The workers’ compensation claims process tends to creep along, often inviting lawyers to the party and leaving both workers and companies frustrated. But this trend is reversing. Why? Technology has been developed that alleviates the stress points that threatened to eventually break the workers’ comp system. The same is true for other insurance segments, as well. The technologies sparking this massive transformation across the insurance industry are artificial intelligence (AI) and machine learning. AI and machine learning help resolve claims exponentially faster, empowering teams to intervene at the right times, as needed. McKinsey goes so far as to predict that, by 2030, “claims for personal lines and small-business insurance [will be] largely automated, enabling carriers to achieve straight-through-processing rates of more than 90% and dramatically reducing claims processing times from days to hours or minutes.” Teams will be able to personalize solutions based on real data accessed instantly instead of requiring weeks of human analysis that can’t possibly incorporate the millions of data points that machines can. Technologies help claims representatives do their jobs faster and smarter so that people receive better care and organizations enjoy significant improvements in their combined ratios. Insurtech Becomes a Thing While AI-based solutions are relatively new to the commercial insurance industry, they have already given rise to a whole new market segment — insurtech. More and more companies are implementing AI into their offerings, and insurtech vendors are experiencing rapid growth of their customer bases as well as extending the contracts of existing customers based on the early benefits they’ve experienced. As the industry enters its biggest period of innovation in a century, driven by insurtech startups, and as organizations begin to track the magnitude of cost savings and other benefits, several important lessons have emerged. Below are my takeaways thus far from what’s becoming an AI revolution: See also: How Claims Process Must Drive Change   Don’t Do AI Just to Do AI There are cool applications for AI hitting the market all the time. Some sales guy is going to come in and show you something that will make your eyes light up. Don’t give in to temptation and sign on to do something just because it is an AI-based solution. Instead, think about your organization’s most pressing needs. What are your pain points? Where are your hold ups? What are employees frustrated with? If a solution fails to address these needs, it’s just another shiny tool that will never be used to its full potential. Practicality and usefulness are essential. Ease of Use Matters You could find the best solution in the world. It could be designed perfectly to take care of your problem, but, if it’s hard to use, it’s virtually worthless. Employees must want to use a new solution; they need to see how it streamlines their daily tasks and makes their jobs easier. This is essential for adoption. Adoption of AI-based tools can often face generational hurdles. There has been some resistance to AI out of fear that it will take over an employee’s job or simply from the desire to maintain the status quo due to personal comfort and familiarity. These are very real fears, and you would be wise not to discount them. The best way to prevail with a new solution is to show clear benefits to employees and make tools and software as easy to use as possible. Make a Plan AI requires forethought — not just in terms of what an organization needs or how employees might use it but also in terms of how it will be rolled out. There has to be a plan for implementation. Who is going to lead the project? How will employees be trained? What will happen with the data once it is generated? Even the best AI-based tools require management. Decisions need to be made in advance to get the most from any solution. Otherwise, implementation can lead to chaos and frustration, and the luster of a powerful new tool will wear off before it’s ever really put to use. Don’t Try to Do Too Much One of the biggest mistakes companies make once they understand what AI and machine learning are capable of is to take on too much. I would strongly encourage organizations to define and maintain a singular focus in applying the technology. When a company’s primary goal is to generate cost savings, for example, everything it does should turn in that direction. After all, the biggest advances come not when one goes broad but when one dives deep. AI applications are no exception. When organizations maintain a singular focus, they can devise the most consistently innovative and necessary solutions for their teams and customers. Real Personalization Is Possible Personalization has long seemed like a myth in the commercial insurance industry, something elusive that every company chases. With AI and machine learning, personalization will soon become a reality. See also: Why AI Will Transform Insurance   Because AI-based solutions can handle absolutely massive amounts of structured and unstructured data — and because they can learn on their own — users gain highly nuanced levels of information, which they can then apply to customize offerings. This opens the door for all kinds of opportunities to develop custom policies or benefits based on relevant data points. When personalization comes into play, everyone wins because costs, care and objectives are all aligned. Next Generations of Claims Operations On top of cost and efficiency benefits that AI is already demonstrating, the solutions of the future will improve the claims process across the board. For example, the need for litigation is reduced when claims are addressed in a timely manner or when injured workers get in to see the best doctor right from the start. Medicare Set-Asides (MSAs) can be processed in a fraction of the time based on better data. The possibilities are virtually endless when it comes to processes that can be improved. What we can see, however, even from these early days of insurtech, is that AI and machine learning will fundamentally improve how care is distributed and help the entire commercial insurance industry evolve. Looking forward to the years ahead. As first published in Claims Journal.

Lots of industries face criticism because they talk the talk but don't walk the walk. But the insurance industry doesn't even talk the talk yet.

Sure, everyone is talking about improving the insurance customer experience, but look at the words we use. Many are opaque—the industry talks to itself, somehow unaware that customers are listening and are turned off by the gobbledygook. Some words are even offensive—we're saying things to customers that we really don't want to be saying.

We have to at least get our talk—our vocabulary—straight before we can figure out to really engage customers and address their evolving needs.

My least-favorite word is one so widely used that few will find it offensive: "adjuster." My problem: If I'm filing a claim, I don't want it adjusted. I want it paid.

Yes, I realize that processing claims is complicated and that all sorts of adjustments need to be made. I also realize that no industry simply pays when a claim is made against a company. But if you send me an "adjuster," you're telling me right off the bat that you don't trust me, and that's a lousy way to start an interaction. It certainly isn't any way to start a relationship, which is what insurers insist they want with customers these days. Don't trust me, if you must, but send me a "claims professional" or simply a "customer service representative." Don't send me an "adjuster."

Almost as bad is "losses," as in "cat losses" or "medical losses." How about, instead: "payments to highly valued customers in their time of need, after years of premium payments on their part"? Does Amazon record a loss when it ships me something? Of course not. And those payments on health or cat insurance aren't losses, either; they're just the cost of doing business—people don't pay those premiums simply because they like us. So, let's look at our business through the customer's eyes and book "payments" or somesuch, not "losses."

Less offensive but still unnecessarily bad are words like "excess" and "surplus." The insurance may be categorized as excess and surplus to the industry, but not to me, the customer. 

Some words already have meanings—and they aren't the meanings assigned by the insurance industry. A binder is a plastic cover with three rings that you buy for your kids as they head back to school; it is not temporary insurance. An endorsement is something you put on the back of a check—or at least used to, before banks simplified deposits. An endorsement is not an amendment to an insurance policy.

Many terms are opaque, even archaic:

• "Capitation" and "subrogation"? Important functions, but there have to be layman's terms that can be substituted.
• If I'm buying life insurance, good luck getting me to grasp intuitively the difference between whole life and universal life; "whole" and "universal" are practically synonyms in this context.
• "Inland marine"? Please.

While we're at it, let's do away with the acronyms. All of them—at least on first reference, and mostly in subsequent references, too.

Changing the language will be hard because so many in the industry subscribe to what I think of as a 19th century sort of approach to business: Let's make things seem as complicated as possible to justify the existence of lots of experts and intermediaries and to demand nearly blind faith by clients. This is sort of the "don't try this at home, folks," approach to business. Leave the complicated terms to us.

The approach has worked for insurers for a very long time. It has worked for doctors and lawyers. If a cynical T.A. in a philosophy class in college way back when is to be believed, it worked for Hegel, too—he supposedly wrote a short, clear version of his big idea (thesis/antithesis/synthesis), and no one took him seriously; he then wrote a 1,000-page, nearly impenetrable version, called it merely the introduction to his ideas and found lasting fame.

But things have changed since Hegel wrote in the early 1800s. Now, if I want to remind myself about Hegel, I turn to Wikipedia and its clear, little summary; I don't crack open The Phenomenology of Spirit. Change has accelerated in recent years, to the point where even doctors find themselves having to communicate more with patients in plain English.

If doctors can simplify how they communicate about the mind-boggling issues involved in medicine, then the rest of us can figure out how to talk the talk in insurance. We need to begin by taking a hard look at every term we use and revising many of them, from the perspective of a total newbie customer, so we talk to customers the way they expect us to talk to them.

That's the only way to lay the groundwork for the broad improvements in the customer experience that we all want to deliver and that customers are increasingly demanding.

Cheers,

Paul Carroll
Editor-in-Chief

Historically, most independent insurance agencies have been slow to adopt new technologies, instead relying on their personal service to clients to differentiate themselves in the market. While it’s true that trusting an agent who has your security, protection and best interests at heart is a huge part of what makes the independent agent extremely valuable, customer expectations are shifting. Modern consumers embrace a digital-first environment. They expect high-end technology and automation to support their shopping, entertainment and banking needs, and insurance quickly joined that list. About five years ago, buoyed by strong capital investment and a surge in insurtech startups, direct-to-consumer personal lines disrupted the industry by bypassing the advisory and guidance upon which the independent agent model was built. Now, it’s the commercial industry’s turn, as we begin to see similar evolution in distribution models on that side. To remain relevant, independent agents must keep pace with the changing landscape of consumer behavior and the technological demand. Customer experience is more important than ever. When it comes to attracting and retaining clients, and delivering on expectations for speed, it's critical to be efficient and digital. API solution integration has become one of the most crucial components of digitization, enabling smoother workflows and increased efficiency and allowing agents to meet customer expectations for real-time, personalized service. By providing a framework for connectivity, application programming interface (API) protocols allow various pieces of software to interact, to share data, and to move data and tasks from one step of a process to the next. For independent agents and the entire value chain that supports them, APIs are game-changing. They give agents the combination of the digital-first approach customers expect, with personal attention and dependable service. Here’s why APIs are transforming the industry for agencies, customers and insurtech providers. APIs improve office workflow. As in every business, productivity and efficiency are critical in any agency. The ability to complete tasks faster, to save time and effort, not only means less work but also frees up more time for agents and customer service reps to spend collaborating with clients to better understand their needs. With something as simple as writing an auto policy, an agent may start and end the process in two pieces of software — first in the agency management system (AMS) and then in the underwriting system. This requires the agent to toggle back and forth, rekey data and perhaps even hand off the process to another individual. With API integration, the data is entered once, moves through the entire process with an electronic handoff from one system to the next, and can even be picked up by a second individual seamlessly. By cutting down on time and frustration, employees can spend their time on more productive, revenue-generating efforts. See also: AI Still Needs Business Expertise   APIs reduce data entry burden. The problem with lack of integration in most agencies is that it requires redundant data entry. And, each time customer data is entered increases the risk of error and inconsistency. For example, if a CSR enters client Amy Smith Jones’ name into the AMS with no hyphen, but the agent enters it into another system with a hyphen, there are two separate records for the same customer. Now, it’s impossible to see the client’s entire account, and there may be duplicate mailings and other communication breakdowns. With API integration, data is entered once — eliminating the time wasted in redundancy, reducing the risk of data entry errors and ensuring data consistency. APIs improve customer relations and retention. Insurance customers expect personalized service and attention. So, when they call the agency for help, they expect that their agent is familiar with their policies and situation. But, in many agencies, simply handling an incoming call is a lengthy process. An operator answers the phone and determines how to route the call, and then the agent must ask some questions to find out how he or she can be of service. With an API integration between the phone system and the AMS, the handoff happens seamlessly. When the customer dials in, the system uses reverse phone number lookup to identify the caller and pops up the customer’s policies on the operator’s computer screen and which agent handles them. Now, the operator can greet the client personally and transfer the call quickly. When the agent answers, they already have information about the client’s account and can immediately ask whether the call is regarding the homeowners or auto policy. This is just one example of how an API-enabled, streamlined system not only eliminates extra steps but also provides the personalized customer experience that clients expect from their agency. APIs demonstrate your digital prowess. As we’ve already established, consumers expect a certain level of modern, digital automation in practically every aspect of their lives. Using APIs to connect digital technologies gives your agency the forward-thinking image that attracts customers who value that quality. For example, even something as simple as mobile document signing technology that integrates directly with your agency management and underwriting solutions can streamline the process for clients. They can log in from wherever and whenever on their mobile device, sign as required and keep the process moving. Even with the personal service an independent agency strives to provide, there will still be clients who prefer less human interaction and a more digital approach, and APIs allow agencies to retain those clients while still addressing their automation expectations. APIs allow tech providers to remain relevant. There are many solutions in the insurtech industry that solve a niche problem — fillable forms for commercial line submissions, for example, or digital signature solutions. Even some of the larger AMS platforms don’t address every aspect of agency workflow, and many depend on complementary software to fill those gaps. API integrations allow the entire insurtech industry, especially point solutions, to thrive by continuing to provide value in the larger scheme. For the larger platform providers, this saves time and money in developing those features and allows the smaller niche players to remain relevant. See also: Growing Import of ‘Edge Computing’   API integrations clearly benefit the entire insurance value chain, from carriers, underwriters and agencies to insurtech providers and consumers. The alternative — continuing to operate with proprietary systems that don’t adhere to industry standards, perpetuating inefficiencies and detracting from the customer experience — will keep the industry stuck in the dark ages and ripe for disruption by new solutions that radically transform the process and the customer experience. Programs such as Vertafore’s Orange Partner Program are just one example of API programs creating a new model for the industry, enabling rich integrations that empower independent agencies to leverage a broad spectrum of solutions, not only within the platform’s ecosystem but also with a wide range of third-party providers. This type of open API approach ensures both technological consistency through integration standards and allows the entire industry to evolve and grow, while providing a more satisfactory experience for customers.

Providing your employees with insurance coverage is one of the best ways for small business owners to support them. Employees with health insurance are happier, far more productive in the office and more likely to stay at a company if they are satisfied with their current benefits. In this digital age, online benefits marketplaces render finding employee insurance for your employees as modern and straightforward as searching for and buying other high ticket items such as automobiles or homes. There are resources at your disposal should you have any questions throughout the insurance shopping and purchasing process. Below are three reasons online marketplaces help small business owners choose health insurance: Convenience As a small business owner, you are exceedingly busy, and your time is valuable. In a recent Vistaprint survey, small business owners reported spending their time on administrative duties, project management, marketing, product development, design and countless other tasks that are essential to growing their businesses. Your hectic schedule demands that you be able to browse and shop from your laptop or tablet, comparing employee health plan options digitally to save time that you would otherwise spend filling out lengthy paperwork, scheduling meetings or playing phone tag. Sophisticated technology modernizes employee benefits shopping as you know it by removing any confusion or unknowns. See also: 5 Health Insurance Tips for Small Business   Breadth of Options Most small business owners want to know they have considered a wide range of employee health insurance options before buying. You don’t want to sift through stacks of paper when considering your choices, but you do want to make sure you haven’t missed the best plan or plans for your employees. Research shows that 43% of individuals shop and purchase online. Look around the store the next time you are shopping and notice the number of people searching the price of a commodity prior to buying it. Employee benefits are no different. It is important to use the online resources available to you when providing your employees with benefits that suit both their needs and your budget. Broker Support The digital experiences offered by online insurance shopping marketplaces do not mean the death of the broker. People still benefit from having access to an expert in the field should they need any assistance. Even with the most streamlined of digital insurance shopping experiences, you may have questions and concerns along the way, especially because this is a high-cost decision that affects your employees directly. It is helpful to have a licensed broker to answer your questions, put you at ease and act as an ally who can assist you through the process. An online experience does not preclude you from having access to one of these valued resources. Licensed brokers are traditionally still made available to small business owners even online. See also: 4 Trends to Expect in Health Insurance Your employees and their health are important to you. Taking advantage of the ample resources provided by online health insurance marketplaces is the smartest and most cost-effective way to make sure your team is covered. You will save time overall and be presented with a variety of precise information faster, while still having access to support every step of the way.

There are so many great advances in the area of "smart homes" and buildings that it makes me wonder what the actual impact has been, or what I might have had to deal with, without all the smart features. The “smart” concept is to be able to secure a building with sensors that can provide safety features and collect information to reduce the risk of water damage, fire damage or other hazards.

I had a second home built and made it smart and connected in as many ways as possible. And my experience has been that I am generally more aware of all aspects of my home. I receive mobile alerts when there is motion on my front porch. I know the temperature in all areas of the house. Water sensor devices provide peace of mind in knowing that there have been no water leaks – if there is a leak, the sensors are connected to the auto shut-off valve in the basement. The SimpliSafe security system is connected to fire and police through the connected security system and fire alarm.

In essence, I know the health of my home at all times – which has been very handy to the owner of a second home.

See also: Smart Home = Smart Insurer! 

From the homeowner’s viewpoint, I can see the value for an insurance carrier. My insurer worked with me by providing a discount. The process was interesting. To obtain the discount, we correlated the capabilities of new devices we installed to the older discount program that was in already place.

A connected home can be considered an asset both in the sense that it has early detection and prevention capabilities and also that it is being actively managed. However, several barriers need to be overcome. The property owner needs education and access to the combination of devices that can assist with the management of the home or building.

To address these issues, many insurers have ventured into partnerships with companies such as Amazon (Travelers) and Roost (Aviva and Erie), to name a few. But there are big challenges involved here: How do you increase the knowledge of millions of policy holders or commercial property owners? And, how do you make available the key connected devices that can, at a minimum, detect water and fire to mitigate the risk of each?

See also: How Smart Is a ‘Smart’ Home, Really? 

In our most recent report, Smart Homes and Buildings: Ten Strategic Considerations for Insurers, we discuss the key considerations for insurers when developing the best value propositions, including the need to develop a deep understanding of specific customer segments, their needs and their adoption of smart devices.

For some, it may still be a few years away; for other insurers and customer segments, the time to engage in this area is now. For example, insurers that focus on segments such as second homes, vacant homes or specific types of commercial properties should be developing strategies now. But every insurer that writes property insurance must be engaged and following the developments in the smart home/property area. And they must maintain a conversation with agents and policyholders about their needs.

Squeezing efficiency out of decades-old legacy systems can seem like a losing battle for many insurance carriers, where long-term contracts are the nature of the business. Process engineers, both in-house and contracted, have driven efficiency within these operations to the point of diminishing returns. After all, there is only so much that Excel macros and keyboard shortcuts can do to streamline highly manual and repetitive processes. So it is no surprise that insurance companies, as well as other financial services institutions, took note when robotic process automation (RPA) entered the scene. By automating software application interactions, such as populating data, documenting audit trails and performing calculations, RPA promises to spare humans from performing these menial tasks while boosting accuracy, increasing efficiency and lowering the cost of operations by as much as 40%. Moreover, RPA requires minimal integration with legacy technology. By using RPA to streamline manually intensive operations, from underwriting new business to claims processing, process engineers can once again extend the life of these legacy systems. When properly applied, RPA has strong benefits. However, is RPA really living up to the hype? See also: The 5 Top Trends in AI and RPA   RPA Challenges While the application of AI and robotics will eventually drive opportunities for efficiency and improved customer experience, many insurance providers are currently struggling to find value. Most firms have struggled with deployment. Providers cannot assume RPA can be integrated into operations and deployed without intensive collaboration with the IT organization. Scaling an RPA program so a carrier can achieve real benefits requires IT process disciplines that are core to an IT organization, such as setting up infrastructure, managing security and executing testing. Without this rigor, an RPA implementation may fail to deliver the promised results, and an otherwise promising robotics program is likely to be scrapped. The second major failure is managing an RPA program without an end-to-end view of the process using experienced process engineers. Without this perspective, companies often spend months creating bots that deliver little real efficiency because they optimize only small portions of a process without reengineering the overall process with the automation in place. This is a critical step on the road to RPA success, otherwise, RPA may not be the silver bullet providers have been expecting. Making RPA Successful A strong RPA program includes a cross-functional team that combines process and technology experts to reengineer, develop and integrate with the people in the process. By so doing, the team will maximize the ability to identify the best places to apply robotics. Essentially, as the old saying goes, if you fail to plan, plan to fail. Additionally, ensuring that IT disciplines are applied will prevent unnecessary rework. Lastly – and most importantly – a cross-functional team will help implement the new processes with proper organizational change management, which will help ensure acceptance. Using these methods, a business process as a service (BPaaS) platform was recently automated to bring greater efficiencies and a better user experience. By leveraging RPA to automate task entry and acceptance, as well as data extraction, a global provider of employee benefit programs saw a 99% improvement in quality and 78% increase in efficiency. What’s Next? Interest in RPA is booming, but it is no silver bullet. RPA alone can’t solve network latency and choke points along the information chain. There is much to consider when implementing RPA, including involving cross functional teams who will bring process reengineering expertise, IT rigor and change management know-how to the program. Currently, process mining tools are finding new utility as they integrate closely with RPA software companies. These tools allow for a more automated approach to opportunity identification and reengineering. By using artificial intelligence to assist process engineers in assessing the processes being executed on the floor, it helps automate the creation of the requirements documents, saving hours of effort and expediting the building of necessary bots. See also: 3 Ways RPA Enables Growth   The next step is further development and use of artificial intelligence combined with robotics. This combination is already present for the intake processes at insurance companies. For example, using AI to improve optimal character recognition (OCR) and robotics to index and classify customer documents for proper routing within a workflow system is now becoming mature. Soon, new RPA and AI applications will rapidly emerge with the help of knowledgeable process engineers. For example, detecting anomalies in data using AI can help find fraudulent transactions. RPA can then ensure the relevant information is efficiently presented to the case manager for a thorough and efficient evaluation. RPA’s promise to enhance the customer and employee experience while improving the bottom line will continue to boost adoption and spur investment, but providers must be strategic to ensure they realize the potential benefits of RPA.

As I watch the insurtech space, I see a fair bit of hype around disruptive technology. Some of what I see reminds me of the dotcom boom of the late 1990s. Then, as now, lots of startups promise to deliver something ground-breaking, and all are competing in the same space, with many of the same ideas. To put this into perspective, let’s look at the global claims loss pyramid. This pyramid is a simplified model that segments claims into four main types. The base layers of the pyramid — representing technology-driven and networked services, and low-value, high-volume claims – are where technology-enabled offerings can be effective. Technology also is beginning to flow into the level above those, where higher-value and more complex claims reside. The top of the pyramid is large complex claims, which are the most technically challenging and require highly experienced loss adjusters. Aligned with these levels are the requirements for claims talent and experience; base-level claims only need basic skills, whereas the top of the pyramid requires the most advanced skills. At the moment, the insurance industry is aware that the claims experience is often the only contact a policyholder ever has with the insurer, so the claims journey must be completed correctly. Around the world, policyholders are demanding the same amount of transparency and oversight in the claims process that they get as consumers when they order something from Amazon or another online retailer. Many personal lines policyholders expect to be able to track and interact with their insurance carrier via an app or mobile portal. Similarly, if they have an app to see their policy details, renew coverage, etc., then consumers expect to be able to make a claim in that app and track or manage it to completion. It is apparent, though, that many prefer a mobile portal because they rarely make a claim and don’t want to install an app they may never use again. They don’t want to have to remember login details for the portal, so they need an encrypted link that will take them straight to their claim, just like a FedEx tracking number. They expect to be able to communicate with all parties via the portal using messaging, not email, but if they need to send in photos or documentation, they may transmit those through the portal without necessarily knowing or caring who is handling the claim. See also: Visual Technology Is Changing Claims   For large complex/technical claims, however, policyholders and other stakeholders have different expectations as to how their claims are handled, and how the communication works. Many insurtech startups don’t seem to differentiate in this claims segment – to many of them, “a claim is a claim.” In some cases, they clearly don’t understand the distinction between simple, low-value claims with repeatable steps, and larger, more complex claims where multiple, detailed narrative reports are needed to settle the claim. Either that or they have chosen to focus in the volume claims space for commercial reasons. Large complex claims are expertise-driven. Technology can support highly experienced adjusters, but technology for the foreseeable future will not replace the skill sets or expertise needed on such claims. A few of the new breed of software-as-a-service (SaaS) claims systems put the insured front and center in a collaborative claims process. The vendors say they can handle just about any type of claim, but they are only good for personal auto, volume and third-party administrator claims. Liability claims often entail complex sets of facts and negotiation, beyond the scope of most vendor offerings. The vendors also don’t offer client-driven SLA tracking, document management, co-insurers, multi-currency or billing capabilities. They assume that a claims manager overseeing a $10 million warehouse fire will trawl through an app on the phone to see status updates. Client-driven SLA tracking, such as through dashboards, is important for clients to make sure their claims are handled in the correct way. Vendors and their advisers need to understand their market better. Lots of insurtech startups are focused on the easy part of the equation – signing up policyholders via chatbots, submitting claims and using artificial intelligence to settle simple claims. Many startups are creating chatbot apps to sign up domestic policyholders and allow them to submit a claim. Every insurer will have this capability soon, as it is simple to build using third-party AI services, so I don’t see this as a market differentiator. We do not see a new breed of agile SaaS claims systems coming to market yet, probably because that is a more difficult system to understand and build. There is also resistance from some suppliers to handing their data and claims process over to a third-party SaaS provider. I haven’t yet seen one of these new-breed claims systems that is built around SLA-driven workflows that drive the claim to completion, though I am aware of some in development, none could support a traditional claim-adjusting business. What some vendors are currently offering is a claims-light system, focusing on collaborating with the various stakeholders via portals and apps instead of email. In the past, suppliers such as outsourced claims management organizations would each build their own systems to fill these gaps, often because insurers either didn’t see value in owning the claims system or couldn’t successfully bring their own solution to market. This multitude of external systems and processes doesn’t serve policyholders well, because it doesn’t always provide a consistent, positive experience when they make a claim. If I am a homeowner policyholder with ABC Insurance, then I should have an ABC Insurance app on my phone that I can use to manage my policy and any claims arising from it, including all communications with whoever is handling the claim. I should expect any outsourced provider or supplier to be plugged into that same system, either because they are directly using the same system or because their own systems are linked into it via an API. Traditional insurers need to re-evaluate how they outsource their claims to a third party because they continue to risk getting disintermediated from their relationship with the policyholder when so much of the claims process occurs outside their organization and systems. They should guarantee a great customer experience when a policyholder makes a claim, and to do that they need to control the collaboration space — the communication and data-sharing piece. Other financial services organizations have already solved this problem for the same reason: to reduce customer churn. Traditional insurers should be able to get this right, but many will need to become more agile in the way they deliver technology to do so. In the meantime, new entrants are launching with systems that already provide their policyholders with a better, more seamless claims experience. I’m not sure how well their systems integrate with external suppliers yet, but I suspect they will get there quickly because their organizations and systems were designed from the ground up to be agile and innovative. See also: Key Technology Trends for Insurers in 2019   Much of the above is already being discussed within the industry. I focus on the claims systems piece because I have been involved in many of these systems over the years, and it is interesting to see the same ideas come up again and again. We were talking about the “shared electronic claim file” in the early days of the internet. Now we are talking about a “collaborative claims workspace” decades later. I am confident that the technology available today will solve these long-standing problems quickly. I have been involved in discussions with low-code development platforms, and it is incredible what companies can now build and deploy for web, mobile and desktop in a couple of months. At this pace of innovation, advancements in claims technology will bring the industry to a crossroads. Will the industry embrace the opportunity to transform its service through the claims experience? Time will tell.

Wearables and fitness-tracking technology have witnessed rapid growth in recent times. International Data Corp. reports that one in every five people in the U.S owns a wearable fitness device. It also estimates that annual shipments will exceed 250 million devices by 2021. Given the ability of technology to provide critical data, the wearables revolution continues to spark interest in the insurance industry. Data collected from wearable devices can provide critical health and fitness information. This information is vital to the development of interactive life insurance policies that track fitness and health data through wearable devices and smartphones. The technology hence holds the key between insurance firms and technology-savvy clients who value a modern, updated experience and digital engagement. Industry giant John Hancock recently announced that it would begin selling interactive policies. They’ll require new life insurance policyholders to use activity trackers and share their fitness data. Insureds will, in turn, enjoy discounted premiums and other benefits. Benefits and Opportunities Wearable and fitness technology can be advantageous to both insurers and their customers. Wearables encourage insureds to become accountable for their health and fitness, and insurance companies stand to gain healthy clients with longer lifespans. Most life insurance policyholders pay their premiums for an average of 20 years. With the adoption and use of the trackers, they will be able to lead healthier and longer lives. Lower mortality means higher insurer profits. See also: Wearable Technology: Benefits for Insurers   Wearables also provide companies with a simplified way of collecting underwriting information. The data simplifies the risk-assessment process by offering metrics that would have taken longer to obtain through a full medical test. The data collected also acts as an additional source of information for product development. In addition to discounts on premiums, clients are also given the tools to boost their quality of life and well-being. Wearable devices can help detect conditions such as heart disease and high blood pressure and help insureds get treatment before things get worse.. The technology can also be used to detect a client’s unhealthy lifestyle habits, such as smoking and excessive drinking. With lifestyle conditions becoming prevalent, wearable devices will go a long way in promoting a healthy lifestyle. Risks and Challenges The rapid growth of wearables and fitness devices comes with the risk of infringing on privacy. The insurer has access to very private information whenever the customer is wearing a device. The ever- present risk of the information leaking to other parties is also high. See also: Workplace Wearables: New Use of Big Data   Another challenge is the reliability of the data collected, as the devices may not always report accurate information to the insurer. For example, devices may be tailored to indicate the motion patterns like walking or running and may not be able to record other activities such as cycling. The elderly may also be victimized by errors, as their exercise regimes may be less demanding. A Force to Be Reckoned With While there are various data safety and accuracy concerns with wearables, they can be overcome with proper protocol. Insurers have always dealt with sensitive information and will need to continue to handle such data with care. As for inaccurate heart-rate and other readings, studies show that fitness data is evened out over time. For example, a wearable device may not provide an accurate reading of the user’s heart rate during fast-paced or high-intensity exercises, but it can provide a comparable average over the period of the workout. The use of wearables and fitness devices as data collection tools in the insurance technology sector is increasingly gaining popularity. Their role in shaping industry trends can no longer be understated. As software and reliability keep improving, insurance companies will further embrace wearables as the future.

It’s no secret that the small business insurance industry is creeping online, representing the start of an insurtech revolution. More insurers are realizing that customers are getting comfortable buying directly from them -- and aren't shy about asking for specific products. There is a huge opportunity for insurers making the jump online, but I would argue that it’s not going to be the first online insurance brokerage that wins… It’s the one that won’t lose its humanity in the face of the digitalization. Here’s a deeper look at how online insurers can provide a more comfortable and human experience for their customers: Follow the Golden Rule It’s a timeless piece of advice, and for good reason: If you wouldn’t accept a certain level of treatment as a customer, you shouldn’t treat your own customers that way. Think about every part of your customers' journey and how your brand interacts with them at key touchpoints. For example, if they call with questions about their policy, are they able to speak with an adviser immediately, or are they on hold for several minutes? Is your site copy easy to understand, or would it take an insurance agent to decipher what you’re trying to say? See also: 5 Digital Predictions for Agents in 2019   Analyzing your customer journey with this empathetic lens can help you better understand opportunities for a more human touch. Don’t make it complicated It’s a huge understatement to say that the insurance industry can be complicated. That’s why, as insurers move to the online world, it’s important to make it easy for customers to get what they need. Don’t overcomplicate things for them or add information that they really don’t need to know. A large number of small business owners are probably shopping online for insurance before or after putting in a full day’s work; they just want what they need, and that’s it. Your digital experience is the face of the company, so make sure it provides a smooth process. Leave industry jargon at the door Be smart about what you’re presenting to the customer because, as I mentioned in my last point, our industry is overwhelming. Creating a more humanizing digital experience involves leaving behind the jargon and framing the conversation in a way that’s easier for the customer to understand. Deliver on your promises A lot of insurtech companies are jumping on chatbots as a platform for engaging with customers. But bots can quickly lead to a negative brand experience if you don’t have the logistics to support chats. Recently, I left a query on a brand’s chatbot and was told that I would get an answer about three hours later (already unacceptable). Seven hours later, I got a response -- but the answer didn’t even relate back to my question. Needless to say, the frustrating experience hurt my opinion of that brand. See also: Best of Both Worlds: Humans and Tech   If you’ve promised your customers something - like support or an easy claims experience - you need to deliver on your promise. It’s as simple as that.

The arguments surrounding the need for change in the insurance industry have largely been won. In recent years, dramatically increasing regulations, competition and customer expectations, along with dwindling resources and shortages of technical skills, have combined to produce an environment of uncertainty. All too often, insurance carriers have tended to push what they have been able to produce, rather than respond to what the customer demands. In a setting where that demand is changing radically, it is more important than ever that carriers step back and listen to customers. Enter "Connected Claims." As insurance’s "moment of truth," the claims process is where the service and delivery of an insurance-provider is judged, so it is natural that it should be a priority. But while the need is clear for a radical revision of the claims process, what isn’t clear is how organizations should undertake such profound and substantial transformational initiatives if they wish to deliver seamless, omnichannel and personalized, ‘Connected’ claims. Bringing about transformation in Connected Claims is not simply a case of refreshing or reorganizing a single department. It has the potential to disrupt – and revitalize – an insurance carrier’s business in its entirety. In our Connected Claims Report 2019, we find out how insurance executives view the challenge of creating a connected ecosystem within claims, where their challenges lie and what their expectations are in the near to mid-term. See also: The Connected World: How It Changes Claims   Our research discovered that no department is unaffected when a carrier undergoes claims transformation, but there are certainly some departments whose influence is pivotal. Between two-thirds and three quarters of respondents cited claims, IT and analytics as the "holy trinity" that drives transformation. To be successful, however, means more than just focusing on internal capability. Although the need for introducing Connected Claims is largely understood, customer service has recently become a key battleground, with the likes of Lemonade and Metromile disrupting the market with quick, personalized and mobile-friendly offerings. A focus on the customer is more than just good business practice. Understanding customers’ needs is the foundation for instigating cultural change. Our research reveals something of a paradox, where the majority of carriers believe their claims process is at least satisfactory but know the time is ripe for a change, and yet many feel unable to persuade their organization to release the necessary resources. Understanding customer motivations, as well as the technical landscape, may well be the evidence that executives need to secure that investment. While transformation may seem to be a radical process, executives are still focused on getting foundational processes in place before moving on to the more experimental technologies. Our research showed that four key areas will demand most of carriers’ attention in the near to mid-term: digital, data, claims technology and AI. It was interesting to discover that this last element is still being viewed with trepidation, particularly by North American executives. Delving deeper into the results, we find that many are already deploying AI-related capabilities, even if they don’t define them as such. The results of the survey show there is clearly a need for greater understanding of the range and capability of the new technologies at carriers’ fingertips. Connected Claims transformation is well underway. We can expect to see a greater shift toward automation and AI-based processes in the next five to 10 years as carriers become more confident that the foundational elements of data, IT and analytics are in place to support the change. But however advanced carriers’ technical capabilities become, focus on customer needs will always be the driving force behind any strategic change. See also: How Connected Cars Will Change Claims   Please download this full report here and get more insights on Connected Claims. This report was produced in conjunction with Insurance Nexus’ coming Third Annual Connected Claims USA Summit 2019, taking place June 5-6, at the Marriott Marquis in Chicago. Welcoming more than 750 senior attendees, Connected Claims USA is the world’s largest gathering for claims executives striving for efficient, customer-centric clams processing. More information can be found on the website at https://events.insurancenexus.com/connectedclaimsusa/.