The insurance industry is being driven by technological advancements that promise to enhance efficiency, security, and transparency. At the forefront is blockchain technology, a decentralized and secure system that has the potential to reshape the way insurance processes are conducted. 

Understanding Blockchain in Insurance

Blockchain, the distributed ledger technology that underlies cryptocurrencies like Bitcoin, has several features that make it particularly well-suited for the insurance industry. Its decentralized nature eliminates the need for intermediaries, reducing administrative costs and increasing efficiency. The immutability of blockchain ensures that once data is recorded, it cannot be altered, providing a transparent and tamper-proof record of transactions.

1. Enhanced Security and Fraud Prevention: Blockchain's cryptographic features ensure secure data transmission and storage. In the insurance industry, this translates to a significant reduction in fraud. Through the use of smart contracts, which automatically execute and enforce the terms of an agreement, blockchain minimizes the risk of fraudulent claims. Insurers can verify the authenticity of claims in real time, streamlining the claims process and reducing the overall cost of fraud detection.
2. Improved Transparency and Trust: Transparency is a cornerstone of blockchain technology. In insurance, this translates to an accessible record of policy details, premiums, and claims. This increased transparency fosters trust among stakeholders, including policyholders, insurers, and regulators. By providing a shared view of transactions, blockchain reduces disputes and enhances the credibility of the insurance industry.
3. Streamlined and Efficient Processes: Traditional insurance processes are often marred by cumbersome paperwork, delays, and manual errors. Blockchain's decentralized ledger simplifies and automates these processes. Smart contracts can automate underwriting, policy issuance, and claims processing, reducing the time and resources required for these tasks. This streamlined approach not only enhances efficiency but also improves the overall customer experience.

Challenges and Considerations

While the potential benefits of blockchain in insurance are substantial, the technology is not without its challenges. Integration with existing systems, regulatory concerns, and the need for industry-wide collaboration are among the hurdles that insurers must navigate. However, as the technology matures and regulatory frameworks evolve, these challenges are increasingly being addressed.

Future-Ready Insurers – Embracing Mobility Tech and Trends

In addition to blockchain, future-ready insurers are embracing mobility tech and trends to stay ahead in a rapidly evolving landscape. The integration of mobile technology, data analytics, and emerging trends such as the Internet of Things (IoT) are reshaping the way insurance is underwritten, sold, and serviced.

1. Mobile Apps and Customer Engagement: Mobile apps have become a powerful tool for insurers to use to engage with their customers. Insurers are developing user-friendly apps that enable policyholders to manage their policies, submit claims, and access important information seamlessly. The convenience offered by mobile apps enhances customer satisfaction and loyalty.
2. Data Analytics for Risk Assessment: The abundance of data in today's digital age is a gold mine for insurers. Advanced data analytics tools allow insurers to analyze vast amounts of data to assess risks more accurately. Machine learning algorithms can identify patterns and predict potential risks, enabling insurers to make informed underwriting decisions and set more precise premiums.
3. IoT Integration: The proliferation of IoT devices is transforming risk assessment and claims processing. Insurers can leverage data from connected devices such as smart home sensors, wearable devices, and telematics in vehicles to gather real-time information. This not only enables personalized pricing based on individual behavior but also facilitates proactive risk mitigation.
4. Artificial Intelligence in Underwriting and Claims Processing: AI is playing a pivotal role in automating underwriting and claims processing. Machine learning algorithms can analyze vast datasets to assess risks, while natural language processing facilitates faster and more accurate claims adjudication. This not only improves efficiency but also reduces the likelihood of errors.

Shaping the future

Blockchain technology is a game-changer for the insurance industry, offering enhanced security, transparency, and efficiency. As insurers navigate the challenges of integration, those who successfully implement blockchain stand to gain a competitive edge. Moreover, the synergy between blockchain and mobility tech is propelling insurers into a future where customer-centricity, data-driven insights, and automation are paramount. 

The future-ready insurer is not merely an adopter of technology but an innovator, embracing the transformative power of blockchain and mobility tech to redefine the insurance landscape. As we move forward, the collaboration among insurtechs, regulators, and industry stakeholders will be crucial in shaping a future where insurance is not just a protective measure but a seamless and intelligent part of our daily lives.

This summer has brought on a slew of severe weather events that have challenged our insurance defense lines with increasing intensity. In July, the National Oceanic and Atmospheric Administration (NOAA) confirmed four new billion-dollar disasters, ranging from wildfires in the West to unprecedented tornadoes in the Midwest and Category 5 Hurricane Beryl in the South. These events brought July’s totals to 19 declared disasters, four more than in July 2023.

The evolving nature of disasters calls for a reevaluation of traditional insurance strategies and a sincere consideration of how innovation in supplemental disaster insurance solutions can ensure dynamic coverage that protects consumer finances in today’s changing weather landscape.

Disasters are striking in unprecedented ways

No community is entirely immune to severe weather, with at least one weather-related disaster declared in all 50 states over the last five years. We are familiar with the widespread need for severe weather considerations when building comprehensive insurance portfolios; however, this summer has heightened the urgency of adaptation with a series of unexpected and unusual weather events.

Most recently, Hurricane Ernesto and Hurricane Debby tested the East Coast with flash floods, power outages, rip currents, and extensive damage in August, which was closely preceded by the devastating Hurricane Beryl in July. The storms have been unusual this hurricane season, as Debby formed nearly a month earlier than the average second Atlantic hurricane, and Hurricane Beryl was the earliest Category 5 hurricane in Atlantic history. These historic events are only kicking off the year’s above-average hurricane season, with the National Hurricane Center (NHC) forecasting 17 to 24 named storms and four to seven major hurricanes before the end of November, surpassing the 1991-2020 seasonal averages of 14 named storms and 3 major hurricanes.

In addition to record-setting hurricanes, tornado patterns for 2024 have called for concern. July saw the second-highest number of tornadoes since 2010 and a 45% higher-than-average pace. Last month set a Chicago-area record for most tornadoes in a day after a derecho suddenly spawned 32 tornadoes across the region.

In the West, the Park Fire has taken its place as the fourth-largest wildfire in California history, devastating more than 401,000 acres. As extreme weather affects states with a new level of intensity, it is increasingly imperative that homeowners assess their preparedness against natural disasters with an openness to new insurance considerations.

Catching the consumer up to speed

While it has always been key for homeowners and renters to consider their financial vulnerabilities when it comes to looming disasters, insurance literacy has taken on heightened importance in the face of today’s increasingly frequent and intense weather events. 

Few policyholders are aware of what their current insurance covers and what it doesn’t. A 2020 survey by Policygenius found that 53% of homeowners were unaware that home insurance policies don’t typically cover flood damage and 80% were unaware that earthquakes aren’t typically covered. Despite these gaps in insurance knowledge, 74% of respondents said they felt confident in their coverage to fully replace their home in the event of a disaster. 

This disconnect between consumer understanding and confidence is concerning and calls on us as insurance professionals to help policyholders get honest about their emergency savings and where severe weather patterns can wreak havoc on their lives and finances.

While the insurance industry is keyed into these evolving weather trends and constantly reacting, “set it and forget it” consumers need more support in staying informed. They might be aware that these new weather trends are causing insurers to raise deductibles in disaster-prone areas and even exit states entirely, but are they familiar with the spreading nature of coverage stipulations like named storm deductibles? With the NHC’s prediction of an above-average number of hurricanes this year, consumers need real-time education on such nuances to get a truer understanding of how they will be financially affected by a disaster.

Coverage needs are changing, and clients need tailored support

As severe weather disrupts lives around the country with a new sense of vigor, consumers need to be made aware of the massive out-of-pocket expenses that can result from coverage gaps in their insurance policies. 

A recent Bankrate report found that only 44% of U.S. adults would be able to afford an emergency expense of $1,000 with savings and 27% lack emergency funds altogether. If you set this against the context that out-of-pocket costs for a disaster can reach $10,000 per household, it is clear that people need additional support, which is why we at Recoop offer up to $25,000 in fast and flexible recovery cash.

When it comes to tailoring coverage to homeowners’ specific needs, exploring relevant multi-peril insurance products is a way to address the ever-evolving climate landscape, as policyholders may face a wide array of unexpected natural disaster risks. For example, in the last 10 years, New York state had declared disasters in six peril areas: hurricanes, tornadoes, winter storms, earthquakes, wildfires, and dust storms.

This kind of peril diversity highlights the need for agents to be on top of regional and national disaster trends to provide meaningful advice to protect their clients’ interests in more dynamic ways. Furthermore, the degree of supplemental disaster coverage can be adapted to suit customers’ needs. Residents living in high-risk areas or far away from family support may require greater backing in the face of a disaster and need guidance from trusted agents to identify more supportive coverage plans.

When natural disasters rank as the fifth most common cause of bankruptcies in the U.S., we must evaluate how to secure more comprehensive insurance coverage to better protect our clients, especially as the changing climate patterns present new challenges. The severe weather trends experienced this summer position supplemental disaster insurance as not a mere add-on but a vital component in delivering comprehensive protection against a range of perils in an increasingly unpredictable weather landscape. The more we stay informed and innovate alongside these trends, the better we can serve consumers with a combination of insurance coverage.

Wildfires have become a relentless threat across the U.S., with the 2024 Texas Panhandle wildfires being one of the most recent and severe examples. The Texas Panhandle wildfires—including the Smokehouse Creek fire, the largest in Texas history—caused $123 million in preliminary agricultural losses, making it the costliest wildfire on record. 

As these disasters grow in frequency and intensity, U.S. insurers face increasingly complex challenges in responding effectively. Here, we’ll explore the key challenges insurers encounter during wildfires and discuss potential solutions, drawing recent insights from the Texas Panhandle wildfires and global wildfire trends.

See also: Big Tech Tackles Wildfires

1. Escalating risk exposure

One of the most significant challenges insurers face is the increasing risk exposure due to the expanding wildland-urban interface (WUI). The WUI is the area where human development and undeveloped wildland meet, and development in this zone has grown significantly, especially in Southern and Western areas of the U.S. As more homes and businesses are built in wildfire-prone areas, the potential for massive financial losses surges. 

The Texas Panhandle fires alone devastated over a million acres, destroying hundreds of properties and causing significant economic disruption. With such widespread devastation, insurers are struggling to balance the risks associated with providing coverage in these high-risk areas.

To address this, insurers must invest in advanced risk modeling and analytics that factor in climate change, historical fire data, and future land use patterns. This can help in accurately pricing policies and setting aside adequate reserves to cover potential claims. Leveraging satellite imagery and AI-driven models can enhance risk assessments and enable insurers to offer more tailored coverage options, possibly encouraging homeowners to adopt fire-resistant building practices.

2. Underinsurance and coverage gaps

Another major issue highlighted by recent wildfires is the prevalence of underinsurance. Many property owners underestimate the replacement cost of their homes or do not update their policies to reflect current values, leaving them inadequately covered when disaster strikes. The extensive losses in the Texas Panhandle emphasized this point, as many victims discovered that their coverage was insufficient to rebuild their properties.

Insurers should engage with policyholders to regularly review and update coverage limits. Educating consumers on the true cost of rebuilding and the importance of updating their policies can reduce the incidence of underinsurance. Additionally, offering extended replacement cost coverage or automatic policy updates linked to inflation or local building costs can provide better protection.

3. Claims handling and customer service bottlenecks

The surge in claims following a major wildfire can overwhelm insurers and their loss adjuster resources, leading to delays and customer dissatisfaction. The aftermath of the 2024 Texas Panhandle wildfires saw a deluge of claims that tested the capacity of many insurers. Efficiently managing this influx while maintaining high customer service standards is a persistent challenge.

Insurers can mitigate this issue by investing in solutions that provide them with immediate intelligence around their affected portfolios, policies, and properties in the aftermath of a fire. These solutions use a combination of data sources such as satellites, aerial imagery, sensors, and specific imaging formats that can see through the smoke created by wildfires, like infrared imagery or synthetic aperture radar (SAR).

This gives insurers an accurate, detailed digital representation of an event's impact, ensuring they can accurately reserve for losses and more quickly respond to support their affected policyholders, even before first notice of loss (FNOL) on occasion.

See also: Technology Can Prevent 4 of 5 Electrical Fires

4. Climate change and the uncertainty of future events

The increasing unpredictability of wildfires due to climate change adds another layer of complexity for insurers. With “weather whiplash” events becoming more common, such as sudden shifts from drought to intense rain or heat waves, traditional risk models are often insufficient. This was evident in the 2024 wildfires, where unusual weather patterns contributed to the rapid spread and intensity of fires.

Insurers must integrate climate science into their risk modeling processes. This includes collaborating with climate experts and investing in scenario planning that accounts for extreme weather variations. Developing partnerships with government agencies and environmental organizations can also provide insurers with valuable data and insights to refine their risk assessments.

5. Regulatory and community pressures

In the wake of catastrophic wildfires, insurers often face scrutiny from regulators and pressure from communities to continue providing affordable coverage. The balance between maintaining solvency and meeting regulatory requirements can be delicate, particularly when there is public outcry over rising premiums or coverage denials in high-risk areas.

Insurers should engage with regulators and community leaders to find sustainable solutions that protect both their financial health and the community’s need for coverage. For example, the Texas Panhandle fires may have been caused by a decayed utility pole that broke, causing live wires to fall on dry grass. Incidents like this require advocating for the creation of state-backed insurance pools or promoting community-based fire prevention initiatives that reduce overall risk.

Responding to these challenges

The increasing frequency and severity of wildfires in the U.S. present significant challenges for insurers. However, by leveraging advanced loss assessment technologies, improving customer education, and collaborating with stakeholders, insurers can better manage these risks and provide essential protection to communities at risk. 

As we move forward, it’s imperative that the insurance industry continues to adapt to the evolving landscape of wildfire risk, ensuring resilience and stability in the face of these natural disasters.

Let’s first agree on what we mean by transformation: “a dramatic change in form or function; a transformation is an extreme, radical change.” Let’s not confuse transformation with mere improvement. 

See also: Let's Stop With the Gibberish

Offering brief context with pros and cons in ascending order of difficulty, which is not to say efficacy, here are ways you can improve your organization, with the long-term goal of transformation in mind:  

1. Outsourcing: Lifting and shifting entire operations (e.g., claims, systems support) from in-house to a vendor partner, typically overseas or in any geography with a substantially lower cost structure. An excellent tool for cost reduction and reallocating in-house resources, but control can be an issue. Also, out of sight can also mean out of mind. Who’s responsible for innovation and continuous improvement? Metrics are key, and they must evolve as circumstances change.     
2. Systems: Implementing a new system or replacing many systems with one system. This has historically been a risky endeavor, with whiff rates approaching 50% for in-house, on-prem implementations, but the risks decrease with cloud-based subscription models, where risks are typically reduced to integration and data migration. Motivated by a desire for efficiency and sometimes new capabilities, people typically confuse systems transformation with cultural transformation, and that can be a mistake. Are you changing the way your people think and work, or are you just changing the method through which transactions are processed? The good news is you replaced a legacy system with something new, but do legacy attitudes, mindsets, and habits remain?   
3. Process Optimization: Here we’re talking about aggressive programs of Lean, Six Sigma, or my favorite, Knowledge Work Standardization, typically led by external consultants. Starting with standard operating procedure (SOP) documents, critical processes are mapped with work products and cycle times, and people are interviewed to eliminate wasted motion and variance. While these engagements invariably spike urgency and can often lead to a new culture of continuous improvement, things can also go the other way, with process efficiencies lapsing once the consultants leave. Establishing good “control” metrics helps ensure this doesn’t happen. Process optimization is rightly viewed as the necessary first step toward process automation, but automation is its own thing, with, to date, mixed results at best. Intended as a cost-out center, automation (e.g., robotic process automation, or RPA) often becomes just another cost center.     
4. Operational Intelligence: COVID-era activity-monitoring tools have evolved into valuable metrics foundries based on both quantitative and qualitative measurement of humans and systems at work. The transformation that comes with operational intelligence is more subtle. Imagine one source of operational truth. Imagine publishing performance metrics by person, by team (e.g., submission turnaround), to all team members in real time. Imagine making personnel decisions based on numbers everyone, including workers themselves, can agree on. Operational intelligence also informs systems decisions. Before springing on ops intelligence, look yourself in the mirror and ask two questions: Do you really want to know? Are you prepared to act?  
5. Artificial Intelligence: This one is a big question mark for all of us. At present, AI, like blockchain, is a solution in search of problems. The technology ethos of “move fast and break things” is clashing with the enterprise ethos of “move slowly and keep things.” Given the risks associated with AI--mainly operational, reputational, and financial--carriers are nonetheless experimenting with it, quarantined to R&D, as a hedge against market/competition risk. It’s possible that AI fizzles out amid legal, financial, and technical issues such as model collapse. It’s also possible AI subsumes the other four vectors of transformation, becoming THE vector for how insurance is processed, with extreme automation, high efficiency, flexibility, and dynamic policy pricing. It’s possible AI-enabled mega-processors emerge, like Visa and Mastercard in card payments, processing, for example, auto and homeowners insurance policies, with carriers maintaining an affinity relationship. Or not. We’ll see.           

See also: 5 Keys to Transforming Underwriting

Anyway, we operate in a relentless cost-out reality. This is our lot in life. Transformation is more aspirational. It’s about finding better ways to work and connect with customers to the good of shareholders. Remember, in digital products such as insurance, operational excellence is marketing excellence. The two converge. And we can’t just cut our way there.  

Our inbox has become inundated with solicitations to participate in a wide variety of North American insurance industry conference as attendees, presenters, moderators, or sponsors.  We suspect yours has, too. 

In addition to the increased number of conference and media production companies entering the fray – inexplicably, mostly U.K.-based – conference themes are increasingly specialized (insurtech, climatetech, innovation, data and analytics, sustainability, GenAI, cyber etc.), which account for this growth in events.

Background

When we entered the insurance industry decades ago, the majority of conferences were long-standing and produced by insurance associations. A few others were relevant to the P&C insurance and technology sectors – IASA being a prime example. Since 1928, the Insurance Accounting & Systems Association (IASA) conference had been a trusted source of knowledge and education, connecting the community of insurance professionals in accounting, finance, systems, and technology. In 2023, IASA became affiliated with The Institutes. The next IASA Xchange conference will be held in St. Louis, June 8–10, 2025.

Beginning in the '90s, the insurance media, seeking to supplement shrinking print revenues, began sponsoring conferences with themes relevant to their readership and advertisers. Many of these continue to thrive today (e.g., DigIn and PropertyCasualty Claims).

In addition, industry associations (e.g., RIMS, PLRB, SIR, APCIA, Global Insurance Forum/III Joint Industry Forum/The Institutes) SEMA,IBIS, CIECA, and CIC) produce large, successful industry and member-specific conferences and still draw large crowds today. PLRB’s continuing education credits are attractive for the various state licensing requirements. Numerous private and public organizations serving the auto and home damage/repair segments have expanded and thrive, as well (CoreLogic, Auto Insurance Report, Property Insurance Report, and others). The regulatory space is well represented by NAIC (National Association of Insurance Commissioners) through a series of state and national quarterly meetings. Finally, the industry’s larger solution providers sponsor promotional, customer-centered events – several are invitation-only.

In 2015, global conference producers began to enter the U.S. market with more highly targeted conferences focused on emerging technologies and insurance industry transformation coinciding with the rise of insurtech. Despite the two-year disruption caused by the pandemic, this expansion has not only resumed but has flourished. One of the more successful of these was the U.K.-based Insurance Nexus (since acquired by Reuters Events), whose first U.S. event was Connected Claims. It debuted in Chicago in 2015 and has evolved to become the world’s largest insurance executive claims event. It will host an estimated 900 attendees on Nov. 12-13 in Austin, TX. Reuters Events has also established other well-attended annual North American industry events, including The Future of Insurance USA and The Future of Insurance Canada. 

We now count well over 50 major insurance-centric conferences scheduled in 2024 and some already announced for 2025.

The first InsureTech Connect (ITC) Vegas was held in 2016 and almost immediately established itself as the world’s largest gathering conference for insurance innovation. The ITC Vegas 2024 event, scheduled for this Oct. 15-17 and presented by McKinsey, is expected to have over 9,000 attendees from the insurance and related industries. It combines extensive networking with what is new and next and facilitates meeting large numbers of people, sourcing more solutions, and creating valuable relationships and partnerships.

In addition to these “national” and “global” conferences, there are dozens more annual and quarterly regional association events, some of which are very well attended, from coast to coast.

The economics of a successful conference can be impressive, but it typically takes multiple events to build the needed awareness and attendance loyalty. The conference and participant data that is obtained is valuable and can feed other year-round informational and educational activities. Of course, this depends on the various stakeholder interests, depending on whether you are an event organizer, sponsor (mainly industry solution providers), insurance carrier attendee, speaker, or investor. Insurtech startups and incumbent solution providers are constantly balancing cost/benefits and seek an ROI in terms of eventual deal flow with carriers and weigh many of the following factors.

See also: Riding the Insurance Roller Coaster

General Selection Criteria

Most of us are unable and unwilling to attend all these events, so it is important to develop some criteria to choose based on our available resources (time and money)

• Keep in mind that, based on conference location and travel options, your commitment may be a day or two longer than the conference itself. And based on time of year and location, consider the potential for travel disruption. 
• Before committing, find out who is attending (at least by company and title). Depending on your responsibilities, ensure that enough of your prospects will be available. Conference attendance numbers can be misleading; find out the breakdown among solution providers, insurers, investors, media, academics, and others. 

Insurance Company Staff

• Consider the opportunity to hold on-site company team meetings, if appropriate - this can be very cost-efficient. Most conferences offer attractive group rate discounts.
• Identify opportunities to gain competitive intelligence. 
• Meeting privately with selected solution providers can save time and control the meeting length.
• If you have a speaking role, conferences can be good for career management and self- promotion.
• Check to see if continuing education (CE) credits are available.

Solution Providers

• Booth location can matter; try to get positioned near hall entrances, close to refreshments. The uniqueness of your premiums or giveaways can also make a difference.
• Take full advantage of the event network apps to search for, identify, and schedule introductions to your highest-priority targets.
• Identify prospects and schedule appointments in advance; reconfirm them one week in advance.
• Exhibitor maps can help you identify and plan your time on the show floor.
• Arrive early and document the exhibit hall floor with your video camera for future reference. 
• Establish an offsite meeting location, which could include a hotel suite.
• Organize and sponsor informational sessions (meet-and-greets) with selected targeted attendees; ask the conference organizer to assist you with the invitation process.
• Schedule offsite social/dinner/sports outings; invitation-only can be considered to keep things manageable.
• Do not expect to see an immediate sales result; your objectives for participation should include network development, visibility, brand awareness, and thought leadership.
• If your company is early stage or seeking funding, keep in mind that most of these events include investors with special interest in insurance technologies.

See also: A Guide to Legacy Modernization

Maximize Your Investment

Whether you are an insurer, solution provider, or “other,” these tips are equally relevant and valuable. The average investment in attending a single conference today is $3,000 - $4,000 all in for insurers and much more for sponsors and exhibitors. 

These strategies may appear to be plain common sense, but most attendees do not practice them.

• In addition to the conference networking app (which is very valuable), use social media before, during, and after the event to share thoughts and let people know where you are and what you are interested in.
• If you are attending with colleagues, resist the natural temptation of sticking with them in sessions and especially during networking breaks and meals. Networking is one of the most important benefits of attending.
• Post-conference, be sure to share your learnings, including your notes, with your colleagues. You are more likely to get approval for your next conference attendance request.  

Our View

While main stage presentations and panel discussions can be informative, we find that smaller, topic-specific group breakouts of between eight and12 individuals, curated by industry experts, allow for more focused attendee participation and informational exchange. Attendee satisfaction survey results are improved, and we hope to see more time allocated to workshop and roundtable sessions.   

The three-day event structure is being supplanted by shorter, 1.5-2-day sessions. Longer events can consume nearly a whole week when including travel and time for the vendors to arrive early/stay late for setup and breakdown of expo areas.

We hope to see you out there in conference land soon.  

One last bit of advice – wear comfortable shoes, especially for supersized events like ITC Vegas.

Paul Carroll

I’ve been a fan of Planck since I met the CEO a couple of years ago, so your acquisition of Planck caught my interest. I’m intrigued about how you intend to integrate their impressive AI capabilities into your software for agencies. Could you start us off with the background for the deal?

Taylor Rhodes

Sure. Applied Systems is an insurtech that actually has been around for 41 years now. Our founder started with an agency management system and has branched out from the core back office into front office sales and marketing, digital payments, etc. Our clients number in the thousands of agencies, with over 700 insurers on the carrier side of the market.

I’ve been in tech now 25-plus years, including at an early cloud company called Rackspace in the early 2000s. I remember going out into the world in the early 2000s and trying to sell cloud computing to CIOs. We used to get told, “No, we're never going to run that kind of data outside of our data center. It’s too critical.” The unlock was the global financial crisis in 2008. People had to cut costs and think of new ways to do things.

By 2009, we couldn’t beat cloud customers off with a stick, but it took a cataclysm in the market to get them to think differently.

There had to be some evolution. You can't just take a three-tier web app, throw it on the cloud, and hope it works, even though that's what customers thought initially. Over 2009, 2010, 2011, people learned how to design for the cloud, and you can see the business model explosion that then happened, including with all the apps that were enabled on our phones.

And I got a front seat to all that.

When we started thinking about AI a couple of years ago, it was hard to separate hype from reality. So we started engaging with a lot of agencies and saying, “What are your most pressing problems?”

Historically, the insurance industry has been a bit of a laggard in investing in tech on the agency side, but that started changing with COVID. When you sent everybody home, there were a whole bunch of processes that didn’t work. That lit a fire under this industry to digitize more and more.

What I think the industry hopes for out of AI is that it can truly be an intelligent automation capability. We have an aging workforce, a lot of whom will retire over the next decade, and unemployment is exceptionally low within the insurance industry. The last thing an agency wants to do is lose a valuable producer or a CSR [customer service representative] or have them so burdened with inefficient systems that they often can’t work on the most valuable tasks.

AI holds the promise of intelligent automation across key workflows. That might be conversations at the point of renewing with a client; the AI can go out and look at all the data points around the company. Has the risk changed because something has changed about the business? If this business, for example, is a restaurant but takes digital payments, do they have a cyber policy? If they don't have a cyber policy, that's a great sales opportunity.

And the Planck guys have built a very clever, proprietary platform that takes advantage of all the LLMs [large language models]. They can go out and discover a lot of valuable information about a target company, about the risk profile of that company, and offer very clear and powerful insights.

We also have unique datasets here at Applied because we see a lot of information within our agency management system and in our carrier connectivity system, and we can leverage those datasets to help train AI models to be much more insightful for application to an insurance agency.

Paul Carroll

Do you have a favorite example or two of how AI is being used?

Taylor Rhodes

Let's start on the productivity side. CSRs at an insurance agency spent an awful lot of time reading emails, trying to understand what the email is actually asking for, searching for documents, opening documents and reading them, comparing them against a different document, and doing all of this in preparation for what actually matters: the conversation with the client.

That conversation might be around a claim, a servicing issue, a renewal, or a new piece of business. What AI can do is summarize emails and tell you in a very punchy way what they are actually about. That sounds simple, but it’s very powerful when you're handling hundreds of emails a day.

The second thing is, AI can understand documents and can distill what’s in them. It can then help you classify what's in that document and compare it to another one so you have a before-and-after view of what's happening. People spend a lot of time on that sort of work.

The person is still in charge. You still get to review and see if AI has made a summary or a recommendation that seems right to you. But instead of doing that all day long, you have an AI that fits right into your workflow and provides you with the right insights at the right moment and cuts hours of work out of your day.

Now let's talk about the revenue side. The number one job in an insurance agency is managing renewals. It is by far the most time-consuming and highest-volume thing that folks do. And the difference between having a renewal rate at, let's say, 90% versus 93% or 94% really matters to the bottom line.

So what do you do when you're getting ready for renewal? Well, again, you're pulling up old emails from the client. You're going to the current policy. You're looking at what happened. You're trying to go out onto the internet and find information about that insured client and their business. Maybe they’re a barber shop, but they’ve started to serve liquor. Are they still a barber shop, or are they actually in a different NAICS code that has a different risk profile?

What Planck and Applied together can do is really create an intelligent renewal capability. We can go out and find all that information and summarize it into key risk factors with ratings, with transparency about why we assigned the ratings we did. This can’t be a black box.

We can also do the sort of thing I mentioned before in that simple example about a company that has started accepting digital payments. That’s a high-fraud area, so if the business doesn’t have a cyber policy we can flag the opportunity to add a line of business.

Paul Carroll

If you project out three to five years, are there particular areas for development that you think could be especially fertile?

Taylor Rhodes

In our point of view, AI isn’t meant to replace human beings. It's meant to help them do the highest and best work.

But there are many ways AI agents could help. Think of a CSR answering phone calls, trying to understand what the client is looking for., connecting the client to the right information so they can self-serve if they want to, finding the right information and presenting it to the human who then will pick up the interaction. ”Now that we’ve agreed on what we're really talking about here, let me get a human involved so the human can do the things that only humans can do.”

You can think about all of these interaction points that happen between an agency and a client or an agency and the insurer, and you can think about AI being a source for the first interaction.

Those are the types of things we see taking place over all the different workflows in jobs within the agency. And they probably aren’t too far down the road. They just take focused effort based on understanding the peculiarities of an agency. And they take having feedback loops and cycles with your clients to help you shape the product in a way that's going to be most valuable for them.

Paul Carroll

That’s great. Thanks, Taylor.

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About Taylor Rhodes

Taylor Rhodes, Chief Executive Officer, leads Team Applied and is responsible for the company's overall strategy and operational execution. Rhodes joined Applied in 2019 after serving as chief executive officer of SMS Assist, the leading cloud-based software platform for multi-site property management. Previously, he was CEO of Rackspace, where he led the Company’s growth from a cloud pioneer to an industry leader with more than two billion dollars in revenue, while establishing the company as a mainstay on the Fortune 100 Best Companies to Work For®. Prior to Rackspace, he served as a leader in enterprise, financial and corporate strategy roles at Electronic Data Systems Corporation. Mr. Rhodes is a former United States Marine Corps infantry officer and holds a MBA from the University of North Carolina at Chapel Hill. He serves on the board of directors for Applied, Zenoss and Liquid Web, LLC.

I'll warn you: I'm grumpy. 

I'm seeing an awful lot of sloppy language that obscures the highly worthwhile innovation happening in insurance, and I need to vent. So I shall. 

Let's start with the biggies — I'm looking at you, "transformation" and "disruption." Those words get tossed around so casually in insurance that they've lost all credibility. 

The internet transformed commerce and just about everything else. The iPhone disrupted communication. A system that is designed to make underwriters 10% more efficient and that might actually deliver 2%? Not so transformational or disruptive....

And our weakness for lofty language can make us soft-headed, so we describe improvements in the most abstract, high-minded way imaginable... and lose all meaning. Just in the past week, I've seen a company describe itself as a provider of "intelligent water solutions." What's a water solution, intelligent or otherwise? Another company called itself a "service provider." As opposed to a product provider?   

The industry's innovation is important, and we're pressing forward on so many fronts that we're continually improving. We can do so much better by our clients, our investors, and ourselves if we can just sharpen our language about what we're doing — and not doing.

I have thoughts.

If I had my way, I'd just dispense with all the forms of "transformation" and "disruption" for the time being. Yes, both are possible. Generative AI looks like it will deliver major, perhaps even transformative, efficiencies all across the board. I'm also bullish on the possibilities for the Predict & Prevent business model, which would turn the traditional approach to insurance on its head by selling what people really want — security — rather than indemnifying them after a loss (as important as that is).

But any disruption will take time, and, in the meantime, we've been hitting the transformation claims so hard and for so long that they've become background noise for clients and investors. I also worry that we may be breathing our own exhaust. I watched IBM fall apart in the late '80s and early '90s as executives fell for their own claims that they were leading the innovation in personal computing and were the low-cost producer. I don't want anyone in insurance to get complacent about how much work lies ahead of us. 

In journalism, stories are generally cut from the bottom, because the more important facts had better be up high, but at ITL I reasonably often find myself cutting articles from the top, sometimes eliminating the first two or three paragraphs. The reason? A fair number of authors begin with broad claims about transformation and disruption on behalf of the industry, and we've all read that kind of thing before. I want to cut to the chase and get at what's actually new.

I also may cut references to studies because they're just designed to make us all feel good (and to get quoted) without shedding any light. For instance, Bloomberg reports that Gen AI could become a $1.3 trillion business in the next decade. But what's a Gen AI business? Sure, Open AI, Gemini, and other large language models are Gen AI businesses, but what else is getting lumped into that number? Apple is about to unveil iPhone models that will incorporate AI into Siri. Does that mean sales of those models will count toward Bloomberg's number? Some percentage of sales? I've begun using an AI to do preliminary editing on articles I publish. Do my time savings count toward Bloomberg's number?

Again, I'd argue for precision — who's doing what to whom, when and how? — rather than toss around big numbers as part of our grand concepts. 

A lesser, but still important, issue is that far too many companies can't seem to be precise about what they do. It's almost as though they've taken their mission statements and turned them into company descriptions without accounting for the fact that the external audience has none of the context that the internal audience has. 

A company that sells technology that detects water leaks may see itself as being in the business of water solutions, but the rest of us don't think about "water solutions." A company may imagine itself "a property and casualty insurance organization that prioritizes simplicity, transparency, and savings," but that sounds like motherhood and apple pie to me. Doesn't everyone value simplicity, transparency, and savings? Why not delete the statement of values and tell me specifically further down how you differ from your competitors (if you, in fact, do)?

And whatever you do, don't get so caught up in the flowery language that you lie to me. An announcement last week said a company was turning claims into a profit center for agencies. In fact, the company sells a system designed to speed claims, saving money for the agency while making customers happier and more loyal. A profit center is a distinct business with its own profit-and-loss statement, so you can save me all the money you want and increase customer loyalty like crazy, but your system still doesn't create a profit center for me. Credibility... gone. 

I understand the need for marketing and for companies to generally talk up what they do. I'm just saying there needs to be credibility about the claims, both because we need to have the trust of external audiences and because we need to be honest with ourselves.

Back in the 1990s, when I was still at the Wall Street Journal, a trend developed among the start-ups I'd meet with. Every single one began its presentation with a slide saying they had the best people. I came close to telling an entrepreneur or four, "No, you don't have the best people. The three start-ups I met with last week have the best people. They told me so, and I have their presentations right here."

I guess this isn't the first time I've been grumpy.

Cheers,

Paul

P.S. Two nits:

• I'd avoid the word "digital," as in the company that recently described itself as "the technology leader that unlocks the potential of digital insurance." Digital is the water we swim in, the air we breathe. The transistor, which made digitalization possible, was invented going on 80 years ago. The microprocessor was invented more than 50 years ago. Apple is about to hit 50. Google has its 26th birthday next week. "Digital" just doesn't have the cachet it once did, and there are much more precise ways of describing what you're doing — in terms of operational efficiency, moving transactions online, or whatever.
• Loads of companies make their descriptions hard to read by just jamming a string of modifiers together in front of whatever the main noun is, often with hyphens connecting them. Here is a mild example from the past week: "the leading financial operations automation platform for insurance businesses." God created pronouns, prepositions, and verbs for a reason. That description would read so much better with just two additional words, as "the platform that automates financial operations for insurance businesses." (Yes, I took out "leading" for a reason. It's a harmless enough word and is certainly used a lot, but if you're really a leader then you don't need to tell anyone. They'll know. Nobody needs to tell you that Steph Curry is a "leading" basketball player.)

I've been waiting for going on 15 years to see real progress in the deployment of grid-scale batteries, ever since I was part of a sort of SWAT team at the Department of Energy in 2010 that invested $37.5 billion of Stimulus Act money to foster innovation. 

Matt Rogers, a senior partner at McKinsey at the time and the leader of the group, made all the sorts of investments you'd expect in solar, wind, etc. but also focused on ensuring that those sources of electricity could be incorporated into the grid. That meant a focus on batteries, to store power for the times when the wind wasn't blowing and the sun wasn't shining. And those batteries had to have enormous capacity, not just enough for a car or even a home but for a town or even a city. 

Battery prices have, in fact, declined at an almost magical rate, down 81% in the past decade as measured in price per kilowatt hour. But the focus of innovation has been on small batteries — for your Fitbit, your iPhone, your car. Grid-scale batteries are a different beast entirely. They have to be radically cheaper than those used in consumer devices and thus are based on different chemistries entirely. 

I've seen evidence of progress for years, but everything was still very experimental — until this past week, when two articles described a series of projects that have moved through the early stages and either have gone live or will soon do so. 

The effects on insurers will take years to play out, but there has been so much industry interest in climate change that I thought I'd share the latest developments.

I, for one, am encouraged. 

The article describing the more concrete progress concerns California — where else? The San Jose Mercury News reports that grid-scale batteries are being used effectively to handle the surges in electricity demand from air conditioners in the state's hot summers. 

The article says:

"Four years ago this week, California’s power grid was so strained by a heat wave that rolling blackouts hit hundreds of thousands of residents over two days. It nearly happened again two years ago, when state officials issued 11 “flex alerts” asking businesses and homeowners to voluntarily reduce electricity use to avoid power disruptions.

"But this year when a record heat wave scorched the state over three weeks from mid-June to July — sending temperatures across the Bay Area and the Central Valley soaring over 110 degrees — there was plenty of power. No warnings. No shortages. No flex alerts."

The reason:

"Battery storage has increased sevenfold in the past five years in California, from 1,474 megawatts in 2020 to 10,383 megawatts now. A megawatt is enough electricity to run 750 homes." 

In other words, California has the capacity to run 7.8 million homes off batteries, at least for short stretches such as those that occur in the evenings, when sunlight is diminishing as people are returning from work and cranking up their AC. 

And the state is just getting going. The article says California has 175 large-scale battery storage projects in operation, up from 36 five years ago, and has "dozens more planned or under construction.... On some days this year, battery power has become the largest source of electricity on California’s power grid. On Wednesday, a record 8,320 megawatts of battery power was on the grid at 7:35 p.m., the equivalent of 16 natural-gas-fired power plants running full power, or four nuclear power plants... running at peak capacity."

The benefits go well beyond reliability for consumers. As I learned during my stint at the DOE, so-called peaker plants have had to be kept on standby to handle the roughest stretches of summer in hot climates. Many only operate for dozens of hours a year, but they had to be there or those ACs would stop functioning in some late afternoons and evenings. Those plants are the most expensive to operate and pollute the most, so anything that keeps them offline cuts costs and emissions disproportionately, and being able to get rid of them would take out a whole layer of expense for the utilities.

The plant featured in the Mercury News article is using what seems to me to be a stopgap solution, based on the chemistries used in consumer batteries. It says the PG&E storage facility that has replaced a natural gas unit at the famous Moss Landing plant — if you ever drive down the Monterey Peninsula, you see its 500-foot concrete towers for miles before you get there — uses 256 Tesla “Megapack” units, "gleaming white steel boxes, each about the size of a shipping container and weighing 56,000 pounds, [that] were built at Tesla’s Gigafactory near Reno." 

But, stopgap or no, the plant is providing practical experience for PG&E about storing and distributing power, about tapping into the existing lines that connect with the grid, and so on. Such lessons will be useful for PG&E and others, no matter what chemistries are eventually used in large-scale batteries.

The more speculative, but perhaps more intriguing, application of grid-scale storage was written up in the New York Times. It concerns a project in Becker, Minn., a town of 5,000 about 50 miles northwest of Minneapolis, where one of the nation's largest coal plants is being retired and a massive solar farm and batteries are being built. The article adds that Becker, where the solar project is to go online next year, "is one of the first of a group of seven Minnesota municipal areas, called the Coalition of Utility Cities, making the change from a fossil-fuel-based economy to clean energy."

I find the Becker example especially intriguing because it uses a more experimental chemistry that, if everything works as planned, could be used broadly. While Tesla uses the lithium-ion technology that appears in most consumer applications — and lithium is expensive these days — the Becker project relies on water, air and iron. When the iron is allowed to rust, the battery discharges electricity; when the battery is recharged, the iron is deoxidized, and energy is stored for later use. 

The initial project is far smaller than what's happening in California but is still designed to be able to power 2,000 homes for as long as five days. And Xcel Energy, the utility that is building the solar project using batteries from Form Energy, is undertaking a similar project in Pueblo, Colo., and a smaller one, based on different battery technology, in Aurora, Colo. 

We're still a long way from home. My brother in St. Paul, Minn., can easily go more than five days in winter without seeing any appreciable sun, so energy storage will have to get much denser and prices will have to drop far lower before there can be a full-on switch to renewables based on grid-scale batteries.

But I'm taking hope anywhere I can find it these days, and I've been waiting a long time for grid-scale batteries to make it into the implementation phase.

Cheers,

Paul

Artificial intelligence is helping to solve data fragmentation within the agriculture industry, removing technological barriers to integrating and standardizing data across the ecosystem. For insurers, AI enhances risk management by improving claims processing and underwriting accuracy as well as reducing the chances of fraud.

That is critically important now that climate change is deeply affecting the agricultural sector. 

More extreme weather events more often, shifting precipitation patterns, and increasing temperatures have upended old models. That’s prompting growers to rethink their operations and leading financial firms to find ways to adapt insurance offerings to reflect this volatility.

The Data Challenge

Data can inform the decisions organizations make and the actions they take, and we’ve seen an explosion of field-level data as drones have begun to collect imagery and in-field sensors gather information. But, until recently, scalability and limited processing power have been a technical challenge, and the agriculture sector (among others) has struggled with diverse and sometimes siloed data sets, various data formats and a lack of standardization.

Regional land survey data, crop production reports, weather data, and market reports may differ slightly between counties or states. Sometimes the same data are presented in different formats or reported over different intervals, such as hourly vs. daily. Even essential information like crop types and weather events can be coded differently across data sources.

Additionally, different data sources might keep reporting bad data when a sensor is broken.

All that has left organizations to compile data sets individually, update data using manually intensive processes, and sometimes base decisions on incomplete or bad data, leading them to the wrong outcomes. If a company or operation doesn’t understand historic weather or yield trends, for example, it might miscalculate regional risk or adopt a less-than-optimal management practice. 

See also: Risk Management Strategies for Agribusinesses

How AI Helps

But AI platforms and the powerful, scalable computing resources that now underpin them, provide advanced tools to integrate, standardize, and analyze data from diverse sources. 

AI can generate uniform, complete data sets that have the same set of data for all fields in an entire portfolio and incorporate new data at regular automated intervals. AI also can identify and remove outliers or interpolate when data is missing for a period or region.

By defragmenting data, the ag ecosystem for the first time can compile, access, and benefit from complete data sets about cropping health and history, management practices such as planting dates, soil health practices like cover cropping and reduced tillage, and more. People can also compare crops with crops from other years or benchmarked across other fields in the region. 

Organizations have access to more data than ever. With AI, companies can evaluate data quality and quickly combine data for real-time decision-making.

This benefits the entire ag value chain – growers, landowners, lenders, and insurers.

Trending insurance use cases

For insurers, enhancing the claims process and improving underwriting accuracy are two use cases where AI shines. Here’s how AI works and adds value in these two scenarios.

Enhancing claims processing

One way that AI drives claims processing improvement is via automated damage assessments. AI leverages remote sensing and machine learning to identify crop anomalies or damage patterns. That makes it easier to measure and model specific parts of the field or plants damaged by a weather event and to precisely quantify those details. As a result, insurers can reduce their reliance on in-field inspections and do faster, more accurate claims assessments.

AI can allow for faster claims determinations, too. That can shave the time it takes for growers to get paid from months to days or weeks, so everyone across the ecosystem benefits.  

Additionally, AI can analyze historic data such as claims data, cropping history, and satellite imagery to identify unusual patterns. It can then flag claims with inconsistencies or identify behaviors that indicate a potential for fraud. An inconsistency might involve discrepancies between reported and observed damage. A behavior might be not planting the reported crop. 

See also: Risk Management for Agriculture

Improving underwriting accuracy

AI also can fuse and analyze historic and in-season data such as crop yields, management practices, soil conditions, and weather patterns, to help with risk assessments. That helps underwriters predict the severity or likelihood of an event, which can provide the intelligence they require to set appropriate premiums.

Insurers can also leverage AI for dynamic or customized policy development. This could involve using historic and current-year data to create a detailed risk management profile for a policyholder or region and establish customized insurance products to allow an insurer to reach new markets, for instance. A dynamic policy might adjust premiums based on real-time data. This could also be used as an incentive to encourage regenerative practices like cover cropping or reduced tillage that have gradual but long-term effects on soil health and land resiliency.

Improved risk management through early alerts is another area in which AI can add value. By using AI to build predictive models, a grower could get an early alert about a pest or disease outbreak and take preventative action, like applying a costly pesticide to the most at-risk fields or parts of fields. In this kind of scenario, both the grower and the insurer could limit their losses.

The bottom line is that AI can improve financial partners’ loss ratio through more efficient and accurate claims processing, establishing more accurate risk assessments and targeted policies, and enhancing and automating fraud detection. In the process, AI benefits growers, who can enjoy better risk management, more targeted interventions, and optimal use of resources.

As the insurance industry navigates the complexities of a rapidly changing market, a significant debate has emerged. Will traditional insurers — with their established practices and deep-rooted presence — continue to lead, or will digital-first insurers seize the future, driven by innovation and customer-centric approaches? This question has become increasingly pertinent as patron expectations evolve and technology reshapes the risk management landscape.

The Evolution of the Insurance Industry

The insurance industry has seen considerable changes over time, primarily influenced by evolving risks, technological advancements, and regulatory frameworks. Initially, insurance was a basic system designed to protect against specific risks, such as fire or maritime losses. Policies were often tailored to each client, and the underwriting process relied heavily on personal relationships and qualitative assessments. As economies expanded and risks became more complex, the sector saw the emergence of standardized policies and actuarial science, which introduced statistical methods to more accurately price risk.

In recent years, digital technology has enabled the industry to innovate and adapt to a rapidly changing world. Integrating big data and analytics has revolutionized underwriting, claims processing, and customer engagement, allowing insurers to assess risks with unprecedented precision.

Moreover, the rise of insurtech — technology-driven companies focused on insurance innovation — has accelerated the adoption of new models such as peer-to-peer insurance, usage-based policies and parametric insurance. These advances are enhancing efficiency and personalization and expanding access to insurance in underserved markets, fundamentally reshaping the risk management and protection landscape.

Key Characteristics of Traditional Insurers

Traditional insurers have built a reputation for reliability and trustworthiness, often supported by strong regulatory frameworks. Below are some of the key characteristics:

• Risk pooling: They operate by pooling the risks of many individuals or entities. This means the premiums collected from policyholders are used to pay for the claims of those who suffer covered losses. By spreading risk across a large number of policyholders, traditional insurers can offer protection at a relatively predictable and stable cost.
• Underwriting: Traditional insurers evaluate factors such as health, occupation, lifestyle, and property details to determine the premium rates and terms of the insurance policy.
• Policy standardization: They often provide insurance policies where the terms, coverage, and exclusions are essentially the same across many customers, with little room for customization. This standardization streamlines the process of selling and managing policies.
• Regulation and compliance: Traditional insurers are heavily regulated to maintain sufficient reserves to pay claims, operate fairly, and protect policyholder interests. They must comply with a range of legal and financial standards set by regulatory bodies.
• Claims processing: They verify the validity of claims, assessing damages and determining appropriate compensation. This is usually a manual process and can be time-consuming.
• Distribution channels: Traditional insurers typically sell their products through a network of agents, brokers, and direct sales teams. These intermediaries educate customers, assess their needs, and find suitable insurance products.
• Investment and financial management: They manage large pools of premium income, which they invest in various assets to generate returns. This helps ensure they have the funds necessary to pay claims and other obligations.

Key Characteristics of Digital-First Insurers

Digital-first insurers — also known as insurtech companies — have distinct characteristics that set them apart from traditional insurers:

• Technology integration: Digital-first insurers leverage advanced technologies such as artificial intelligence (AI), machine learning, and big data analytics to streamline operations. This integration enables more accurate risk assessment, personalized policy offerings, and efficient claims processing.
• Customer-centric approach: They focus heavily on user experience, offering easy-to-use digital platforms for purchasing policies, managing accounts, and filing claims. This often includes mobile apps and online portals that provide 24/7 access to insurance services.
• Customization and flexibility: These insurers often provide highly customizable policies tailored to each client's specific needs. They offer innovative products like pay-per-mile car insurance, on-demand coverage, and microinsurance, which allow customers to adjust their coverage based on real-time needs.
• Cyber insurance: Cyber insurance is a rapidly growing sector providing coverage against digital threats such as data breaches and cyberattacks, resulting in over $4 billion in losses in 2020 alone. It’s particularly relevant in the digital-first space, where protecting sensitive information is crucial.
• Automated processes: Digital-first insurers rely on automation for many aspects of their operations, from underwriting and policy insurance to claims and adjudication. This reduces administrative costs and speeds service delivery.
• Data-driven decision-making: They use extensive data analytics to inform decision-making across all business areas. This includes using customer data to predict risk, optimize pricing, and improve customer engagement strategies.
• Direct-to-consumer sales: Many digital-first insurers bypass traditional intermediaries such as brokers and agents, selling directly to consumers online. This model allows for lower costs and more competitive pricing.
• Focus on innovation: Constant innovation is a hallmark of digital-first insurers. They’re often at the forefront of developing new insurance products and services, using emerging technologies such as blockchain, telematics, and the Internet of Things (IoT) to create more efficient and responsive insurance solutions.

See also: How Everybody Wins in a Digitized Insurance Market

Customer Experience and Expectations Are Priority

Customer experience and expectations have become critical determinants of success. Traditional insurers — long established, with extensive infrastructures — have historically focused on reliability and comprehensive coverage. However, they often fail to deliver the seamless, personalized experiences modern customers expect.

The traditional model’s reliance on face-to-face interactions, paper documentation, and slower response times can seem like a hassle to a digitally savvy clientele accustomed to the instant gratification of the online world. As customers increasingly value convenience, transparency, and quick service, traditional insurers are under pressure to innovate and adapt their offerings to meet these evolving expectations.

On the other hand, digital-first insurers are rapidly gaining ground by prioritizing customer experience at every touch point. These brands use technology to streamline processes, offering intuitive mobile apps, AI-driven customer support and chatbots, and personalized policy options. The ability to customize coverage, receive instant quotes, and file claims efficiently online resonates strongly with today’s customers.

Digital-first insurers also excel in providing transparency and simplicity, making insurance more accessible to those who may have found traditional processes confusing or intimidating. Their focus on user experience — often manifested through mobile apps and responsive customer service — builds strong consumer relationships and loyalty.

As the insurance industry faces a critical juncture, the model that will dominate will likely be the one that most efficiently aligns with customer expectations. Digital-first insurers currently have the advantage, as their approach meets and often anticipates customer needs, positioning them as leaders in this new era.

See also: The Need for 'Digital Fluency' in Insurance

Integrating the Two

The insurance sector's future may not be a clear-cut victory for either model. Integrating traditional and digital-first insurance can be a strategic move. Traditional insurers bring a wealth of experience, extensive customer bases, and robust regulatory frameworks to the table, which are valuable assets in a highly regulated sector. By adopting digital tools and methods, these insurers can enhance their existing infrastructure, improve operational efficiency, and exceed customer expectations.

For instance, integrating digital underwriting processes and automated claims handling can streamline operations and provide a more personalized customer experience. This hybrid approach allows traditional insurers to leverage their strengths while modernizing their offerings.

Conversely, digital-first insurers can benefit from integrating aspects of the traditional model, such as building deeper customer relationships and offering more comprehensive policy options. They can also enhance their credibility and trustworthiness, which is crucial in an industry where customers seek security and reliability.

A combined approach can enable digital-first enterprises to expand their reach and scale more effectively. Thus, the future of the insurance sector may not necessarily be a zero-sum game between traditional and digital-first models. Instead, it could see the emergence of hybrid insurers that blend the best elements of both worlds, offering a comprehensive, technologically advanced and customer-centric experience. This integration could provide the optimal path forward, meeting diverse customer needs and adapting to a rapidly changing market.

A Collaborative Future

As the industry evolves, it becomes clear that the future of insurance may lie in collaboration rather than competition. By embracing a hybrid model, insurers can take advantage of both approaches, ensuring they remain relevant and responsive in a rapidly changing environment. The key will be to focus on what matters most — delivering value, building trust, and meeting changing customer needs.

Ultimately, the model that will dominate the future of insurance isn't about being purely traditional or entirely digital. It's about being adaptable, innovative, and customer-focused. Insurers that integrate these elements successfully will be best positioned to lead the sector forward.