Tag Archives: crawford

5 Main Areas for Blockchain Impact

Blockchain, or distributed ledger technology, has quickly become a fixation in the financial services industry as a result of its potential to revolutionize our thinking about data sharing and security.

In considering the technology, senior business and IT leaders at property and casualty (P&C) companies must balance their natural skepticism about “next big thing” trends with a clear recognition of both the large-scale impacts and significant upside.

See also: What Blockchain Means for Insurance  

After all, it’s not hype to say that the opportunity is huge and that the possibilities of future applications are many. Similarly, it’s not hard to see how distributed, secure, peer-to-peer ledgers — the mysterious and exotic-sounding technology behind blockchain — may one day be as common in the insurance industry as Structured Query Language (SQL) databases. Blockchain has the potential to evolve into a core, underlying element in the technology “stacks” of most P&C carriers, supporting a diverse range of processes and part of your company’s future technology “plumbing.”

P&C executives must also keep in mind that these are still very early days. Blockchain in 2016 is roughly where the World Wide Web was in 1996 — on the radar of forward-thinking companies but still a long way from adoption at scale. Therefore, the question for most P&C companies is not whether they will adopt blockchain, but rather what and how to start testing, develop proof of concepts and proving out the value proposition.

In 2016, we saw numerous announcements of intent, but to date we’ve not seen many (any?) true applications of blockchain propositions live in the insurance market. In 2017, we will see the reality – in specialty P&C and in health insurance. This will lead to a fundamental rethinking of insurance business models.

See also: Blockchain: What Role in Insurance?  

In our new report, we look at emerging blockchain applications and the five main areas where we see the potential for transformation/disruption in the insurance industry.

No, Brokers Are Not Going Away

In 1997, the CEO of a Silicon Valley company told me I should give up on being an insurance broker and look for a new job because I was about to be disintermediated. Technology would let carriers and clients connect directly, and nothing I did could stop the movement of history.

Well, I ignored his advice, and the brokerage part of the insurance supply chain has grown by a factor of 25 in the past two decades.

But many people are now warning again of disintermediation. Was my friend just too early in his prediction? Will the doomsayers be right this time?

In a word, no.

First of all, disintermediation rarely happens as rapidly or completely as the technologists tend to think, with their binary, one-zero, on-off approach to the world. There are actually many more bank tellers today than there were when ATMs were introduced decades ago and were supposed to put tellers out of business. Remember when realtors were going to disappear, as buyers and sellers connected directly? Realtors are thriving. Even travel agents are still around despite the spread of sites like Expedia. There are only about 40% as many as there were two decades ago, but they deliver more value now, because they handle more complex problems or have developed specialties, such as exotic fly-fishing vacations that few have the expertise or confidence to plan on their own.

See also: Why Aren’t Brokers Vanishing?  

Insurance is even less likely to face disintermediation than bank tellers, realtors and travel agents because, if you think finding a fishing guide in Alaska is hard, try explaining how a workers’ compensation “experience modification” is factored or how the Affordable Care Act will affect the buying public if the new administration has its way. Even though the rise of comparison sites suggests that policies are easily comparable, they are not. It takes sophistication, based on lengthy experience, to help a client evaluate his or her needs and to sort through all the carriers and policy options to find the right fit. Product, price and relationship all have to fall into the right place at the right time.

Besides, as the founder and chairman of Insurance Thought Leadership, I have a ringside seat on the startups that are providing tools that will make the broker’s role even more important than it is now. In addition to the main site, where nearly 800 thought leaders have published more than 2,500 meaty articles on innovative ideas, we recently launched the Innovator’s Edge, which is tracking the more than 725 insurtech startups. I can say with confidence that the role of the broker will broaden for the foreseeable future.

Here are just some of the companies that will help ensure that all of us brokers have a Happy New Year – and many more to come:

RiskGenius – This startup, run by Chris Cheatham, uses artificial intelligence to instantly compare and contrast policy coverage and produce a report in layman’s terms. That helps clients see what’s going on. It also helps brokers keep track of changes in policies, making back offices much more efficient — serving clients better, at lower cost.

The RiskGenius solution plays into a trend that seems to be generally missed but that will be profound, in insurance and elsewhere. While some entire jobs will be automated — look at what robots are doing to many manufacturing jobs — the broader effect is that pieces of jobs will be automated. It used to be that every senior executive had a secretary, but as typing, some answering of phones, some scheduling and so forth have disappeared from assistant jobs, the span has become one assistant for every two, four or even larger numbers of executives. The same sort of winnowing of functions will happen with brokers, because of solutions like RiskGenius’. Brokers and brokerages will take on more strategic work as they let go of the more mundane tasks that can be taken on by technology.

Refer.com, run by Thomas Gay, likewise makes brokers more efficient as we prospect for business. While social marketing and social selling have attracted so much attention, but haven’t panned out, Refer.com scours the internet 24/7 to find topics of interest to prospects and puts them in an email format. The system prompts the broker about the optimal pace at which to send the emails, providing a high-tech, high-touch approach that can build the sort of referral network that brokers crave.

Agency Revolution, whose CEO is Michael Jans, offers complementary capabilities by automating marketing campaigns — for instance, sending out emails on clients’ birthdays, as policy renewals near, etc.

Pypestream, which has the good fortune to have ITL advisory board member Donna Peeples as its chief customer officer, can greatly improve customer service for larger brokers. Pypestream’s chatbots mean that customers can text queries to brokers — a means of communication that so many prefer these days — rather than call and wait on hold, negotiate a phone tree or face some other indignity. The chatbots filter through the texts, query any and all back-office systems that have anything to contribute and answer routine questions so fast that Pypestream sometimes has to slow the response so the client isn’t tipped off that it’s really dealing with a computer. Clients are happier, and brokers offload routine questions so they can handle more substantive issues.

GAPro, where Chet Gladkowski is chief marketing officer and chief information officer, also can make brokers much more efficient by providing what it calls verification as a service. GAPro addresses the huge time sink that is certificates of insurance. These are important, because they let parties to a deal know that other parties are carrying the requisite insurance — but they’re only as good as the paper they’re printed on (or the PDFS that contain them). Just because someone can show he had insurance a month ago doesn’t mean that certificate is still in force today, when the deal is finally coming together. Brokers spend an inordinate amount of time verifying these certificates — but GAPro automates all that, so it’s possible for everyone to know in real time the insurance status of all relevant parties. Again, this means faster and better service for clients.

GroundSpeed automates loss runs and the processing of claims data, simplifying a complex, painful process and letting clients and brokers see on a dashboard all the claims they’ve made under an insurance policy.

Risk Advisor, whose founder is Peter Blackmore, helps brokers extend risk management services to small businesses. These services had previously been practical only for larger businesses, because of the expense of the work involving in identifying and mitigating an individual business’ risks. But Risk Advisor has automated the process so much that far smaller companies can enjoy the sort of attention and expertise that big clients have traditionally received. That change pushes brokers in the direction that both they and clients would like to move: The brokers will increasingly help prevent losses rather than coordinate payment after losses occur.

WeGoLook, whose founder and CEO is Robin Smith, provides arms and legs (and brains) to brokers for any sort of service. Her 30,000 “Lookers” across the U.S. are currently handling tasks such as taking photos and gathering other information after car accidents, but their work is really limited only by our imaginations, because they give us the sort of inexpensive, free-lance workforce that Uber has brought to transportation. How valuable is the sort of service that WeGoLook can provide? Well, Crawford just announced that it was buying 85% of WeGoLook in a deal that puts a $42 million valuation on this young startup.

See also: Calling all insurtech companies – Innovator’s Edge delivers marketing muscle and social connections

This list of seven companies is just the start, as a visit to the Innovator’s Edge will show you. So, my bet is that if my Silicon Valley friend and I reconvene in 20 years, we’ll see that the role of the broker has become even more strategic and has moved by leaps and bounds beyond where it is today.

Insurtech vs. Legacy Insurance Carriers

Combining the resources of one of the world’s largest TPA firms with one of the world’s largest sharing economy platforms will result in true innovation within the insurance industry during a time when most carriers continue to operate in a legacy manner. Forbes, December 8, 2016

The writer was describing the announcement last week that Crawford will acquire 85% of the equity in my company, WeGoLook, which I believe will be the precursor both for other mergers and for other types of deals that will drive innovation through a merger of the gig economy and the insurance industry.

Let me explain.

Traditional Supply Chain Disruption

Simply put, the traditional supply chain is being disrupted. Hugely.

Digital technology and innovation have altered the traditional supply landscape in a number of ways. Technology has decentralized and democratized the supply chain, removing the need for traditional intermediaries. This digitization has resulted in the rise of gig economy platforms, which can use mobile technology to organize cost-efficient labor in a connected supply chain ecosystem.

For a long time, insurance carriers have tacitly acknowledged the need to adjust business models and consumer delivery processes. The time has come.

The WeGoLook-Crawford partnership is only the beginning.

Customer Experience Is Changing

Forbes contributor Steve Olenski noted that “the [WeGoLook-Crawford] merger is making the customer experience even better than before by adding key benefits for insurance company customers.”

These advantages include a more streamlined claims process, the addition of flexible workers to supplement field staff and powerful mobile technology.

See also: The Sharing Economy and Accountability  

It goes without saying that the younger generations love mobile. When it comes to business-to-consumer interactions, mobile is becoming even more important than traditional communication pipelines.

Simply put, the customer experience is now one of on-demand. WeGoLook, and other gig economy platforms, are premised on on-demand asset delivery through mobile technology.

The Workforce Is Changing

The world is becoming more freelance. By 2020, one study predicts that 50% of the U.S. workforce will be independent contractors. This has significant implications that move beyond the insurance industry itself.

WeGoLook and the gig economy are using technology to redesign work process flows for enterprise clients. This, combined with the ability to dispatch on-demand workers who possess the proper skill-sets, helps to augment and supplement existing, full-time workforces.

This augmentation can be indefinite, or during times of peak demand.

Perhaps even more importantly, gig workers can easily act as field personnel for platforms that don’t yet have a nationwide footprint.

For insurance carriers, this results in a much faster and cost-effective way of providing inspections, or performing low-complexity tasks.

Gig companies including WeGoLook are more than just vendors; we easily become part of traditional business processes through partnerships and acquisitions.

What happened last week, was a perfect example of this integration in its infancy.

Expediting Claims Processes

The Crawford-WeGoLook acquisition solves one of the most persistent challenges in the insurance industry: how to get claims processed faster.

Today, insurance inspections may take anywhere from a few hours to a few weeks to schedule and execute.

With the acquisition of WeGoLook, Crawford is fast-tracking the entire process and streamlining the claim process workflow by leveraging “gig economy” workers, already in the field”

  • Crawford will be able to send out claim requests in real-time, tapping into WeGoLook’s workforce of 30,000 Lookers, and growing.
  • Crawford will be able to assign experienced agents to high-priority tasks, allowing Lookers to handle simple inspection requests for a fraction of the cost.
  • Crawford will experience extensive data capture efficiencies. All inspections sent through WeGoLook will be funneled through a secure, mobile platform. No more paper trails, and no confusion over what an inspection does or does not entail.
  • Crawford can leverage WeGoLook’s custom inspections capabilities. For special requests, such as needing an agent who is proficient in a specific language, Crawford can simply include the request in the order to WeGoLook’s workforce.
  • Crawford can quickly scale its workforce up or down to match demand for inspections.

Indeed, according to Crawford’s press release, this strategic acquisition will enable “Crawford to revolutionize, automate and expedite the claim handling process by utilizing a large mobile workforce for automotive and property inspections.”

See also: A Mental Framework for InsurTech  

These are exciting times for the insurance industry, with innovative technology ingraining itself in this centuries-old industry. The above thoughts are simply my observations, and time will certainly tell the full story.

But I can assure you, the marriage between the insurance industry and gig economy will be a lengthy and prosperous one.

Brexit Brings Some Opportunities in U.K.

The recent vote for Brexit will by no means destroy the U.K. insurance industry – if managed properly, the industry can emerge more resilient and competitive than ever. While insurers in the U.K. proceed with caution as they prepare for the country’s exit from the European Union, we at EY see this “Brexit moment” as an opportunity to foster innovation and transformations in the industry.

See also: Thoughts on Insurance After Brexit  

Insurers agree that Brexit does present a number of challenges, including instability and legal uncertainty that may arise from a delayed exit. However, we believe that with diligence and imagination, the U.K. insurance industry can use Brexit to secure its future and maintain preeminence as a leader by:

  • Investing in developing expertise in emerging areas such as big data and the Internet of Things
  • Creating attractive product lines that stand out from potential rivals in Europe
  • Developing services and products that will be attractive to growing regions beyond the EU

The industry should use the opportunities created by the Brexit vote to help London remain the best place in the world to conduct business and take steps to make London insurers the most innovative and customer-focused.

For more information, read EY’s new report.

2016 Latin America Insurance Outlook

Despite sluggish economic growth and troubling inflation in key markets, the 2016 insurance market outlook for Latin America remains relatively bright. The rollout of new insurance products and distribution approaches at a time of low market penetration should drive strong growth for insurers. Insurance premium growth is expected to rise by around 6% to 7% in 2016 and possibly beyond should the economic environment improve as expected. At the same time, the emergence of end-to-end digital capabilities is transforming the Latin American insurance market. This digital market disruption will force insurers to make rapid revisions to existing business models to stay competitive and build market share.

Customer expectations rising

Commercial customers will continue to require more sophisticated insurance solutions in 2016, including coverage for business interruption, cyber security, civil unrest and errors and omissions. Latin American consumers, many of whom are young, cosmopolitan and tech-savvy, will continue to push for new insurance channels and services that fit their lifestyle. To respond, insurers will need to simplify and adapt products for Millennials and sharpen their focus on mobile and social media interactions. Evolving customer needs throughout the region are compelling insurance companies to rethink their strategies, processes and services. The rise of financial technology, or fintech, companies is causing insurers, particularly in the consumer insurance sector, to reconsider their business models and increase their investment in new digital technologies. Despite a desire to avoid conflicts with legacy models, insurers realize that flexibility, efficiency and innovation are critical for success in a more demanding marketplace

Competition heating up

The liberalization of industry regulation across Latin America has opened insurance markets to wider competition. The abundance of insurance capital has intensified competition from various directions: from global insurers seeking a foothold in the region to local insurers looking to expand cross country to entrenched insurers defending their turf. These competitive trends are keeping insurance rates flat through much of the region and, in some cases, pushing them lower. The most substantial rate decreases have been in non-catastrophe property.

Pockets of premium increases can be found in areas of instability, such as Venezuela. However, insurance capacity is very limited for Venezuelan political risk, with most risks dependent on the international reinsurance market.

As markets develop in Latin America, commercial demand is increasing for new forms of insurance coverage, such as environmental liability. The opening of the oil industry to the private sector in Mexico, for example, is exposing new oil exploration and production entrants to potential losses from environmental damages. But market capacity is still restrained in key markets, such as Brazil, where only a few insurers offer such liability coverage.

Read our Market Outlook for LATAM Insurance in 2016 to understand more about the dynamics facing the South America Market here.