Tag Archives: John Hancock

Key Technology Trends for Insurers in 2019

In 2019, we will see many of the 2018 technology trends continue but with an added focus on business transformation and value.

Innovation

In 2019, we will see continued investments in insurtechs and fintechs, as more companies realize the value of technologies that enable the delivery of next-generation digital experience, especially in the area of customer engagement. Consumers’ demands are driving the need for better self-service capabilities, mobile capabilities and engagement tools.

As with John Hancock’s use of Vitality and with SE2’s investment in Life.io, we’ve seen the creation of next-generation customer engagement platforms that leverage wearables and other social and industry data to get unique insights into prospects’ and policyholders’ lives. That allows these companies to offer better needs-based, more personalized products. As insurers are able to access higher-quality data, there will be more experimenting with analytical models and algorithms to transform the underwriting, sales and marketing paradigms. Additionally, the ability to access consumer data in real time will continue to drive innovation in the insurance industry.

Companies like Human API and Clareto are bridging the gap between heath information exchanges, healthcare providers and life insurance carriers, enabling them to fine-tune underwriting, claims and other business processes. Helping consumers live a better life and have a holistic approach to manage both their mortality and income risks is the way to go rather than sell point solutions with aggressive sales tactics.

See also: 3 Insurtech Trends Accelerating in 2019  

Artificial Intelligence/Machine Learning

While there continues to be excitement and conversation around artificial intelligence and machine learning, the fact of the matter is that the insurance industry as a whole continues to struggle with adoption. Issues around data governance still need to be solved, data rationalization is not complete and data quality continues to remain a major challenge for insurers.

Looking ahead in 2019, there will be more work in this area as insurers make progress in putting into place the foundational elements needed to create a strong data paradigm that will enable AI and ML adoption as well as generate real business value. There will be progress made in creating and enhancing data repositories, data lakes and other foundational infrastructure technologies. This year will see a refocus on AI and ML — especially in conversational AI — that will enable insurers to streamline and augment the work of their own employees and distribution network, ultimately providing a superior experience to policyholders.

Digital Transformation

Driven by customers’ market needs, digital transformation continues to remain a key priority in 2019. Many insurers remain constrained by the complexity of their back-end systems, resulting in very real concerns around agility, value and delivering the right consumer experience. Consumers are demanding more simplified products, as well as a growing preference for bundled products with the overlap of income and mortality risk. Without a nimble, flexible architecture in place, many insurers struggle with launching products fast enough to capture new customers with these preferences and gain market share.

The year 2019 will see an increase in insurers looking to create effective and efficient direct-to-consumer distribution channels or other digital distribution channels to reach the vastly underserved middle market and millennial customer segments. Additionally, there will be increased pressure by the market for lower pricing, leading insurers to create cost efficiencies through digitization of back-end processes, increasing usage of RPA (robotic process automation), STP (straight-through processing) and digitized operations processes throughout the entire lifecycle of the policy.

There is not only a price play but a consistency and a quality play that our industry struggles with, as well. At SE2, we call this moving from a “high touch” to “low touch with hugs” operating model.

End-to-End Platform Modernization

Driven by the need to reduce or eliminate outdated legacy technologies and address business and technology architecture complexity, an end-to-end platform modernization focus will be a very high priority for life and annuity insurers this year. Insurance carriers are realizing that the investments they’ve made in front-end digital capabilities are not giving them adequate return on investment without a fully digitized, modern and simplified back-end system. These delay the time it takes to launch products and hamper the ability to streamline business models. With a digital, open architecture platform, insurers can easily integrate systems and plug in APIs to extend their capabilities.

See also: 8 Key Insurtech Trends for 2019  

Overall, 2019 should be yet another interesting year for our industry and SE2, as we see billions of dollars of innovation spending led by tech giants like Google, Amazon and Microsoft, and the L&A industry finally beginning to reposition itself.

IoT: Collaboration Is Now Mandatory

The definition of collaboration is the action of working with someone to produce or create something. That seems far too simplistic a way to describe the many types of collaboration already at work in the insurance industry and moreover does not begin to convey the looming and enormous demand for working together that will be required for success in implementing the Insurance Internet of Things (IoT).

Historically, the insurance industry has had to use a wide variety of collaboration tools to succeed as data, information, consumer behavior, products and regulations changed with increasing velocity. These tools included e-mail, texting, instant messaging, content management systems, enterprise social platforms and formal enterprise collaboration software. Insurers have even begun to leverage the use of digital technology and web-based collaboration tools such as Slack to empower employees, enhance user experiences, improve internal communication and strengthen agent and broker relationships.

See also: Insurance and the Internet of Things  

Looking beyond insurance companies themselves, we note the emergence of insurtech accelerators and incubators, both independent and captive. What is becoming apparent is that there is a convergence taking place between these entrepreneurial startups and the traditional carriers, sparking collaboration between the new, small and fast market entrants with the old, big and slow incumbents. Much more of this kind of collaboration will be required for the insurance industry to survive and thrive in tomorrow’s world.

New forms of collaboration are emerging in the insurance ecosystem, some more formal than others. Strategic alliances and partnerships are being announced daily, as are vendor-vendor and carrier-carrier arrangements. Recent examples are plentiful; CoreLogic joined the Guidewire PartnerConnect program to deliver more accurate property risk pricing and residential estimating more efficiently to Guidewire’s property insurance customer base, and Insurity collaborated with Allstate Business Insurance to quickly deliver a new self-service quoting app with convenient data pre-fill.

Co-opetition is a more innovative form of collaboration that has been gaining traction. Former competitors work together to leverage a common, defined opportunity that yields better results for each company than either could have achieved on its own. In the world of insurance IoT, of which the connected car is a major subset, we increasingly see original equipment manufacturers (OEMs) participating in programs with auto insurers with telematics data exchanges and with each other in developing vehicle-to-vehicle (V2V) communication standards.

In other areas of insurance IoT, we are seeing a rapidly increasing number of health and property insurtech partnership announcements with insurers delivering innovative new risk-management products and services to consumers (e.g. Vitality-John Hancock, Roost-Liberty Mutual, True Motion-Progressive, etc.).

As the number of connected things expands exponentially, so, too, will the frequency and velocity of data generated by these sensors and devices. The ability to receive, normalize, manage and use all of this digital data will quickly exceed the capacity and expertise of even the largest insurers, so collaboration with a new generation of information management and data science providers will be mandatory.

See also: 12 Issues Inhibiting the Internet of Things  

For insurers and others to successfully navigate this burgeoning ecosystem, access to relevant knowledge and competitive information will also be mandatory, and one effective way to gain these insights is participation in subject-specific industry conferences where expert speakers and industry thought leaders share their experiences and insights. One such event is the Insurance IoT USA Summit taking place in Chicago on Nov. 30 and Dec. 1.

So critical will be effective collaboration in the future that it is conceivable that formal courses, certifications and degrees in collaboration will be offered by business schools in response to the exploding demand for this set of business skills and expertise driven by IoT proliferation and adoption. In any event, participants in the insurance ecosystem that best master the art of collaboration are sure to be the market leaders of the IoT future.

Sensors and the Next Wave of IoT

Spies and “bugs” have made frequent appearances in movies, books and television. In the James Bond movie series, we see an array of devices that were designed for 007 by “Q.” In the 1997 movie, Tomorrow Never Dies, Bond’s BMW car and mobile phone provide the first glimpses of the potential of the Internet of Things (IoT). He remotely starts and drives the vehicle to escape the villains, while operating a number of built-in devices from the phone as the car views and senses issues. Q was always on the leading edge of new technology for Bond.

Fast forward 20 years, and we now have sensors and capabilities in so many things … in our appliances, automobiles, mobile phones and a host of common wearables. You may not think of these as “bugs,” but they are. They are mini- and micro-technology components employed to see, listen, learn, assess and respond. The only difference between today’s sensors and yesterday’s is that today’s sensors are infinitely better at reading and recording data — and they may be used for the common good.

To prove that they are still considered “bugs,” however, you only need to look at a bill introduced recently by U.S. Sens. Mark Warner (VA) and Cory Gardner (CO). The Internet of Things Cyber Security Improvement Act is aimed to protect the federal government from cyber intrusion through the Internet of Things. Their bill raises a great point — sensors need built-in security measures that will allow for the good features to be used without introducing new risks.

See also: Insurance and the Internet of Things  

Good Bugs Eat Risk

In the insurance industry, we understand the implications of sensors and their ability to lower risk. “Bugs” and sensors are now our best friends. In our Future Trends 2017: The Shift Gains Momentum report, we examined how IoT experimentation and implementation is reaching into every area of insurance. Here is a short list of innovative ideas introduced by early adopters of IoT in insurance:

  • Progressive, via the Snapshot usage-based-insurance telematics offering, monitored how customers drove using an OBD plug-in device from Zubie.
  • Liberty Mutual partnered with Google to use NEST connected smoke alarms in the home to help customers reduce fire risk and carbon monoxide poisoning while also reducing their homeowners insurance premium.
  • Beam Dental began pricing dental insurance based on smart toothbrush usage data.
  • John Hancock used wearable devices to track the well-being of customers, lowering life insurance premiums and offering an incentive program through Vitality to shop for an array of things.
  • Oscar, a health insurance startup, used wearable fitness trackers and a mobile app to help track and encourage members to be fit, find doctors, access health history, access the doctor on call and connect to Apple Health.

In addition to the last two examples above, companies are using wearable devices and the data generated from them to better assess individuals for healthcare, life insurance, workers compensation and investment rewards based on their activity and lifestyle. Innovative insurers are using wearables to provide improved underwriting discounts, rewards, claims monitoring and new services using real-time data. The new services can include advice on healthy living, real-time healthcare and prevention, real-time monitoring and assistance in treatment or recovery plans and determining return to work timeframes for injuries or other health-related incidents. These all contribute to enhanced customer experiences, longer customer lives and improved insurer investment options.

There’s No Limit to Sensor Growth

This rapid experimentation and use of IoT isn’t just limited to wearables, telematics and smoke detectors. Sensors of all kinds are being born into healthcare environments, construction sites, commercial buildings, roads and bridges, homes and cars.

  • By 2025, the Internet of Things will be worth trillions annually.
  • Connected homes will grow rapidly by 30% per year in the U.S. alone, where 22% of households now have at least one connected device.
  • The wearable device market is expected to more than double over the next five years.

Sensors Should Reduce Claims

With the proliferation of companies innovating and taking new offerings to market using IoT, we are seeing the beginning of a huge boom in insurers using IoT to drive an engaging customer experience through personalized insurance offerings, reduced costs and new value-added services. The Boston Consulting Group estimated that U.S. insurers could reduce annual claims by 40% to 60% with real-time IoT. The key is that insurers will be able to move from paying claims to mitigating or eliminating risk by engaging with customers via IoT devices while also enhancing the customer experience.

What’s Next for the IoT? Better bugs?

Though so much remains uncertain and untested, we should expect to see a rapid evolution of technologies to sort out which sensors are most valuable in which locations and just how IoT can bring cost-effective monitoring to market.

For example, P&C insurers were quick to pick up on OBD technology, with installed devices in vehicles. In many cases, mobile phone monitoring soon became a more cost-effective solution. Most smart phones have GPS capability and an accelerometer. And now automotive manufacturers are embedding sensors and telematics in vehicles to enhance safety and position themselves toward autonomous driving vehicles – just like Bond.

As some wearable technologies are dropping out of the running, life and health insurers will soon be taking advantage of advancements in smart watch design. The first wave of wearables looked like digital tech devices with touchscreens and LED displays. The next wave is the introduction of smart tech into “normal”-looking watches from standard manufacturers like Movado, Tag Heuer, Fossil and Tommy Hilfiger. Android Wear technology will be feeding the data. These would be much more like Q would have designed, and they will undoubtedly be worn by many who wouldn’t normally use an Apple Watch or a FitBit.

A similar technology wave is beginning to hit homes. Currently, sensors are in use in some thermostats, appliances, lighting systems, security systems, computer and gaming devices. But one of the drawbacks to having so many sensors is that most companies haven’t networked all of them to a single IoT data framework. This hinders the ability to aggregate the data across sensors, limiting the potential value. Every new data point requires a new type of sensor. As with OBD devices, attaching a sensor to everything may even become non-essential, in favor of one centrally located device with multiple sensors.

PhD students at Carnegie Mellon University have been developing a plug-in sensor package they call a “Synthetic Sensor.” Plug it into an outlet, and that room is immediately a smart room. Instead of a smart sensor on every item in the room, multiple sensors in the device track many items, people and safety concerns at once. The device can detect if anything seems to be “wrong” when appliances are in use by analyzing machine vibrations. And, of course, it can track usage patterns. The sensor can even track things insurers may not need to know, like how many paper towels are still left on a roll.

See also: How the ‘Internet of Things’ Affects Strategic Planning  

So, would P&C insurers like to be connected to the water heater thermometer, or have access to a device that can hear pops and leaks? Would L&A insurers like to know the lifestyle and behaviors of their customers to encourage healthy living?  Much of this will be sorted out in the coming years.

What doesn’t need to be sorted out is that insurers will want access to device data – and they will pay for it. They will need to be running systems that will readily hold the data, analyze it and use it effectively. Cloud storage of device data and even cloud analytics will play a tremendous role in giving value to IoT data streams.

IoT advancements are exciting! They hold promise for insurers, and they certainly will make many of our environments safer and smarter.

Insurers Are Catching the Innovation Wave

As the June 30 deadline approaches for this year’s SMA Innovation in Action Awards, I’m looking forward to seeing the innovative strides that insurers and solution providers have made in the past year. The market is changing so quickly that adaptability is key.

The SMA Innovation in Action Awards recognize insurers of all types and sizes who are rethinking, reimagining and reinventing the business of insurance. In recent years, we have recognized a number of traditional, established companies that are propelling themselves forward. They have combined the best strengths of our industry today with the best new ideas from insurtech and the digital world. And this convergence of the old and the new is the true path to success.

See also: Key Trends in Innovation (Parts 4, 5)  

Our winners have showcased this type of mindset by blending their existing projects and goals with very targeted uses of insurtech, emerging technologies and new data sources.

  • Experiment with new technology and customer experiences. John Hancock’s Vitality Program (2016 winner) engages policyholders through gamification and personalized guidance to increase their healthy activities, like exercise and annual physicals. Policyholders can report data online or through a free wearable fitness tracker. In the next phase of this project, John Hancock has expanded the customer engagement model to now provide discounts on healthy foods from participating stores. Each time the policyholder buys a healthy food, the discount and brand appear on the checkout receipt, reinforcing John Hancock’s role as their partner in healthy living. In addition to the creative application of emerging technologies, John Hancock is shifting from a transactional relationship with their customers to one based on value-added services.
  • Engage with emerging technologies. Texas Mutual (2016 winner) tackled a loss-prevention challenge, engaging workers to learn and follow onsite safety procedures by creating virtual reality scenarios to train construction workers. Texas Mutual’s Safety in a Box app was designed for easily accessible, familiar technology: the user’s mobile phone with a free cardboard viewer. Texas Mutual also distributed viewers at construction industry conferences and filmed in both English and Spanish to reach a broader audience.
  • Incubate innovation. Incubating Haven Life (2015 winner) internally allowed MassMutual to test a new business model: selling life insurance completely online in about 20 minutes. Underwriting Haven Life’s policies relies on external data fed through proprietary algorithms, reducing the time and complexity for the applicant.
  • Look at the big picture – but start small. Motorists (2016 winner) completed the first phase of its plan to achieve complete organizational transformation within 10 years. The ultimate goal is to operate as an “85-year-old startup” designed for innovation and collaboration, and the company redesigned a key workspace to foster this cultural shift. It built around cutting-edge technology to enable work to shift seamlessly across time zones and continents. This first step is intended to encourage more collaborative work styles to spread throughout the company, bringing Motorists closer to its vision.

One of the best parts of our awards program is to showcase how innovation is flourishing within our industry – and not just with greenfield insurers or those partnering with insurtech firms. Together, John Hancock, Texas Mutual, MassMutual and Motorists have more than 400 years of experience in writing insurance. They demonstrate how no company is ever too established to embrace change.

See also: 3 Ways to Leverage Digital Innovation  

For more information on the SMA Innovation in Action Awards and to create your own submission, visit www.strategymeetsaction.com/awardsSubmissions are due by June 30.

We will also be focusing on the power of convergence at our annual SMA Summit in September.

5 Topics to Add to Your List for 2017

As an industry, we are knowledgeable. In fact, I think one could say that insurers may know more about the way the world works than most other industries. We hold the keys to risk management and the answers to statistical probability. We underpin people, businesses and economies world-wide. We have centuries of real-world experience and decades of real-world data dealing with individuals, groups, businesses, property, life, investments and health.

Yet, in 2017, none of that experience will matter unless we are willing to embrace an entirely new field of knowledge. The convergence of technology with digital, mobile, social, new data sources like the Internet of Things (IoT) and new lifestyle trends will make insurers better, smarter and more successful IF we are willing to “go back to school” and audit the class on modern, innovative insurance models, generational shifts in needs and expectations and disruptive technologies.

This class is largely self-taught. Between you, Google, traditional and new media (think Coverager, Insurance Thought Leadership and InsurTech News), social networks and a few hours each week, you can expand your horizon toward the future to become a knowledgeable participant in 21st century insurance. It will help, however, if you know what to search for. In this blog, I’m going to give you five high-level areas to keep tabs on in the coming months. These are the places where technology and market shifts are going to create massive competitive energy in the coming year.

Insurtech, Greenfields and Startups

As of this writing, AngelList (a startup serving startups,) lists 1,069 insurance-related startups. Many of these are new solution technology companies. Others are new insurance companies or MGAs focusing on new market segments, new products and new business models. The influx of capital from venture capital firms, reinsurers and insurers has advanced the proliferation of startups and greenfields based on new tech capabilities. Business model disruption will continue to be mind-boggling, exciting and scary all at the same time — bringing insurtech into the mainstream and powering the industry-wide wave of innovation.

Whether you are sifting through ideas to improve your competitive position, launch a new insurance startup or greenfield, seek partners actively engaged in insurtech or invest or acquire a new technology startup, insurtech companies and their growing numbers are to be watched. Reading through these types of lists will give you a feel for the expansive nature of insurance. You’ll see how marketing minds are turning traditional insurance concepts into relevant products and solutions that fit today’s and tomorrow’s lifestyles. Be inspired to engage in insurtech in 2017, because time is of the essence. For background, start by reading Seed Planting in the Greenfields of Insurance.

See also: 10 Predictions for Insurtech in 2017  

Artificial Intelligence and Cognitive Computing

AI and cognitive computing technologies like IBM’s Watson have been touted as the link between data and human-like analysis. Because insurance requires so much human interaction and analysis regarding everything from underwriting through claims, cognitive computing may be insurance’s next solution to better analyze, price and understand risks using new data sources and add an engaging and personalized advisory interface to their services to achieve efficiency and improvements in effectiveness as well as competitive differentiation. Cognitive computing’s speed makes it a great candidate for underwriting, claims and customer service applications and any task requiring near-instant answers. IBM and Majesco recently announced a partnership to match insurance-specific functionality with cloud and cognitive capabilities. This will be an area to watch throughout 2017.

On-Demand, Peer-to-Peer and Connected Insurance

Trov allows individuals to insure the things they own, only for the periods during which they need to insure them. Cuvva is betting that people will want to have insurance on their friend’s cars during the time in which they borrow them. Slice launched on-demand home-share insurance to hosts using homeshare platforms like Airbnb, HomeAway, OneFineStay and FlipKey. Verifly offers on-demand drone insurance. Insurance startups are filled with companies that are providing insurance to the new spaces, places, behaviors and lifestyles where insurance is needed.

Other startups are using social networks and the Internet of Things to bring parity to insurance, often lowering premiums. Peer-to-peer insurers like Friendsurance and Lemonade put customers into groups where the group’s members pool their premiums, payment for claims come from the pool and, in the case of Lemonade, leftover premium is contributed to social causes. Metromile uses real usage data to provide fair auto insurance premiums.

Here is a space where insurers must keep their eyes open for opportunities. How can P&C insurers cover those who don’t own a car, but who still drive periodically? How will group health insurers help employers lower their rate of medical claims? How will life insurers promote wellness and reduce premiums?  Many of the answers will be found in digital connections, social knowledge, IoT data and an ability to provide timely, instant and on-demand coverage.  For more insight, start reading 2016’s Future Trends: A Seismic Shift Underway and the soon-to-be-released update.

The Revival of Life Insurance

One area that will receive a much-needed insurtech stimulus will be life insurance. The life insurance industry ranks last as noted in the recent research, The Rise of the New Insurance Customer: Shifting Views and Expectations; Is Your Business Ready for Them?, which is likely reflected in the decline of life insurance purchases over the past 50 years. The 2010 LIMRA Trends in Life Insurance Ownership report notes that U.S. individual life insurance ownership had dropped to the lowest rate in 50 years, with the ownership rate at just 44%. As new simplified products are introduced, new data streams proliferate and real-time connections improve, life products are poised to change. Already, new life insurers and traditional life insurers are positioning to use connected health data as a factor in setting premiums. John Hancock’s Vitality is perhaps the best current example, but other players are entering the mix — many simply claiming to have a better methodology for selling and servicing life policies. Haven Life, owned by Mass Mutual, and companies such as Ladder, in California, are reinventing term insurance … from simplifying the product to creating an “Amazon-like” experience in buying in rapid time. Ladder, in particular, uses a MadLibs-type underwriting form that’s not only relevant but fun to use.

The life insurance industry is hampered by decades-old legacy systems and the cost of conversion and transformation is taking too long and costing too much. As a result, look for existing insurers to begin to launch new brands or new businesses with modern, cloud core platforms to rapidly innovate and bring new products to market for a new generation of customers, millennials and Gen Z. As we saw in 2016, most new entrants are aimed at term products that will sell easily and quickly to the underserved Gen Z and millennial markets. New life players and products, as well as existing life insurers, reinsurers and even P&C insurers seeking to capture this opportunity will be interesting to watch in 2017.

See also: What’s Next for Life Insurance Industry?  

Cloud and Pay-As-You-Use

If your company is underusing or not using cloud computing with pay-as-you-use models, 2017 should be a year for assessment. Though cloud use isn’t new, its business case is picking up steam. Search “cloud computing and insurance” and you’ll find that the reasons companies are seeking cloud solutions are evolving.

The case for core system platform in the cloud reached the tipping point in 2016 … from nice to consider to a must have, and it will be the option of choice in 2017. The logic has grown as capabilities have improved, cost pressures have increased and now the demand for speed to value and effective use of capital on the business rather than infrastructure is gaining priority. Incubating and market testing new products in a fail-fast approach allows insurers to see quick success and capitalize on pre-built functionality with none of the multi-year implementation timeframes.

Increasingly, many insurers are taking advantage of the same pay-as-you-use principles of cloud as consumers themselves. They are paying as they grow, with agreements that allow them to pay-per-policy or pay based on premiums. They are using data-on-demand relationships for everything from medical evidence to geographic data and credit scoring. They use technology partners and consultants in an effort to not waste downtime, capital, resources and budgets. They are rapidly moving to a pay-as-they-use world, building pay-as-they-need insurance enterprises. This is especially true for greenfields and startups, where a large part of the economic equation is an elegant, pay-as-you-grow technology framework. They can turn that framework into a safe testing ground for innovative concepts without the fear of tremendous loss, while having the ability grow if the concepts are wildly successful. Major insurance research firms advocate cloud as a smart approach to modernizing infrastructure and building new business models. Keeping cloud on your company’s radar is crucial and good place to start is reading The Insurance Renaissance: InsureTech’s Pay-As-You-Go Promise.

These are just a few of the areas we should all be watching throughout 2017, but the vital step is to take your new knowledge and apply your “actionable insights” throughout your organization, powering a renaissance of insurance.

Make 2017 your company’s Year of Insurance Renaissance and Transformation!