, to include more modern solutions that will help them further streamline operations. By combining capture, workflow, integrations and RPA, insurers can take some of the tedious tasks out of their employees’ workload and automate those processes, leveraging a "digital worker" to replicate redundant and manual tasks. For example, take a loss-run request process – which one of our customers completely transformed using capture, workflow and RPA. Capture Intake processes are often tedious because there are too many manual steps. Without standardization around the process, it is inefficient and doesn’t provide reliable metrics. To continue to move critical information forward, data needs to quickly and accurately get to the right people – where and when they need it. Many content services applications offer multiple ways to capture data and instantly digitize documents, including emails, PDFs and Office documents, and connect them to key processes. This ensures data is digital from the beginning and throughout the lifecycle. Once imported and classified, insurers can create a standard way to kick off processes, drive additional efficiencies, enable performance metrics to identify trends and better assess internal resources. For loss run requests, once the request is made – whether by email or through the insurer’s portal – integrations with the content services platform can capture the request to officially initiate the process. See also: The 5 Top Trends in AI and RPA   Workflow A workflow automation tool is an excellent way to help keep processes digital by electronically routing information to the appropriate person at the right step in the process. Additionally, because information is electronic, it is easier to monitor the status of items by incorporating real-time notifications. Within the loss-run request process, employees can use electronic workflows to take captured information and run that data through the applicable channels to get the claims history reports needed to make an informed underwriting decision. After the insurer receives those claims history reports, they can analyze how many claims were made, what types of claims were made and the financial impact of those claims. RPA RPA, intelligent automation, AI and machine learning are making it easier to take advantage of digital workers to further streamline processes and achieve greater efficiency. For the loss-run request process, once information is digitally captured, indexed and put through a workflow queue, the workflow can tell the digital worker to take indexed keywords and run them through third-party websites to gather any hits for the loss-run history. Once those are available, the digital worker can open the reports, download them from the website and upload them into the content services platform. There, the workflow process is finalized and the requestor, or agent, can access the report and make a decision. It took a digital worker three to five minutes to complete each item, saving more than 20 hours per day on run-loss automation requests, according to a customer using a combination of content services and RPA technology. The entire loss-run request process was simplified down to nine steps:

1. Index data for transaction type, market and policy number in content services platform
2. Navigate to market web portal based on market keyword
3. Log into market portal
4. Navigate to “Request Loss Run”
5. Enter policy number and select submit
6. Retrieve loss run report
7. Save loss run report
8. Import loss run report to content services platform
9. Send report through final workflow steps

Building innovative solutions on proven technologies, like content services platforms, allows insurers to continue to evolve and modernize, as well as keep pace with the expectations of their clients. With any new solution, an organization needs to evaluate the best way to implement the technology into is business processes to ensure it helps them achieve greater efficiency and improve customer service. For RPA and intelligent automation it’s often easiest to incorporate and leverage these solutions in processes that:

• Have a minimum number of steps
• Are highly repetitive
• Aren’t super complex
• Have a quantifiable value

See also: 3 Ways RPA Enables Growth   Understanding the ins and outs of each of your processes is the first essential step to know where new technologies like RPA, intelligent automation, AI and machine learning will best benefit. Once implemented, employees become more productive and can focus on higher-value tasks to deliver faster and better service to their prospects and customers.

Of all the shiny new tools piquing insurers’ interest, blockchain is among the shiniest: 46 percent of insurers plan to use blockchain within two years, and 84 percent say it’s reinventing the way they engage with new partners, according to research by Accenture. But while blockchain presents enormous potential to revamp claims and contract management, detect fraud in real time and more, most insurers aren’t ready to adopt blockchain. Why? Because they struggle to leverage less shiny digital technologies to create a more seamless claim processing experience, a fundamental aspect of policyholder satisfaction. Focusing on a technical evolution rather than holding out for a complete revolution, with claim processing at the center, will position insurers to make deep gains in performance now that can continue seamlessly into the future. It’s an approach that offers strong potential to increase not only policyholder satisfaction, but also profit. How can insurance companies make the right technology plays for an elevated claim processing experience? Here are three strategies to consider. Expand self-service options via a mobile app—and ensure staff support an all-digital experience. Mobile apps are an easy and fairly inexpensive digital innovation with high return: 42 percent of auto insurance policyholders use mobile apps to upload photos or videos of vehicle damage directly to their insurers, a J.D. Power survey found. And when insurers use these images, policyholder satisfaction surges. The problem is, insurers only use these images about half the time they are received. When this happens, the delight policyholders gained from self-directing the claim experience diminishes, and satisfaction plummets, the survey found. See also: 3 Techs to Personalize Claims Processing   Bringing customer service representatives and claim adjusters on board with an all-digital claim processing experience ensures policyholders get the seamless experience they crave. Make sure staff understand the importance of using the information policyholders provide—including images of damage incurred to their vehicle or property. Seek to limit duplicative inquiries, and continually look for ways to raise the bar around the digital experience. One survey points to five factors that distinguish outstanding mobile apps for insurance from those that are just so-so:

• Ease of navigation
• Appearance
• Availability of key information
• Range of services
• Clarity of information

Also critical: digital tools that offer timely, highly personalized guidance and support real-time customer interactions. Leverage data intelligence to speed claim processing. A McKinsey study found insurers could reduce claims expenses by 25 to 30 percent by automating claim processing—an approach that also boosts accuracy. Three opportunities for insurers to explore include:

• Intelligent case management. Machine learning automatically determines the next step in the policyholder’s claim processing journey, such as the need to schedule a repair appointment. Then, data-driven tools enable policyholders to perform these tasks digitally.
• Digitizing complex tasks. Using data analytics can simplify and standardize tasks such as estimating the value of a loss. When these tasks are performed annually, amounts can vary by claim adjustor—a major dissatisfier for policyholders.
• Automating front-end and back-office processes. Digital frontrunners use automated tools to send estimates for damage, verify repair invoices, and reimburse policyholders or service providers according to their preferred method of payment.

Make the move to electronic claim payment. Claim payment is the final step in claim processing and adjudication, and it’s the single aspect of the claim experience policyholders remember most. But insurers overwhelmingly default to paper-based payment, even as check-based payments in other industries continue to decline. The positive impressions gained from digital touchpoints at other points in the claim journey are erased when policyholders must:

• Wait days for a paper check to arrive in the mail
• Physically transport paper checks to a service provider or bank for payment or reimbursement

Making the move toward electronic payment—which is 10 times cheaper than paper checks—speeds processing time and payment receipt How can insurers build the right digital claim payment strategy—one tailored to the needs of individual policyholders and service providers? The right solution should include more than one payment option for policyholders, such as ACH, push-to-debit or check. For service providers, payment options may include ACH, virtual card payments, or checks. See also: Transformation of Roof Claim Processing   Some insurers have the expertise to build an electronic payment approach internally. Others purchase digital payment technologies or partner with banks and/or fintechs to provide this service. Determining the right approach involves careful consideration of cost, time to market (speed is critical), options for expanding services as new payment modalities are introduced, and the ability to protect sensitive policyholder data and comply with financial regulations. A Tried-and-True Model for Innovation As policyholders demand a standout digital experience, there is a temptation among insurers to build out their blockchain strategy. Blockchain generates a lot of hype for its potential to unlock significant value by simplifying complex, highly manual processes. However, there are challenges to blockchain adoption, including around scalability and deployment. Instead of waiting on blockchain, putting claim processing at the forefront of a company’s innovation agenda now empowers insurers to transform key capabilities today, setting the stage for more advanced technology adoption in the future.

During the past decade, SMA has conducted a survey to learn how insurers are viewing emerging technology. This year’s technology survey reflects industry changes, because, in the grand scheme of things, some of the featured technologies are no longer emerging. And because the strategic value of the technologies to insurers is maturing, there is a shift in how the research looks at transformational technology. At the end of the day, technology should be about transforming the business and driving better outcomes. The survey results reveal the degree to which strategies are being generated. Are there pilots in the works? What percentage of the activities are implementations? Where do commercial insurers believe impact is at a business-area level? And, probably everyone’s favorite, are insurers investing? This year’s recently published survey showed some predictable results – AI is the insurance industry darling, and commercial lines is no exception. But there were also some surprises – IoT activity fell off from 2018. But why? The reasons highlighted in the report are important – it isn’t lack of value. SMA analysis and experience reveals that there are seven technologies that are supporting commercial lines transformational activity to one degree or another:

1. AI/Machine Learning
2. Robotic Process Automation (RPA)
3. New User Interaction (UI)
4. Internet of Things
5. Virtual Payments
6. Wearable Devices
7. Blockchain

To be very clear, not every insurer and every product line places the same value on each of the transformational technologies. Commercial lines are complex, and insurers are adopting where business outcomes are improved and the technology is within the parameters of strategic plans. The trick for many commercial lines insurers will be to pay close attention to shifts in business outcomes and respond quickly. Unlike past technology cycles, competitive advantage tied to technology adoption is emerging quickly. See also: Winning in Small Commercial Lines   For the skeptics about commercial lines adopting transformative technology, I hope you are a bit more positive. For those curious, or even downright happy, I hope learning curves went up, and you are challenged to understand how the seven transformative technologies can drive better outcomes within your own company. For more information, check out SMA’s research report, Transformational Technologies in P&C Commercial Lines: Insurer Progress, Plans, and Projections.

Internet of Medical Things is no longer a thing of the future; it can be rightly called a thing of today. Worldwide, a plethora of hospitals, health facilities and labs have adopted IoMT systems of iconnected devices and big data, which allows them to render error-free, personalized and overall superior healthcare services to their patients. On top of that, the demand for digitalized healthcare is growing, especially among younger generations, who are more likely to opt for medical providers offering digital capabilities. Such a system, however, can actually become a source of security and privacy threats to a medical facility and its patients. This vulnerability is a downside of the rapid emergence of healthcare IoT, which neither the equipment makers nor medical practitioners were prepared for. For now, healthcare institutions and legislative bodies are working hard to catch up and impose medical security practices, yet many facilities remain drastically behind the curve. In the light of grave consequences for human health and life, as well as possible financial and reputational harm to a medical facility, being ill-prepared for IoMT security violations is off-limits for healthcare executives. It’s high time you homed in on making your healthcare IoT impregnable, and this article will serve as a guide on this journey. Read on and learn about the most common security threats that an average Internet of Medical Things is susceptible to and, most importantly, the ways to shield your connected healthcare environment against conceivable cybersecurity risks. What Makes IoMT Vulnerable? Put into practice, the Internet of Medical Things is a vast and miscellaneous entity, often amounting to thousands of connected devices. On average, between 15 and 20 medical devices for monitoring and treatment are implemented in a single ward in the U.S. This number is only predicted to grow: According to a study by Frost & Sullivan, by 2020 the number of operating appliances – from insulin pumps to pacemakers, from imaging systems to MRI scanners – will reach up to 30 billion globally. So, on the face of it, detecting vulnerabilities in such a system is similar to looking for a needle in a haystack. In fact, there is a definite pattern of security flaws that most healthcare IoTs are susceptible to, and being aware of them is a stepping stone to rendering the system invincible. See also: Why Medical Records Are Easy to Hack   Let’s go over the most common weak spots of an average IoMT infrastructure. Legacy Systems IoMT emerged surprisingly swiftly and in a sense caught medical authorities off guard. Healthcare facilities were unable to build designated environments from scratch due to monetary or time constraints, so the majority established their medical IoT on their legacy systems. These systems were flawed and outdated more often than not, lacked crucial cybersecurity controls or all of the above. With time, a small share of organizations revamped their legacy systems, while the majority, according to a Forescout report, still operate on the Windows versions that are to expire by 2020, which would leave them unsupported and highly vulnerable to cybersecurity breaches. Outdated Medical Devices Medical devices used to be designed with no or few security considerations, and this used to suffice, as they were standalone, and threats were close to zero. Now, healthcare IoT requires medical devices to be connected within a single network, making outdated hardware a potential source of critical data exfiltration. Apart from this, a fair share of older medical devices are not in line with the cybersecurity guidelines of the Food and Drug Administration (FDA), require manually implemented patches or are beyond repair, which makes them exposed to all kinds of internal and external security threats. System Sprawl The undeniably positive trend toward increasing the number of connected medical devices has a downside: It expands the attack surface. The vaster the medical network becomes, the more foothold cybercriminals gain for infiltration. Besides, the devices commonly come from a variety of vendors, which complicates compatibility between the tools and hinders unified security measures. Best Practices to Mitigate IoMT Security Risks Network Segmentation When you have a vast IoMT legacy system that you do not plan to shift away from anytime soon, limit the potential attack surface by segmenting your medical IoT. The segmentation principle rests on individual needs and priorities: You can separate vulnerable devices only from the main network or segregate them based on their function or user types. Also, the FDA guidelines insist on separating unpatchable devices from the rest of the network and minimizing the traffic to them. Applying this unsophisticated measure, one can successfully isolate potentially vulnerable tools from sensitive data and more secure devices, and prevent a possible malware infection from spreading across the network. Segmentation also facilitates supervision of the disparate IoMT environment. Regular Updating and Patching Thorough updating and security patching can become an effective preemptive measure against data breaches. However, because the medical IoT system consists of software and hardware from miscellaneous vendors, expect patch and update releases to be numerous and irregular. This can be managed in two ways: by appointing a dedicated team to implement new versions and bug fixes as soon as they come out or automatically streamlining this process, which will require elaborate development. Another challenge of updates in medical facilities, especially in intensive care wards and such, is that a great many life-sustaining devices cannot become inoperative even for several seconds. Data Encryption Protected health information (PHI) is a coveted prize for cybercriminals who target healthcare facilities, and, in a medical IoT environment, data is more ubiquitous than ever. There is a constant flow of patients’ information within the network of devices, and a fair amount of critical information is stored on servers and devices – all an easy target unless protected. Encryption is a baseline measure for securing the integrity of PHI. The encryption process involves using a specific algorithm to render data incomprehensible, decipherable only with a confidential key. Encryption keys should also be properly secured, and access to them should be limited to select people. Therefore, in the worst-case scenario when PHI does get stolen, a threat actor could hardly access the data or assign any meaning to it. See also: Insurance and the Internet of Things   Machine Learning Machine learning (ML) can help diminish security concerns related to the Internet of Medical Things. It can serve as an extra-sensitive risk detector, recognizing suspicious activities across all the network’s devices and endpoints in real time. Beyond that, ML can monitor data exchange within the facility as well as with external entities and detect anomalies in the data flow. The technology can also be leveraged for predicting system vulnerabilities, analyzing the facility’s big data and recommending corresponding security measures. Still, for the time being, machine learning is too young as a technology to be left to its own devices, so considerable human supervision and correction is still required. With IoMT, It’s Better Safe Than Sorry Internet of Things has proven to be a disruptive technology for healthcare, used to diagnose more accurately, monitor treatment progression closely and perform sophisticated procedures, to name but a few applications. At the same time, the IoMT environment is very complex, demands financial investment and upkeep and, among all things, can be the loophole for a security breach or a data loss. Still, it is better to prevent than to treat problems, and health professionals know this like nobody else. Do not wait for the worst to happen – instead, be aggressive and implement relevant security measures to keep your facility and patients from harm. After all, with so much at stake – money, reputation, health and even lives – inaction is inexcusable.

If your customers go to your website to pay, and you use a third-party vendor to process the payment, whom are they paying: You or the vendor? The answer to this deceptively simple question can determine whether your business handles online payments smoothly or runs afoul of state laws, landing you in legal hot water. It turns out that, at least in some states, the answer is far from straightforward. In fact, it may even depend on how you ask the question. As the head of a company that helps other businesses process online payments easily, I saw this up close in New York state as we navigated the complicated legal guidance on behalf of our partners. It’s an instructive story for businesses that may be thinking of adding online payment to their websites, because it illustrates the pitfalls you could face if you hire the wrong people. It all began on June 19, 2007, when I received an advisory opinion that had been published by the New York Insurance Department responding to a question I had asked: “May an entity that provides a service to insurance companies that permits policyholders to pay their insurance premiums by credit card charge those policyholders an additional fee to cover credit card and other service expenses?” The answer? No. The department said that vendors such as my current company, Simply Easier Payments, may not charge policyholders paying insurance premiums with a credit card an additional fee. The document ends with this statement: “Because an insurer may not impose a credit card surcharge on a policyholder, anyone acting on an insurer’s behalf, such as the company, is similarly prohibited from imposing a surcharge on the policyholder.” I then asked a slightly different question and received a very different answer just a few months later. See if you can spot the difference in the second question: “May an entity that provides a service to insurance policyholders that enables them to pay their insurance premiums electronically by credit card charge those policyholders a fee to cover credit card and other service expenses”? The answer? Yes. In a Feb. 25, 2008, response, the department said that nothing in New York insurance law and regulations bars a vendor that “provides a service to insurance policyholders that enables them to pay their insurance premiums electronically” from charging a fee. If you find that confusing, you’re not alone. But it turns out there’s a world of difference between the two questions. See also: 7 Questions on Taking Online Payments   Who are your customers paying? The regulators in New York were kind enough to meet with me for a discussion about our business model before they reached the second opinion. They were very clear in our meeting about the difference between the two answers. In the first question, we were considered to be a legal representative of the insurance company. We were acting on the company's behalf. As such, we were subject to all the same laws and regulations as the company was. Imagine you regularly eat at a hot dog stand, and the city has a rule that the stand can’t charge you extra for condiments. The owner can’t just hire a lawyer to stand nearby and demand payment instead; it’s all the same hot dog stand. But in the second question, we were not representing the insurance company, we were helping the policyholder. That meant we had a separate business relationship. In this example, you’re not going to a hot dog stand. You’re giving money to a friend who’s going to bring you back a hot dog and maybe run some other errands for you. If he demands an extra dollar for the trouble of getting mustard and relish, there’s nothing stopping him. Define your pre-existing business relationship. The department used three criteria for determining if an existing business relationship existed between us as a vendor and the insurance carrier or agency.

1. Is there a written contract between us and the merchant receiving the payment?
2. Does the merchant receiving the payment pay us any amount for any service?
3. Do we pay the merchant any other amount?

If the answer to any of these was yes, then the department would consider us to be the representative of the carrier or agency and therefore subject to all the same laws and regulations. In addition, one other criterion was noted in the permission granted on Feb. 25, 2008: “The payment system does not at any time hold the premium payment on behalf of the customer or any insurance company.” The conclusion reads: “Thus, an insurer (or anyone acting on the insurer’s behalf) may not impose a credit card surcharge on a policyholder. Your client, by contrast, is not selling insurance and is not acting on any insurer’s behalf. Rather, it is providing (and charging for) a distinct service, i.e. the making of secure payment via electronic means.” What does this mean for your business? The moral of the story is not what you should do if you’re running an insurance agency – or even a hot dog stand – in New York. It’s that you need to be aware of the complexity of these laws before you hire any company to help process payments for your business. The wrong decision could prove costly. The laws on credit card surcharges vary from state to state, and not all of them are as tricky as the scenario we ran into in New York. But in general, states now agree on those criteria for establishing a separate business relationship. See also: 3 Reasons to Use Online Marketplaces   As a result of that back-and-forth in New York, we at Simply Easier Payments stripped our business model down as much as possible to avoid any legal complications. We do not have a contract with merchants. We do not charge merchants for any service, e.g. no monthly fees, no charge-back fees, no integration fees, etc. We do not pay merchants. And we never hold the premium payment in any way. This helps us avoid any situation in which we might be considered a legal representative of the businesses we work with. The goal, as our name says, is to make things easier.