Tag Archives: Brian Harrigan

InsurIQ’s Brian Harrigan

Brian Harrigan, Founder and CEO of InsurIQ, describes the company’s ability to give consumers a more holistic view of all their insurance coverages in one easy to use platform, simplifying the process of researching, buying and managing a portfolio of insurance products as needs change and evolve.

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Will Insurers Ever Learn From Amazon?

You may (or may not) remember that when Amazon.com began in the late 1990s, the single focus of the company was selling books online. One product category, one type of manufacturer, one market focus — people who buy books. At the time, virtually everyone in the publishing industry scoffed at the idea that anyone would want to buy a book they couldn’t first touch. Today, Amazon.com sells all types of products from all types of manufacturers to all types of individuals and businesses every day of the year. No one is scoffing any more — except perhaps the insurance industry.

Just like the publishing industry two decades ago, the insurance industry in facing a once-in-a-generation digital disruption and transformation, and I’m not sure the industry knows it. Let’s look at the distribution of insurance through the lens of an Amazon.com-like buying experience.

Most insurers and distributors automatically start with the typical objections: “Insurance is complex,” they say; or, “What about the regulatory restrictions?”; or, “My agents have to explain the product benefits to the customer.” The knee-jerk reactions make sense in an industry that is mostly agent-centric and that seemingly treats customers with at least some contempt.

We have, after all, built rules around every aspect of insurance: who can buy, what they can buy, when and how they can buy, who they are, where they are located, what they want to insure, how much insurance they need, how much it costs. There are licensing and appointment rules, compliance and regulatory issues, insurance company underwriting requirements, rating rules, policy issue guidelines, premium remittance standards and distributor channel conflict rules, and these may all be different depending on the kind of product – life, accident and health, property and casualty, individual, group, association, employer and so forth. While many of these rules make sense, many others are simply vestiges of “the way things have always been done.” That is a problem for our industry.

The reality is that a consumer doesn’t care about most of the nitty-gritty, inside baseball, that affects all of the above. The consumer cares about being in control of the insurance purchase experience like he is in control of every other shopping experience. That’s not to say the consumer wants to go it alone without an agent necessarily. But it does mean the consumer wants to be able to make that choice — and, today, she can’t. Increasingly, consumers are being schooled on how to buy everything through the convenience of a digital market; why not all of their insurance?

It won’t be long before insurance consumers will expect to access products from multiple carriers, shop, compare, buy their policy with the credit card they pull from their wallet and have their policies, ID cards, welcome letters, privacy notices, etc. instantly delivered to their own online account (not through a carrier). How about the convenience of going to a digital marketplace that remembers each consumer for subsequent transactions? Maybe like Amazon Prime?

I’ve always wondered what the executives at Barnes & Noble, Borders, Simon & Schuster, HarperCollins and Penguin (not to mention Circuit City and J.C. Penney and Sears) were thinking back in the 1990s as Amazon.com started to gain traction. I wonder the same thing now about some insurance executives.

Savvy insurers and distributors will meet consumers where they want to be met and transact business in the digital marketplace. Or they won’t. But if the industry doesn’t go there quickly, someone else will – of that, I’m sure.

The Achilles Heel of Insurer Technology

Migrating the technology infrastructure supporting insurance underwriting to “digital” has substantially different meanings depending on who has the floor. For some insurers, it is simply the ability to put a product on the web and offer on-line quotes to prospective policyholders. For others, it is the ability to quote, bind and issue a policy on line.

The more sophisticated platforms offer a complete digital marketplace for consumers to shop, obtain pricing, buy, bind, pay for and have policies delivered for a variety of products, offered by multiple carriers, into a secure web-based account, using familiar, digital, “shopping cart” tools and techniques. Still, many carriers need to examine their current systems, which were not built for speed to market or a high degree of automation.

The issue for many carriers attempting to go digital is the burden of having web-based sales integrate seamlessly with their legacy systems. I’ve had numerous conversations with executives who bemoan the fact that they can’t offer a product in a different channel because the systems “can’t handle it.” So, carriers are turning away business (and doing their customers a disservice).

The Achilles heel for most insurers is that insurance product systems design theory of the ’80s and ’90s was component-based. It made sense at the time, but it doesn’t any more.

The typical carrier legacy system configuration involves a different systems component for practically every function along the product continuum, starting with account acquisition and continuing through agent licensing, underwriting, compliance, rating, quoting, binding, policy issue, premium collection, commission administration and claims payment and ending with financial reporting.

Along the way, account data is input into each separate system (sometimes manually, sometimes automatically), resulting in multiple silos of redundant account data. How many employees do you have going through a monthly reconciliation process just to determine you are not double counting business? Wouldn’t it be great if those employees were helping to generate revenue, not figure out if the revenue you think you have is actually revenue?

Component-based systems are further complicated because they are often programmed in different languages, come from different vendors, require separate support and maintenance personnel and in many cases rely on programmers who become experts in a very narrow section of the code. (“Don’t ask me about the commission system; I do the billing system.”) The complexity gets compounded with acquisitions of companies that have deployed a similar, component-based approach.

Carriers that are serious about a digital transformation need to take a holistic view of the product sales, underwriting and policy administration continuum. Instead of looking at a new component for the underwriting function, a new policy administration system, a new document management system, carriers need to view the entirety of the product process, create a single, relational database and work with a “product agnostic” platform.

The ability to put all products on a single system with capabilities to automate underwriting, rating, quoting, binding, policy issue, premium and commission administration is the ideal scenario. Providing access for all users to run all applications from a single system eliminates redundant data entry, programming and maintenance requirements of component-based platforms and enables you and your company to concentrate on the strategic initiatives you’re supposed to focus on.

4 Rules for Digital Transformation

In 1990, I had the good fortune to meet the founders of a new technology company focused on the automation and real-time adjudication of health insurance claims. The company, Paperless Claims Inc., (PCI) was way, way ahead of its time, deploying “rules-based” logic to achieve an 80% first pass adjudication rate for completed health insurance claim transactions originating from a physician’s office via a dial-up modem. The final claim determination and payment details were transmitted back to the provider’s office in less than two minutes. PCI found some early adopter health payers for their technology, but the industry preferred to use people to process the massive amounts of paper for the majority of claim transactions over the next 20 years.

Fast-forward to today when suddenly the insurance segment is “ripe for digital transformation,” and all segments are scrambling for solutions to support online distribution and automated administration for virtually all types of insurance products across the personal lines, accident and health, small business commercial lines spectrum.

How do decision-making executives in the insurance segment know how to move beyond the status quo and put their company on the right path toward digital transformation? There are four key (and remarkably simple) constructs that provide the guidance:

1) All insurance products are the same. When you stop and think about it, all insurance products follow the same path from the acquisition of account data, to underwriting, rating, quoting and binding, then through policy issuance, premium invoicing, (billing), commission administration, financial reporting and renewals. Some products may require more underwriting than others, and others have more fulfillment than others, but, deep down, they all follow the same course.

2) All insurance products are governed by rules. There is a rule for every element of every product: underwriting rules, class codes, Zip codes, type of risk, height, weight, smoker/non-smoker, etc. All the rating rules and quoting parameters, questions around when certain endorsements and riders will apply, the rules for binding accounts and issuing policies, of premium billing, commission hierarchies and financial reporting are all known. The issue in most carriers today is that the application of those rules may vary based on the systems or people applying them.

3) Rules can be (and should be) automated. All insurance product and process rules can be automated, and, when they are, results for each transaction component require fewer touch points. The digital transformation of the process work flow provides users with “real-time” actions. You may say, “But there may be exceptions to rules, like giving an underwriter the ability to change a premium by up to 5%”. And I agree. In that case, you still want capture the reason(s) for the change and have a manager sign off – and both actions are just additional rules.

4) One system is better than many. Most carriers are saddled with single-function, component systems that have been banded together over the years. Every new product (and every product change) requires a Herculean effort to make sure “the system” can handle the business.   Each year “the system” takes up ever-increasing resources for “maintenance,” “data reconciliation” or other non-revenue-generating activities. A single comprehensive system built on a relational database platform will reduce both staffing and maintenance costs and allow you to measure your product time in weeks, not days.

These are pretty simple concepts that can have an enormous impact on your business. Defining all product rules so that the majority of work flow, process transactions may be automated requires different thinking about the approach to systems than has been the traditional insurance segment view. Senior insurance industry executive are beginning to understand and appreciate the power of a comprehensive, platform.