The difficult economic and climatic conditions of the past few years have created a challenging environment for commercial property owners. Despite an improvement in reinsurance capacity since the financially devastating year of 2022, underwriters continue to face headwinds, and conditions remain less favorable than in past years.  

Inflation and other macroeconomic pressures are not helping. Significant increases in structural steel and concrete products have been particularly challenging for builders and played a major role in ballooning construction costs. Meanwhile, construction wages have risen by 22% over the past four years, roughly matching the general level of inflation. These difficulties are exacerbated by labor shortages within the industry, with 77% of contractors reporting difficulties in sourcing skilled workers for building projects. All this has inevitably led to delayed construction timelines and higher business interruption costs. 

In addition to these economic pain points, geographic and climatic conditions have become major factors in elevated property insurance prices. Regions prone to hurricanes, floods, wildfires, tornadoes and winter storms typically see higher insurance rates due to the increased frequency and severity of these events, which collectively caused losses exceeding $100 billion in 2023 alone.

See also: Parametric Insurance Can Tackle Climate Risks

From 2020 to 2022, the U.S. experienced 60 weather and climate disasters with losses exceeding $1 billion each. The total damage from weather and climate disasters since 1980 amounts to approximately $2.7 trillion. On average, from 2018 to 2022, the U.S. endured 18 such disasters annually. The year 2023 set several weather and climate records. Notably, Earth experienced its warmest July on record, and Tropical Storm Hilary became the first tropical storm to hit Southern California in 84 years, shattering daily rainfall records. Overall, 2023 witnessed 28 weather and climate disasters with losses exceeding $1 billion each. Flooding events alone caused almost $7 billion in damages across the U.S. 

The combination of a lackluster economy, workforce shortages,and escalating material costs has put commercial property owners in an unenviable position. In the past, property insurance rates primarily depended on the building's quality. Today's pricing is increasingly determined by factors such as construction year, materials used and whether a property’s location renders it vulnerable to surging natural disasters.

What should commercial property owners do? 

Insurance strategies that would have been conservative in 2018 have been rendered prudent by the challenging property market of 2024. In this type of environment, it is crucial for property owners to ensure that their coverage is both adequate and cost-effective. Those who are concerned about their current coverage or dreading their next renewal should consider taking the following steps to mitigate their risk profile and make themselves as appealing as possible to insurers: 

See also: Glimmers of Good News on Climate (Finally)

1. Conduct a Professional Property Inspection:

Engage a licensed professional or organization to thoroughly inspect your property. This step can help identify potential risks or existing damages that may affect your insurance premiums. 

2. Obtain an Up-to-Date Building Valuation:

Have your insurance agency perform a detailed valuation of your building. This ensures your coverage reflects the current value and condition of your property, helping you avoid being underinsured. This is especially important in the context of recent inflation – outdated valuations may lead to underinsurance.

3. Benchmark Your Costs:

Compare the insurance cost per square foot of your property with similar structures in your area. This will help you understand if you are paying a competitive rate and where you might negotiate better terms.

 4. Prioritize Repairs and Upgrades:

Address any delayed maintenance issues such as sprinkler system upgrades, roof repairs and updates to security and electrical systems. These improvements can reduce the risk of damage and potentially lower your insurance premiums.

5. Prepay Premiums and Bundle Policies:

Consider paying your premiums in advance, if possible, as some insurers offer discounts for prepayment. Additionally, bundling multiple policies with the same provider can also lead to savings.

6. Advocate for Your Coverage:

Ensure that your insurance agency is seeking the best possible coverages for your property. Regularly review your policy details with your agent and make adjustments as market conditions and your property needs evolve.

Balancing the priorities of premium costs and coverage quality is a perennial challenge for commercial property owners and one that has become more difficult than ever in the past few years. In this fluid economic and climactic environment, it is more important than ever that you look critically at your policy and take common-sense steps such as those listed above to lower your risk profile and get the best coverage you can. You have the power to avoid becoming a statistic. When significant damage occurs, there is no advantage to being underinsured.

Summary:
A recent discussion with one of our customers highlighted a sophisticated global car insurance fraud where criminals exploit insurers' lax verification processes. The fraudsters insure cars online without ID verification, report lost keys, and either tow the vehicle or recode the keys to steal it. They also damage the car to necessitate towing, gaining possession through these means. This scam has been identified in multiple countries, including the US, UK, and South Africa, prompting insurers to implement stricter verification measures using data from credit bureaus. FRISS suggests enhanced defenses like multi-factor authentication, biometric verification, cross-checking details, and stricter key replication policies. Additionally, insurers should verify towing requests, educate policyholders on proper claims procedures, and use network analytics to detect fraud. These measures aim to balance robust fraud prevention with maintaining a positive customer experience.

A recent discussion by our very own VP of Sales EMEA/APAC, Ariane Braam-Verkoren, with an insurer highlighted a concerning global fraud scenario that organized networks are leveraging against insurance companies worldwide. 

Here's how the scam unfolds: 

The criminal selects a car from a parking lot, then insures it online through a provider that doesn't require ID or ownership verification. Shortly afterward, they report lost keys, prompting the insurer to either tow the vehicle to a chosen location or send a locksmith to recode the keys, enabling the criminal to drive away. When they discovered that some insurers don't offer key replacement, they adapted by puncturing the car's radiator to mechanically damage it. Their goal in this case is likely to have the vehicle towed to another location, thus gaining possession of the car. 

Claims with a similar modus operandi have been identified in countries such as the US, UK and South Africa, where these criminals exploited the lack of stringent verification processes by using fictitious information to facilitate car thefts, staged accidents or using towing operators to uplift accident damaged vehicles to their towing yards where they hold these vehicles ransom until the insurer pays for the release.   

Throughout this process, nobody checks if the person reporting the loss or damage is the rightful owner of that car.  

As a result, insurers in these regions have implemented stricter policies and verification processes to confirm insurable interest. They leverage data from credit bureaus during the application process to verify customer information. This functionality is also available in other countries, especially in Europe, where similar data sources are utilized to enhance the accuracy and security of the insurance application and claims processes. 

Here’s how insurers can bolster their defenses, with assistance from FRISS: 

Identity Verification 

Multi-Factor Authentication (MFA): Require the person reporting the loss or damage to provide both a driver's license and a photo ID. 

Biometric Verification: Implement biometric verification methods, such as fingerprint or facial recognition. 

Secondary Contact Method: Verify the claim by calling a registered phone number or sending a confirmation message to the policyholder's contact number. This step ensures that even if fraudsters capture the contact details, the rightful policyholder is notified. 

Policyholder Verification 

Cross-Checking Details: Use FRISS technology to cross-check the person’s details against insurance records, ensuring they are the registered policyholder or an authorized individual on the policy. 

Alert System: Create an alert when the person reporting the claim is not listed in the policy information. FRISS scoring or identifiers can highlight discrepancies in contact details. 

Ownership verification: Requires the policyholder to provide proof of vehicle ownership when the policy is initiated. Alternatively, this verification can be facilitated through technology and data sources that automatically confirm ownership details. 

Strict Key Replication Policies 

Authorization Checks: Implement protocols requiring key replication requests to be authorized by higher-level officials within the insurance company. 

Call-Back Procedure: Establish a call-back procedure to the registered owner using a verified contact method. 

Manufacturer Key Replacement: Ensure that keys are replaced only through car manufacturing dealers, who are required to verify the owner's identity. 

Physical Presence Requirement: Mandate the physical presence of the car owner for key replication. If the owner cannot be present, require a notarized authorization. 

Towing and Repair Protocols 

Pre-Authorization for Towing: Verify towing requests through additional checks, including direct contact with the registered owner and confirmation of incident details. 

Secure Towing Contracts: Partner with towing companies that have strict identity verification protocols. 

Damage Verification 

Independent Assessor: Have an independent assessor verify reported damages before authorizing repairs or towing. If damage appears self-inflicted or malicious, initiate an investigation. 

Customer Education through Awareness Campaigns 

Claims Procedure Education: Educate policyholders on the importance of following proper claims procedures to prevent unauthorized claims. 

Verification Steps Awareness: Ensure policyholders are aware of the verification steps the insurance company will take to prevent fraud. 

Online Claim Registration: Advocate for the use of online claim registration processes that require login credentials, enhancing security. 

Network Analytics 

Watchlists and Network Analytics: Implement watchlists and network analytics to identify and monitor suspicious activity patterns and uncover organized networks. 

Conclusion 

These fraud scenarios highlight significant vulnerabilities in the current claims processes. Other trends such as claims of lower value, which often go undetected due to the thresholds set by insurers in straight-through processing, can also highlight a significant vulnerability.  Organized crime syndicates make use of these vulnerabilities and find their ways to fraud the system. By implementing stricter verification protocols, leveraging advanced technology, and educating policyholders, insurers can significantly reduce the risk of such frauds. This always needs to be in balance with the disturbance it might give honest customers who are in need of support. Collaboration with FRISS will provide the technological backbone to support these enhanced measures, ensuring that identity verification, network analytics and real-time checks on fraud scenarios are robust and secure without impacting the pleasant customer experience. 

Written by Dennis Potgieter

Sponsored by ITL Partner: FRISS

Even though insurance fraud costs companies billions of  dollars each year, detection has historically been a manual process. It relied on human analysts to identify patterns and anomalies in claims data. However, with the advent of big data and advanced analytics techniques, it is now possible to use technology to automate and enhance fraud detection. 

Understanding Insurance Fraud 

Insurance fraud is the act of intentionally deceiving an insurance company to receive an illegitimate benefit. There are many forms, including: 

• False claims: This involves submitting a claim for a loss that did not occur or exaggerating the severity of a loss to receive a larger payout. 

• Staged accidents: This involves deliberately causing an accident to make a false insurance claim. 

• Premium fraud: This involves providing false information to an insurance company to obtain a lower premium rate. 

• Identity theft: This involves using someone else's identity to make a false insurance claim. 

Underwriting Insurance Fraud 

Underwriting insurance fraud occurs when an individual or organization provides false or misleading information to an insurance company to obtain coverage or receive a payout on a claim. This type of fraud can take many forms, including providing false information about the value of insured property, misrepresenting the nature or severity of an injury or loss or failing to disclose relevant information that would affect the insurance company's decision to provide coverage. 

Insurance fraud can be costly for insurance companies, as they may end up paying out claims that they would not have approved if they had accurate information. This, in turn, can lead to higher premiums for policyholders as insurance companies seek to recoup their losses. 

To prevent underwriting insurance fraud, insurance companies typically conduct thorough investigations of applicants and claims, using a variety of tools and techniques to verify information and detect fraud. These may include background checks, inspections of insured property and analysis of medical records and other documentation.

See also: Disaster Fraud: The Dark Side of Claims

Fraud Detection Process at Underwriting Stage 

Claims Insurance Fraud 

Claims insurance fraud involves deceiving an insurance company to receive an illegitimate benefit. In contrast to underwriting insurance fraud, which involves providing false information during the insurance application process, claims insurance fraud occurs after a policy has been issued and a claim is submitted. 

There are different types of claims insurance fraud, including: 

• Created accidents: This involves deliberately causing an accident to make a false insurance claim. 

• Exaggerated claims: This involves inflating the amount of damages or injuries suffered to receive a larger payout. 

• False claims: This involves submitting a claim for a loss that did not occur or that was not  covered under the policy. 

• Multiple claims: This involves submitting multiple claims for the same loss to receive multiple payouts. 

• Fake billing and submission: This involves submitting a claim for a loss that never occurred, such as claiming a car was stolen when it was not. 

These are just a few examples of the many ways in which insurance fraud can occur. Detecting and preventing these fraudulent activities is crucial for insurance companies to maintain profitability and avoid losses.

See also: Coping With Insider and Outsider Fraud

Fraud Detection Process at Claims Stage, Investigation Stage, and Post-Claims Stage 

Using Big Data for Fraud Detection 

Big data refers to the vast amounts of data that are generated every day from a wide variety of sources. This data includes everything from social media posts and online transactions to medical records and government data. For insurance companies, big data provides a wealth of information that can be used to detect and prevent fraud. 

One of the main advantages of big data is that it allows for the creation of detailed profiles of individuals and entities. By collecting and analyzing data from a wide range of sources, insurance companies can gain a comprehensive understanding of a person's behavior and history, making it easier to identify fraudulent activity. 

For example, insurance companies can use big data to analyze patterns of behavior, such as how often a person files claims or the types of claims they file. If a person suddenly starts filing a large number of claims or claims for unusual types of losses, this could be a sign of fraudulent activity.

In addition, insurance companies can use big data to detect anomalies in claims data. For example, if a person files a claim for a loss that is far outside the norm for their geographic region or demographic group, this could be a sign of fraudulent activity. 

Advanced Analytics Techniques for Fraud Detection 

In addition to big data, insurance companies can use advanced analytics techniques. These include: 

• Machine learning: Machine learning algorithms can be trained to identify patterns in data that are associated with fraudulent activity. By analyzing historical claims data, machine learning models can learn to identify the characteristics of fraudulent claims and flag suspicious claims for further investigation. 

• Predictive analytics: Predictive analytics models can be used to forecast the likelihood of a claim being fraudulent based on historical data. By analyzing factors such as a person's past behavior and demographic characteristics, these models can assign a fraud risk score to each claim, allowing investigators to focus on the highest-risk claims. 

• Social network analysis: Social network analysis involves analyzing the connections between individuals and entities to identify patterns of fraudulent activity. By examining the relationships between claimants, insurance companies can identify networks of fraudsters who are working together to commit fraud. 

See also: Are You Fraud-Friendly?

The Future of Insurance Fraud Detection 

As big data and advanced analytics techniques continue to evolve, the future of insurance fraud detection looks promising. In the years to come, we can expect to see even more sophisticated fraud detection systems that use data and artificial intelligence to identify fraudulent activity in real time.

Adoption Phases of Big Data Analytics 

However, fraud detection is not a one-size-fits-all solution. While big data and advanced analytics can provide powerful tools for insurance fraud detection, the industry must be aware of potential challenges and limitations. Here are a few things the industry should look out for: 

• Data quality: The accuracy and completeness of data are critical for effective fraud detection. If data is incomplete, outdated or inaccurate, it can lead to false positives or false negatives. Therefore, insurance companies should ensure that their data is of high quality and regularly updated. 

• Privacy concerns: Insurance companies must also be mindful of privacy concerns when collecting and analyzing data. They must comply with data protection regulations and ensure that sensitive personal information is kept secure.

• Bias: Machine learning algorithms can be susceptible to bias, particularly if the data used to train them is biased. For example, if historical claims data is biased against certain demographic groups, the machine learning model may perpetuate that bias in its fraud detection. Therefore, it is important to regularly audit and evaluate algorithms for  potential bias. 

• Human intervention: While big data and advanced analytics can automate many aspects of fraud detection, it is still important to have human analysts review and verify suspicious claims. Human expertise is essential for making complex judgments and interpreting the nuances of certain claims. 

While big data and advanced analytics can provide powerful tools for insurance fraud detection, it is important for the industry to be aware of potential challenges and limitations. By addressing these challenges and ensuring that data is of high quality, accurate and unbiased, the industry can continue to improve its fraud detection capabilities and prevent losses.

A ransomware breach can be devastating for insurance providers, both in financial terms and in terms of the companies' reputation. 

With ransomware attacks on the rise and growing in sophistication, it is no longer enough to have a contingency plan in place if the worst happens; forward-thinking providers are looking at ways to prevent the next data breach before it can result in harmful media coverage and a class action lawsuit. 

That conversation should not be based in the IT department. Move it up to the C-suite level, where the focus is inherently directed toward the core objectives of asset protection and risk management. 

A systems review for vulnerabilities from unpatched software or password attacks should be on the agenda, but do not overlook the way in which most ransomware is now delivered—through phishing emails distributed to all of your personnel, from the CEO to the newly hired junior underwriter. 

Phishing emails? Like those old Nigerian prince scams? Hardly. By combining the capabilities of artificial intelligence (AI) with the voluminous amount of personal identifying information now easily accessible about all of us online, hackers can create personalized emails capable of fooling even the most vigilant employees. 

This is how phishing used to look:

Surprisingly, even these types of emails still claim thousands of victims every year. But the current state of phishing can create emails like this:

This email greets the recipient with a nickname commonly used by his friends and family. It was apparently sent by someone he knows and includes a photo and other personal details. The sender’s email address might be different, but given the preponderance of evidence that this is genuine, that difference could be attributed to the sender's changing email providers—if it is even noticed at all. 

What would happen if enough information were found about 100 of your employees to create an email like this? One financial organization ran a penetration test and found that phishing emails like this one routinely averaged a 4% click-through rate, with half of those who clicked also downloading a malicious payload. That means for every 100 employees at your company, four are potential phishing victims. And all it takes is one click from one work account to compromise your systems. 

How Do Hackers Obtain Private Information?

It’s easier than you might think. There are more than 250 data brokers that specialize in collecting personal identifying information on everyone, and sharing or selling access to that content to any interested party. 

The potential pools of content sources that can be accessed are seemingly endless: news articles, public records, property ownership documents, Google Street View photos, high school/college records, community events, social media. During COVID, data brokers paid restaurants, then desperate to survive with empty dining rooms, to share whatever customer information they collected from apps, loyalty programs and food delivery orders.  

In addition to personal and demographic data, organizations are also now gathering information on our opinions and behavior that can be leveraged to sell more products and services – and if data brokers want that content, as well, they are welcome to it. 

See also: A Resurgence in Credit Card Fraud

Protect Your Company – By Protecting Your Personnel

Ransomware gangs achieved an alarming 56% increase in victims worldwide in 2023, despite greater awareness of the risk and despite servers having been hardened to resist infiltration. And early indications suggest that 2024 may be even worse. Imagine having to send the dreaded email to policyholders acknowledging that their personal information may have been acquired by hackers, access made possible in part because of one employee’s Instagram post about his trip to the Grand Canyon.

Trying to control the flow and exchange of information online to prevent such an attack may seem like an impossible task – like putting toothpaste back in the tube. But it can be done, and focusing on that objective now is preferable to dealing with the cost of restoring IT systems after a breach, providing credit monitoring and identity theft protection to victims and coping with the negative publicity and the class action lawsuit.

The plan starts with education. While every insurance organization likely provides guidance on recognizing the common signatures of phishing emails and texts, intensifying these efforts may be necessary to make personnel aware of the enhanced capabilities of AI-generated emails, and how vigilance is now more important than ever. Anything that looks even slightly suspicious should be questioned and reported. 

Consider providing employees with a corporate account that monitors and removes personal information online. Some focus only on data brokers and people finder websites, where this content is most commonly found. Others will extend their search across the breadth of the internet to locate the kind of information that hackers exploit, and to make sure it comes down. Such services can cost as little as a few dollars per employee per year. 

Once that content is removed, there are ways to prevent new content from showing up; tools such as a VPN and VoIP numbers can replace authentic information (i.e. phone numbers, online search and browsing history) with content that cannot be traced back to an individual user. 

Not every organization will take these steps, which gives those that do an advantage because hackers, regardless of whatever IT skills they have acquired for their trade, are also lazy. They seek targets where the most content on the most individuals can be accessed and weaponized. If enough details about your personnel cannot be easily collected for a phishing attack that is likely to succeed, they will turn their attention elsewhere. 

See also: Are You Fraud-Friendly?

An Ounce of Prevention…

Cyberattacks are on the rise across all industries, but the financial sector, including insurance organizations, is particularly vulnerable to a wide range of threats. The reason is obvious: hackers know these targets have access to millions of dollars in funds and provide critical services that many people rely on. They also see a high likelihood that victims will pay the ransom quickly to restore access. A 2023 survey from Sophos found that nearly half of those organizations that were hit chose to pay quickly.

In 2023, financial organizations had to invest an average of $2.2 million to fully recover from an attack, plus what could be millions more in legal fees.

By increasing awareness of the challenge of phishing – with both your personnel and your vendors – and reducing access to personal identifying information, it is possible to keep these AI-enhanced attacks from claiming your organization as their next victim. 

As the global life insurance industry continues to undergo significant change, chief risk officers (CROs) have an increasingly pivotal role to play in ensuring their organizations prepare for a multitude of complex and wide-ranging challenges.

Geopolitical conflict and a changing climate

The impact of the war in Ukraine, together with the lasting effects of the pandemic, have led to a turbulent few years with higher inflation driving up interest rates and significant economic uncertainty. This geopolitical volatility has continued into 2024, exacerbated by the conflict in the Middle East and the prospect of elections in over 50 countries around the world. Against this backdrop, CROs will need to continually consider the wider potential implications of geopolitical risks on an insurer's risk profile, both economic and operational. 

Climate change, meanwhile, is complex, nuanced and characterized by uncertainty. The Institute and Faculty of Actuaries (IFoA) has warned that current climate-change scenario modeling techniques are significantly underestimating climate risk, with too much of a focus on regulatory scenarios, which, while they introduce consistency, also introduce the risk of groupthink. In addition, these techniques still exclude many catastrophic impacts that we can expect from climate change – they simply do not exist or are not well represented in models and methods that we use today. 

Also, the focus of most life insurers' investigations into climate change has been on the direct impact of physical and transitional risks on asset portfolios without considering the potential wider indirect impacts on both assets and liabilities--for example, considering how variations in climate might affect policyholder behavior, which could in turn affect mortality or persistency. To be more effective, CROs will need to address the material limitations and uncertainties of scenario modeling. 

Climate change requires a new lens through which to view materiality and proportionality, alongside current methods. The global risk landscape is more complex and connected, and the potential for disasters to cascade through systems is increasing with the impacts having greater geographical, social and temporal reach.

Regulation rising on the CRO radar

In the U.K., Solvency U.K. reforms have been well communicated, with changes to the risk margin having come into effect at the end of 2023 and matching adjustment reforms due in the middle of 2024. The PRA have also recently focused on funded reinsurance as one of their top priorities for 2024. The CRO will need to consider the impact of recapture on capital requirements, considering how collateral links to their risk appetite and have a plan for taking ownership of assets and liabilities in the event of recapture.

Meanwhile, IFRS 17 has been a long time coming, and our recent global survey of over 300 firms suggests more work is needed to complete the job. So far, much of the burden has fallen on the finance function to interpret the standard, implement new methodology and assumptions, adopt new systems and cope with increased complexity in the reporting. This is set to change, with CROs expected to become more involved. This is because the new IFRS standard contains more judgment than its predecessors. And where there is judgment, you typically see a greater level of oversight. IFRS 17 results are also externally reported, so a risk function is likely to have a closer view over model reliability.

See also: Building an Effective Risk Culture

Consumer outcomes and operational resilience

Regulatory focus in the U.K. during 2024 seems concentrated on consumer outcomes, evidenced by the rollout of the consumer duty introducing a new consumer principle that requires firms to deliver good outcomes for retail customers. It goes further by requiring firms to enable their customers to make effective decisions that are in their own interests. This is intended by the regulator to be a paradigm shift in delivering a higher standard of customer care and protection in the market.

This links to operational resilience, which is focused on the ability of insurers to adapt and respond to operational disruption. For example, the Financial Conduct Authority in the U.K. has been focusing on the potential impact on consumers, such as when disruption leads to claims not being paid. Significant progress has been made, with risk functions heavily involved in designing operational resilience frameworks and putting in place impact tolerances, with CROs continuing to have an integral role in the review and challenge in these areas. 

Raising the bar on model risk

Actuarial valuation models or day-to-day tools such as Excel used to produce key information to stakeholders are not always well governed, potentially leading to key numbers reported by a life insurer being incorrect due to the data calculations or process involved. This risk is exacerbated with the increased use of open source tools and data science techniques in models. While not a new challenge for life insurers in 2024, we do see a variety of levels of maturity in the market in terms of addressing model risk in the business, coupled with obvious intent by the regulator following a recent supervisory statement to U.K. banks, which we expect will require investment to raise the bar on model risk this year and into next. 

The incentive for insurers to make that investment is clear. Strong model governance provides greater confidence in reported results. Whether it's Solvency II or IFRS 17, quotes on new business acquisition pricing, numbers communicated in letters or online to customers, it's not uncommon to see material errors in reporting. These can and have had real business consequences, needing rework and redress. Yet, all too often, firms only implement strong model governance once they have made a material error.

See also: Behavioral Science and Life Insurance

Preparing for the unexpected

The CRO is responsible for maintaining an effective risk framework to help guide the business through foreseeable regulatory and business change, and with which the company can safely execute its strategy. For example, the business needs to have a clear risk appetite and risk limits to manage certain exposures. In addition to this responsibility, the CRO will also need to have the capability and tools to monitor and respond to a much wider myriad of emerging or horizon risks that have the potential to affect the business, some at high velocity and with little warning. 

You can bet your bottom dollar that the risk event that does arise will be slightly different to any that an insurer has potentially foreseen or modeled in advance. The rapid rise of generative AI is a clear example of a disruptive force, that is both risk and opportunity. The technology has evolved at astonishing speed with insurers finding themselves scrambling on a steep learning curve to recognize the risks and leverage the potential of generative AI. 

With insurers having to deal with increasingly complex challenges and opportunities, we expect to see CROs taking on a wider strategic role within their organizations. The risk function has a pivotal role to play in the most difficult discussions and decisions, helping to identify, assess and mitigate risks that threaten the viability of business models and the achievement of sustainable growth in the face of uncertainty.

Navigating healthcare costs can often be a challenge, as seen when engaging with practitioners. Typically, when a doctor prescribes drugs or recommends tests, they send their instructions to the pharmacy or laboratory, leaving both the patient and doctor unaware of the impending costs. Isn't it better if we could know the cost before it is incurred, taking advantage of various data sources at our disposal?

I experienced this issue firsthand when my wife and I were anticipating the arrival of our first child. The quotes for a simple imaging procedure varied widely among providers, with costs ranging from $100 to $800. As a professional in healthcare technology, I was equipped to untangle this ambiguity, yet it was clear the potential confusion it could cause for someone outside the field.

Experiences like these empower my profound desire to develop a healthcare system that stands not only for affordability but also for transparency and accessibility for all. Despite the geographic disparities, my unwavering vision of establishing advanced healthcare facilities in remote areas of the world holds steadfast. My aspiration is to create a system that capitalizes on data science, using historical data to mold a future where healthcare isn't a privilege but an inherent right for all. My steadfast mission is to guarantee that quality and economical healthcare services are available to every individual, regardless of their socio-economic status or geographic location.

Healthcare Challenges

The primary issues with healthcare cost predictability are rooted in the complexity of the healthcare system and the intricate nature of many contributing factors. These include:

• Lack of Transparency: Healthcare systems and billing can be very complex, making it difficult for patients to understand exact costs upfront. 
• Inconsistent Pricing: The prices of services can vary dramatically among different healthcare providers and even geographical locations, with the patient often unaware of the reason for this variation.
• Complex Billing: Medical bills can be incredibly complex and hard to decipher. They may include medical jargon, coding systems or abbreviations that a layman would not understand.
• Hidden Fees: Hidden, undisclosed or unexpected fees can be tacked onto the bill, such as facility fees or charges for additional procedures or tests, and patients aren't typically made aware of these costs up front.
• Insurance Complications: Insurance policies often involve complex terms and conditions and may not entirely cover certain services, leaving patients with unexpected out-of-pocket expenses.
• Unexpected Costs: There can be unexpected costs included in the final bill, for services like laboratory tests or additional procedures that were not initially accounted for.

See also: Using Data Science to End Surprise Billing

Technological Challenges

From a technical perspective, implementing a solution to predict healthcare costs brings a host of challenges:

• Data Integration: Integrating data from a multitude of sources, each with different data storage systems and formats, is a significant hurdle.
• Real-Time Processing: Given the dynamic nature of the healthcare industry, the system needs to process data in real time (or near real- time) to provide accurate estimates, which is technically demanding.
• Regulatory Compliance: Compliance with healthcare regulations, notably HIPAA in the U.S., is mandatory when handling patient data. Fulfilling these requirements while implementing advanced data analytics can be complex.
• Data Quality: Inconsistent, incomplete or erroneous data can impede the development of accurate predictive models. Ensuring high-quality data is challenging but essential.
• Security: Healthcare data is sensitive, making robust security measures a necessity to prevent data breaches.
• Resource -Intensive: Developing, implementing and maintaining a solution is resource-intensive, both in terms of cost and technical expertise.
• User Acceptance: The solution needs to be user-friendly and easily interpretable by non-tech users like patients and healthcare providers, which is an additional challenge in design and implementation.

See also: Insurance Models Driven by Hourly Wages

Comprehensive Solution:

To address the problem of unpredictability in healthcare costs, a comprehensive solution can be designed in the form of a Healthcare Cost Prediction Platform. This platform would integrate AI and machine learning algorithms to process and analyze huge datasets from various relevant sources. Here is a broad overview of the solution:

• Multi-Source Data Integration: The platform will integrate data from various healthcare providers, pharmacies, laboratories and insurance companies. It will use robust application programming interfaces (APIs) and data connectors to bring all this data from disparate sources into a unified environment.
• Data Standardization and Quality Control: After the data integration phase, the platform will standardize data to remove inconsistencies and attain uniformity. The integrity of the data would be ensured by regular quality checks to increase the reliability of the predictions.
• Predictive Analytics Tools: The core of the platform would consist of sophisticated AI-driven predictive analytics tools. These tools would analyze the historical data and extrapolate that into future costs, giving the patient and doctor a clear idea about the cost implications even before the treatments commence.
• Real-Time Updates: The platform would be designed to handle real-time data, allowing for cost updates as prices change at healthcare providers and insurance policies get updated.
• Security and Compliance: The entire solution would be designed with privacy and security at its core, maintaining strict compliance with regulations like HIPAA to safeguard sensitive patient information.
• User-Friendly Interface: The platform would be equipped with an easy-to-use interface, providing cost estimates and comparisons in a comprehensible format. An integrated dashboard could allow users to input their specific needs and get an accurate estimate of costs.
• Continuous Learning: The platform would be capable of learning from the previous data to improve the accuracy of its predictions over time, making it more reliable.

By implementing this Healthcare Cost Prediction Platform, we can tackle the challenge of unpredictability in healthcare costs, making healthcare more affordable and transparent for everyone.

Extreme weather across the globe—including heat, wildfires and floods—is escalating. Meanwhile, the East Coast is sinking, and only 14% of Americans have flood insurance, according to a survey commissioned by Selective and conducted by the Harris Poll. That same survey also found that the majority of Americans severely underestimate their own personal flooding risk while overestimating what their policies actually cover.

What gives?

For agents and consumers, the insurance landscape—which, by all indications, will only continue to be affected by extreme weather—is in complex, unprecedented territory. There’s no denying it: We’re all being forced to maneuver through turbulent headwinds, which is why it’s all the more important to examine the powerful forces at play. Doing so will ensure that insurance professionals and consumers alike are equipped and positioned to navigate the months and years ahead.

See also: How to Prepare for Extreme Weather

Examining the Insurance Landscape

The insurance industry remains in a hard market, and no one knows exactly when it will end. There are numerous contributing factors to the hard market—from lingering effects from the pandemic to increased interest rates and inflation, as well as broader economic uncertainty and extreme, volatile weather.

More frequent extreme weather and natural disasters inevitably lead to increased losses for insurance carriers, which compounds the challenging market. Meanwhile, late spring marks the beginning of hurricane and wildfire season, which creates problems in the short term and, depending on the severity of the season, could carry long-term implications, as well. 

In addition, many carriers are struggling to maintain adequate (and often mandated) reserve capacities. Rate increases and underwriting discipline will be at the core of insurers’ measures to carve a path forward. Until the landscape changes, these challenges will remain forces that insurers must contend with to remain competitive and profitable.

While the economy and hurricane season can’t be controlled by agents, what is within their control? What opportunities exist? 

As mentioned, only 14% of Americans have flood insurance—and, according to that same survey, two-thirds of Americans with homeowners or renters insurance incorrectly believe their current policy covers flood-related damage. Those statistics show that a laser-eyed focus on consumer awareness, education and engagement is crucial, and the key to how agents can successfully navigate the hard market and add value to their clients amid extreme weather.

Consumer Communications Amid Extreme Weather and the Hard Market

There are three key points that consumers need to know—and that insurance agents need to clearly communicate in their messaging to their customers, both current and prospective. Whether the communication is on social media, via email, over the phone or in person, these are the points to drive home with consumers: 

• Standard Policies Rarely Include Flood Protection: While millions of Americans assume that their homeowners or renters policy includes coverage for flood damage, the reality is that standard policies almost always omit flood protection. Flood insurance is typically a separate policy, obtainable through either the federally backed National Flood Insurance Program (NFIP) or the private market. 
• FEMA Flood Maps Are Not a Sufficient Guide: According to the National Association of Insurance Commissioners, approximately 25% of flood claims covered by insurance policies occur outside FEMA-designated hazard zones. While FEMA certainly serves an important role in providing resources and guidance, solely relying on FEMA flood maps will, for many homeowners and renters, pose the risk of being underinsured. And as extreme weather continues, this risk only escalates.
• Anywhere It Rains, Flood Damage Is a Threat: Flooding can occur due to various scenarios, including persistent rainfall, river and lake overflow, rapid snowmelt and even wildfires. It’s also essential for consumers to be aware that there is a 30-day waiting period for both purchasing and renewing flood insurance, and that flood protection policies can be purchased at any time—except during an actual flood. Considering the extent to which consumers are underestimating the threat of flood damage, it’s all the more important for insurance industry professionals to focus on communicating these basics, and doing so with clarity and empathy.

See also: Property Underwriting for Extreme Weather 

In addition, it’s crucial to be proactive about renewals and cultivating strong relationships with fellow industry professionals, including carriers and underwriters, who can be vital in securing that favorable policy and helping both the agent and policyholder maneuver through the hard market. For agents, that relationship-building ability combined with local expertise and access to multiple markets will go a long way to alleviate customers’ pain points. 

While the focus here has been mainly on extreme weather and flood protection specifically, much of this analysis also applies to the broader complex insurance market. Across the board, the story remains largely the same: Premiums are increasing, while many consumers remain unequipped with the knowledge and tools to adequately protect themselves, their assets and their families. 

What this all underscores: the critical and ever-increasing role of independent agents and industry professionals in helping consumers make wise decisions and successfully navigate this landscape. 

The good news, if you’re an insurance industry professional: today, is that your job is more important than ever—and as a consumer educator and advocate, you are primed to make a tangible, positive difference for policyholders, their loved ones and their financial futures.

The nation’s medical overbilling epidemic is literally sickening for businesses and individuals alike. In fact, many analysts lay the blame on egregious provider billing practices as a key contributor to: 1) participants with outstanding medical bills, 2) participants who forgo care due to anticipated out-of-pocket costs and 3) the exploding cost of health coverage, where participant contributions have a significant impact on take-home pay and where employer costs represent the largest P&L expense other than wages in many organizations. These issues spark runaway spending that erodes take-home pay, household wealth and corporate profits. 

Medical overbilling diminishes wages, lowers take-home pay, and increases cost sharing, causing scores of average working Americans to delay or forgo important medical care or ration medicine – damaging health. That undercuts the ability of households to save for emergency expenses and undermines productivity.

There is an urgent need for clear and accurate price transparency in healthcare to avoid medical overbilling. The task is twofold: securing the right administrative capabilities and plan design. 

Role of TPAs

Employers must be able to confirm a third-party administrator’s (TPA) process for ensuring that it receives accurate pricing where there is a preferred provider organization (PPO) network in place, as well as processes for identifying upcoding, billing errors or other inaccuracies. This is accomplished through auditing a sampling of claims from a third-party auditor that typically is performed annually. Many health plan sponsors also have long crafted performance-based TPA agreements where additional compensation may be earned.  

Reference-Based Pricing (RBP)

Reference-based pricing (RBP) is another key step to consider along the way to achieving accurate price transparency and avoiding egregious medical bills. Employers must confirm that where designs or provisions are in place, the processing to ensure accurate pricing may only require the TPA to confirm the accuracy of the coding and location of services. Once accuracy and location are confirmed, the TPA will reprice as necessary to the reference schedule adopted by the plan. 

See also: Using Data Science to End Surprise Billing

Plan Design

Plan design in and of itself is also critically important to remedying medical overbilling. Employers must consider that open negotiation and independent dispute resolution (IDR) procedures may trigger a new risk for health plans – even those that apply RBP to non-network providers or plans that directly contract with providers and facilities.

Adopting a “pure” RBP plan that does not contract with providers will generally avoid the IDR process. Because there are no out-of-network claims or direct-contracting fees, and becausee there is no need to determine a median in-network rate, these plans are generally not hurt by the No Surprises Act. 

Further, because in-network charges also tend to vary substantially, pure RBP ensures the suggested reference price (or billed amounts, where lower) applies in every situation. 

Other than determining the accuracy of pricing, price transparency is typically only a consideration when it is part of the purchase decision. So, the following points must be highlighted:  

• First, “accurate” suggests multiple prices for the same procedure, including variance among providers in the same PPO network, likely varying by contract provision. Individual providers may also vary their pricing for certain procedures. This is why it is so important to confirm that the patient received the correct price as stipulated in the contract. 
• Second, a price comparison is best accomplished prior to the provision of services. When done correctly, it would be an important component of an advanced explanation-of-benefit process.
• Third, the difference in price may not be as important to consumers as the difference in their out-of-pocket (OOP) expense. Therefore, side-by-side comparisons may have a more noteworthy impact on the cost to the plan. 

Experience has shown that when people are spending their own money, they’re more circumspect about those purchasing decisions. Therefore, the goal is to encourage wise consumer behavior. Health Savings Account (HSA)-capable coverage is one smart choice that often encourages consumer behavior in medical services decision making. By participating in an HSA-capable plan, consumers have a say in selecting medical services and incurring out-of-pocket (OOP) costs – where those OOP expenses can be paid with tax-preferred HSAs assets. 

HSA-capable coverage will generally lower the initial cost of coverage and help the participant prepare for years when they have out-of-pocket spending. The example below, involving a typical PPO with a $500 annual deductible and 80/20% coinsurance, shows what happens if the same service is priced at $1,000 and $2,000 under two different health plan models: 

As previously suggested, transparency in pricing is much more important to the consumer if they are actually spending their own dollars. So, when seen in the same example, a side-by-side comparison of a traditional PPO and an HSA-capable PPO identifies the incentive to check on the price. This recognizes that where a worker has a choice between the traditional and HSA-capable PPO, where the employer contribution is typically the same dollar amount (for coverage and employer contributions to the HSA), the worker and the plan both spend less – benefitting from consumerism.  

See also: The Need for Transparency in Underwriting

Empowering Consumers to Make Informed Decisions

Ensuring that health plan members have more of an ownership stake in their healthcare choices is a vital piece of the puzzle in combatting medical overbilling. Consider that just 43% of healthcare expenses have been traced to services that may have been shopped for by a motivated employee, according to the Health Care Cost Institute. 

Influencing consumer behavior is predicated on improving healthcare literacy through helpful educational materials, meaningful communication campaigns and decision-supporting tools. Arming healthcare consumers with the right knowledge will help them make healthier lifestyle choices, as well as select more appropriate coverage options and address cost concerns. By making more informed decisions about their healthcare, health plan members will improve their health outcomes and, by association, do their part to help remedy the nation’s medical-overbilling epidemic.

We've all seen the claim that "data is the new oil," and a recent global survey by Aon found that, in fact, information assets are 14% greater than property, plant and equipment assets (PP&E) at major organizations. But Aon also reports that organizations only insure about 19% of their information assets, vs. 60% of their physical assets -- despite believing that they have at least 2 1/2 times the likelihood of a loss on their information assets.

That sounds to me like a need for customers and an opportunity for insurers. 

So let's have a look at that report, along with some other items of interest that caught my eye over the holiday weekend:

• A pretty thorough argument that climate change is NOT increasing the number of Atlantic hurricanes (even though it appears to be raising their intensity and causing other sorts of storms).
• A move by Google that may radically change search and, thus, render obsolete many of the social marketing tactics used by agents and insurers.
• A really bad sign for commercial real estate, which insurers not only provide coverage for but invest in. 
• And, for fun, the latest high-profile glitches by generative AI. (Hint: Don't use Elmer's glue to keep the cheese from sliding off your pizza.) 

The Aon report says a major reason for the discrepancy between tangible and intangible assets is that intangible assets are too new and too volatile for insurers to be comfortable with them. 

"The insurance industry typically builds actuarial loss models based on decades of data," the report says. "However, due to the dynamic and fluid nature of intangible assets, we will never have decades worth of static intangible assets and risks data. Therefore, 'retain risk' versus 'transfer risk' decisions require fresh thinking."

How do we achieve that fresh thinking? The short answer in the report is: "Risk management typically considers frequency and severity of perils. With respect to intangible assets (especially artificial intelligence and cyber), we should add velocity of evolving risk profiles."

The long answer requires some serious engagement with the report. Here, I'll just cite a few more of the stats that show the serious underinsurance of intangible assets:

• "70 percent of respondents say their organizations are still not purchasing standalone cyber insurance coverage. The average limit for those organizations purchasing cyber insurance is $17 million." 
• "Only 35 percent of respondents say they have a trade secret theft insurance policy, and a similar percentage of respondents (34 percent) have an intellectual property liability policy."
• "Business disruption has a greater impact on information assets ($324 million) than on PP&E ($144 million)."

So, while the issue of information assets is truly tricky, the need is huge.

An article in Forbes, "Climate Change, Though Quite Real, Isn't Spawning More Hurricanes," says: "A search for answers about climate and hurricane connections reveals little or no evidence that major landfalling hurricanes in the Eastern United States have increased in frequency since data collection started around 1850."

The author says the data most commonly used suggest otherwise but says that we are simply better at detecting storms in the Atlantic and that they have become more memorable in the decades during which they've been named. He also acknowledges what is obvious to the insurance industry: that damages from hurricanes have soared, because at-risk areas are being built up and more people are moving into them. 

He adds that "there is some recent evidence that storms may be intensifying (i.e., increasing in severity) faster and traveling slower, which are subjects of active research."

The article challenged some of my assumptions and is an interesting read.

An article in Platformer describes the vast implications of an announcement Google made last week on providing more AI capabilities to search.  

"Google’s idea for the future of search," the articles says, "is to deliver ever more answers within its walled garden, collapsing projects that would once have required a host of visits to individual web pages into a single answer delivered within Google itself. The company’s AI-powered search results, which it calls Search Generative Experience, are coming to all users in the United States soon, Google announced.... By the end of 2024, they will appear at the top of results for 1 billion users." 

We've all seen this trend developing for some time. If you Google a matchup in the NBA playoffs, you get all the relevant information in a box: the time of the game, the win-loss record in the series, where it's broadcast, what the in-game score is if one is in progress and so on. No visit necessary to any other site. But Google is planning to go much further -- a slogan that appeared frequently at the announcement was, "Let Google do the Googling for you."  

That will be great for Google and often for the user, but all those sites that people used to click through to visit will be starved of traffic. Gartner Group predicts that traffic to the web from search engines will fall 25% by 2026.

That will mostly hit the publishing business, but it will also affect anyone -- including many carriers and agents -- that provide information online in the hope that people will click through to their sites to learn more. Why click through if Google's AI already tells you everything you want to know?

You've been warned.

An article in Bloomberg reports the sort of warning sign I've worried about and have been watching for in commercial real estate: 

"For the first time since the financial crisis, investors in top-rated bonds backed by commercial real estate debt are getting hit with losses. Buyers of the AAA portion of a $308 million note backed by the mortgage on a building in midtown Manhattan got back less than three-quarters of their original investment after the loan was sold at a steep discount. It’s the first such loss of the post-crisis era, says Barclays."

The five groups of lower-ranking creditors were wiped out, but what concerned Bloomberg most was that "the pain is reaching all the way up to top-ranked holders, overwhelming safeguards put in place to ensure their full repayment." Those losses are "a testament to how deeply distressed pockets of the US commercial real estate market have become. 'These losses,' warns Barclays strategist Lea Overby, 'may be a sign that the commercial real estate market is starting to hit rock bottom.'"

That is a concern for insurers on multiple levels. The most straightforward issue is for those that have invested in commercial real estate. But there will be ripple effects in other areas, too, for instance as workers' comp carriers have to adjust to the new world of hybrid work and as P&C carriers support construction companies as they turn many office buildings into apartments.

Finally, an article in the Washington Post documents a series of embarrassing errors by generative AI. The article says: 

"In search results, Google’s AI recently suggested mixing glue into pizza ingredients so the cheese doesn’t slide off. (Don’t do this.) It has previously said drinking plenty of urine can help you pass a kidney stone. (Don’t do this. And Google said it fixed this one.)

"Google’s AI said John F. Kennedy graduated from the University of Wisconsin at Madison in six different years, including 1993. It said no African countries start with the letter “K.” (Nope. Kenya.)"

The article explains at length where these stupid answers come from. For instance, the glue suggestion somehow came from a joking Reddit post from 11 years ago. Google's AI missed the joke part. 

But I mostly read the article to have a chuckle about that stupid AI... while it lets me.

Cheers,

Paul

It is no longer a matter of whether or not a business needs a customer portal. That question has been asked and answered with a resounding yes. And most businesses have conceded and developed one, though quality varies greatly. But the question remains, how good does your customer portal have to be?

When considering if a customer portal is good enough to satisfy customers, remember the competition is not only from other insurers. Rather, the portal has to stand up to scrutiny from consumers who are comparing it to other digital portals they use like Uber, Amazon, and Jet Blue— and they have high expectations. 68% of consumers surveyed say they wouldn’t use a company’s chatbot again if they had a poor experience and 32% of consumers agree they’d leave a brand they love after one bad experience, proving the criticality of getting digital portal services right the first time. 

Focus on the Right Parts of Your Digital Portal

With the seemingly endless customizations possible, insurers need to narrow their focus to the most critical components when it comes to designing a digital portal. Keeping customer data secure is non-negotiable. Other essential features customers expect from their portal include:

• Mobile web friendly 
• Easy, integrated payment capabilities
• Ability to submit and track a claim
• Data-driven product recommendations 
• Alerts and notifications for policy updates or severe weather warnings 

In addition to these top customer concerns, businesses should focus on these considerations when designing their portal:

Understanding Your Customer’s Needs

When developing a digital portal, consider the reasons why customers engage with companies, then use this information to prioritize the project. The top three reasons for customer inquiries are billing issues, support with a product or service, and order status. Start by adding or improving these aspects of the digital portal to add immediate value. 

Insurers can look at actual usage logs provided by most portals to determine what is most important to users and to gain insights into what may need to be corrected. Finally, insurers can also survey their customers to learn more about their needs and wants. 

By analyzing user interaction data within the portal, insurers can identify which capabilities are most used and valued by customers. This data-driven approach can lead to better decisions on where to invest future funds when refining the portal to offer more tangible user benefits. The balance between innovation and cost-efficiency helps to ensure strategic business goals are met while customers are satisfied.

With this knowledge, insurers can enhance their digital portal to meet these top needs first, optimizing the experiences customers use most often. By making these critical parts of the customer journey simple and intuitive, insurers will see more value than if they spent time improving parts of the portal that are rarely used. 

Flexibility

Flexibility is an important consideration when designing a portal. Consumers expect real-time experiences that provide value when they need it, so adapting to changing customer demands is critical. The ability to add new features or update existing ones very rapidly is an integral part of the flexibility customers expect. A configurable portal, along with regular vendor updates, allow an insurer to keep up with customer expectations. 

Research has shown 65% of customers expect the companies they do business with to adapt to their changing needs over time. Working with a vendor that offers continuous improvements through system upgrades can help ensure portals are flexible and adapt to changing consumer needs.

User Experience

Consumers expect a logical user experience. They are familiar with cool technology that is intuitive, easy, and functional — and they demand the same from their insurance portal experience. Any customer-facing portal must be easy to navigate and should match the look and feel of the insurer’s brand. 

Consumers demand mobile-friendly experiences and enjoy performing many different tasks on their smart phones, so any customer portal must be optimized for the mobile experience. Consumers pay bills, do research and chat with live agents and bots within other apps, so they expect this same functionality to work smoothly when logging into their insurer’s portal from their mobile device.

The hyper-personalization trend continues with a McKinsey study showing 71% of customers expect personalized interactions, like tailored content, customized recommendations, and personalized messages, and a full 76% are frustrated when that doesn’t happen. Configurable portal designs should allow insurers to personalize interactions for returning customers to enjoy. Insurers can accomplish this by knowing their customers’ wants and working with developers to include these personlizations. 

Single Interface 

Having an omnichannel experience means customers can decide how they want to interact with their insurer, having the freedom to choose different methods of communication at different times. But this experience should still be streamlined and optimized for the consumer, so even if an insurer operates on different core systems for different lines of business, the customer should see one integrated portal. They shouldn’t need to log out and back into different systems to accomplish their needs when a single interface provides a more streamlined customer experience. 

Balancing Cost and Capabilities

It never makes business sense to overspend on technology. However, insurers need to allocate a reasonable budget toward developing and maintaining their customer portal, and may need to overcome technical debt left from previous solutions. Some signs a business is grappling with technical debt include: 

• Slow release cycles, which may result from workarounds or complexities in the code that need to be managed each time a change is made. 
• Frequent outages or system crashes that may derive from shortcuts during development. 
• Challenges scaling the technology or integrating it with new tools as the original design did not account for growth. 
• Maintenance outweighs new development as IT resources are forced to spend more time fixing bugs than developing new features. 

Insurers with greater technical debt and those who have not kept up with digital trends will likely need to spend more to remain competitive. The trend toward digital self-service is only accelerating as consumers demand robust online capabilities. 

To calculate the return on investment for a digital portal, consider the increase in customer satisfaction and retention in ROI calculations. A good customer portal can significantly increase customer retention, with a recent survey showing customers who repeatedly use multiple self-service channels have a 25% higher retention rate. 

Balance the cost and the desire to add more features by prioritizing customers’ demands. With survey data and an understanding of what customers need, insurers can control costs by adding the right features and capabilities. And with a continuous feedback loop and regular vendor updates, the customer portal always remains current.

The Role of the Agent

The agent plays an important role in leveraging digital portals to help their clients through the purchase experience. Agents often help customers access the portal for the first time, helping them to set up and personalize the portal. Policyholders often need access to their ID cards or dec pages, and agents may help them access those documents. 

Policyholders often call their agent for help with filing a claim or inquiring about their claim status. Agents may also use digital portals to educate policyholders about their coverage, provide updated quotes, or offer recommendations based on their current coverage and personal needs. Agents may also help with basic updates for their clients, like adding an email address or updating employer information. 

Because the agent is often the first point of contact for policyholders when something goes wrong, insurers should invest in training agents on how to best use their portals. This best practice will help both the insurer and agent to sell more and spend less time with customer support. Providing incentives — for both insurers and policyholders —— will help encourage greater adoption. 

Portals can be valuable tools for agents to upsell policies and provide more personalized service to customers. Agents can add value by helping their policyholders navigate the portal to service their needs. 

How Good Does Your Customer Portal Have to Be?

In today's digital age, the quality of the customer portal can define a brand's success. To truly stand out, it must rival not only others in the insurance industry but also the best in any industry, as consumers compare their digital experiences universally. Staying ahead means embracing flexibility and continually refining the user experience based on actual customer feedback and emerging trends.

So how good does an insurer’s portal have to be? It must score well with consumers based on customer satisfaction surveys. Insurers should analyze how much the portal reduces their customer support costs, and decide if there is room for further improvements compared to industry benchmarks. Consider how the portal supports the agent network and whether it provides a positive experience that makes agents want to promote the insurer’s brand. Finally, benchmark how the portal stands up to competitors to be sure it compares favorably.

By investing in a customer portal that excels in these key areas, insurers can not only meet the high standards consumers now demand but also create lasting engagement that fosters consumer loyalty and drives growth.

Sponsored by: ITL Partner: insured.io

External Sources:

1. https://www.salesforce.com/content/dam/web/en_us/www/documents/research/State-of-the-Connected-Customer.pdf
2. https://www.pwc.com/us/en/advisory-services/publications/consumer-intelligence-series/pwc-consumer-intelligence-series-customer-experience.pdf 
3. https://www.forbes.com/sites/forbestechcouncil/2023/05/19/the-changing-face-of-customer-experience-in-the-self-service-economy/?sh=7bc6bc94545f
4. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying