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Despite COVID, Tech Investment Continues

Insurers will continue to experiment with emerging technology in 2021, despite the challenges of 2020. When the COVID-19 pandemic hit, many insurers paused their 2020 innovation plans, emphasizing digital workflows and cost control at the expense of emerging technology pilots. Heading into 2021, technology priorities for many insurers, especially those in the property/casualty space, are similar to those of 2019.

The U.S. is still in the midst of the pandemic, and some insurers are anticipating lower premium revenues for the coming year. In spite of this, insurers are investing in technologies like artificial intelligence and big data, though some are narrowing the scope of their innovation efforts for the coming year.  

Understanding Emerging Technology Today

Insurers typically take a few main approaches to emerging technologies. Early adopters experiment with the technology, typically via a limited pilot. If the technology creates value, it’s moved into wider production. Insurers that have taken a “wait-and-see” approach may launch pilots of their own.

Novarica’s insights on insurers’ plans for emerging technology are drawn from our annual Research Council study, where CIOs from more than 100 insurers indicate their plans for new technologies in the coming year.

No insurer can test-drive every leading-edge technology at once, and every insurer’s priority is a result of its overall strategy and immediate pressures. Still, at a high level, several industry-wide trends are apparent:

There is big growth in RPA; chatbots continue to expand. More than half of all insurers have now deployed robotic process automation (RPA), compared with less than a quarter in 2018. Chatbots are less widely deployed but on a similar trajectory: from one in 10 in 2018 to one in four today.

AI and big data continue to receive significant investment. These technologies take time to mature, but it’s clear insurers believe in the value they can provide. More than one in five insurers have current or planned pilot programs in these areas for 2021.

Half of insurers have low-/no-code capabilities or pilots. These types of platforms are relatively new but have achieved substantial penetration in a short time. Early signs indicate they could become a durable tool for facilitating better collaboration between IT and business experts.

Despite continued tech investment, 2021 might be a more difficult year for innovation. Insurers’ technology priorities have generally reverted to the mean — more so for property/casualty than for life/annuity insurers — and technology budgets for 2021 are within historical norms. Still, some insurers are paring down pilot activity in less proven technologies, like wearables, to maintain their focus on areas like AI and big data. Technologies with substantial up-front costs, like telematics, may be harder to kick off in 2021. 

See also: Technology and the Agent of the Future

How Emerging Technology Grows

Emerging technologies have widely varying rates of experimentation, deployment and growth within the insurance sector. Their growth rates boil down to a few key related factors:

  • How easily the technology is understood.
  • How readily it can be deployed and integrated with existing processes.
  • How clearly the value it creates can be measured and communicated.

At one end of the spectrum are technologies like RPA and chatbots. These technologies create clear value, are readily added to existing processes and are relatively easy to deploy. As a result, insurers have adopted them rapidly.

Artificial intelligence and big data technologies require longer learning periods; sometimes, they require business processes to be completely reengineered. The technologies create value for insurers but have grown more slowly because they take time to understand and integrate.

Drones, the Internet of Things (IoT) and telematics can create new kinds of insurance products or collect new kinds of information. These can also create value, but their growth remains slow because developing these technologies may require orchestration across several functional areas, and they can be costly to ramp up.

On the far end of the spectrum are technologies like augmented and virtual reality, blockchain, smart assistants and wearables. Most of these technologies don’t yet have established use cases that demonstrate clear value, so it remains to be seen whether they will be adopted more widely.

Using Emerging Technology

One key insight from Novarica’s study is that technologies that integrate readily to existing processes can grow more rapidly than technologies that require new workflows to fully use. This observation comes with a few caveats for both insurers and technology vendors.

Insurers sometimes fall into the trap of “repaving the cowpath” — they adopt new technologies but integrate them into their existing (inefficient) business processes. Doing so means they can’t get maximum value from their investment. Ironically, it’s usually the shortcomings of legacy technology that have made these processes cumbersome in the first place.

It’s easy to understand the value that technology creates when it integrates with an existing process and can be measured with the same key performance indicators (KPIs). It’s much harder to create a new process enabled by new capabilities, train employees to execute it and demonstrate that the new way is better than the old way. Yet getting the most out of emerging technologies often requires rethinking how business might be done.

See also: 2021’s Key Technology Trends

For their part, vendors should focus on the value their products create and the problems they solve, aligning them to insurer needs. It’s not enough to use a new technology for its own sake, and using new tools sub-optimally may make them seem less effective. Vendors should coach their insurer clients through best practices and help them understand how their tools can ease, change or make obsolete existing processes.

At its core, insurance is a simple industry focused on connecting those exposed to risk to capital that can defray potential losses. At the center of that value chain are insurers, that continue to explore new technologies to better understand their risks, sell more and operate more efficiently. Even in uncertain times, insurers are innovating.

20 Issues to Watch in 2021

Out Front Ideas with Kimberly and Mark kicks off every year with our popular 20 Issues to Watch webinar. While there are certainly more than 20 issues to discuss after the unprecedented events of 2020, we focused on the high-impact issues relating to workers’ compensation, healthcare and risk management. These are all important issues for every risk manager and insurance professional to monitor in 2021. 

1. Healthcare Watch

President Biden’s healthcare plan has been referred to as ACA 2.0, as his approach is expected to build on the Affordable Care Act. As a longtime supporter of public options, President Biden will likely give consumers access to Medicare-style health plans, along with an option to continue private insurance. In keeping with the ACA, expect to see the return of the individual mandate and associated penalty removed in 2017.

For most of 2020, there was a significant decrease in employer healthcare spending due to limited in-person care caused by COVID-19. Many employers spent less than in 2019, with average savings around .5% to 2%. Ambulatory care settings and hospital admissions accounted for the largest areas of decreased spending. However, pharmaceutical costs, as projected, increased roughly 6% due to the pandemic. 

Telehealth continues to rise in popularity, with its ever-increasing accessibility. Its long-term use remains unknown due to dependence on government regulations, but expect its continued use in the short term from health providers accustomed to its use. 

2. Political Polarization

With Democrats holding a narrow majority in the House and controlling the split Senate, it is uncertain whether there will be a sweeping or incremental change, especially because President Biden has historically been a political moderate. The secretary of Labor nominee, Marty Walsh, was a former union leader and strong supporter of organized labor, so expect potential Department of Labor policy changes, especially in Occupational Safety and Health Administration (OSHA) enforcement and independent contractor classification.

Political polarization has created continued conflicts for much of our history. There is much work to be done to restore public trust, reduce conflicts and provide a better path forward for our country. 

3. COVID-19 Vaccine Considerations for Employers

Employers are currently assessing their options for requiring employee vaccinations. While employers that primarily have employees working from home have fewer concerns than those working directly with the public, all employers have questions regarding a mandatory vaccine policy. Updated Equal Employment Opportunity Commission (EEOC) guidelines published Dec. 16 state that employers can require workers to be vaccinated, with some limitations, including:

  • Title VII religious exemptions
  • Americans with Disabilities Act accommodations 
  • Any additional rights that apply to either EEO laws or federal, state and local authorities

Like all employment law, expect there may be litigation over employer mandates to require the vaccine. In developing policies, employers will be considering not only their workforce but the expectations from the general public they interact with. 

4. Supply Chain Diversification

COVID-19 caused significant disruption in the U.S. drug supply chain because 80% of the necessary components used in pharmaceutical manufacturing for the country come from China and India. China is also responsible for around 80% of the essential elements used in personal protective equipment (PPE), leading to a shortage during the start of the pandemic. 

These supply chain disruptions were widespread and illustrated the need to diversify sources and not rely on imported goods for critical components. Diversification will make companies more resilient to unexpected events such as natural disasters, political unrest, trade sanctions and other pandemics. 

5. Public Health Policy

Over the decades, public health achievements have included childhood vaccination programs, fluoridation of drinking water and the global commitment to eradicating HIV/AIDS. There are many public health services we should be able to rely on, including preparedness and response capabilities, addressing and diagnosing health hazards, informing and educating the public and strengthening and mobilizing communities, to name a few.

However, a lack of coordination between the federal government and state public health officials led to poor planning and response to the pandemic. Successful public health initiatives rely on people’s trust in public health, but poor communication, mixed messaging and inconsistency in applications and expectations only furthered challenges. 

Public health in the U.S. has generally struggled to make a clear and compelling case for prevention and non-medical approaches to health and well-being. Public health would benefit from leaders focusing on building trust and connecting with communities’ shared values, inspiring participation and active listening.

See also: Don’t Go Into Recovery Mode in 2021; Reset

6. COVID-19 Claims Development

The workers’ compensation industry has seen tens of thousands of COVID-19 claims. According to industry data, the vast majority of those claims are small, with average paid figures just over $1,000. However, the industry has also seen many claims over $1 million incurred on cases that resulted in death or had an extended ICU hospitalization. There could be additional development on these claims as long-term health consequences from COVID-19 become apparent.  

Businesses are seeing COVID-19 related litigation in other areas, including business interruption, employers’ liability, general liability, employment practices liability and even directors and officers coverage.

7. Evolving Employee Benefits

In 2021, expect more employer emphasis on addressing mental health and well-being in the workplace. There are more employer offerings with telehealth’s continued use, like mental health apps and videos with on-demand options. The Center for Workplace Mental Health provides a wealth of employer support for workplace well-being, like the new program Notice. Talk. Act, which offers training for company leaders to improve their understanding of mental health on employees and the organization.

Understanding financial health is a primary concern for employees across the country because the pandemic left many unemployed. Many employers have partnered with their 401K providers to provide webinars and online tools to assist their employees with budgeting and forecasting expenses. Group health solutions are also assisting employees in better understanding copays, deductibles and high-quality care options, ultimately driving down costs and improving healing times.

Flexible work schedules and time away programs are being altered for 2021. Split schedules or starting earlier or later are options many employers are adopting as workers are challenged with their children’s online learning needs or caregiving opportunities. Additionally, the pandemic has caused financial problems for many, adding to stress and anxiety for workers. Allowing and encouraging time away from work is necessary to create a healthier, more productive workforce.

8. Redefining Workers’ Compensation

Presumptions for COVID-19 are just the latest example of how workers’ compensation continues to expand beyond its original design of covering only traumatic accidents in the workplace. As more conditions and diseases are deemed work-related, and more presumption laws are passed, the line between workers’ compensation and group health continues to blur. 

9. COVID-19 as a Comorbidity

While we still know very little about the long-term effects of COVID-19, we know that there is an increasing number of patients experiencing new symptoms months after recovery. These symptoms range from blood clots to neurological symptoms, like brain fog and confusion, to continued respiratory challenges, like shortness of breath. There have also been reported psychosocial effects like anxiety, hopelessness, depression and post-traumatic stress disorder (PTSD), especially in healthcare workers and ICU patients. 

If a large percentage of COVID-19 patients develop long-term physical and mental side effects from the disease, it could increase claims for years to come and even have the potential to be comparable to existing comorbidities such as obesity or diabetes. 

10. Post-COVID-19 Analytics and Benchmarking

The insurance industry and risk managers rely heavily on actuarial models and benchmarks to analyze performance and predict future exposures. One of the core assumptions of analytics and benchmarking is that most analysis components are under conditions similar to the past. However, the pandemic introduced several variables into the analysis that raise questions about the validity of those models in the future. 

In workers’ compensation, frequency models have been disrupted, and there have been delays in medical treatment, litigation and return to work. Carriers are also having to develop new risk models that take into account the potential impact of future pandemics.

11. Employers Addressing Caregiving

Caregiving challenges were mounting for employers in advance of the pandemic. They were magnified because of work from home, school closures, after-school programs, day care and elder care programs. Supporting employees who are also caregivers means first understanding the impact of caregiving on your workforce, then implementing policies, programs and benefits that offer them tools to assist. These may include offerings to support balancing work and caregiving and case management support to coordinate or find caregivers. Employers that are advancing programs such as these use employee peer groups to partner with human resources and business leaders to create programs and offer a feedback loop regarding effectiveness.

12. Expanding Regulatory Burden

Amid the pandemic, regulators released new regulations regarding claims reporting, COVID-19 tracking, premium collection and job classifications. Systems had to be modified to collect the latest information, and already stretched resources needed to adjust to fulfill these additional requirements. 

All these regulatory changes were made with little input from stakeholders, and the increased requirements added additional administrative costs for everyone involved, including employers, third-party administrators (TPAs) and carriers. Temporary emergency rules and regulations are continually expanding and show no signs of letting up.

13. Workforce Evolution

Companies have adjusted their approach when addressing performance, productivity and workplace safety after a major shift to work from home in March 2020. Employee engagement and technology were just a few of the many impacts of this shift. Social distancing and office redesign coupled with consistent communication have proven successful for companies that brought their employees back to the office full- or part-time.

For companies opting to continue work from home policies, there are many unanswered questions regarding when to bring employees back. Whether or not employees are comfortable returning, if vaccines will be mandated or even just waiting until the surge subsides are all considerations for a potential return to the office. Regardless of when return to work becomes a viable option, expect the expansion of remote work opportunities post-pandemic.

14. Economic Recovery

The pandemic has caused significant unemployment increases, with lower-wage workers in service industries being affected the most. Brick-and-mortar retailers were already struggling before the pandemic, and 29 major retailers closed more than 10,000 stores nationwide in 2020. Industries like travel and hospitality are not expecting to see 2019 revenues return until at least 2022. Because these industries rely heavily on business travel, there may never be a full return, as companies are reevaluating the necessity of travel expenses.

While government aid packages could be expanded, they are a temporary fix. Ultimately, the economy will not fully recover until we get people back to work, meaning there will need to be widespread vaccine distribution, removal of government restrictions and new job opportunities for permanently displaced employees.

15. Insurance Innovation

New models for claims processing, including automation, will continue to emerge in 2021 and 2022, widening the gap between the innovators and legacy providers. The consumer journey and engagement will begin to evolve in a material way, driving on-demand tools and solutions. With an added emphasis on customer experience, organizations must rethink their design around support models to assist with consumer education, planning, decision-making and coordination of services. 

With the advancement of technology and the emergence of models not offered previously, expect pricing models to be adjusted. Early adopters wanting to engage in new models will help shape the learnings and performance of the innovation and engage in transparent discussions around value and pricing.

See also: 2021, We Can’t Wait to Get Going!

16. Insurance Market Challenges

In 2020, businesses saw significant price increases across multiple lines of coverage and carriers reducing policy limits in an attempt to reduce their exposure to losses that have been both historic and difficult to predict. Reinsurers reported significant price increases for 1/1 renewals with contract language changed to eliminate ambiguity around underwriting intent and reinforce exclusions. Exclusion of pandemic losses from workers’ compensation treaties means carriers will not have reinsurance available for those losses.

Workers’ compensation is the one line of commercial insurance that has been relatively stable in the last year. Due to drops in employer payroll, overall premiums and claims dropped in 2020. Several factors are putting pressure on carriers to adjust pricing, including historically low interest rates that lower carrier investment income and discounting on long-term claim payouts. There are also significant differences between the guaranteed cost market, which is drive by claim frequency, and the retention market, which is driven by claim severity. The costs of catastrophic injury claims has continued to climb at rates well above medical inflation.  

Risk managers should expect more of the same this year. As losses continue to grow in multiple lines of coverage, carriers are trying to find the correct pricing to make these lines profitable. Additionally, coverage gaps are developing as carriers tighten up policy language to avoid unintended claims. For example, many policies and reinsurance contracts added tight exclusions for infectious diseases, excluding coverage for conditions like Legionnaires disease, which had been previously available.

17. Cyber Risks

Deepfake videos, increased phishing and ransomware attacks and more vulnerable remote workforces have all contributed to record cyber threats. Any vulnerabilities could leave an organization open to million-dollar ransoms, data leaks and irreparable reputation damage. As hackers become more sophisticated and organized, it is vital to remain vigilant, and training employees cannot be overlooked.

18. Public Sector Challenges

The economic recession caused by the pandemic resulted in municipalities receiving significantly lower tax revenues from areas like sales tax, hotel taxes and income taxes. The public sector faced increased costs from public health expenses and the costs associated with operating in a pandemic environment. Additionally, civil unrest and riots in larger cities resulted in billions of dollars in public property damage and thousands of injuries to law enforcement officers. 

Law enforcement agencies face additional challenges due to decreased staffing and recruiting and an increase in retirements. Amid all of these obstacles, pensions remain significantly underfunded, and, as retirements accelerate, these pensions could run out. Ultimately, the events of 2020 will increase the costs faced by public entities, which will increase the burden on taxpayers to pay for all these costs.  

19. Lessons on Industry Engagement

In 2020, most conferences evolved to host their first virtual events. While many industry stakeholders have voiced concern with virtual fatigue and are anxious to get back to in-person events, the value of conferences before the pandemic is in question. As companies have adapted to online certifications, prospecting virtually and partnering with clients outside of these events, organizations question the return on investment of these conferences. While there will be a return to in-person events eventually, expect to see smaller booths, fewer attendees and a larger focus on local and regional participation. 

20. Litigation Management

Pandemic restrictions have forced courts across the country to postpone significant portions of their dockets, causing delays in litigation in both workers’ compensation administrative courts and civil litigation. These delays can cause claims exposures to escalate along with administrative costs associated with the litigation. In dealing with these delays, it may be best to be selective about what is litigated. 

To listen to the archive of our complete Issues to Watch webinar, please visit https://www.outfrontideas.com/. Follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about coming events and webinars.

U.S. M&A Will Rise Sharply in 2021

After a year during which the U.S. insurance industry had to grapple with the global pandemic, the severe economic downturn and other factors such as political uncertainty, insurance deal activity in 2021 will be robust due to several factors:

  • Increasing premium rates and a more optimistic outlook for most lines of business will make stronger market players more likely to look for growth opportunities through acquisitions, some of which may have been put on hold in 2020 due to the pandemic.
  • The improving market conditions for insurers is also attracting more capital into the industry, which will help fund more deals. In addition, with interest rates at historic lows, buyers may look to tap cheap debt or deploy funds stored away during the pandemic to fund acquisitions.
  • As the economy begins returning to a more stable state in 2021 — presumably after the widespread dissemination of COVID-19 vaccines — insurers will benefit from a reduction in both the regulatory and commercial uncertainty that resulted from the pandemic, which will allow for more focus on longer-term strategy and deal-making.
  • For many large insurers and insurance intermediaries, the pandemic demonstrated a need to double down on efforts to adopt innovation into their existing business models and focus on a digital approach to customer experiences. Insurtech businesses were able to help insurers become more digitally focused and access new sources of data, technology and distribution channels despite the challenges of the pandemic. In 2021, insurers will target acquisitions of startups as a means of accessing novel technology platforms and new distribution channels; insurtech startups will be willing to consider being acquired by or partnering with large incumbents after having experienced the uncertainties of the pandemic and due to the need to allow for exits by early investors.

Don’t Go Into Recovery Mode in 2021; Reset

The new year has finally arrived. The holiday greetings that landed in my inbox last month all celebrated turning the page on 2020. The reality is we will continue to live with the effects of last year’s disruptions.

Approaching 2021 as a “recovery” year implies to some degree going back to where we were — and if that is where you put your efforts, you will miss the bigger opportunity, which is to hit the reset button and begin anew. Assume that we are not going back.

New beginnings require believing, thinking, imagining and acting with a new outlook. So, here are seven rules for breaking the rules as you pursue your organization’s reset in ways that might point you to a remarkably better year.

1. Rewrite the Rules for Today’s Realities

The orthodoxies that were defined by the way things used to work are out of date. You may find that the rules defining policies, processes, metrics and structures for your business were developed in another time when the bases for assumptions were very different. They may now be outdated and hurting your progress and results.

A healthy question to ask is: “Where did those rules come from?” Be willing to ask this question and open the dialog with colleagues about where change can help the organization. We are in a new space, forced to operate on new terms. Don’t let tight adherence to the old rules become self-imposed constraints on your reset efforts.

2. Revalidate the Problems You Are Trying to Solve

The market has moved. Stakeholders have moved. Customers’ needs have shifted, intensified and been reordered. That means it’s time to make sure that the problems your company’s solutions address are completely aligned with all of these changes.

Are you a solutions-pusher or a problem-solver? The latter will capture more expansive opportunities to serve customers because their focus will naturally be on customer-centric problem statements. Don’t get stuck on your existing solutions. The compelling problems may now be elsewhere.

3. Shift From Talking About Innovation to Taking Action

There is always great interest in talking about innovation. When aspiring founders and intrapreneurs ask me where to begin the journey toward realizing their vision, I always begin with the same feedback: Just start. Do something. There is not an unambiguous rule book. Being in the game experimenting and learning is the best way to advance. Weight your innovation energy heavily toward execution of prototypes and understanding the business model, over sharing presentations and theories.

4. Be Clear on What you Mean by Innovation

Innovation is very easy to theorize about, harder to deliver. It’s a messy journey, one that confounds people whose comfort zone is defined by predictable, linear processes.

“Innovation” is also a word loaded with meaning, ranging from “cool stuff” to hard-working solutions to real problems. Be clear on what innovation means to your organization, how it connects to creating stakeholder value, what customers you want to serve and whose problems you want to solve with innovative answers. Gain alignment with colleagues so you can lock arms on where you want to head.

5. Embrace Uncertainty as Opportunity

Ambiguity, uncertainty and unpredictability are replacing the standards and rules. Acceptance that we will likely be operating in this new environment for some time opens up new possibilities. We are seeing this already in the expansion of home delivery offerings, B2B2C businesses moving to serve consumers directly, new approaches to supply chain management, the rapid growth in telemedicine and countless new digital services offerings.

There will be continued opportunity in the fallout of last year’s events. Within the messiness are massive new problems calling for answers, so shift energy from a focus on maintaining stability — where it may no longer even be possible — to embracing uncertainty as a source of opportunity.

See also: 11 Insurtech Predictions for 2021

6. Reevaluate Where Your Mindset and Skills can Have the Greatest Impact

To adapt quickly enough to new market circumstances, your core business partners may be newly open to engaging with you differently than in the past, tapping into your skill set and mindset to accelerate progress on pressing priorities. For example, there is now widespread focus on reinventing the employee experience, rethinking the configuration of the workplace and accelerating the digital transformation of the customer experience. Where can you dive in and assist where you may not have been viewed in the past as a valuable resource?

Recalculate the mix of short-term versus long-term initiatives on your project list. Are there challenges right now to the core business model that require unconventional solutions? Challenge your assumptions about where on the time horizon resources are being used. Transfer skills — speed, agility, collaboration tools, fit-for-purpose processes — that power new ways of executing. What have you learned this year that can be seeded throughout the business for obvious, tangible impact?

7. Reset Relationships With Your Internal Stakeholders

This is a time to build new partnerships with colleagues and be positioned to exploit what you do best for the benefit of your customers and the health of the business. To figure this out, follow the enduring first rule of marketing: answering “what’s in it for me?” Understand what drives your colleagues rationally and emotionally, how they define success and where, as a result, there are new points of alignment. Go on a listening tour in the organization to find out how stakeholders see the year unfolding, what they are worried about, what their hopes are for the year. Choose partners who already exhibit in their behaviors, actions and decisions the necessary growth-oriented mindset and ways of working.

Even with the new year underway, we will continue to face the challenge of being able to contribute in the midst of rapid transformation, to reshape how we can help customers, support employees and meet business goals. Doing so depends on our own ability to let go of old paradigms that no longer work, and to be willing to be constructive rule-breakers focused on solving the problems people never had before, but are struggling with now.

What 2020 Taught Us on Selling Insurance

2020 was a year of accelerated digital transformation in insurance across all lines of business. Major purchases such as life insurance or financial products are increasingly bought and sold online, making the digital customer journey one of the top sales tools in the insurance business.

Effect of the COVID-19 crisis on insurance sales

The COVID-19 crisis had wide-reaching effects across all lines of business. Consumers drove less and, at the same time, shopped around for better deals in auto insurance coverage. Historic mortgage rate lows combined with a trend of fleeing big cities for suburbs, so home insurance sales also skyrocketed this year. When it comes to health, record unemployment and concerns about adequate plan coverage drove most of the insurance buying activity. Coupled with reduced doctor visits, profitability in health plans remained positive, although long-term ramifications are still to be seen.

Life insurance policies faced challenges, including Fed rate cuts and decreased return on carrier investment assets, making profitability a significant challenge. Medical exams became more difficult to complete, and delays and restrictions led to funnel breakage, leading to reduced sales amounts. Because life insurance is not a required policy, it is often the first to evaporate from the consideration set during the economic downturn.

What insurers need to change to succeed in 2021

2021 is the year of ultimate change – and not bad change, but change that will affect the entire insurance organization for the (digital) years to come.

The need to focus on the holistic experience

The way consumers research and buy insurance products has changed. Every interaction with a customer becomes a potential turning point, from a website visit to a call with a customer representative or a visit to an office branch. 

Purchases initiated through digital channels are likely to stay online. According to the J.D. Power 2017 Auto Insurance Study, customers who set up an account online with their insurer are two times as likely to also use an app to submit incident photos. In addition, they are three times more likely to report the first notice of loss online.

Still, most insurers lack a clear plan or holistic digital strategy, so their efforts often result in an incoherent patchwork of digital initiatives. Processes are not digitized end-to-end, and channels are not integrated. As a result, insurance companies’ digital endeavors are often not fully reflected in their top line, let alone their bottom line.

First, insurers must transform their digital channels by mirroring the success of big online retail platforms. Insurance policies that are sold online need to be packaged and priced differently than those that rely on face-to-face sales. 

Second, digital support goes hand-in-hand with sales. Given the complexity of insurance products, even those that are simplified to match the digital world, insurance agents must be armed with effective support tools. Support reps need to be supported with the tools that will help them sell on value and explain to the customers which product best matches their needs, smoothing the pass to up-and cross-selling.

See also: 2021, We Can’t Wait to Get Going!

Prioritizing digital customer journeys

Digital channels have been an important part of the insurance business for many years. But digital always played a supportive role. Today, the digital channel takes center stage, and it needs to be treated as the star of the show.

Instead of rushing to quickly release ad-hoc digital initiatives that do not have synergy with each other, digital leaders must strategically approach digital customer journeys.

The digital customer journey must be smooth, effective and seamless for the customer. Every interaction must be logged for further analysis on the back end, and manual actions must be automated to prevent delays, errors and backlogs. Integration between front-end and back-end technologies is key to achieving end-to-end digital journeys that are up to the challenge.

Empowering agents and brokers to deliver better service

Simply converting a decade-old rates calculator to a digital app will not do the trick. Insurers must support sales and service reps by providing them with all the tools and materials they need, attractively packaged and tailored to the digital world. 

Employee experience is as important as customer experience, as, after all, employees will be the ones guiding customers on their purchase path. 

Self-service, 24/7

The digital world is always on. Having a robust self-service capability that is on 24/7 is one of the requirements nowadays. Consumers are used to getting anything, any time, and expect an immediate reaction to their online actions.

Consumers expect insurers to use the data they already have to improve their experience further. A self-service portal that keeps asking existing customers for the information that the insurer already has elsewhere in their systems is going to cost the insurer its customers.

Automation and personalization of the digital journey are key here. End-to-end digital policy onboarding and claims handling have emerged as a key competency that consumers want and expect. But digital transformation also removes high costs from the onboarding and claims processes by eliminating manual work that used to be required.

Creating digital insurance journeys for 2021

Once you’ve understood and accepted your points of change, it’s time to create the best digital insurance journeys. Here are the benefits that simply cannot be overlooked:


Creating a single digital journey is no longer enough. Insurers must focus on automating customer journeys end-to-end, including both the transformation of the front end and back end. 

This requires scalability. Technologies that can amplify existing resources and create repeatable processes that can be implemented across the organization.

Time to market

Traditional enterprise development projects that take anywhere between six and 12 months are no longer fit for the fast-moving pace of the digital world. Agility and time to market are becoming key competitive advantages for digital-first insurers.

Increased efficiency and productivity

Digital is not only about the experience, but it is also about boosting the efficiency and productivity of your employees. Back-end processes that require a lot of manual handling create delays and waste your employee’s time. 

Improved data accuracy

Insurers gather a wealth of data on their customers. However, the access to this data must be democratized, as, currently, it is not accessible to every employee who needs it in an actionable format.

The right technology

Digital technology such as mobile, AI, no-code platforms and IoT plays a key role in a company’s ability to quickly respond to consumer actions or feedback as well as gather data on market conditions. Identifying which technologies are best suited to cater to the demanding digital customer is the key to success in 2021.

See also: 11 Insurtech Predictions for 2021

Insurance in the ‘new normal’

Insurers are faced with a difficult task,. Digitally savvy consumers, fast-moving technologies and the demands for personalization strain internal IT resources to the max. Using the right digital tools is necessary to ensure the ultimate success of the company and of course, the best customer experience out there.

Selling insurance in 2021 isn’t the same.