The marriage of “insurance” and “technology” — “insurtech” — continues to attract investment among P&C insurers, and startups specializing in insurance technology products are popping up all over. In fact, investment in insurtech reached $853 million in the first quarter of 2017 — a 50% increase over the same period in 2016.
While, to date, most insurtech products have focused on the distribution and sale of insurance, there is great opportunity for new insurtech innovations to offer superior customer service, which translates to loyal customers — the brass ring in a highly commoditized market.
Insurtech enables fast and personalized experience, any time and anywhere
Customers want to know that they will be looked after if any issues arise — even after a policy purchase. This means succeeding at a full range of customer interactions and touchpoints, from addressing customer questions about their bills, to working with a customer during the claims process. Customers expect these interactions to be personalized, fast, efficient and on their own terms. At the same time, insurers are looking to automate some processes, thereby increasing time savings and freeing employees to focus on more complex activities. Altogether, this is why technologies like artificial intelligence and chatbots have found a following in insurance.
Artificial intelligence, for example, enables personalized customer service from the initial interaction to processing a claim — often without any human interference at all. Artificial intelligence can analyze a customer’s profile and recommend insurance products best-suited for the customer. And, by removing human intervention, the potential for error decreases.
Chatbots, too, are gaining favor for their ability to do things like schedule an appointment or process a payment, any time and anywhere. Whatever a chatbot can’t help with can be elevated to a human, but just eliminating these types of simple tasks from employees’ to-do lists can be a boon to their productivity.
Industry is evolving
To be sure, traditional insurers are embracing insurtech to augment and improve their customer service. Insurtech distributors, too, are realizing the need to evolve and offer more than just great purchase experiences. In personal lines insurance, for example, distributors understand they must provide more than a great buying experience, so they are becoming insurers as a way to better control the customer experience. Metromile, for example, which became an insurer in 2016, recently launched a new automated claims service, which enables a more seamless claims experience. Now, Metromile more easily assesses whether a claim can be quickly processed and paid.
Improving customer service can be daunting, especially for traditional insurers that sell multiple products in various customer segments through a variety of channels. In a highly commoditized market, however, the customer experience is the all-important differentiator. By investing in insurtech innovations, insurers will find they have a leg up on the competition and will reap the rewards of satisfied, loyal customers.
With $5 trillion in premiums, an incredibly low level of customer satisfaction, aging infrastructures, an analytically based, high-volume business model and a “wait until we have to” approach to innovation, insurance is now fully in the sights of the most disruptively innovative engine on the planet, Silicon Valley. The tipping point for insurance is here.
More than 75 digitally born companies in Silicon Valley, including Google and Apple, are redefining the rules and the infrastructure of the insurance industry.
Inside the Insurance Tipping Point – Silicon Valley | 2016
It’s one thing to listen to all of the analysts talk about the digitization of insurance and the disruptive changes it will bring. It’s quite another to immerse yourself in the amazing array of companies, technologies and trends driving those changes. This post is the first of a series that will give you an inside look at the visions, culture and disruptive innovation accelerating the digital tipping point for insurance and the opportunities that creates for companies bold enough to become part of it. (Join us at #insdisrupt.)
Rise of the Digital Ecosystem – Expanding the Boundaries of Insurance
Digital ecosystems are innovation catalysts and accelerators with power to reshape industry value chains and the world economy. They dramatically expand the boundaries within which insurance can create value for customers and increase the corners from which new competitors can emerge.
Silicon Valley is home to companies acutely aware of how to establish themselves as a dominant and disruptive platform within digital ecosystems. That includes Google, which is investing heavily in the automobile space with Google Compare and self-driving vehicles and has acquired Nest as an anchor in the P&C/smart homes market. Fitbit is already establishing health insurance partnerships. And let’s not forget Apple. The Apple Watch already has insurance-related partners. Apple has clear plans for the smart home market and has recently launched AutoPlay, its anchor entry into the auto market. There are rumors that Apple plans to develop an iCar. And that’s just what we know about.
Customer Engagement and Experience – New Digital Rules, New Digital Playbook.
When your customer satisfaction and trust is one of the lowest in the world and companies like Apple and Google enter your market place, it’s really time to pay attention. There is a customer value-creation and design led innovation culture in the valley unrivaled in the world, and the technology to back it up. Companies like Genesys, and Vlocity are working on perfecting the omni channel expereince. Hearsaysocial and, declara, are working on next gen social media to help customers and the insurance industry create better relationships. Many of the next generation of insurance products will be context aware, opening the door to new ways of reaching and supporting customers. Companies like mCube and Ejenta, are working to provide sensor based insight and the analytics to act on it. Trunomi, Beyond the Ark, and DataSkill via cognitive intelligence are developing new innovative ways to use data & analytics to better understand and engage customers. Lifestyle based insurance models are being launched like Adventure Adovcates and Givesurance, And some of digital marketing automation’s most innovative new players like Marketo, and even Oracle’s Eloqua are rewriting and enabling a new digital generation of marketing best practices.
Big Data and Analytics – Integrated Strategies for the New “Digital” Insurance Company
The techno buzz says big data and analytics are going to affect every business and every business operation. When you are a data- and analytics-driven industry like insurance that deals with massive amounts of policies and transactions, that buzz isn’t hype, it’s a promise.
The thing about big data and analytics is that when they are used in operational silos, they provide a tactical advantage. But when a common interoperable vision and roadmap are established, analytics create a huge strategic advantage. That knowledge and the capability to act on it is built into the DNA of “born digital” entries into the insurance market like Google.
The number of companies working on big data and analytics within the valley is staggering. We have already discussed a few in the Customer Engagement section above. Here are a few more, In the area of risk: RMS is building its stable of talent in the big data space; Actian is delivering lightning-fast Hadoop analytics; Metabiota is providing epidemic disease threat assessments; and Orbital Insights is providing geo-based image analysis. In the areas of claims and fraud, Palantir, ScoreData, Tyche and SAS are adding powerful capabilities for insurance. Improved operational effectiveness is being delivered by Saama Technology, with an integrated insurance analytics suite; by Prevedere, with data-driven predictive analytics; by Volumetrix, with people analytics; and by Sparkling Logic, which helps drive faster and more effective decision making.
Insurance Digitized | Next Generation Core Systems
With insurance boundaries expanding, integration with digital ecosystems, increasing reliance on analytics and the demand for personalized and contextualized outcome- and services-based insurance models, core systems will have huge new sets of requirements placed on them. The requirement for interoperability between systems and data and analytics will grow dramatically.
Surviving the Tipping Point – Becoming One of the Disruptive Leaders
This is a small sampling of the technologies, trends and companies just within Silicon Valley that are shaping the digital future of insurance. The changes these will drive are massive, and they are only the tip of the iceberg.
An Insurance Tech meetup group open to all the insurance-related companies within Silicon Valley was just announced by Guillaume Cabrere, CEO of AXA Labs, and already has 64 members. For established companies to survive the tipping point and thrive on the other side of it requires more than handing “digital transformation” off to the CIO or marketing team. Success requires a C-Suite that has become an integral part of the community and culture building the digital generation of insurance companies.
For technology companies and next-generation insurance companies, success requires building partnerships with established and emerging players.
This blog series is designed to inform and accelerate that dialog and partnering formation. It will include a series of interviews with disruptive leaders from industry and Silicon Valley. If you or your company would like to be a part of that series, please let me know.
Join us for the next Insurance Disrupted Conference – March 22-23, 2016 l Silicon Valley
ITL readers receive a 15% discount when registering here.