The fastest way for insurers to lower healthcare costs is also the easiest way to improve how people care for themselves and others. In three words, the way forward—for insurers and individuals—is basic life support (BLS). In three letters, the way to save a life is through CPR. If insurers provide incentives to customers to learn CPR, if people take CPR certification courses, we will have reason to rejoice. We will have more people with the ability to respond to a life-threatening emergency with a life-saving procedure. Patients will, in turn, have fewer hospital stays and quicker recovery times. This invaluable procedure will yield valuable savings in time and money, too. Insurers must lead this effort, infusing the public with a sense of purpose by purposefully improving people’s confidence about what CPR can do. By explaining why CPR is a necessity, insurers can show people how to save lives. When every second counts, people can then count on themselves to not only be good Samaritans but to also deliver the goods, so to speak, when there is no time to wait for first responders to arrive on the scene or paramedics to provide additional help. People who can administer CPR possess the best insurance policy: life itself. That policy is portable. It transcends cities, counties, states, countries and continents. It is a policy for personal empowerment and public enrichment, offering what no amount of money can match and no measure of fame can equal. It is a policy to save lives and strengthen communities. It is also a policy to advance the interests of the insurance industry. It is a policy with no liabilities and many rewards, both professional and personal. The former is a reward that puts insurers at the forefront of innovation involving science, technology, and medicine. The latter rewards policyholders—and feels rewarding—because of what they alone can do: save lives. See also: The Science That Is Reinventing Healthcare   CPR is too important a skill not to learn. It is too vital to life and longevity for us not to recognize its benefits. It is too indispensable for a health-conscious citizenry not to know its advantages. It is too advantageous for insurers not to acknowledge its worth. It is too worthwhile for a community not to accept its virtues. By promoting CPR, insurers can convert their support of life-saving techniques into a lifetime of savings for their respective clients. Insurers can reinvest that money by expanding coverage or making coverage more accessible to those who need it but cannot afford it. Such is the ROI of CPR: a skill that works—a skill that every worker should study—for the good of all people. Too convenient a chance not to capture, now is the time to seize an opportunity that can secure the credibility of insurers and sustain the safety of policyholders—of people—nationwide. If insurers fulfill that mission, the dividends will accrue for generations to come. Together, insurers and individuals can accomplish that mission.

The intersection of workers’ compensation with laws on leave of absence and job accommodation has become increasingly challenging. With the expanding number of federal, state and municipal laws on the books, there is also confusion about how and when they overlap. There are many inconsistent approaches and far too many organizations forced to compensate for their errors. Fortunately, there are experts who can help increase our understanding of these laws and how to ensure we are implementing our leave and accommodation policies properly. Three of them agreed to explain and simplify this complex topic as guests on our most recent Out Front Ideas with Kimberly and Mark webinar:

• Jennifer Holland, senior manager, leave strategies at American Airlines
• Bryon Bass, senior vice president, workforce absence solutions at Sedgwick
• Jeff Nowak, attorney at Littler

The Challenges Workers’ compensation stakeholders face a variety of hurdles trying to navigate and implement leave and accommodation policies. The first hurdle that our panel addressed is the expanding number of such laws. According to the panel, more than 70 proposals introduced in state legislatures this year have a leave of absence component. Some seek to expand existing rights for unpaid leave; for example, covering relationships such as siblings or domestic partners. Others concern paid family leave. While it is unlikely that we will see the federal government adopt the idea, several jurisdictions are jumping on that bandwagon. New York, Washington, D.C., Washington and Massachusetts are in the process of developing regulations to implement such laws. Another challenge facing organizations is ensuring their policies correctly address the ways leave and accommodation laws affect one another. Workers’ compensation should generally run concurrent with other leave laws, yet many organizations do not do so. Or, they may not understand some aspects of workers’ compensation, such as allowing injured workers to take time off for medical appointments. Finally, the panel identified consistency as another problem area that can get employers in trouble. The Equal Employment Opportunities Commission, for example, has sued employers for failing to provide the same return-to-work opportunities to workers with occupational versus non-occupational injuries. Some states find themselves struggling to meet quick deadlines for implementing new laws. By the time the regulatory information is provided, there are just a few months to put the new rules in place to ensure they are fair to employees as well as businesses. Panelists observed that some of the challenges surrounding leave and accommodation laws can be directly attributed to problems at the employer level. Some organizations are resistant to change or fail to have internal discussions about why a particular accommodation cannot work and do not try to create alternative arrangements. In some instances, the employer does not even realize there is a request for a leave of absence or accommodation. These situations can end up being time-consuming and expensive. Two examples provided by our speakers demonstrated the need for organizations to recognize and respond appropriately to requests. In one example, a pregnant employee was prescribed bed rest and sought approval to work from home. When her request was denied and no discussion took place, she pursued the issue. That case is now headed to a jury to decide. See also: Absence Management: Work Comp’s Future?   In a second case, a store clerk with diabetes wanted permission to have orange juice available at her register. Again, the request was denied, and the employer failed to engage in the interactive process or offer any alternative. A jury’s finding in favor of the employee cost the company more than $750,000 in compensatory damages and attorneys’ fees, plus back pay. Accommodation Issues The interactive process is a vital, but very misunderstood, provision of the Americans with Disability Act (ADA). As we see from the two cases above, failure to adhere to the requirement can become a significant and costly problem. The interactive process simply means the process of engaging with the employee to determine:

• If there is a qualified disability, and, if so
• If a reasonable accommodation is possible.

The key word in the term, and the one that is often misunderstood, is "interactive." Both the employee and employer need to be part of the discussion. This can occur between the worker and supervisor, HR representative or, in some companies, an ADA coordinator or other specialist. According to the panel, the obligation to engage in the interactive process is triggered at any time the employer becomes aware of the need for accommodation. Stated a better way, it is triggered when the employer knows — or should have known — there was a disability affecting the employee’s ability to carry out the essential duties of the job. This is an area that can trip up employers because it means the employee does not have to make an actual request for accommodation for the interactive process to be triggered. It’s a common myth carried over from the early days of the ADA when the employee had a duty to ask for accommodation. That is no longer the case. The panelists pointed out that courts in recent years have found, based on observable behaviors of the employee, that there was a duty to begin a process to inquire if there is a disabling issue preventing the worker from effectively doing his job. Identifying "observable behaviors" can be difficult. Our speakers advise training front-line managers and supervisors to be familiar with such behaviors and understand when and to whom to raise the issue. Terms such as "interactive process" and "observable behaviors" are just two of many that can confound employers. Fortunately, there are excellent tools available to help, especially through the Job Accommodation Network (JAN). This is a service funded by the Department of Labor. The website is: www.askjan.org. Among its resources is one called the interactive process, in which JAN breaks it down into six steps to ensure compliance:

1. Recognize the request.
2. Gather information on restrictions and limits and how they are affecting the job.
3. Explore accommodation options with the employee.
4. Choose the accommodation that is most beneficial for both the employee and employer.
5. Implement the accommodation.
6. Monitor.

Panelists stressed that monitoring is especially important because the person’s situation can change, and employers need to ensure the accommodation is still effective. One piece of advice our speakers provided concerns transitional duty and how that affects ADA requirements. Transitional duty is not intended to be permanent. There should be a timeframe that triggers an assessment to determine what the next steps will be. More permanent restrictions may be imposed, and the employer should determine if essential job functions will be affected and, if so, what to do. This is also an area where consistency of policy is crucial. Similar options must be provided to workers, regardless of the nature of the injury. There are situations where employers have been sued for failing to offer similar opportunities to people with similar injuries. Finally, the panelists noted that employers need to understand what is meant by "reasonable accommodation." It is a change to the way a job is done, a change to the work environment that allows the person to perform all the essential functions of the job. It could be a change in schedule or a change in process, for example. It may involve a leave of absence. Leave of Absence "Reasonable" in terms of extended leaves of absence (LOAs) can be another confusing issue. In response, courts have generally said that employees have to show that whatever amount of time they are seeking will allow them to return to their jobs. They have sought to determine if the leave will be a factor in helping the person return. One problem area our panelists identified is that physicians’ notes seeking extended leaves often do not indicate whether or when the person will likely be able to return to work. Both the employee and physician need to indicate that an additional leave will have a reasonable estimation to return to work and that the extended leave will aid the process. Panelists commented that a major concern related to LOAs for employers is potential abuse, such as directly before or after holidays or other planned periods of time off. There can be a fine balance for employers trying to determine whether the leave is warranted, and erring on either side can be problematic. See also: The Key to Lower Health Care and Absence Costs   There are also situations of potential abuse when the employee takes off more time than suggested by the physician. These can be legitimate, as the physician’s time is an estimate, and the worker may need more time. But there can also be cases in which the worker is taking advantage of the system. The panelists stated that any situation that suggests possible abuse must be viewed carefully. Working closely with field supervisors and managers who have closer relationships with the employee than an HR representative can provide great insight. Also, employers can look for patterns (i.e., whether leave requests are occurring on a regular basis). Where states and municipalities are adopting new paid leave laws can be extremely challenging to incorporate them into existing rights laws. For example, newly adopted laws may involve new job protections. Bereavement for relationships not previously allowed may now be included. A trend panelists identified is leaves of more than 12 weeks. Layering on LOAs plus sick time and vacations in a way that meets a state’s requirements can be daunting. Our speakers are trying to encourage different states to adopt similar practices to make it easier for employers to navigate the complexities of the leave interactions. So far, however, that has not occurred. Our guest experts warn that employers need to be cautious about terminating workers who are on LOAs. The timing must be done with care to ensure their leave is not perceived as causing the termination. Employers can take steps to ensure they stay compliant with the myriad of leave laws. According to the panel:

• Use partners, such as in-house attorneys, or outside experts, such as a third-party administrator, who can guide and interpret the laws to determine if there will be an impact.
• Keep documentation for disciplinary decisions concerning a worker who is or has been out on leave. It is important to show that the decisions are well-supported. The documentation may also warrant an independent layer of decision-making so it shows a decision, such as termination, was not made solely by a manager. An HR representative or attorney should review such decisions to make sure they are legal.
• Avoid hasty decisions to deny accommodation. Instead, be guided by five simple words: How can I help you? Fully and carefully review the request, engage the worker, seek additional information, if needed, discuss the request with managers and, regardless of the decision, make sure it is defensible. If a requested accommodation cannot be implemented, tell the employee why it cannot and make sure the decision is backed up. Seek alternative solutions. Set a time limit, such as two weeks or one month, then reassess the situation to see if it is working. Put all of this in writing so you can defend any and all actions later if necessary.
• Consult free resources. In addition to the JAN website, the EEOC, Society for Human Resource Management and Disability Management Employer Coalition websites also have valuable resources available.

We are finally beginning to experience a long-awaited revolution in the insurance industry. Historically, insurance has been one of the last and slowest industries to embrace technology as a means of modernization and process innovation. The insurance industry is fragmented, without common standards, and until very recently did not attract many investment dollars, which exacerbated the general lack of incentive to modernize. However, in the past few years, we have seen signs of revitalization in the industry, and it is becoming an exciting time to be a part of the insurance community. According to a report published by the National Institutes of Health, "Healthcare costs in the U.S. now account for 16% of the country's gross domestic product, and per capita healthcare spending is approximately twice that of other major industrialized countries. Inefficiencies persist within the healthcare system because—in contrast to other economic sectors in which competition and other economic incentives act to reduce the level of waste—none of the healthcare system's players have strong incentives to economize." It has been said that 40 manual workflows make up 25% of an insurer’s cost of doing business. A recent report by Newsweek--sponsored by Salesforce and Deloitte, which included a survey of 300 C-level insurance IT executives--found that in the quote-to-enroll process, only 4.5% of new business is "mostly" or "extensively" low-touch. About 52% of the processes used are achieved manually. When taking time to dive deep into their process, John Hancock discovered that even for one line of coverage, 120 steps could be condensed to seven and turnaround time reduced from several days to a few minutes. See also: Key Technology Trends for Insurers in 2019   Those of us who have been in the industry for some time are all too familiar with the time-consuming processes that have been used for decades, and there are a variety of players who have decided to do something about it. The past few years have seen an unprecedented amount of investment money flowing into the insurtech industry, which is beginning to change the market outlook as well as boost competition, which in turn is motivating startups and established companies alike to embrace change. We are beginning to see new partnerships and the building of the infrastructure necessary to overhaul the industry, enabling a new focus on user experience and connecting APIs instead of the endless custom work typically required in this industry. There’s a new optimism in the insurance industry that is catching fire. According to a recent report by Accenture, “In five years, nearly all the insurance executives in our survey expect the industry to be transformed by digital technologies.” Further, the report found that 90% of insurance executives state they have a coherent, long-term plan for technology innovation in place. Quicker turnaround times, automated processes and good user experience translate to more new business, higher retention and lower employee frustration and, arguably, could help bring down the costs of healthcare overall. There are at least three areas that need to be addressed to help the insurance industry to modernize and innovate. Insurance professionals would agree that the most common problems in the old processes are the incessant need to copy and paste, the aggravating issue of double entry and the frustration of having to cross-reference multiple sources to get accurate information. We need to break down silos, open up data and replace legacy systems to get these processes running more smoothly and quickly. Breaking down silos In Accenture’s report, “47% of survey respondents also say lack of collaboration with the IT function is preventing them from realizing their technology investments’ value.” From our own experience and years working in the benefits industry, I cannot tell you how many hours, days and months have been lost simply copying and pasting information from one Excel file into another, having to log into multiple systems to manually log information or to simply verify that the information needed to accomplish the task at hand is indeed accurate. Unlike other industries, there are very few APIs available that allow systems to communicate and connect with each other. Because of this lack of connectivity, many employees at insurance companies end up using up to five to 10 systems simply to complete their everyday tasks. Automating Once there begins to be a focus on modernizing and upgrading core systems, a carrier can begin to think about real efficiencies, including automation. Automating even a few of the top 40 manual processes would increase productivity and performance. Imagine the ability to:

• Automate the confirmation of group information for a master data store to automatically verify its accuracy
• Auto-ingest census information by machine reading
• Consolidate account information into a single record
• Provide one point of entry to populate multiple systems

Automating these processes not only leads to quicker turnaround times and better efficiency, but it also enables insurance professionals to close more new business and gives them a competitive edge and a way to stand out from those companies that may be slower to adapt to new technologies. See also: 3 Steps to Succeed at Open Innovation   Partnerships Working with possible competitors, as well as vendors, is becoming increasingly important, and new levels of collaboration are necessary for companies that wish to thrive in the digital economy. There is no one system that does everything that an insurer needs; it simply does not exist at this point and may not exist for several years. McKinsey says that “ecosystems will account for 30% of global revenues by 2025” and that, “to succeed in ecosystems, insurers will have to take a hard look at their traditional roles and business models and to evaluate opportunities to partner with players in other industries.” We are still facing an uphill climb to transform the insurance industry from stodgy to streamlined, but there are signs of a renewed energy and drive that show promise. As more and more insurance companies and partners see the value of digitization, automation and collaboration, everyone will benefit from a more connected ecosystem, and the insurance industry will do its part to make healthcare a more manageable, and possibly even satisfying, experience for the consumer.

As we near the end of the first quarter of 2019, which trends are worth watching? Data Visualization 3.0 To kick us off, let me highlight an area that is a regular topic on this blog, data visualization. Progress in this area is always a combination of skilled people as well as technology. So, building on the positive examples from IIB Awards 2018, what is the trajectory for 2019? Well, I think this video from Elijah Meeks (senior data viz engineer at Netflix) highlights some important 2019 trends. He not only summarizes the history of data viz tool development, but also the changing expectations of users. He may well be right about the 2019 theme of convergence -- a third wave, not just of tool convergence but of developers and readers expecting one more flexible tool and communication medium. Self-Serve Analytics Tries Again There have been plenty of times when Gartner’s predictions of technology adoption have proven too ambitious, but they are always worth hearing. In a recent paper, Gartner predicted that by 2019 fully automated or semi-automated systems would be delivering more analytics than data scientists (or analysts). Now, I am old enough to have seen at least two other waves of analytics “self-service,” with many predicting the democratization of analytics, only to later find that business leaders would prefer an analyst to do the work for them. See also: 3 Skills Needed for Customer Insight   However, with the rise of machine learning improving the intelligence and personalization of report/visualization delivery, this time may be different. This article from Dataversity does a good job of considering how this might happen for business intelligence (BI). However, I think it stretches the term BI too far and misses the difference between the advanced analytics and data science work, where data scientists should focus. AI Applications Revitalize an Antiquated Trend We shared several posts on the state of AI during 2018, focusing on financial services applications and even the issues of AI ethics. However, when worrying about potential threats to your career, it has become clear that many applications are hyped. What we began to see in 2018 was a more mature production line to manage the delivery of AI products (including role of product manager). Several speakers at the Data Leaders Summit 2018 shared their practical experience in deploying AI models from lab to business lines. So, I was interested to read this post on the reliable customer experience (CX) hub “Customer Think,“ from Vince Jeffs of Pegasystems. He provides a useful summary of how AI applications will evolve to better meet the CX demands for 2019, including familiar topics like empathy, human-machine collaboration, data protection and ethics. Jeffs makes a good case for how AI applications will begin to demonstrate progress on all these fronts in 2019, an important milestone, if not yet the sci-fi destination of AI. NOT the Year That Blockchain Transforms Businesses This is a strange one for me to finish on, but I thought it worth including this (non) trend. Given that we have focused before on blockchain, and the outstanding questions if it is to help data science leaders, this caught my eye. The title is almost clickbait, which is rare for a great site like Datafloq. However, the thoughts are worth reading. In this short post, Steve Jones helpfully summarizes both the progress in business adoption and the problem of still over-promising. See also: Key Insurtech Trends to Watch   I hope wise businesses will continue to adopt blockchain technology only where it is a more appropriate data solution. That could achieve its status as a data source that begins to matter to data leaders for analytics, too. But more likely it will be 2020 before we see serious use. Which Waves Are You Preparing to Ride? I hope those trends were useful to share with you and help inform your planning. There are many more topics I could have covered, including wider developments in data science, IoT and virtual reality/augmented reality (VR/AR). Which technology waves will you be riding in 2019? Are any essential to you achieving your 2019 goals? I’d love to hear your priorities or forecasts.

In an insurance industry battling rising costs and losses, the struggle to attract and maintain customers is real. Fortunately, studies show that existing customers value good service and meaningful relationships even more than low rates. This means that, to maintain the customer relationships they already have, insurers must focus on customer experience and engagement. Here’s why customers leave after a closed deal, and what you can do to forge stronger, more profitable, long-term relationships. Why Customers Leave (and Why They Stay) New customers often shop on price, but even the best insurance rates don’t retain customers who experience poor customer service. In Gladly’s 2018 Customer Service Expectations Survey, 92% of customers polled said that they would stop doing business with a company after three or fewer bad customer service experiences — and 26% said it would take only one bad experience to make them leave, says Shep Hyken, chief amazement officer at Shepard Presentations. “Your customers no longer compare you just to your direct competition. You are being compared to the best service they have ever received - from any company or any person,” Hyken says. That’s a tall order for insurance companies, which continue to lag behind other sectors in customer service, the Actuary’s Chris Seekings writes. The insurance industry’s customer satisfaction index score fell in 2018 while the scores of a majority of sectors rose, says Affinion Vice President Karen Wheeler. Insurance customers’ needs are relatively simple: They want policies that meet their needs at prices they can afford, and they want good communication with their insurance company, says Bain's Darci Darnell. “They expect their insurers to help alleviate their anxiety, not add to it.” In practice, however, insurance companies aren’t delivering on these basic needs. Bain’s fourth annual Customer Behavior and Loyalty in Insurance report, written by Henrik Naujoks and fellow researchers, found that most insurers are not delivering the quality products or ease of use their customers demand. The study found that 80% of insurance customers ages 25 to 40 rated their insurer low on the items that mattered most to them. See also: How to Enhance Customer Service   The transition to a digitally based customer service world remains racked with growing pains. Mark Breading describes an attempt to cancel a magazine subscription that required three phone calls, two web forms and an online chat session. In the end, Breading says, he contacted his credit card company and blocked the transaction — a process that was simpler than contacting the magazine itself. Unlike magazine subscriptions, however, insurance coverage is often a requirement. Customers may already feel that dealing with their insurance company is a chore; when the available communication tools are tough to manage, the relationship can be damaged beyond repair. “The challenge (and opportunity) is to enable the smooth transfer of those interactions and the related information between different channels in real time, so that the customer is provided with choice, and the use of digital and human capabilities can be optimized,” Breading says. How Insurance Companies Respond to Customer Variability Emboldened by easy information access and driven by a desire to save money, insurance customers are quicker than ever to switch carriers when their policy anniversaries arrive. To combat the regular shift in customers, insurance companies have leveraged a number of tactics. These tactics include leveraging data to improve personalization and employing new tools and strategies to make it easier for customers to purchase property and casualty insurance, says Tom Super of J.D. Power. However, digitization and its corresponding personalization no longer make companies stand out from their competition. In fact, companies that don’t offer a simple, personalized on-demand experience stand out from the crowd by falling short of everyday customer expectations, says Kevin Haydon, who works at the digital insurance platform EIS Group. While customers understand that buying insurance isn’t as simple as ordering pizza, they expect the same relative level of ease and personalization from both transactions. When prices rise but communication doesn’t get easier, customers feel the pressure to switch insurers from two directions at once. That customers place such high value on ease of use sends a strong message: Insurers' understanding of value must also extend beyond the bottom line, says marketing automation manager Brandon Carter. “Value doesn’t necessarily equal cheaper prices or more stuff. It simply means enhancing the customer’s ability to solve problems and reach their goals,” Carter says. Customers have made it clear that they value insurers who help them solve problems and reach their goals — and who make it easy to do so. These two elements thus become a powerful focus area for insurers. Helping Customers Find Value in Their Insurance Relationship Understanding how different policy options will affect their lives is the biggest factor influencing customer satisfaction in insurance, says Mikaela Parrick at Brown & Joseph. Customers want to know how their coverage benefits them. Currently, only 67% of insurance consumers — about two in three — believe that their insurer helps them understand their policies thoroughly, Parrick adds. When insurance companies put effort into helping customers connect coverage to personal benefit, however, their overall customer satisfaction scores increase by an average of 9 percentage points. The process of learning how to communicate value to existing customers teaches insurance companies more about those customers, as well. This understanding helps insurance companies retain existing customers, attract new ones and boost their own bottom line, says David Pieffer, who works in property and casualty insurance at J.D. Power. “Since insurance is a ‘must-buy’ product for most customers, the reason they buy the product is straightforward; however, why they buy a particular insurance company’s product is not so obvious,” Pieffer says. Failing to understand a customer beyond their risk profile is a big mistake for insurers hoping to adapt to current demands. Think Big With Omni-Channel Omni-channel in insurance offers benefits to the insurer by enabling more streamlined service, and it offers benefits to customers in the form of easier communication and transactions with their insurance companies. Yet one of the biggest values of omni-channel for customer retention remains largely untapped: the power to leverage an omni-channel platform as a tool for customer engagement. “Companies with the strongest omnichannel customer engagement strategies retain an average of 89% of their customers,” says Kris Hackney of Applied Systems. Companies at the weak end of the spectrum, however, retain only 33% of their customers on average. Enabling customers to contact their insurer via their preferred channel is a form of personalizing the customer experience, and it doesn’t require investments in big data. See also: Building a Customer-Service Culture   Build Networks as an Insurer Insurance companies are busily building digital networks to improve the customer relationship. The value of human networks, however, should not be underestimated — particularly when today’s platforms offer the opportunity to add valuable perspectives to the relationship between insurers and the insured. An approach that incorporates insurance agents into the company’s overall de-siloing may have a stronger impact than merely improving technology, says Casey Gustus, CEO of Apliant. Agents remain the single best way to maintain the level of human personalization insurance customers want — and they make it easy for customers to get their questions answered, building a relationship customers want to maintain. Expanding beyond traditional relationships can help bring insurance customers into the fold and keep them there. For instance, insurance companies can partner with financial advisers to reach potential P&C customers who turn to their financial adviser for coverage assistance, says Brian O’Connell at Insurance News Network. Research from Chubb and Oliver Wyman reveals that 40% of customers who seek the help of financial advisers would consider switching to a financial adviser who also provides help with acquiring insurance, says Annmarie Camp, executive vice president of sales and distribution at Chubb Personal Risk Services. Partnerships like these, boosted by technology, help customers feel that their personal needs are met and that receiving the insurance assistance they need is easy. This sense of support provides significant value and strengthens the bond between insurers and their customers.

The future of the insurance industry is the customer. More and more insurance companies are stepping up their games and moving to digital and customer-centric strategies. The push to position the customer at the forefront of the industry is driving the adoption of self-service technologies — digital offerings capable of delivering more user-friendly customer experiences. In turn, the industry is embracing another customer-centered technology: chatbots. But important questions remain:

• How will chatbots solve historic industry pain points around customer service?
• How can humans and chatbots work together to improve the customer experience?
• In what ways will chatbots change the insurance industry over the long term?

By answering these and other questions, the insurance industry can better leverage chatbots to improve the customer experience —and prepare for the changes ahead. Chatbots: Why now? Until recently, customer service has been frequently discussed but rarely prioritized in the insurance industry. Traditional customer-facing processes rely heavily on phone interactions and fall short of customers’ digital expectations. Although some insurers have reduced the tedium of traditional processes, customers frequently experience long wait times and multiple touchpoints for a single action or request. Taking a page from the e-commerce playbook, leading insurers are empowering customers with self-service capabilities, which augment the work of employees and agents, allowing them to focus on more meaningful customer interactions. See also: Will Chatbots Take Over Contact Centers?   Chatbots are a natural extension of the push for self-service capabilities. They improve the customer experience through a cooperative approach involving both humans and artificial intelligence (AI). The timing is right for the widespread adoption of chatbots. Just 34% of consumers report they have definitely not interacted with a chatbot in the past year. By making it easier for customers to answer common questions and perform routine activities like filing a claim, chatbots reposition customers at the center of insurance processes. How chatbots improve the customer experience Retail and other sectors have successfully used chatbot technology to significantly enhance the customer experience. However, the buying and claims processes in insurance present unique challenges. Insurance customers purchase policies because they are afraid of losing things they care about: cars, houses, even loved ones. As a result, customers are more emotionally invested when buying insurance than when they purchase consumer goods or even big-ticket items like vehicles. Chatbots help neutralize emotions during the transactional stages of the insurance lifecycle. In some ways, chatbots are an extension of a web search. The difference is that they go deeper and present customers with information that is otherwise difficult to access. Chatbots also streamline routine tasks, eliminating the frustration policyholders commonly experience when dealing with insurers. Consumer acceptance of chatbots is largely predicated on the availability of human interactions for certain tasks. Nearly half (49%) of consumers feel better about using chatbots if they know they can escalate the experience to a human interaction. The ability to defuse the emotional element of buying insurance accelerates the speed of doing business. In addition, agents and customer service representatives no longer have to perform transactional processes, which improves their quality of life in the workplace and leads to a faster pace of service and internal transformation. There are limits: At some point, humans must engage customers directly and assist them with the emotional aspects of the insurance process. Still, with today’s most advanced chatbots, there is the potential to capture new insights and further improve the policyholder experience through personalization. For example, when a customer prices flood insurance, chatbots with AI running in the background can quickly identify the best and most affordable coverage for her situation. Insurance customers have grown to expect this level of personalization from retailers and consumer-facing brands. As AI-powered chatbots gain traction, customers will expect the same from their insurers. A look ahead: What’s next in chatbots for insurance companies? Chatbots will have a transformative effect on the customer experience, but benefits may vary by insurance category. Chatbots provide an opportunity to reimagine the role of health insurance and position health insurance providers as true partners in the quest for better patient outcomes. For example, chatbot solutions can provide free/low-cost health coaching or other services. See also: Chatbots and the Future of Interaction   In life insurance, chatbots enable insurers to build on existing trust and serve as wellness partners to their customers. Leveraging AI, chatbots can deliver personalized recommendations that improve customers’ quality of life by promoting financial, physical and emotional wellness. Similarly, chatbots have the potential to generate added trust with property and casualty insurance customers. With advanced analytics, chatbots can improve how customers price insurance policies or streamline the claims process. When combined with IoT devices, chatbots may even be able to provide real-time analysis, enabling customers to prevent incidents like a leaking hot water heater or a pending part failure on a vehicle. By focusing on customer needs, chatbots not only strengthen policyholders’ relationships with their insurers but also drive sales through touchpoints that span a range of digital channels. Humans remain a vital part of customers’ experience with insurers, but, with chatbots on the team, human agents and customer service representatives have the freedom to focus on more meaningful aspects of customer relationships — a big win for customers, employees and insurance companies themselves.

Insurance carriers and third -party administrators (TPAs) are well aware that emerging technologies are poised to change the industry. But, to many, it feels like the rhetoric has gone off the rails. You can hardly greet a consultant or surf the business pages without being told that digital reinvention is a do-or-die imperative. More insurers are adopting and contending with a world influenced by machine learning, artificial intelligence or the Internet of Things. More are deploying robotics or blockchain. A multitude of obstacles stand in the way of those left behind. Their organizations are often long on enthusiasm but short on vision. Senior executives, mindful of quarterly results, are excessively cautious about the near-term expense of IT innovation. Employees are prone to resist disruption that challenges skillsets or threatens jobs. And resource-stretched IT departments are hard-pressed to reinvent anything while struggling to keep existing systems running. The good news is that these obstacles can be overcome -- assuming tech leaders know where to start and adopt an effective approach. Below is advice on how to proceed, garnered from top performers in the industry. Start simply — Find a vendor with a proven insurance-industry track record who can help conquer discrete challenges, such as automating adjustments or on-boarding new customers. Some consultants, hungry for seven-figure contracts, may advocate radical and immediate change across the organization that is over their head. Smart, targeted change tends to be the better approach. Forget about the big bang overhaul all at once, particularly if the company lacks vision or commitment. Instead, start small to build evidence and snowball your effort. Target minimally viable projects and iterate to get bigger. See also: Culture Side of Digital Transformation   Empower bridge builders — Partners can be the best source for finding talent fast, rather than stumbling through the difficult process of attracting and building it in-house. Outsourced teams of specialists driving cloud native solutions can move quickly and transfer expertise. The coders these vendors can attract are valuable. Competent coders who can collaborate well with your whole company are priceless. They’ll help you get your ideas out of the IT trenches and into strategic meetings, where they belong. And they’ll bring forward the company’s best ideas and biggest challenges. Find these people and partners, and cultivate them. Be strategic — Fomenting a digital revolution requires forethought, planning, networking and disciplined execution. Just as a general doesn’t go to war by pointing his troops toward the enemy and shouting “charge,” a digital leader needs to understand what they are up against, where the pitfalls lie and how to best achieve her organization’s objectives with the people and assets at her disposal. The leader needs to be able to present convincing use cases up the chain of command. Target early, conspicuous wins — Projects that streamline operations, achieve cost savings or provide visible improvements to the customer experience can help demonstrate the tangible benefits of digital transformation. An experienced insurance-industry tech partner may be able to quickly alleviate operational challenges, such as capacity spikes and customer-experience deficiencies in claims intake. Such quick wins can build momentum; they should be pursued even if it means delaying initiatives seen as urgent to IT, such as legacy-system modernization. Be mindful of budget — In today’s environment, where all CEOs say they are running a technology business, the IT department needs the best talent available. Obviously, talent doesn’t come cheap, particularly with the current supply-demand imbalance. Given that nearly every industry from mining to warehouses, finance and retail is undergoing a shift to digital, there aren’t enough engineers and data scientists available or coming through the education system to meet the demand. Initiatives that help the CIO make a case for additional funding can mean the difference between an IT team that can barely keep up with the trouble-shooting backlog and one that propels the company into the future. Cultivate allies — A battle is best fought by a coalition of the willing who can provide resources, ancillary support and political backing. Likewise, a CIO or director of technology needs to find executives within the organization who are enthusiastic and knowledgeable supporters of digital change. When IT departments choose to forge ahead without obtaining adequate buy-in from the business side, they can fail. Similarly, when seeking help from outside vendors, strong working relationships are critical. Think broadly — Once you have achieved the critical mass of credible success stories, a viable budget and executive support, you can tackle the “transformational” aspect of digital transformation. That is, you can begin to revamp the organization’s culture to operate more like a nimble tech company than one weighed down by bureaucracy and legacy systems. See also: 5 Digital Predictions for Agents in 2019   Digital transformation is meant to pave the way toward a more efficient and profitable future. For the moment, however, many insurance executives are concerned by the scope of what lies ahead. Some worry whether they have enough of a grasp on what is hype and what is real in the digital space to lead their companies through the initial steps of the journey. Others are daunted by accounts of digital initiatives gone awry and, conversely, by the winner-takes-all competitive dynamics inherent in tech-driven industries. Yet there is no doubt that change is coming. By following the advice summarized in this article, carriers and TPAs can start on the path of digital transformation and take control of their digital destiny.

When IBM was struggling in the late 1980s and early 1990s, analysts often said the company was so big that it was going to take a while to turn around. A common image for the company was an oil tanker: You don't just lean on the rudder and go hard left in that baby. 

A similar analogy is used today at some insurance companies as they try to become more innovative. While surveys show that the industry hopes to improve customer experience, accelerate product development, etc., there is less confidence that companies will succeed. Many seem to feel like that oil tanker, and expect it will take years to get a new heading and gain momentum.

The innovation approach that most embodies the oil tanker is what ITL's Guy Fraker calls the "change management model." The mandate for innovation comes from the top, and everybody is expected to support it. The company may try a venture arm, an innovation lab and maybe even an internal incubator. But not all the efforts are connected, and there is no communication plan or change in incentives and rewards to get organizational alignment and buy-in. The focus is on creating an innovation culture, and, after a few years, you may even have built a new ship—but it’s still an oil tanker. 

What if, instead of an oil tanker, your approach was more like a speedboat? This common approach also is driven from the top, but, instead of a companywide effort, it relies on rotating, virtual teams. The small teams may be more agile but are isolated from the rest of the organization and, over time, can feel exposed and vulnerable. Their efforts to hand off innovation ideas to business units typically meets resistance. The teams may report to the C-suite, but there’s no organizational incentive for existing business units to follow their lead and adopt their recommendations. Like a speedboat, the small team is fun and exciting at first, but it tends to be short-lived and can’t take the larger organization very far. 

If the oil tanker is too cumbersome, and the speedboat is too small, where does that leave us?

Why not convert the oil tanker into something that resembles the strength and adaptability of an aircraft carrier? It can’t turn much faster than an oil tanker, but a carrier can extend its reach by launching multiple assets—and bringing them back to report and refuel—and is constantly scanning the horizon for intelligence. 

The aircraft carrier analogy fits the "innovate to grow model" of innovation. This approach is driven from the top and leverages clearly defined constraints and focus points. It rewards employees for participation, its goals are transparent to the entire organization and the workforce is encouraged to participate. The approach starts small but can scale, so the small team grows over time. It can employ change management tactics, such as a VC arm or an idea development programs. The key difference is that these efforts report up to a person or team in the organization who advises and engages corporate leadership. 

You may think you now need to stop and design and build an aircraft carrier, which would take even longer than turning that oil tanker, but most big companies already are aircraft carriers or can be with a little adaptation.

I just finished the wonderful new biography "Churchill: Walking With Destiny" and learned that England launched a plane from an adapted cruiser in 1924, way before aircraft carriers existed in anything close to today's form and when flying was still in its infancy. Now, Churchill was positively protean. He was at least the godfather of the tank, if not the father, and he became so convinced of the power of planes so early that he asked that the Wright brothers be consulted as England built the Royal Air Force. (He became a pilot himself in the 1910s, only giving up his training when so many trainers and friends died in crashes that colleagues managed to convince Churchill that a senior member of the British government shouldn't take such risks.) 

While I'm not expecting anyone in insurance to be the next Churchill—what a disruption that would be!—we have plenty of resources in front of us to innovate quickly if we just stop thinking in terms of oil tankers or speed boats and start launching planes off whatever aircraft carrier we have or can improvise. 

Cheers,

Paul Carroll
Editor-in-Chief

As technology causes premium to contract, the most visionary insurers will change their focus from insuring risks and processing claims to obviating risk and instantly mitigating losses. Reflecting on my experience working with insurers and the IT and service providers who support them, I recall that about 15 years ago insurance business leaders suddenly needed to understand a number of new technologies to be able compete. Before that moment, the words “innovation” and “insurance” had rarely been used in the same sentence. The insurance industry was thought of as ultra-conservative and risk-averse—it seemed to move in slow motion while other industries were accelerating. ROI was a far more important metric than CSI or retention rates. Old habits die hard—but die they eventually will. The shift from an analog to a digital business world was challenging for all business sectors, but for the insurance industry it was particularly so, and likely the most disruptive change that the industry had encountered since the advent of the computer. The business of insurance is, at its core, about gathering, managing and storing a tremendous volume of information and using it to make calculations and predictions necessary for the creation of protection products. In an analog world, these functions were performed on paper—mountains of paper. Digital processes enabled these processes to be simplified and made faster and easier. However, the insurance industry, being conservative by nature—and subject to regulation—also kept the paper versions, creating even more complexity and making the management burden even greater. See also: Innovation Imperatives in the Digital Age   Transactional processing represented another challenging shift. In the analog era, people and labor were employed for every process from selling policies to developing rate quotes to managing claims to producing correspondence. With the onset of automation, the focus quickly shifted to eliminating human labor and reducing cost. For business leaders, their focus changed almost overnight from the management of large numbers of people and facilities to an understanding and effective deployment of new processing technologies. As if these shifts were not demanding enough, what followed was exponentially more challenging: Driven by the more technology-forward banking segment of the financial services sector, insurance experienced a seemingly never-ending stream of new technologies that disrupted every corner of the business. This next wave of technologies transforming the business of insurance appeared like a tsunami. The Transformation of Operational Process and Business Models Today, technology-driven disruption is accelerating, and the industry has entered a new phase: the transformation of underlying operational processes and business models. The initial impact was felt in distribution channels but more recently has begun to seep into the very infrastructure of the business—product development, pricing, rating, underwriting, loss reporting and claims management. The claim department consumes approximately 80 cents of every premium dollar earned, so it offers the greatest single departmental opportunity for earnings improvement. It is also customer-facing and represents the additional opportunity to improve overall customer satisfaction, retention and brand improvement. See also: How to Move to the Post-Digital Age?   Industry transformation still has a distance to go, and the next iteration of the business may cause even more fundamental upheaval in the C-suite. The explosion of “connected” things—cars, people, buildings, factories and the continuous streaming of data flowing from them—will drive two major shifts. First, traditional insurance product premiums will begin to contract in tandem with a reduction in the demand for insurance as the risk of losses is avoided. Second, the most visionary insurers will (and already have begun to) reinvent their basic business model from insuring risks and processing claims to obviating risk and instantly mitigating losses. The Darwinian dictum of “survival of the fittest” has never been more apt. This article was first published at Insurance Innovation Reporter.

Like 2018, 2019 is shaping up to be a positive year for the insurance industry. The stronger economic outlook is driving up net investment income, consolidated capital and surplus and other factors -- see the table (from Deloitte) below: However, in the same report, Deloitte warns, “While 2018 and 2019 are shaping up to be banner years for insurers, some concerns are being raised about an economic slowdown, if not a full-fledged recession, as early as 2020.” In other words, insurance businesses must be mindful of expenses if they wish to navigate the rough waters of a less lucrative market. One of those cost areas is IT. No matter the size or specialty of the insurance agency, IT affects operational efficiency, customer experience and compliance, among other areas. Making the right decision in each is essential, but it cannot be done without a chief information officer (CIO), i.e., an experienced IT leader to identify bottlenecks, maintain compliance and ensure that your clients are satisfied with their digital experiences. Unfortunately, not every insurance business can necessarily afford or access a CIO. See also: How Virtual Reality Reimagines Data   However, these insurance businesses could leverage virtual CIOs (vCIO). The benefits of vCIO consulting cut across three major areas of relevance to your insurance business: 1. Complete IT Leadership Be it patchy WiFi, computers breaking down or client portals crashing, these and other such IT issues will impede staff productivity. This can hamper your ability to sign on new clients as well as put existing client relationships under pressure. A vCIO can bring a team of full-time IT experts to investigate your existing system to find the root causes that are derailing your operations and causing cybersecurity issues and compliance problems. A vCIO can provide clarity of how your IT options -- be it systems, processes or training -- will both maintain productivity and meet strategic business goals. 2. Lower Costs The average payroll cost of a CIO is $142,609 per year; salaries can range from $81,718 to $269,033 (Monster). For small and medium-sized insurance agencies, that salary alone would be a significant spike to overhead. Moreover, these smaller agencies may not require a CIO around the clock, as a large outfit would. This is where the cost advantage of a vCIO is key. Typically, vCIOs will charge a flat fee. A number of IT solutions for the insurance industry, such as managed services, actually include vCIO services as part of the agreement. So, many small or medium-sized agencies leveraging managed IT services may not need to pay extra to access vCIO services. 3. Objective, Outside Look at Information Systems Your IT manager may be a great asset, but IT has many different fields, with each field requiring dedicated experts. Be it cybersecurity, mobile, cloud management, web development or something else, it’s good to have an outside expert to take a look. See also: Insurance and Fourth Industrial Revolution   A vCIO can provide a neutral assessment. For example, a vCIO could come in and identify a gap in your compliance measures, thereby preventing you from getting hit by a fine. The vCIO could identify a glaring cybersecurity problem before it flares up into a costly technical (and legal) problem for your agency. A vCIO may not be ideal for larger entities, which have exponentially greater technology needs, potentially across dozens -- or hundreds -- of offices. Larger entitites may also have many more custom technology systems, such as an on-premises data center or custom-coded internal and client-facing applications. But every organization needs full-time access to a CIO to take ownership of your technology. Should something fail, you can’t afford to not have that leadership when you need it most.