Tag Archives: efficiency

5 Things Here to Stay, Post-Pandemic

The coronavirus pandemic forced a near overnight shift in how workers across swaths of industries, including insurance, work. Virtual meetings, telecommuting, a boom in remote tech – these things all became part of the everyday workplace reality in a flash and shook attitudes about what it means to be “at work and working.”   

My team and I work with a range of business owners in the insurance industry, from one-man shop independent agents and brokers to larger firms. While responses to where and how people work have certainly varied, we do anticipate that there will be several permanent side effects on insurance workplaces even after the pandemic subsides.  

1. Putting the brakes on road warriors 

Pre-pandemic, many insurance industry road warriors routinely traveled the bulk of each week to get in front of people. Although some can’t wait to hit the road again, others revel in the ability to reach more agents and brokers in less time virtually. Companies will likely be weighing multiple considerations before giving employees license to travel again, and curtailing travel when not absolutely necessary. There aren’t just health and safety concerns for having employees limit travel; companies that have slashed budgets are likely shaving unnecessary expenses.  

2. Expanding first-hand touchpoints with new audiences 

There’s still an argument for the effectiveness of in-person sales meetings, but the pandemic has really opened up the lines of communication to the entire organization. That is, where maybe only one or two people might be in an in-person meeting, a virtual meeting gives the opportunity for multiple people to participate. It’s a benefit most didn’t realize would materialize when electronic calls became the go-to. There’s a benefit to customers and employees to connecting first-hand, even virtually, over getting information relayed to them. 

3. Examining operations with an eye for efficiency 

Employees across the industry will be more attuned to how efficiently they work because of lessons learned during the pandemic. A decrease in travel and elimination of a commute free up chunks of time. Everyone will now also evaluated which meetings are truly important and which need to be face-to-face; some clients will prefer to permanently meet electronically. We have already seen a boom in technology advancements and uptake in the industry to help employees work efficiently while remote. 

4. Boosting take-up rates 

The changes forced on business by COVID-19 could increase insurance take-up rates, especially in an area like flood, where the new norms may reduce prices and increase the ease of transactions. What’s more, if there is one glaring lesson that we are learning from the pandemic, it is that the unexpected should be expected. Assessing and addressing risk – whether for businesses or homeowners – is top of mind as people strive to eliminate the potential impact of controllable surprises; for example, the aftermath of the Michigan floods this spring. 

5. Forcing modernization 

Some insurance agencies and brokers are welcoming the changes necessitated by the pandemic, while others started kicking and screaming that they would have to alter their operations. For example, agencies that discouraged a reliance on digital quickly had to change their tune, embrace how well old-style, mandatory two-hour Monday morning meetings could work on Zoom and update technology infrastructure from computer towers to laptops. Regardless of how advanced a company was in terms of digital acceptance, the pandemic has certainly forced those that were behind to catch up or risk the efficacy of their business in the long term. 

The next few weeks and months will likely bring more change and will bring even more clarity to how the industry will be permanently reshaped. There is great value in some of the changes we have seen – and anticipate to stay – and for those willing to be adaptable and flexible there can be great opportunity and growth.

How Tech Makes Sector Safer, Smarter

The digital transformation of the insurance industry is first and foremost motivated by the demands of clients, who are always looking for the easiest way to solve claims. New technologies also can improve processes, eliminate fraud risks and collect data that can be used to personalize services.

Together with banking and finance, insurance is one of the most highly regulated industries, and any change must go through lengthy and rigorous probation. This explains the lag in using state-of-the-art technology compared with other industries.

However, things are changing, and the insurance industry can see gains of $1.1 trillion just from AI.

Here are five ways technology can make the insurance industry better for clients and more efficient for providers.

Process Automation and AI-Based Decisions

Digitization has affected most business sectors by cutting processing times, simplifying procedures and offering more power to clients. The insurance industry can benefit from all this, too.

Claim processing can be stepped up, with clients performing some part of the registration process, then letting AI do the rest. Technology can also increase renewal rates and cut down churn by sending automatic reminders or scheduling automated payments.

Underwriting is no longer delegated exclusively to people. Now it is a mix of automatically computed risks and human decision-making.

Since this industry relies heavily on extensive paperwork, any help regarding recording, sorting and retrieving information is a notable improvement. OCR and computer vision make insurance brokers’ works easier and save time.

Self-Service Portals and Chatbots

Clients are becoming more tech-savvy with their ever-more=powerful mobile devices. They are no longer ready to wait in lines at an office to be served by an insurance officer. The trend is to create a website or an app where clients can buy a policy, submit claims and evidence, create support tickets and request payments as quickly and conveniently as possible.

This should be part of an integrated omnichannel strategy, where the client has a choice of communication channels with the insurance provider.

See also: In Age of Disruption, What Is Insurance?

While some clients still prefer talking to a human agent, and this service is not going anywhere any time soon, chatbots are gaining ground. These solutions are helping insurance companies reply on the spot, thus eliminating waiting times, which are frustrating for customers.

IoT-Based Prevention

Better prevention methods could help avoid a great deal of the hazards for which insurance companies have to pay. Pipe leaks, fire outbreaks, gas leaks and more can become things of the past with the help of smart IoT sensors, which are becoming the norm in modern homes.

This is something AXA is already testing within smart homes. When home appliances are connected to a central system and give constant feedback, it becomes easier to avoid accidents by simply shutting off those posing a high risk. In a disaster, it will also be easier to process the claim because there is a clear record of the underlying cause.

Fewer Accidents With Self-Driving Cars

Self-driving cars will eventually be able to avoid collision with each other and other objects, reducing the number of accidents and saving insurance companies millions of dollars.

Until then, installing smart safety systems in vehicles can also diminish the number of accidents or at least minimize adverse outcomes.

Healthier With Wearables

Most chronic health problems are preventable if people adopt a healthy lifestyle. Some insurance companies are already implementing gamification schemes to motivate their clients, with the prize being a discount in the insurance premium paid. The motivation of the insurer here is that the cost of the bonuses or discounts is far less than the doctors’ fees.

Technology can also help medical providers keep track of the entire care delivery cycle, from the admission to long-term remote monitoring. This can smooth out the friction between hospitals and medical insurance providers, as this insurance portal development project explains in detail.

Ethical Issues of IT in Insurance

Although the consumer’s benefits in the form of personalization and less friction are apparent, there is also a darker side of using IT in insurance. Ethical issues include:

  • Data governance. Because these systems are very recent, there are few legislation points covering data accessibility and management, except for GDPR and some others.
  • Security and privacy. As with any other information systems, the problems of authentication and encryption remain relevant.
  • Transparency. Most smart systems act as black boxes; therefore, clients and staff have no way to explain why the system returns a particular answer. This contradicts the fundamental right of the client to be fully informed about the service.
  • Bias and discrimination. The primary concerns here are related to the ability of AI to qualify a specific client as high-risk and deny the client the service or put the client at a disadvantage.
  • Job losses. Reports show that as many as 18% of current insurance jobs could be automated by 2025.

See also: IT Security: A Major Threat for Insurers  

Despite the risks, using IT in the insurance sector means that there are fewer intermediaries between the client and the provider, faster service, less friction and overall more accessible policies. As the insurance tech is maturing, it’s time for providers to weigh the advantages versus risks and consider a digital pivot while it can still provide a competitive advantage.

The Entrepreneur as Leader and Manager

Entrepreneurs are doers. One of the strengths of successful entrepreneurs is that they get things done. However, relying solely on their own capabilities is limiting.

We only have so much time, energy, creativity and intelligence; it is a finite game. To realize the fullness of our potential, we have to harness the time, energy, creativity and intelligence of others. We need to be playing an infinite game.

To do so, we must learn to lead and manage.

In this complex and ever-changing world in which we live, we typically are dependent on others to get the results we want. As an entrepreneur grows his or her business, the interdependencies multiply. Entrepreneurs have to trust others — and other people have to trust them.

See also: 6 Tech Rules That Will Govern the Future  

The starting point is leadership. My friend and colleague Dr. Herb Koplowitz defines leadership as follows:

“Leadership is the ability to set a direction and coordinate the actions of others in implementing it.”

Leadership is primarily concerned with vision and strategy. Vision is the direction toward which you want to take your business. Strategy is the clear plan of action to get there. Management is concerned primarily with accountability and authority. The challenge for many entrepreneurs is that they lack clarity around their vision; they lack strategy to build the right structure; and they have never learned how to exercise authority or hold people accountable.

For the entrepreneur, the ability to create highly productive working relationships that can fulfill their vision depends on three factors:

  • Effectiveness: Doing the right things to reach their strategic goals.
  • Efficiency: Doing things right to optimize the use of resources and to reduce costs.
  • Trust: Creating a positive working environment where people feel safe, respected and valued for their contributions.

As a leader and manager, it is important to take the time to develop and implement a business plan that includes:

  • A well-articulated vision (where do you want your business to be in five years?)
  • A clear strategy to reach that vision (what needs to happen to fulfill your vision?)
  • A formal organization structure designed to implement your strategy (who and what do you need to support your strategy and achieve your vision?)
  • Staffing and managerial leadership practices to maximize effectiveness, efficiency and trust (how do you need to transform the way you lead your business?)

See also: Incumbents, Insurtechs Must Collaborate  

To take your business to the next level, you need to be a leader and a manager.

Next-Gen Analytics Drive Efficiency

Across the insurance industry, analytics has become the most heralded technology investment for insurance companies, wholesalers, brokers, agents and other intermediaries. Yet, with soft market conditions, thinning margins, intensifying competition, escalating M&A activity and rapidly evolving technology, making the right choices and investments is imperative.

Not surprisingly, many insurers and intermediaries have opted to maintain systems that have long become obsolete before jumping into what they’re led to believe may be the next generation of features.

The issue is where to focus. Selecting the right platform essentially comes down to assessing an organization’s current and future information needs and matching them to today’s technology offerings.

To put this in a wider context, let’s take a closer look at some of the dynamics currently facing the commercial insurance marketplace.

Broker and Agent Challenges

Competition

Brokers are moving aggressively to build their business across all market segments, industries and geographies.

Consolidation

The pace of M&A is accelerating among mid-sized and smaller broker/agents. This affects all players – whether you are an acquirer, likely to be acquired or face direct competitors with added capabilities or resources through M&A transactions.

Focus on Maintaining or Improving Margins

All players are driving not only for market share but for growth that will deliver higher margins. Accordingly, competition among brokers and agents is intensifying for the most profitable business segments.

Drive for Efficiency

With the sustained soft commercial insurance market, brokers and agents face an imperative for greater efficiency and improvement in workflow structure.

Rising Client Expectations

Despite generally lower rates for insurance coverage, clients continue to have higher service expectations of all their providers.

Reconciling Old and New Technology

Brokers and agents must balance the need to incorporate technology against the cost of development, implementation and integration of any new system with legacy systems.

Insurer Challenges

Strengthening Distribution Network

Many insurers are working to develop and expand business with national, regional and local brokers and agents.

Navigating Competition

Insurers face intensifying competition for all types of business, especially in profitable coverage lines and with high-margin client segments.

Emerging Risks and Opportunities

Evolving risks provide opportunities for innovation both in terms of creating products and improving existing coverage lines.

Maintaining Individual Producer Relationships

Insurers want ways to address a lack of visibility of accounts and account owners at national, regional and local brokers; to remain effective, they must keep up with contact changes at brokers, shifting responsibilities of client managers.

Growth vs. Retention

With each renewal, insurers must balance need for client retention with a drive for new business.

Better Data and Feedback

To meet aggressive growth goals, insurers need improved market intelligence and feedback on product offerings and potential solutions for improving both retention and capturing new business. They also can gain from formal feedback mechanisms to track reasons for lost business. 

Building solutions: Meeting the industrywide need for tech-based analytics

In recent years, global brokers have developed and implemented proprietary systems that enable them to capture details of individual placement transactions on a global basis and gain insights on pricing trends, terms and conditions, market penetration, client and carrier characteristics and success rates.

This information also yields substantial benchmarking data for senior management, individual brokers and marketing executives. For insurers, these analytical capabilities have proved invaluable in developing and refining insurance products and services, targeting industry segments more effectively and operating more profitably.

Within the U.S., however, the largest global brokers still account for only about 20% of the overall commercial insurance marketplace. As insurers strive to expand their business with national, regional and local brokers and agents, they need similar robust analytical capabilities to achieve efficiencies.

Today, most insurers have access to a variety of technology-based solutions for tracking and analyzing various types of claims. However, beyond what’s currently available from the largest brokerages for their own business, insurers generally lack similar solutions for identifying and managing their incoming business and continuing clients across the spectrum of their broker and agency relationships.

The next generation of analytical platforms will enable insurers to track, manage, understand and evaluate business obtained from each of their brokerage and agency relationships. Insurers will be able to pinpoint producers at each broker directly responsible for placing business by geography, client size, industry sector and other delineators.

With a clear line of sight across their entire portfolio, insurers will have enhanced abilities to develop and roll out new products and policy features, especially those targeted to specific industry sectors or client types. They will be able to get rapid feedback on why they lost business or failed to win new clients.

Meanwhile, as mentioned, brokers and agents face similar challenges with respect to their accounts and underwriter relationships. Given the number and spread of clients in their books, brokers want solutions that enhance their efficiency and ability to service and grow their business.

New platforms also will offer brokers and agents the ability to track and monitor their business, as well as to strengthen and expand their relationships with insurers. Individual producers will be able to view their own accounts and benchmark them against those of the same size, geography, industry and other factors.

This, in turn, will help brokers and agents identify and address gaps in client programs, expand the insurers providing quotes for individual clients and specific coverage lines, negotiate pricing terms and conditions more effectively and elevate overall service delivery and performance.

The same platforms will offer views for broker/agency senior leadership that will detail account profitability; help assess performance by producer, office or region; and make informed decisions about resource allocation, sales, marketing and planning. After a merger or acquisition, the systems will help accelerate business integration, including the development of consistent service delivery across the combined book.

Major advancements in technology, including dramatic decreases in data storage costs afforded by the cloud, will make new analytics platforms more affordable and accessible to insurance companies, brokers and agencies of all sizes. Ultimately, the widespread availability, real-time information, feedback and robust capabilities of the next generation of analytics platforms will propel the insurance distribution system into the 21st century.

Stay tuned.

Getting to 2020: the Finance Function

Even as economies recover, the insurance sector continues to face many competitive pressures and regulatory challenges. Yet a new drive for growth is emerging. The 2014 EY Global Insurance CFO Survey captures the priorities and challenges for finance and actuarial teams as they seek to support business growth strategies while addressing regulatory and cost pressures.

Delivering more value to the business through performance measurement and improved decision support is the top priority for the finance function through 2020. Among senior finance professionals participating in the survey, 71% indicated that “being a better business partner” ranked among their top three priorities, with 35% placing this as number one.

As insurance companies around the world continue to invest in data management and analytics capabilities, the role of finance and actuarial functions has become even more critical. The processes and systems supporting these functions are key to developing deep insights into business performance, as well as customer needs, preferences and behavior. In response, finance leaders have been increasing their efforts to improve the capabilities of their organizations to meet the new demands. In the survey, 89% of respondents stated that they have either begun a change program or are in the planning stage.

However, the drive to better insights is not without challenges. Among the issues is the impact of continuing regulatory compliance demands. According to 35% of those surveyed, implementing new regulatory and financial reporting requirements was the highest priority for finance and actuarial organizations; 56% ranked this among their top three. As a result, the ability for these organizations to strike a balance between delivering value to the business and meeting daily operational demands will continue to be a challenge.

Not surprisingly, the current data and technology footprint will require significant change to meet the challenges of the finance function of the future. Across the finance operating model, survey participants scored data as the least developed capability on average, while technology recorded the greatest gap between current and required future state.

Other Key Findings

  • Top three business drivers: #1 growth, #2 managing costs and #3 regulatory changes
  • Two-thirds of respondents rank data and technology issues among the top three challenges facing finance and actuarial functions; participants on average score data as their least developed capability
  • By 2020, the most significant shifts in maturity levels by operating model will be in data management and technology capabilities
  • Respondents expect onshore shared services to support transaction processing functions, with outsourcing selectively used for payroll and internal audits
  • Decision support and controls are expected to account for a larger share of finance and actuarial headcount by 2020

What insurers must do

We see three key areas where insurers can take action:

  • Modify current reporting processes by developing an efficient reporting solution architecture.
  • Deliver timely and relevant management information and link strategic objectives to performance indicators.
  • Improve finance and actuarial operational performance by using the right skills and processes to strike a balance between effectiveness and efficiency.

For the full survey from which this excerpt was taken, click here.