Tag Archives: insurance nexus

Claims: Beyond the ‘Moment of Truth’

I have proudly worked in the North American insurance claims and information technology industry for over 30 years and have witnessed significant, albeit gradual, improvements in process and service. More recently, almost overnight, the switch of information gathering and distribution from analog to digital has transformed claims.

Mobile consumer technologies have been adopted rapidly, disrupting sales and distribution models and their supply chains. Instant gratification has become a natural expectation.  

Insurance Claims Process Evolution

In insurance, claims remains the “moment of truth.” Claims represents the best single opportunity for an insurer to engage personally with its customer, satisfy the coverage promise and foster loyalty. But claims has begun to evolve. It has been a highly complex, labor-intensive, stubbornly long, expensive and customer-unfriendly process. But it is benefiting in a big way from new and exciting technologies, and investors are eager to place bets on a new generation of entrepreneurs who shun working for large corporations (at least until those companies acquire them for mind-boggling amounts).  

The “Amazon effect” (immediate delivery of virtually anything from entertainment to information to merchandise to food through a simple, digital interface) drives consumer expectations even for insurance claims service, no matter the behind-the-scenes complexities involved. In the fiercely competitive personal lines market, traditional carriers are responding by transforming the claims process to make it more “Amazon-like.” In the process, carriers are lowering claim costs, producing savings that can then be reinvested in lower, more competitive, insurance premiums. 

See also: Breakthroughs Finally Appearing in Claims   

The claims process is still complex. It involves many disparate technologies and services, and firms that range from very large corporations to smaller, more local providers. Integrating and streamlining all of the related interactions is not trivial. But new, low-cost computing capabilities and information management technologies are enabling the interoperability of this ecosystem, leading to an array of profound changes, including these 12.

Claims in 2020 and Beyond

  • Control over first notice of loss (FNOL) will be contested as technology enables real-time accident notification. The change will allow for new influences in claim process response, resolution and the customer relationship 
  • Average cost of auto repair will rise further, exceeding $3,600, as more late-model-year cars enter the car park loaded with costly accident avoidance and self-driving technology that requires post-accident scanning and recalibration. A $5,000 average repair cost is already in sight. This trend will be reinforced by strong consumer preference for more expensive light trucks and SUV/CUVs, now representing 70% of new sales, and, soon, more electric vehicles (EVs)
  • As cost of repair climbs, so, too, will total loss frequency. It is now at 24% for some carriers, increasing claim costs and placing added stress on valuable claims-adjusting resources. Tech-enabled processing solutions will emerge to compress cycle times and ensure compliance, but deployment and integration will take time 
  • The collision repair industry and its traditional direct repair program (DRP) relationships with insurers will change in more fundamental ways as OEM repair network certification programs gain traction, with support and encouragement from trade groups, consumer safety, legal and regulatory advocates. This, in turn, will add upward pressure on average repair costs  
  • Growth in claims self-service, including auto photo estimating, will outpace other methods of inspection. The change will upend staffing models and disrupt appraisal work forces as well as the traditional collision repair referral process
  • A culture of speed and transparency will develop and attract new talent, filling an important gap
  • AI, including computer vision, machine learning, data analytics and automation, will begin to streamline and compress the insurance claims process, identify and deter fraud and remake related work forces and skill sets 
  • Digital imagery and measurement from aerial to drone to ground-based will permanently alter the property claims estimation, settlement and repair process. The change will create new strategic partnerships between carriers and third-party providers and transform the property claims field and desk appraisal
  • On the journey toward touchless claims, carriers are realizing that they need to deliver empathy at scale. They will leverage intelligent platforms while recognizing and deploying emotional data – and achieving a proper balance between digital and human touch 
  • CEO-led diversity and inclusion initiatives will become critical to attract talent in claims and boost organizational performance across the enterprise as well as increase competitiveness in the market
  • Emerging technologies getting greater attention and testing in claims use cases will include virtual and augmented reality (VR/AR) for staff training, field service and support
  • Success in the art of developing and managing effective strategic alliance and partnerships and collaborating with others, including competitors, will become table stakes for innovation 

Collaboration in Action

Now, more than ever, cross-industry collaboration across the vast claim ecosystem is critical to delivering an efficient, high-quality, low-cost claims experience to policyholders. One excellent forum for such collaboration is Connected Claims USA Summit, taking place this year in Chicago on June 24-25. As chairman of this exciting event, I invite you to join us this summer to discuss and learn how to move from strategy to action and implement the future of claims today.

See also: Future of Claims Intake for Insurance?  

How Insurers Are Innovating Right Now

From day-to-day operations, to the very relationship between insurers and policy-holders, it is no exaggeration to say that connected insurance represents the biggest potential for transformation that insurance has witnessed since the invention of the computer. See, for example, the ability of an insurance carrier to react to live data, in real time, and prevent a loss from occurring. From simply mitigating the effects of a loss, they become partners in risk-prevention.

In an increasingly competitive, technology-driven market, insurance carriers must continually innovate to deliver connected products and services that resonate with customers and provide what they need, rather than what the insurer can offer. Likewise, as technology develops and the digital distribution of insurance products increases, product development itself must become similarly agile and responsive.

Squeezed between decreasing profit margins, increasing customer expectations and greater competition, however, all insurance companies find themselves in a potentially make-or-break position; innovate or die.

See also: Understanding New Generations of Data  

Yet while technology represents insurers’ best chance at outstripping competitors in terms of product development, efficiency and customer experience, with so many new technical possibilities available (many of which are relatively unexplored), there is also ample opportunity for them to overspend and underdeliver.

To provide some clarity, Insurance Nexus recently interviewed over 300 executives to understand where insurance companies are concentrating their efforts to improve connected product and service innovation, who is responsible for these projects and how things are expected to progress in the future.

In the course of our research, it was striking to note the degree of importance with which executives are now viewing connected insurance innovation. 50% of respondents believe that CEOs and heads of strategy must take the lead in connected product development–a clear indication that innovation is rightly regarded as an enterprise-wide undertaking.

Our results also suggest that insurers recognize the scale of these projects and that, in many cases, they do not have the required competencies in house; 54% said that leveraging the expertise of external technology partners and insurtechs has been of greater value than relying solely on in-house talent.

On the subject of departmental collaboration, the results show that data and analytics departments feature heavily in connected product innovation. This is significant principally because the success of the AI and machine learning systems that underpin so much of connected products is predicated first and foremost on data, both volume and quality. If insurers can maximize the potential of the data they already possess and then intelligently insert aspects of AI (as opposed to hastily implementing an AI system and feeding it on poor-quality, invalid or disparate data), they will see the greatest results.

One particularly eye-catching statistic was that over half of respondents claim that their most successful channel for communicating product development and new services is by word of mouth. Although initially surprising to us in the digital age, this will be of great comfort to marketing teams everywhere because it tends to support the idea that product development should begin with the customer and their needs. If those needs are met, customers are showing themselves willing to become brand ambassadors themselves, a particular boon to insurers in such a saturated marketplace.

Download the infographic for detailed statistics on:

  • Which technologies are insurers embracing and actually integrating into their everyday procedures and products, including AI, ML, data analytics, automation and IoT?
  • Where are insurers prioritizing investment: operational efficiencies and internal procedures or customer-facing UX technologies?
  • What are the proven internal blends of skill sets that drive transformation forward, including leadership buy-in and recruitment initiatives in IT and data analytics?
  • How to incorporate external technology experts and insurtech that supercharge what you can offer your customer.

This infographic was created in association with Insurance Nexus’ coming Connected Insurance Europe Summit, taking place May 15-16 at the Novotel Hotel in Amsterdam. Welcoming more than 350 senior executives from across departments, the event will provide organizations with the necessary strategies and insights to transform each core pillar of product development, strategy and innovation and communication of value to the customer. For more information about Connected Insurance Europe, please visit the website.

An AI Road Map to the Future of Insurance

2018 saw unprecedented advances in the investment and deployment of artificial intelligence capabilities within the insurance industry, and 2019 promises to be no different. With the Insurance AI and Analytics USA Summit kicking off in Chicago, May 2-3, we spoke to some of our speakers to gauge their thoughts on the challenges that insurance carriers face in implementing AI.

“AI is impacting insurance at an unprecedented pace,” says Bilal Parviz, vice president of product development at Arch Mortgage Insurance. Eugene Wen, Manulife VP of group advanced analytics, adds that, “With innovative new players entering the industry and the traditional players trying to catch up, the industry is going to experience further significant change.”

William Dubyak, VP of analytics for product development and Innovation at USAA, says: “It’s impossible to open a magazine without seeing hype about analytics changing every aspect of your life.”

Although good progress has been made to date, there is a definite sense that we are only at the tip of the AI-iceberg.

In the eyes of Chuck Gomez, Novarica VP of research consulting: “Each year, the topic of AI gets more interesting as emerging technology evolves and adoption rates go up, indicating that more can be accomplished with progress. While the subject of analytics has been around insurers for a while…there’s still a lot to learn about analytics centered around underwriting, claims and customer service.”

See also: Future of Insurance Looks Very Different  

Insurance AI and Analytics USA will address distinct applications of AI, and Thomas Sheffield, SVP, specialty claims, at QBE, who will speak on the claims track, says: “From a claims perspective, our next 10 or 20 years will be defined by how well we embrace technology, artificial intelligence and the nearly boundless opportunities that arise from those advancements.”

Still, in conducting our research for the Insurance AI and Analytics USA agenda, it was striking how many carriers cited difficulties in actually embedding the technology they recognize as so integral to their future success.

AI and Results-Driven Innovation

Data is more abundant than ever, yet in many cases is unstructured, disparate and, well, just very big. Customers now demand seamless, omnichannel and personalized service, and, with a shortage of technical expertise hitting every industry, leveraging the availability of data and the potential of technology is difficult.

Moreover, as first movers begin to reap the rewards of integrating advanced technologies, time is running short. As Accenture’s Future Workforce Survey recently found, insurance companies that commit to AI to the same extent as “top-performing businesses could boost their revenue by an average 17%” by 2022. It is therefore incumbent on those that have not acted to do so now, or face irrelevancy.

See also: Insurance: On the Cusp of Disruption  

Despite the upheaval, opportunities are arising as carriers learn how to leverage changes in their environment. Insurance Nexus spoke to insurance data experts Paul Travers (SVP of finance technology, data and process, MetLife) and Amish Amin (director, claims data analytics, Nationwide) for their perspectives on how carriers can leverage AI, machine learning and chatbots to improve profitability, turbocharge customer experience and make the most of the explosion in data and computing power.

Access the full whitepaper here to find out more

Our discussions first centered on defining and describing the types of disruption in evidence across the insurance spectrum, with three phenomena in particular having profound impacts: the proliferation of data, rising customer expectations and a lack of suitable talent among the workforce. Addressing these drivers will necessitate changes from top to bottom, from insurance companies’ use of technology to organizational structures and the very nature of job functions that have remained constant for decades. Suffice to say that understanding the causes of disruption is key in such a rapidly shifting environment.

The theme of data is very much at the forefront of carriers’ minds. As Travers says, “Insurance is just ripe for disruption…[because] the availability of both structured and unstructured data is unprecedented.” More data may sound promising, but coming from many different internal and external sources and types of technology, the result is “disparate, unstructured data” that makes “traditionally used methods of analysis much harder.” Yet, with the right data governance structures and technology in play, the potential is enormous: MetLife enabled prescriptive analytics of business drivers to unlock real-time decision making.

Among all the talk of technology and processes, customers themselves were never far behind the scenes and possibly represent the greatest impetus for insurance carriers to act now. More and more B2C brands (not just insurance) are taking the customer experience as their starting point for innovation due to the influence of new players: agile and digitally native start-ups. These organizations, which have typically arrived on the scene in the past decade, have a massive advantage in that they do not have multiple legacy systems to contend with, so creating a cohesive, personalized and digital experience is easier (relatively speaking, of course).

Ultimately, customers vote with their wallets and have demonstrated the appeal of these types of on-demand, personalized and omnichannel service (see the successes of Lemonade, Hippo and Metromile). Legacy carriers need to match these standards and in the process will find manifold benefits other than just to the customer experience. Amin detailed unexpected benefits that Nationwide encountered after revising aspects of the customer interface, which included massive time savings for call-handling agents, as well as the improvement to the customer journey and more efficient processes.

See also: New Phase for Innovation in Insurance  

Advanced technology and all the data in the world mean very little, however, without the technical expertise and business knowledge needed to analyze data, draw insights and apply them in the real world; “You can’t just get a data scientist to come and solve your insurance problems,” one executive says. Although some organizations have set up partnerships and skills pipelines with local schools, colleges and universities to tap into the next generation of data scientists, few carriers have the resources to hire and train a new team with the required technological expertise and insurance business acumen. There will have to be more creative hiring and training practices than have traditionally been employed in insurance, and our experts shared several strategies to finding and creating the workforce with the right requisite blend of talents, skills and experience.

The whitepaper, Results-Driven Innovation: Turbocharging Insurance Profitability and CX with AI, Machine Learning and Chatbots, was created in association with Insurance Nexus’ sixth annual Insurance AI and Analytics USA Summit, taking place May 2-3, 2019, at the Renaissance Downtown Hotel in Chicago. Expecting over 450 senior attendees from across analytics and business leadership teams, the event will explore how insurance carriers can harness AI and advanced analytics to meet increasing customer demands, optimize operations and improve profitability. For more information, please visit the website here.

A P&C Guide for Digital Distribution

Property and casualty insurers aren’t shying away from digital distribution. “[F]our out of five insurers either have, or are planning to set up, wholly digital sales processes in which humans are involved only when customers need advice,” Accenture global insurance industry Senior Managing Director John Cusano reports.

But taking digital distribution from concept to reality still poses major challenges for many P&C insurers.

Here, we look at some of the biggest challenges of implementing a digital distribution strategy and how to overcome them.

Everyone’s Going Mobile

In a 2013 article for Wired, Christina Bonnington predicted that the world would contain 24 billion connected devices by 2020 and that the Internet of Things would result in people doing ever more tasks from their smartphones.

We got there early: Statista estimates that the world of 2018 already contains 23.14 billion connected devices and that the number will be more like 31 billion in 2020. And more of these devices than ever are mobile devices.

It seems as if the insurance industry only just began to embrace the opportunities afforded by digital technology when customers’ attention switched to this highly connected, primarily mobile world.

Today, customers “expect the same intuitive experience from their insurance carriers as they do from their favorite mobile app,” says Rahim Kaba at OneSpan. And they’re not the only ones. “Even insurance agents are demanding better digital capabilities from insurers to increase their ease of doing business,” Kaba says.

See also: Is P&C Distribution Actually Digitizing?  

Putting Numbers to the Scope of Mobile’s Impact

Mobile is an essential consideration for insurance companies, according to Andrew Sheridan at DialogTech, who cites several statistics that illuminate the opportunity available:

  • 40% of customers’ time researching insurance was spent on mobile, and 51% of these customers purchased insurance as a result of their research.
  • 25% of insurance shoppers do all their buying via their mobile devices.
  • 66% use a specific insurance company’s app.

Yet going mobile poses some challenges for insurance companies. For one thing, customers expect to be able to do everything from pay premiums to file claims, get driving tips or find a repair shop via a mobile app. That’s a lot of work for an app to do — and the more an app does, the slower and thus less appealing it is likely to be

Another challenge is the integration of older technologies with new ones. As Parmy Olson notes at Forbes, older telemetrics devices like Progressive’s Snapshot are starting to give way to smartphone apps that perform similar tasks, measuring speed, distance and other driving-related factors that can affect premium calculations.

These apps can seem more convenient to customers, but they can also make certain measurements or calculations more difficult. For instance, telemetric devices installed in the vehicle itself can more easily detect a crash and call for help, says Jim Levandusky, vice president of telemetrics at Verisk Analytics.

Embracing Industry Shifts

One solution? “Collaboration with the disrupters,” says Trevor Lloyd-Jones at LexisNexis Risk Solutions. Embracing mobile tools like telematics can make mobile apps easier for customers and more effective for insurance companies, and when these tools are approached through software as a service (SaaS) or similar providers, concerns about security or analysis are often addressed as part of the platform.

Companies that dismiss disruptors in the insurtech sphere do so at their peril, says Nikolaus Sühr, co-founder and CEO of KASKO. The era of relying solely on historical data may be coming to an end. “Disruption in other industries is actually changing user behavior and the nature of risk, so there is no relevant historical data anymore,” Sühr writes.

When moving into mobile for customers, agents or both, don’t be afraid to A/B test mobile apps, try new things and to innovate, says Amir Rozenberg, director of product management at Perfecto. While experimentation must account for the tight regulatory world insurance companies inhabit, trying out options in the mobile sphere allows P&C insurers to better understand how their customers use mobile — and how the company can use what it learns to attract and keep better customers.

Within this process, however, it’s important to keep mobile in perspective. “Even with this trend, companies need to ensure a mobile app supplements the overall experience and doesn’t dominate it,” says Rodney Johnson at Kony.

One Size Doesn’t Fit All

“With customers using more devices in more ways, there are new options for customer engagement,” stated a recent Incom Business Systems white paper. There are also plenty of challenges. Mobile devices feel personalized to customers, and with companies in other industries extending that personalization to their apps, insurance companies are feeling the pressure to personalize, as well.

A hallmark of in-person or traditional channels has been their one-size-fits-all approach to customers, according to Shashank Singh in an article at Insurance Nexus. Many P&C insurers have attempted to transfer this approach to the digital world, only to discover it doesn’t work.

Data and analytics offer insurers an unprecedented opportunity to understand and respond to each customer as an individual, from recommending products to calculating risk.

Digital distribution can also make it easier to capture a growing segment of the P&C insurance market that has changed its behavior as it finds itself priced out of coverage. “Rethinking distribution is key to successful inclusive insurance,” says Peter Wrede of World Bank Group USA. “Low distribution costs make insurance affordable for low-income people.”

A 2017 article by in The Street noted that 18 million adults in the U.S. currently cannot afford auto insurance, so they go without, often turning to public transportation or rides from friends instead. As a result, “personal automobile insurance is in a crisis,” said Dave Delaney of Owner Operator Direct. “Rates have been increasing steadily since 2011, and there is no end in sight.”

By turning to a digital distribution system to reduce costs, however, insurance companies gain the opportunity to make coverage more affordable, recapturing some of the 18 million customers who currently believe auto insurance won’t fit into their household budget.

See also: The Future of P&C Distribution 

Lack of Support Systems

Personalization of the digital customer experience, leveraging tools like mobile apps, presents a profound opportunity to understand and respond to customers’ needs better than ever before, said Ash Hassib, senior vice president of insurance solutions at LexisNexis. But “data availability isn’t the issue,” Hassib said. “It’s how you use it to underpin sustainable and profitable growth that’s the real challenge for insurers.”

And for many insurers, this challenge arises the moment they try to use that customer data within their current organization.

“Insurers have focused on digitalizing the front end, with insufficient focus on the systems that support distribution,” said a May 2017 report from the Insurance Governance Leadership Network. Additional challenges in retention have resulted, with insurance companies noting that customers leave because the system doesn’t provide adequate support for their experience.

Customers who use multiple channels to communicate with insurance companies are more likely to face problems caused by insufficient systems inside the organization itself. Perhaps this is why, relative to other industries, insurance company employees rated their companies 9% lower on providing a high-quality customer experience, according to Tom Bobrowski at The Digital Insurer. P&C companies were also rated 8% lower than average at “good cooperation between functions,” allowing the company to meet the customer’s needs effectively.

One option is to take a hybrid approach, says Sasi Koyalloth in a Wipro Ltd. white paper. A hybrid approach focuses on incorporating human agents into the digitization process, focusing on giving agents and employees the digital tools necessary for seamless communication throughout the organization.

Regardless of approach, “a single view of the customer is crucial,” says Robert Paterson at Afinium, noting that software as a service (SaaS) providers already exist with the tools and support needed to help P&C insurers move to a single platform for managing information.

And the systems’ cost needn’t be onerous. “Another key driver for adoption of SaaS solutions is its use in developing pricing models that can be directly related to system usage,” Paterson says.

Final Thoughts

The switch to digital is now or never for P&C insurers. Working with knowledgeable insurtech providers can help companies address concerns about data security, analysis and customer experience, allowing insurers to take full advantage of the digital world to build more personal and long-lasting customer relationships.