One of the things I have always loved about working in insurance is that it is hardly ever boring. It’s an industry that offers you the space to learn and grow, and taking advantage of this opportunity is not just to your benefit, but to the consumer's, as well. This is especially true when it comes to how emerging technologies can help you more accurately predict a policyholder’s risk profile and set rates accordingly. A perfect example is geospatial technology (GIS). 

With the climate changing, severe weather occurrences are leading to increased levels of risk for insurers across the country (with some regions affected more than others). GIS allows for more accurate risk assessment, going even deeper than ZIP code level.

Climate change and insurance

In 2023, Florida, Texas and Louisiana experienced the most hurricanes, and these severe weather occurrences inevitably led to insurance losses. According to Rate Retriever’s Quarterly Rates Update, these three states were – unsurprisingly – also among the most expensive for car insurance in 2023.

Instances of severe weather such as hurricanes, tropical storms and tornadoes have been increasing, and premiums (specifically in coastal regions and the Midwestern part of the country) have been skyrocketing as a result.

To remain competitive with the rates we are offering while still protecting ourselves, we need to analyze risk more closely than ever before. GIS can help us do just that through the use of highly specific maps.

See also: How Technology Is Changing Fraud Detection

What is GIS?

In the simplest terms, GIS is the process of understanding severe weather risks through precise mapping. This technology allows for the insurer to analyze and identify certain hazards or catastrophic risks associated with a certain region with incredibly tight precision. This basically allows you to take territorial rating assessments one step further, getting down to a level so incremental it can split one street in half and predict a different level of risk for each side.

We are all familiar with the old way of territorial rating: the tedium of inputting every ZIP code in a particular region or state into an Excel file and going through each line item to assign a specific rating. GIS flips this process on its head by allowing you to scatter plot all your policy locations on an actual map and analyze the risk exposure much more tightly.

This technology also helps you to assess risk in a more real-time manner and work to prevent fraud by not allowing new business quotes to come through your system while a catastrophic event (such as the wildfires that ravaged Texas back in February) is taking place. This makes it much more difficult for individuals in a particular area to game the system by getting insurance only when they know severe weather is coming and they’re likely to have a loss.

The benefit to the consumer

The key benefits that GIS offers to insurance professionals are fairly simple: 

• The ability to more narrowly predict risk level by region can help you save money on claim payouts 
• This technology can help prevent fraud by exposing potential insureds who are only getting insurance because they know severe weather is coming
• It simplifies the process of territorial rating by being able to visually analyze different regions on a map

There are plus sides of this technology for consumers, as well. By adopting GIS technology, you have the ability to warn your clients of potential losses before they happen so they can act. 

While there is nothing you can do to prevent the hurricane from coming, you can keep your clients in the loop on how the hurricane may affect them. With this information, clients can make necessary arrangements to protect their assets and perhaps avoid having to file a claim altogether. 

The information you provide to clients introduces an additional benefit for you as an insurer: an increase in client loyalty. If the insured trusts that you have their best interest at heart, they have more incentive to remain a client. 

See also: Convergence and the Insurance Ecosystem

The potential of GIS

The possibilities for how GIS can be implemented and utilized are vast. When you’re looking at a GIS map and you’re able to understand where the impacts of severe weather are felt most strongly you have the power to almost see into the future and predict these occurrences before they happen. This allows you a level of protection that has never been possible before.

Artificial intelligence and machine learning technologies also come into play here, enabling you to add the likelihood of an event like a hurricane or a tornado into your modeling service so you can try to understand how these events might affect losses. This likely means that as GIS becomes the industry standard for territory rating, AI and ML technology will become more prevalent right alongside of it.

This kind of technological advancement has the potential to affect your business all the way across the board. It introduces opportunities for automation and deep analytics in underwriting, risk management, claims, business reliance and several other areas. 

Autofill is my friend. I just wish insurance came closer to the experience I have when buying other products.

That issue turned out to be key to the conversation I had this month with Jeff Heine, chief revenue officer at Novidea, an insurance management platform, about the friction that can be eliminated in the process for purchasing insurance.

“Instead of making people enter information in every system multiple times,” he said, “why not flip the dynamic and use the information that’s out there? …  We’ve surrounded the broker with all kinds of information, so have them draw on that information and just ask the policyholder to confirm the answers to questions.”

Heine, who described his suggestion as an inversion of the submission process, expanded on the idea to propose a “container” for information. Once the customer, working with an agent or broker, assembles the information needed to write a policy on, say, a property, it can be enriched with information about comparable properties that provide context on the level of the risk. With data on risks becoming more granular, the carrier and broker can share with the insured not just what the level of risk is but why the level is what it is and what the insured can do to reduce the risk (and lower premiums).

“The insured is becoming more of the risk manager,” Heine said.

Crucially, the container is portable in Heine’s view of the future. The insured can take it with them even if they move to a different carrier; they don’t need to start from scratch in providing information on whatever is being insured. Although Heine and I didn’t talk about passing that container on to the next owner of a property, that would be possible. You’d have to redact the information about the owner, but all the information on the property could be sent along, saving the new owner the friction that comes with having to look up the age of a roof and a host of other details.

I’m sold. I think you’ll find the conversation interesting, too.

Cheers,

Paul

4 CHALLENGES IN ADOPTING BROKER TECHNOLOGY

Change management will become a critical capability for insurance agencies, as resisting technological innovation can cost companies millions

CUSTOMER SUCCESS IS KEY, BUT WHERE TO START?

Single-entry quoting tools can let agents generate more options for clients, and automated quoting tools on the website provide great convenience.

UNLOCKING OPPORTUNITY IN THE SURETY MARKET

Increased surety usage is anticipated in real estate, renewable energy and healthcare in 2024, as it moves beyond construction.

DEBUNKING THE MYTH OF SECRECY

Businesses applying for coverage must abandon the myth of secrecy and provide much more information for underwriters.

HOW TO CUSTOMIZE INSURANCE FOR GEN Z

Nearly 40% of Gen Z does not have homeowners’ or renters’ insurance, highlighting the need for solutions tailored to this group. 

4 MAJOR COMMERCIAL INSURANCE TRENDS

Generative AI, unanticipated risks, rate increases and social media’s effects will preoccupy insurers for the rest of 2024.

Paul Carroll

I wonder, first, if you would describe what you see as the main points of friction between carriers and agents and brokers?

Jeff Heine

Let's look at commercial insurance. There's a lot of data and documents that are passed back and forth between the broker and the carrier and, downstream, the reinsurer. One mature prospect we have literally says it still emails spreadsheets. Think about the loss of time just in structuring the risk to get it to market. And did we capture all the data? What about midterm adjustments? Can you keep the data current? That's been a consistent point of friction. 

The friction makes getting the right coverage incredibly difficult. When I recently bought some insurance for a condo, I went with the agent who did the best job of using external data to suggest the right coverage for me. The friction extends all the way through claims, opportunities with loss prevention and so on. 

Paul Carroll

I always try to think of analogies, and, in this case, the process of applying for insurance reminds me of applying to colleges back in my day. It’s all so manual, and a lot may differ from carrier to carrier, from agent to agent. I wonder why the process can’t be more like the universal application that so many colleges use now. My kids used the universal form, applied to maybe 15 schools, and went to Cal and Yale, while I applied to three and went to Michigan State. Just sayin’.

Jeff Heine

Absolutely. In my recent experience, one agent asked for all kinds of basic information and had me take some photos, while another basically just asked for the address and came back with more complete information. 

A lot of times, there will be midterm adjustments, but they won’t be captured into the AMS [agency management system], so they won’t show up in the renewal. That’s frustrating for the customer.

Paul Carroll

What are other points of friction?

Jeff Heine

Carriers not only want to know as much as possible about the risk but also want to enrich the data based on information about similar properties. Carriers also need broad access to the data, not just in silos. That’s where LLMs [large language models, used in generative AI] have a real opportunity.

We did a survey on the state of digital transformation in insurance, and we learned that about three out of four insurance organizations have a plan in place to make significant changes to their tech stack in the next year. That’s because it's costing them too much money and doesn’t give carriers the data they need to properly price the risk or serve the needs of the account.

Paul Carroll

An old colleague of mine, working at a claims-related insurtech, said his goal was to make the claim the boss of the process. Rather than have a person be the boss, sorting through emails and trying to keep track of all the data that needs to be gathered and all the people who need to be pinged, the claim would use AI to pull everything together. Jeff, I need this information. Michelle, I need this information. Jeff, I’m still waiting for that information. That sort of thing.  

Jeff Heine

Rather than have the broker asking questions of the policyholder, a better way is: We’ve surrounded the broker with all kinds of information, so have them draw on that information and just ask the policyholder to confirm the answers to questions.

We'll call it a container. Instead of making people enter information in every system multiple times, why not flip the dynamic and use the information that’s out there, enrich it and start to look at the actual exposure at the front porch before it even hits the carrier? 

Think about the cost to the carrier just to decline a submission and how much they could save. 

Paul Carroll

I hear you on, Can you confirm this? Autofill is my friend.

We’ve started to get into solutions, but I'll explicitly ask that question: What can be done in the short term and then what can be done in the long term to reduce the friction?

Jeff Heine

Some of it is just about modernizing. There are still so many different legacy applications out there that don't provide a formal view for the customer. Then there are technologies that sit on top of the legacy systems—and I mean systems, plural. Our research shows that insurance organizations are using at least five-plus different tech systems. And it's not just policy admins; it's how you rate/quote/bind; it’s the CRM [customer relationship management] system. So we have to modernize, however that's done.

We also have to have modern applications, like a customer insurance portal, so you can interact with customers in the way they want to be met, in the way they’re used to. I think that need is acknowledged. It's just a really tough shift. 

But again, I’d stress the need to invert the submission process. Don’t just have the broker gather data. Start by using other technologies that can not only get the data you need but enrich it. You take care of the insurance opportunity while making yourself easier to do business with. 

I know there are folks out there doing this. There's actually quite a bit of money spent on the whole submission process by the carriers.

Paul Carroll

That's great. Is there anything I didn't ask about that I should have asked about when it comes to friction?

Jeff Heine

I’d just come back to this idea of a container. Let’s think of the insured having all their information where it's a bit portable, and give them a bit more power over their transactions. You know, where I, as the customer, am not having to rekey information all the time. I know a bit more about my risk. 

Smarter consumers are actually looking for ways to manage their exposure themselves, and I think that the container idea empowers them a bit with the portability of their data.

Paul Carroll

I like that. That certainly has been the push for a long time in healthcare, to give people full access to their records and to make them portable. We’re a long way from getting there, but I think that’s the right direction to move in.

Jeff Heine

In some markets, like Florida and California, insurance has become much more difficult to obtain, but Firewise designations, for instance, are helping people prepare their homes to make them more insurable. That's an example of that container, if you will. People are getting information and having to take responsibility. The actual insured will be more of a steward of what they do in that container.

Paul Carroll

I see carriers not just getting more granular about how they're evaluating the risk but then communicating back to the homeowner. I owned a home in Lake Tahoe for a number of years back when my kids were younger and were ski racers, and I got sort of vague feedback in those days about, well, you need to have brush cleared away from the house for this distance to reduce the risk from wildfire. That was sort of helpful, but these days carriers are starting to be more specific. They don’t just say, your risk is X. They say, your risk is X because of these factors. If you change the landscaping, if you upgrade the roof, if you do something else, then your risk score will improve by this much. 

Jeff Heine

You make more of your own choices. And that’s going to force the agency and broker market to think and behave a bit differently, because the insured is becoming more of the risk manager.

Paul Carroll

This is great, Jeff. Thanks.

About Jeff Heine

Jeff Heine serves as chief revenue officer at Novidea, responsible for driving global revenue and other revenue-focused functions to achieve the company’s business objectives. He brings 20 years of property and casualty (P&C) insurance industry expertise. Most recently, he served as CRO at Betterview, a remote property intelligence platform that turns data into actionable insights for P&C insurance carriers. The company was acquired by Nearmap, one of the world’s largest location intelligence and aerial imagery solutions providers, in December 2023. Before that, Heine was CRO at Groundspeed Analytics, an AI-powered ingestion and data solution for the commercial P&C industry, which Insurance Quantified acquired in June 2023. Heine has other related experience, including Guidewire Software, Adsensa (now Coupa Software) and CCC Information Services. He holds a BS from Bradley University in Illinois.

With an unprecedented "super-cycle" of elections in 2024, almost half the world’s populations will go to the polls before the year is out. According to a new report from Allianz Commercial, security is a concern in many territories, not only from the threat of localized unrest but because of the wider-reaching consequences of electoral outcomes on foreign policy, trade relations and supply chains.

The headline election will be in the U.S. in November, when a narrow result could inflame existing tensions. The European Parliament elections in June could also deepen divisions, if radical-right parties gain votes and seats. As unrest can now spread more quickly and widely, thanks in part to social media, financial costs from such events for companies and insurers are mounting. Economic and insured losses from just seven civil unrest incidents in recent years cost approximately US$13 billion. With the threat of terrorism also on the rise, and the prospect of greater disruption from environmental activists, businesses will face even more challenges in the next few years and will need to anticipate as well as mitigate evolving risks with robust business continuity planning.

So many elections in one year raise concerns about the fueling of polarization, with tensions potentially playing out in heightened civil unrest. Polarization and unrest within societies are fueled by fear. They undermine trust in institutions and challenge people’s sense of a common purpose built on shared values. We also expect to see increased unrest around environmental issues in the future, not only from activists but from those who are pushing back against government climate mitigation policies.

See also: 20 Issues to Watch in 2024

All eyes on elections in the U.S. and the E.U.

The U.S. presidential election in November is likely to be a close call, with the outcome depending on results in a handful of states. A recent poll shows that more than one third of Americans believe President Biden’s election in 2020 was not legitimate. [Editor's note: No evidence supports their belief.] Widespread disaffection among voters could be exploited by misinformation created by artificial intelligence and spread via social media. Deep fakes, disinformation and repurposed imagery, as well as customized messaging, could galvanize unrest or influence small but potentially decisive parts of electorates.

Many commentators have predicted that European Union elections in June could see a number of states politically shift to the right, with the potential for populist or far-right parties to gain votes and seats, building on a trend seen in 2023. Any success for these parties across Europe could result in growing opposition to E.U. environmental, immigration and human rights policies.

The impacts of a political shift to the right and subsequent policy changes endure long after a political party’s term in office. They fundamentally change societies and public attitudes and make the next electoral shift to the center or left seem drastic, creating the potential for schisms and potentially violent responses from those who feel underrepresented by a regime change.

Environmental activism and terrorism threat expected to rise

Between 2022 and 2023, environmental activism incidents increased by around 120%. An impactful example was the arson attack on an electricity pylon in Germany by a left-wing extremist group. This suspended production at a local Tesla plant in March 2024, leading to economic losses estimated in the hundreds of millions of euros, according to reports. In addition to high-profile protests, a trend toward using more targeted tactics, such as focusing on individuals or politicians, is evident. There is a chance that more environmental protests could escalate from acts of nuisance into larger criminal acts.

The number of deaths from terrorism increased 22% in 2023, and is now at its highest level since 2017, although the number of incidents fell. The major terror attack in Moscow in March is a timely reminder that the risk of politically or religiously motivated terrorism is back on the global agenda, and that the losses can be catastrophic. The primary driver of Islamist terrorism is the radicalization of home-grown perpetrators, which is currently being fueled by the Israel-Hamas war and is leading to an increased risk in the U.S. and Europe. However, government foreign policy is also a big driver of risk, as the Moscow attack proves.

See also: Top Global Business Risks in 2024

Multinational companies show increasing demand for political violence insurance

Political violence can affect businesses in many ways. Those in the immediate vicinity of unrest can suffer material damage to property or assets and business interruption losses, while indirect damage can be inflicted on companies in the form of loss of attraction or denial of access to their premises. 

Businesses need to protect their people and property with forward planning, such as ensuring safe and robust business continuity planning is in place in the event of an incident, increasing security and reducing and relocating inventory if likely to be affected by an event. Using scenario planning and tracking risks in areas key to their operations can raise businesses’ awareness of where political violence and civil unrest risks may be intensifying. Companies should also review whether their insurance policy covers the impact of risks such as strikes, riots and civil commotion.

As the world of risk becomes more complex, the role insurers play in that world also becomes more complex. It’s why we hire and train an army of the best modelers our leading universities can produce. It’s why we’ve seamlessly absorbed — instead of resisted — the best risk insight and efficiency tools the insurtech craze has had to offer. And it's why industry capitalization has grown by almost a third in the past five years.

But our ability to maintain pace with that complexity is slipping. It was evident during the pandemic and is becoming increasingly clear as the protection gap—meaning the delta between economic losses and insured losses—continues to grow, both in developing and developed markets. 

It’s not totally surprising. While society needs insurers to “see the forests” when it comes to risks, we’re focusing on the microbes left by the beetles burrowing under the bark of individual trees. Put another way, while espousing ambitions to be holistic risk partners, we’ve used our new tools to systematically narrow our roles to the most familiar of our offerings: risk transfer. 

This dichotomy—between increasingly sophisticated underwriting and growing societal risk—is particularly evident with climate resilience. Leading insurers have understandably reassessed their market exposures and begun sending the difficult risk signals that reflect the damage posed by rising sea levels, warmer oceans, stronger storms and hotter temperatures (not to mention rising claims inflation, continued development in high-risk areas and regulatory pressures).

But there was a time when our industry focused on risk whether it was on our balance sheets or not. In the 1890s, that spirit drove insurance leaders to see electricity for what it was—a step change in modern civilization—not simply as an underwriting factor. So instead of focusing only on how to price the risk, they harnessed knowledge to reduce the risk. 

Voila! There came Underwriters Laboratory, which William Henry Merrill founded to help make electricity safe for the world and allow insurers to manage the residual risk of electrical fire.

Compare that with how we are handling climate challenges now. Can we honestly tell ourselves that we’re behaving as if confronting a “step change in modern civilization”? Just as we look back at Merrill today, future generations will study what we did when the planet faced the most wicked of risk problems. Did we fall prey to short-term pressures? Did we battle over a shrinking amount of properly priced weather-related risk? Or, given our risk-bearing role in society, did we intentionally leverage our industry’s unique knowledge and insights to help communities thrive while confronting heightened risks? 

Since beginning a climate residency at Duke’s Nicholas Institute for Energy, Environment and Sustainability earlier this year, I’ve had opportunities to exchange ideas with leading experts on climate and its impacts. What I’ve discovered is that the knowledge and tools of the insurance sector are deeply relevant to some of the thorniest climate challenges and their potential solutions. 

During a recent visit to campus, I had conversations with brilliant people—none of whom had in-depth insurance knowledge—about derisking carbon offsets, creating money for adaptation, promoting eco-tech wildfire hubs, deploying the IN-CORE computational resilience tool, understanding community data needs, advancing ESG in the C-suite, reducing occupational exposure to extreme heat and more—lots more. One mind-bending conversation even challenged the term “climate change,” suggesting that the problem is really about humans’ impact on planetary water systems, not the weather.

So much creative thinking is happening on climate issues that are fundamentally about risk—our industry’s domain. Insurers could create—and accrue —immense value if we systematically leaned into these issues with scale. 

That’s why I’m proud to be working with leaders at Duke and the University of Georgia to launch the Center for Innovation in Risk Analysis for Climate Adaptation and Decision-making (CIRCAD). In response to a National Science Foundation RFP focused on improving collaborative efforts around climate modeling, CIRCAD aims to develop a dynamic platform for leading thinkers in the insurance world to engage directly with top academic researchers to define an action plan for impact. 

But that’s not all. CIRCAD also seeks to create a platform for our industry to quickly prototype, pilot and scale new risk reduction and risk management concepts. A platform that improves decision-making amid future uncertainty. A platform that repurposes our industry’s most fundamental role—risk modeling—to capture and monetize the value of the resilience dividend. And a platform that, by virtue of its size and impact, can allow our industry to approach decision-makers as partners, not supplicants. 

In other words, CIRCAD is a collaboration that seeks to do for climate risk what Underwriters Laboratory did for electrical risk. 

What’s next? This fall, Duke University and the University of Georgia will convene leaders from the insurance industry and academia, facilitating what may be the most advanced and significant conversations our industry has ever had on climate issues. The aim is for CIRCAD to begin defining a climate resilience agenda that reflects the full breadth of our industry’s societal risk management role. 

Interested in joining the dialogue? The event will be invite-only, but please watch this space for registration materials. 

The time to act is now. Because as Hamilton reminds us, “History has its eyes on you.” Let’s make sure we’re proud of the view. 

The what and why of achieving a goal -- also known as strategy -- are the easy part. It is in the how, or execution, where the hard work comes in and where success is ultimately determined.

It is therefore no surprise that while the goal of modernizing data and analytics operations in insurance is nothing new, advancing along this path has remained elusive for many re/insurers. Legacy challenges, resource constraints and inefficiencies in organization and infrastructure all conspire to limit progress. Fortunately, RGA's journey proves that data modernization can indeed be achieved and that the resulting efficiencies make it well worth the effort.

Collaboration: Setting the Stage for Transformation

A vital first step to this data transformation is collaboration between business and IT teams. By understanding the roles and responsibilities required for successful decision making between the two teams, insurers can create a collaborative environment fostering innovation and sustainable growth. The business owner is tasked with defining problems and success criteria and dedicating analytical resources to develop solutions, including a self-service model. In parallel, IT owners propose suitable tools, manage technology partner resources and execute the company's technology strategy.

At RGA, this partnership model enabled the business side to set expectations early for a desired future state and IT to make proposals around approaches to get there. This ensured alignment and facilitated allocation of necessary resources such as dedicated IT staff -- a common challenge for emerging technology initiatives. At the same time, our IT teams were challenged to ensure consistency with the broader enterprise architecture when proposing solutions to foster end-to-end organizational alignment and integrated, sustainable upgrades. Bringing the business and IT teams together has led to collaboration beyond the initial scope of the project scope and elevated continuing business-as-usual interactions.

See also: Characteristics of an Effective Change Agent

Overcoming Legacy Challenges

Legacy data systems in life insurance are often plagued by duplication, inconsistent tooling and inefficient processes. Combating this starts with constructing datasets at their most basic level, thus curtailing the need for subsequent aggregation and enabling scalability to accommodate future analytical needs and prevent data redundancy. It is also important to clarify data ownership roles by installing functional data leads and data owners, ensuring responsibilities transfer smoothly across functions while aligning with internal policy, regulatory obligations and contractual arrangements. Finally, tool selection must focus on an end-to-end architecture that benefits the entire organization.

At RGA, data modernization began with acknowledging that legacy issues hindered adaptability to analytical demands. We redefined data ownership, invested strategically in technology tools and phased out legacy systems in favor of scalable solutions that considered downstream integrations to maximize the reusability of analytical code. Key principles guiding this modernization process included:

• Source of Truth: Establishing a single source of truth for core datasets at the most foundational level, devoid of premature aggregation, ensures all downstream processes are fed uniformly and accurately.

• Self-Service Analytics: Empowering business units with tools and capabilities to independently access and analyze data reduces dependency on IT and accelerates decision making.

• Scalability: Prioritizing scalability in technology investments to meet future demands diminishes current limitations and unlocks the potential business value.

• Active Monitoring: Continuously tracking expenses, usage and process efficiency enables iterative improvement and fosters formalization of repeatedly used processes.

Advancing Data Centricity

The resulting framework at RGA integrates data from multiple sources through a "data fabric," a centralized repository for curated datasets for which access is managed and secured, yet readily available as needed. The data fabric supports a robust analytical database that enables self-service and the generation of business processes by users other than IT, supporting ad-hoc initiatives while also monitoring expenses and usage. Layered on top of this are advanced analytical capabilities and business intelligence, leveraging the speed and efficiency provided by the underlying analytical database to derive insights.

Just as important as the technology is the realignment of roles within the organization. RGA introduced data leads within key functions, such as operations and underwriting, to outline the analytics strategy for their respective domains. The data operations (Data Ops) team executes these strategies, ensuring seamless integration and coordinating cross-functional initiatives. Overseeing it all is the chief data officer, who works with senior leadership to align the overarching data strategy with the company's vision and to ensure investment generates desired business value. These roles are complemented by partnerships with IT, change management, legal and other technology partners.

See also: Winning Back Reinsurers' Confidence

Avoiding Pitfalls and Achieving Success

As with any transition, life re/insurers must navigate potential pitfalls in their modernization journey, and RGA was no different. Challenges encountered that can now serve as a guide for others include:

• Environment Integration: Migrating from on-premises to a cloud environment demands careful planning to ensure seamless co-existence and transition.

• Strategic Alignment: Technology investments should align with the broader business strategy.

• Comprehensive Solutions: Integration must be end-to-end, avoiding piecemeal approaches that can lead to systemic incongruence, while enabling a future state of accelerated technology enhancements.

• Expense Management: Monitoring expenses can help avoid unexpected cost overruns and enable the retirement of unused processes.

• Change Management: Prioritizing and investing in change management, focused on both systems and the people who interact with them, facilitates adaptation and uptake.

Despite the typical challenges of any major technology enhancement, RGA's modernization journey proved well worth the effort. Resulting efficiencies yielded significant improvements in system run times -- often 10 to 100 times faster. The process also produced a much stronger relationship between IT and the business, with clearly defined roles for data and analytics leads. Expense management and enhanced approval processes are now embedded in day-to-day operations. And an advanced security model further safeguarded the transformation, empowering business units to operate autonomously and securely. Teams now devote less time to constructing analytical models and datasets and more time to interpreting them for business insights.

Conclusion

For life insurers contemplating a path toward data modernization, RGA's journey offers a potential blueprint. It emphasizes early and clear expectation setting, fully funded and business-aligned IT proposals and a symbiotic business and IT collaboration. This blueprint underlines the importance of overcoming data challenges, investing in scalable and agile systems and continuously monitoring and refining processes.

Through data modernization, life insurers can achieve data fluency, drive business value and pave the way for an analytics-driven future. The key lies in an unwavering commitment to innovation, robust planning and a collaborative spirit that stretches across organizational functions.

Michael Reilly is a managing director in Accenture's insurance strategy. He has more than 20 years of experience helping insurance companies around the world transform underwriting operations and organizations. He has led large-scale commercial insurance transformation programs in underwriting, policy, business intelligence and mergers and acquisitions. He has also co-written and presented multiple articles on underwriting, analytics and knowledge management.

Paul Carroll

Of all the things you’ve written, perhaps the most startling to me was based on some work you did with The Institutes, ITL’s parent. You wrote that underwriters only underwrite about 30% of the time. The rest of the time is spent on paperwork and on sales-related work. Is that still pretty much where we are?

Michael Reilly

Yes. We just did a survey with a client, and the numbers are tracking around the same 30% to 40%. It varies a bit by carrier, but that’s about what is spent on the core risk evaluation. There's a lot of other stuff that underwriters spend time on that is, quite frankly, administrative or data prep that they shouldn't be spending time on.

Paul Carroll

What would a reasonable goal be?

Michael Reilly

A reasonable goal is closer to 60%. There are now technology solutions that help the underwriter focus and do their evaluations faster. There's no reason why I can't get unnecessary tasks off their plate.

Paul Carroll

Someone used a new term with me the other day: “digital paper.” They said that, sure, insurance had made progress toward being paperless but that we now have digital paper: PDFs, spreadsheets and other documents that, while in electronic form, still require all the manual flipping through and drawing data from that we’ve always done with paper. How do you get beyond digital paper and all the way to digital?

Michael Reilly

This is a favorite topic that I talk about all the time. I joke that underwriting hasn't changed in 300 years.

Sure, 300 years ago it was done in a coffee shop. Someone came down the street with the application, the junior underwriter popped out and got it and the underwriters created a file folder that they passed back and forth while they did their work. In modern times, we started to mail documents back and forth, then we FedEx-ed them, then we had fax machines and, congratulations, today we do email. But those emails include PDFs, so they aren’t really digital data. The information is still locked away. And what do we do with those emails? We put them in file folders. They’re digital file folders, but they’re still file folders.

I'm old enough to remember an underwriting space where you had these Manila file folders with seven parts. The first part had correspondence. Then you had your application. You had your loss runs, your statement of values and so on. Now go look at today’s electronic files. You have the same seven parts. It’s like you just took the old system and moved it over.

People are pushing around digital pieces and saying, ooh, we have digital workflow. Digital workflow has replaced the mailrooms, but that’s about it.

While there’s a bit of variation, a core kind of commercial submission document for property/casualty probably has about 500 useful pieces of information. Our core rating system and policy systems carry just enough information to get the rate done and get the policy issued. All of that other risk data stays locked away in those PDFs, so the underwriter has to look at it individually. At a renewal, you'll see the underwriter with two PDFs on two different screens trying to figure out what's different.

Today, a carrier might send the submission to an operations person or maybe offshore, where someone types in 100 pieces of data. That's nice, but I left 400 behind, and the 400 I left behind are the stuff that tells the story that the underwriter uses to make their decision.

But technology tools now let me digitize all that data and ingest the whole thing, not just the 100 fields, and show it to the underwriter at the key decision points.

The magic of an underwriter is that they’ve seen an awful lot of these things before. So we rely on the underwriter to make a judgment call. Is this average, below average, above average? But what if I could use data and show you exactly where this submission is average, below average and above average? I can look at the claims frequency, at the cost per square foot, at the number of employees, and I could show you compared with a peer group exactly where this one is, without your having to dig through the PDFs.

I can set up an analytical view from a triage perspective. What's our probability to win this? Are there flags on this building that mean I should spend more time evaluating it? From a negotiating perspective, what’s our experience with this broker? At renewal, I can do a side-by-side digital comparison of what's changed year over year, to focus the underwriter’s attention on exactly what's different so they can figure out what to do.

I can make the underwriter incredibly more efficient if I break that cycle of paper documents and move from PDF to digital to true digital. That's the vision we're talking about.

Paul Carroll

I'm sold. Why hasn't this happened yet?

Michael Reilly

Several reasons. One is the ingestion technology is relatively new, and carriers are just getting their arms around the tools. Some work better than others, and there have been some false starts. Digitization takes some time, and, quite frankly, a lot of carriers are short-sighted. They only think to digitize the same data they use today in their policy and other systems and aren't taking the extra leap and thinking what else they can do. Some also just lack imagination.

The technology is there. There’s not a technology limitation any more. The issue is just, Do you have the imagination to actually picture a digital underwriting path and then drive to that path?

Insurers like to be fast followers. They don't always like to be first doers.

But we're starting to see pockets of experimentation here and there. Two years ago, it was only pilots for ingestion. Last year, a couple players became more serious about ingestion and did a little bit of playing with the analytics, though mostly for the management team, not the frontline underwriter. That's another problem we see: Carriers get focused on Google, with all this cool data for the managers, and don’t recognize that the real value of the data is in giving it to the front line.

I describe underwriting systems sometimes as three generations. The first was a policy system. The second was our workflow system. The third is these big data platforms and stuff. You're seeing some new players, like Federato, at maybe level 2.5 or 2.7. They’re not quite a level 3, but they're definitely pushing the boundaries.

Paul Carroll

How long would it take me, if I'm a good-sized carrier, to go full bore on these sorts of ingestion and analytics capabilities? Are we talking about a two-year effort, a five-year effort?

Michael Reilly

It varies a bit, but on the extraction side I can tell you that, for a project we started over a year and a half ago, we had the first submission extraction going for North America in three months. In four more months, we were extracting all North America submissions for APEX submissions, all U.K. submissions, and we're getting ready to do Europe.

So could you be extracting all the data within a year? Yes, you could. The complexity is putting that data into your systems, but the cleaner you have the landscape on the extraction side, the faster you can go.

There are still some challenges. We’re running at 95% or 96% accuracy, so not necessarily 100%. You still need to plan for some humans in the loop and some bit of correction, but you can still be way more efficient than you are today.

Paul Carroll

I'm really curious about this idea of the dark data. What's lurking in those 400 pieces that you don't have?

Michael Reilly

Maybe you don’t see that computer equipment is in the basement in a flood zone. Wildfire zones change year to year, and policy documents aren’t smart enough to match the changes against the locations of the properties being covered. We saw that when wildfires hit California. Good carriers had a better view of what their current book was. It’s not that other carriers didn’t have the right data within their walls; the data just wasn’t accessible within their walls.

Paul Carroll

Are there any things I haven't asked about that are top of mind for you about underwriting that I should have asked about?

Michael Reilly

There are two other hot topics. One is AI, which everybody gets excited about. I think we're too excited, to be honest, in some degrees. It can be applied in the tooling and in the preparation but not necessarily in the core underwriting decision until there’s more transparency about how it makes decisions. I’m making $100 million decisions. I'm not trusting the AI to do that yet.

There's still too much nuance, especially in the commercial space. There's a wonderful commercial bakery near us. But they also let the public come in, and you can get a hot roll right out of the oven. So now it’s a commercial bakery and a retail bakery. Oh, by the way, they bought the best deli in the area and put one of the shops actually in their bakery, with the other one down the street. Now you get the hot roll off the conveyor belt, walk it over and have them make a sandwich for you. Best sandwich in the world.

An underwriter can interpret all those different exposures and figure out how to balance everything. AI is very good at looking at homogeneous risks and seeing the patterns of a homogeneous risk, but commercial insurance isn't homogeneous. AI won’t replace the underwriter, but it can make the underwriter smarter by putting the data in context.

Paul Carroll

The other hot topic?

Michael Reilly

You're seeing this more in Europe than we are in the U.S., but there is the green element coming in, and carriers need to consider that from the risk perspective. Carriers need to figure out what their commitments to becoming green by a set time mean, not just for their investment portfolios but for their underwriting. Do I cover those businesses or not cover those businesses?

Paul Carroll

Super. Thanks so much for your time and your insights, Michael.

Farm Bureaus are so much more than insurers – they’re considered the voice of farmers and ranchers nationwide. Between advocacy at federal and local levels, educational programs, and the general empowerment of farming families, Farm Bureaus are actively building a sustainable future of safe and abundant food, fiber, and renewable fuel for our nation and the world. 

At the center of every Farm Bureaus’ mission are its members, those who have dedicated their lives to farming and ranching. In its simplest form, the aim of Farm Bureaus is to meet its members where they are today and empower them to keep running day-to-day operations while focusing on the future. 

One operational piece that’s critical for both members and Farm Bureaus is paying (or collecting) insurance premiums. And in a world where the modern consumer can make one-click purchases on Amazon or easily pay other bills online, outdated or manual payment processes can be a major source of frustration for your members.

By offering easy paths to self-service, Farm Bureaus can cater to both traditional preferences and the more modern preferences of next-generation farmers coming up today. This begins by providing a seamless customer experience where it matters most.

What do members want out of their payment experience? 

To help billers stay aligned with customer payment preferences, InvoiceCloud conducts an annual survey of ~2,100 bill payers nationwide to determine the current state of online payments. Data from our most recent survey (available for download December 2022) indicates several overarching trends that should give you a sense of the payment experience your members are expecting: 

1. Digital: In general, digital insurance payments have increased across the board since 2020. Mobile and online portals were the two most popular and preferred payment channels, but mobile took the top spot as the most used and most preferred for the first time. 
2. Convenient: The #1 word selected when respondents were asked how they would “describe their ideal payment experience.”  
3. Automatic: There’s been a 5% spike in automatic payment enrollment since last year, especially among folks aged 60 and older. 

All of these descriptors apply to the needs of farmers – they required quick, easy ways to get their Farm Bureau premiums paid every cycle, so they can spend more time on the countless other daily operations that should be taking precedence. Even from the Farm Bureau perspective, leveraging an online payment portal streamlines manual tasks and offers bureau employees more time to focus on critical member issues and needs. 

So, what would your member’s ideal digital payment experience actually look like? Here are a few examples of how to identify a truly frictionless payment experience: 

• One-time payments: This frictionless payment options allow members to pay quickly with only their member number, policy number, or account number – no passwords needed. 
• More Ways to Pay: Members should be able to choose from multiple payment channels (online portal, mobile device, text message, etc.) and methods (credit card, Apple Pay, ACH, etc.), and each option should be as easy to use as the next. 
• Payment Reminders: Farm Bureaus should allow members to opt in to email, text, calendar, and phone reminders so they never miss a bill again. 
• Review and Store Invoices: Members enrolled in paperless billing should be able to receive and review invoices online any time they’d like. 
• Automatic Payments: Allow members to “set it and forget it” with easy automatic payment enrollment capabilities. 

Options like these are crucial to helping Farm Bureaus remove friction from their payment experience, therefore making life more convenient for members and staff alike. 

Why Georgia Farm Bureau partnered with InvoiceCloud 

In the spring of 2022, Georgia Farm Bureau Insurance selected InvoiceCloud as its next online payment solution. The goal was to give its 250,000 members a variety of frictionless options for securely paying bills electronically. 

George Monk, General Manager of Georgia Farm Bureau Insurance, shared that the decision stemmed from the organization’s responsibility to meet members where they are today. 

“Our members rely on us as partners in everything that they do, so it’s essential that every interaction we have with them, be it in-person or via automated means, be as personable and pleasant as possible. The convenience and sophisticated payment options that come with InvoiceCloud give our members the options, intuitive experience, and peace of mind they’ve come to expect as part of a larger organization designed to improve the lives of our members.” 

– George monk, Georgia Farm Bureau Insurance General Manager

Want to learn more about how InvoiceCloud can help improve the high-value member experience of receiving bills and making payments? We’d love to connect and understand more about your goals! Schedule a no-obligation call here or watch the video below to hear a little more about who we are.

Sponsored by ITL Partner: InvoiceCloud

Originally Posted By InvoiceCloud

Many insurance organizations share common pain points when it comes to collecting premium payments – but what’s the biggest, top-of-mind challenge that keeps insurers up at night? We wanted to know, so we asked 106 insurers who attended a recent live webinar the following question: 

Which objective is most important for your insurance organization? 

• Decrease payment-related phone calls 
• Decrease inbound paper checks 
• Decrease print and mailing fees 
• Reduce late premium payments and cancellations 

With 62% of the vote, the majority of insurers asked selected “reduce late payments and cancelations” as their most critical organizational goal. This makes perfect sense, considering that late or delinquent payments often lead to policy cancellations, spikes of policyholder churn, and a negative impact on your organization’s revenue flow. 

How can you reduce late premium payments and cancellations? 

Since delayed payments are such a major concern for so many insurers – perhaps yourself included! – we wanted to offer 4 ways your organization can utilize online payment technology to combat late premium payments and prevent policy cancellations. 

1. Provide flexible payment options

The past year has seen a tremendous shift if the way customers are making payments, and it’s more important than ever to offer policyholders flexible payment options.

For example, “pay later” mobile wallet options enable your customers to pay their bill over time and can even safeguard your collections in the process. Options like PayPal’s Pay in 41 and PayPal Credit2 allow your organization to get paid upfront while offering your customers the flexibility they need. Giving customers the ability to schedule payments in advance can help drastically, too. While this feature may not be right for all customers, for payers who are experiencing a sporadic flow of income, scheduling payments ahead of time may allow them to make payments while income is consistent.

2. Prioritize communication with policyholders

In all relationships, communication is key. This is especially true for insurance organizations and their policyholders. Clear communication doesn’t just ensure for consistent collections, but can also greatly improve your customer’s experience, which can boost CSAT scores and online adoption rates. 

One great way to communicate with your customers is through Outbound Campaigns —messages that your organization can send to customers to remind them of upcoming bills, late payment notices, and much more. These campaigns not only establish a consistent channel to communicate with your customers but also are critical to preventing late and/or canceled premium payments.

3. Remove roadblocks from the payment process 

A stellar policyholder experience is critical to the success of your organization, so making the premium payment process a simple and seamless is one easy way to reduce late premium payments. Your organization can simplify the payment process by removing any roadblocks to an effortless, completed payment. 

For instance, not requiring customers to log-in or register each time they need to make a payment; an optimized guest checkout route is not only efficient, but can encourage your customers to pay online more frequently. In fact, a recent Invoice Cloud survey found that 38% of respondents said ‘convenience’ was the number one reason they chose to make a payment online, and forcing your customers to register or log-in is the opposite of convenience. 

Pay by text and “one click” payment options (like Invoice Cloud’s OneClickPay) are also great for streamlining the payment process.  

These features not only increase online adoption rates but result in more consistent payments overall. If customers are offered a simple way to pay a bill, they’re more likely to make a payment sooner than later — improving internal efficiencies and giving your organization peace of mind knowing most premium payments will be paid on time each billing cycle.

4. Drive to self-service enrollment 

Encouraging policyholders to enroll in self-service payment options like AutoPay and paperless billing are key for locking in consistent payments. Your organization can do this effectively by offering customers a payment solution that is designed to encourage policyholders to enroll in these options at every customer touchpoint, including: 

• On their bill 
• On the payment screen 
• In the confirmation email after a payment has been made 

Ready to get started? 

Evaluating and, subsequently, innovating your organization’s premium payment experience is undoubtedly the quickest way to improve premium consistencies and reduce cancelled policies. 

Luckily, Invoice Cloud has everything you need to start offering a better premium payment experience. Download our free content package, The CIO Toolkit: Resources for Insurance Chief Innovation Officers, and you’ll receive: 

• Research report: Keeping Up with Millennial Policyholders 
• Podcast: PC360’s Insurtech Center Podcast Series – How technology is supercharging CX in the insurance industry 
• Infographic: Customer Experience in Insurance 
• On-demand webinar: Novarica + Invoice Cloud – Embracing Positive Disruption: How Technology is Transforming the Insurance Industry 
• Case study video: California Mutual Insurance Company 
• BONUS WORKSHEET: The Insurance Innovation Checklist 

Sponsored by ITL Partner: InvoiceCloud

Originally Posted By InvoiceCloud

As is true across all industries, customer expectations are constantly evolving for insurance providers. While the wants and needs of customers may change, one thing remains the same — policyholders will not renew policies with insurance providers that don’t meet their expectations.

One McKinsey study shows that satisfied customers are 80% more likely to renew their policies. However, only 15% of customers are satisfied with their insurers’ digital experience.

The fact that insurance carriers who provide best-in-class customer experiences generate 2 to 4 times more growth in new business and 30% higher profitability than carriers with an inconsistent customer focus demonstrates just how critical satisfactory customer experience truly are.

Exceed expectations with true SaaS for insurance

Software as a Service (or SaaS) is a software delivery model that provides all the benefits of a single software interface for all of your core systems, without the need for continuous updates by your IT department. Translation? Your organization enjoys all of the benefits of owning software without the trouble of managing and maintaining it.

For insurance companies in particular, SaaS is ideal because it’s secure, customizable, scalable — all of which works to increase policyholder satisfaction and retention. This delivery model also empowers insurers to digitally transform while allowing employees to place emphasis on core business functions rather than IT maintenance.

When choosing a SaaS vendor to work with, however, it’s important to make sure you’re signing up for a true SaaS solution. Sometimes, companies practice what’s called cloudwashing, or running traditional software on a cloud instance and marketing it as a “true SaaS” solution. In a cloudwashing scenario, multiple versions of the software still exist, as opposed to a cloud native solution, where only a single version or platform exists.

Take Netflix, for instance. As a true SaaS platform, Netflix has one single instance solution that all subscribers have access to. When a new show or movie comes to the platform, users will automatically have access to the program on any channel they use to stream.

Cloudwashed solution, however, require users to undergo costly and time-consuming customizations every time a new functionality is available. This can not only interupt daily operations, but frustrate policyholders and strain finite resources in the process.

What does cloudwashing look like?

It’s crucial for insurance companies to be able to identify true SaaS solutions from those that are cloudwashing. To ensure you’re choosing a true SaaS solution, be sure to ask yourself these questions: 

• Are all of your customers on the same codebase or are they on variations of a common codebase? True SaaS is a single-instance, multi-tenant platform, meaning all clients are on the same base software code and platform, but others can simultaneously use the same code. 
• How much time and effort goes into updating your system? Are internal IT resources being overextended to manually update software? True SaaS software would automatically update when a new feature and functionality was available.
   
• Does your software provider’s website accurately depict what they provide?  If a provider’s website promotes “SaaS-based” solutions instead of “true SaaS,” it’s most likely cloudwashing. 

So, what do policyholders expect? 

Most importantly, it’s important to understand that hosted solutions, even if they are cloudwased, cannot futureproof user experience to consistently meet policyholder expectations. Research shows that 45% of policyholders are looking to switch providers within the next year, which means it’s never been more important for insurance organizations to evaluate the customer experiences they’re providing.

In order to keep up with these expectations, insurance companies first need to understand exactly what their policyholders expect. In a recent webinar, the InvoiceCloud team unveiled the results of a recent survey to explore what policyholders want and how insurers can leverage this data.

A few of their key findings include: 

• Digital payments are table stakes: Only 6% of policyholders prefer to pay bills by mail. By far, more people preferred to pay either online or via mobile device 
• Make digital payment options frictionless: 89% of non-digital payers would be willing to make online payments if they were easier to find and use. 
• Leverage targeted communications: Policyholders are less likely to miss a premium payment if a reminder (or reminders) catered to their preferences is sent.

Overall, it’s clear that policyholders have high digital expectations, which insurers can fail to meet. Leveraging true SaaS solutions enables insurance organizations to consistently meet changing expectations, while reducing internal workloads.

Don’t take our word for it, see it for yourself! Watch the video below to learn how Ellington Mutual enhanced its policyholder experience with InvoiceCloud’s true SaaS engagement and payments solution.

Sponsored by ITL Partner: InvoiceCloud