Tag Archives: Newsweek

The Revolution Is Finally Here

We are finally beginning to experience a long-awaited revolution in the insurance industry. Historically, insurance has been one of the last and slowest industries to embrace technology as a means of modernization and process innovation. The insurance industry is fragmented, without common standards, and until very recently did not attract many investment dollars, which exacerbated the general lack of incentive to modernize. However, in the past few years, we have seen signs of revitalization in the industry, and it is becoming an exciting time to be a part of the insurance community.

According to a report published by the National Institutes of Health, “Healthcare costs in the U.S. now account for 16% of the country’s gross domestic product, and per capita healthcare spending is approximately twice that of other major industrialized countries. Inefficiencies persist within the healthcare system because—in contrast to other economic sectors in which competition and other economic incentives act to reduce the level of waste—none of the healthcare system’s players have strong incentives to economize.”

It has been said that 40 manual workflows make up 25% of an insurer’s cost of doing business. A recent report by Newsweek–sponsored by Salesforce and Deloitte, which included a survey of 300 C-level insurance IT executives–found that in the quote-to-enroll process, only 4.5% of new business is “mostly” or “extensively” low-touch. About 52% of the processes used are achieved manually. When taking time to dive deep into their process, John Hancock discovered that even for one line of coverage, 120 steps could be condensed to seven and turnaround time reduced from several days to a few minutes.

See also: Key Technology Trends for Insurers in 2019  

Those of us who have been in the industry for some time are all too familiar with the time-consuming processes that have been used for decades, and there are a variety of players who have decided to do something about it. The past few years have seen an unprecedented amount of investment money flowing into the insurtech industry, which is beginning to change the market outlook as well as boost competition, which in turn is motivating startups and established companies alike to embrace change. We are beginning to see new partnerships and the building of the infrastructure necessary to overhaul the industry, enabling a new focus on user experience and connecting APIs instead of the endless custom work typically required in this industry.

There’s a new optimism in the insurance industry that is catching fire. According to a recent report by Accenture, “In five years, nearly all the insurance executives in our survey expect the industry to be transformed by digital technologies.” Further, the report found that 90% of insurance executives state they have a coherent, long-term plan for technology innovation in place. Quicker turnaround times, automated processes and good user experience translate to more new business, higher retention and lower employee frustration and, arguably, could help bring down the costs of healthcare overall.

There are at least three areas that need to be addressed to help the insurance industry to modernize and innovate. Insurance professionals would agree that the most common problems in the old processes are the incessant need to copy and paste, the aggravating issue of double entry and the frustration of having to cross-reference multiple sources to get accurate information. We need to break down silos, open up data and replace legacy systems to get these processes running more smoothly and quickly.

Breaking down silos

In Accenture’s report, “47% of survey respondents also say lack of collaboration with the IT function is preventing them from realizing their technology investments’ value.” From our own experience and years working in the benefits industry, I cannot tell you how many hours, days and months have been lost simply copying and pasting information from one Excel file into another, having to log into multiple systems to manually log information or to simply verify that the information needed to accomplish the task at hand is indeed accurate. Unlike other industries, there are very few APIs available that allow systems to communicate and connect with each other. Because of this lack of connectivity, many employees at insurance companies end up using up to five to 10 systems simply to complete their everyday tasks.

Automating

Once there begins to be a focus on modernizing and upgrading core systems, a carrier can begin to think about real efficiencies, including automation. Automating even a few of the top 40 manual processes would increase productivity and performance. Imagine the ability to:

  • Automate the confirmation of group information for a master data store to automatically verify its accuracy
  • Auto-ingest census information by machine reading
  • Consolidate account information into a single record
  • Provide one point of entry to populate multiple systems

Automating these processes not only leads to quicker turnaround times and better efficiency, but it also enables insurance professionals to close more new business and gives them a competitive edge and a way to stand out from those companies that may be slower to adapt to new technologies.

See also: 3 Steps to Succeed at Open Innovation  

Partnerships

Working with possible competitors, as well as vendors, is becoming increasingly important, and new levels of collaboration are necessary for companies that wish to thrive in the digital economy. There is no one system that does everything that an insurer needs; it simply does not exist at this point and may not exist for several years. McKinsey says that “ecosystems will account for 30% of global revenues by 2025” and that, “to succeed in ecosystems, insurers will have to take a hard look at their traditional roles and business models and to evaluate opportunities to partner with players in other industries.”

We are still facing an uphill climb to transform the insurance industry from stodgy to streamlined, but there are signs of a renewed energy and drive that show promise. As more and more insurance companies and partners see the value of digitization, automation and collaboration, everyone will benefit from a more connected ecosystem, and the insurance industry will do its part to make healthcare a more manageable, and possibly even satisfying, experience for the consumer.

On-Demand Economy Is Just Starting

Fifteen years ago, the idea of having access to any bit of information you could possibly want at your fingertips was outrageous. In 2001, you could get access to the Internet from your phone, but the experience would be slooooow, and it might cost you hundreds of dollars. Dial-up Internet from desktop computers – remember them? – was still very much a thing. Now, people carry smartphones that give them instant access to just about anyone, to every bit of news and to almost all the knowledge in recorded history.

People use those devices mostly to watch videos of singing goats and people failing at dunking a basketball, but that’s a different story.

The point is that technology, such as smartphones and smart watches, has created an on-demand world where gratification needs to be instant. When someone decides he wants something, he doesn’t want it in two hours. He doesn’t want it in 20 minutes. He wants it now. And, he wants it at the push of a button.

As the trajectory of the last 15 years shows, the trend toward on-demand will only continue, perhaps even accelerate.

The main driver, as usual, is good, old Moore’s Law, which has seen the computing power of a chip double every year and a half to two years since the 1960s at no increase in cost. Moore’s Law is why a gigabyte of memory, which cost $300,000 in the mid-1980s, today costs less than a penny, and why, despite some technology headwinds for Moore’s Law, we’ll have devices hundreds of times as powerful as today’s before kids born this year enter high school.

Other “laws,” such as Metcalfe’s, continue to drive the value of networks at an exponential rate. So-called “network effects” are why millennials rarely have their phones more than a foot away and why there is so much effort to make devices even more accessible – in front of your eyes, a la the failed-but-not-forever-dead Google Glass, or on your wrist as a “watch.” Nicholas Negroponte, the founder of the MIT Media Lab, has argued for years that we’ll eventually wind up with cellphones surgically implanted behind our jaws, where they will have easy access to our vocal cords and our ears.

But Moore’s Law and Metcalfe’s and the others that have driven the unbelievable progress in computing are just the start. Now, three more factors are kicking in, increasing the pace toward the on-demand world. First, sensors and cameras are wiring more and more of the world every day. Second, people are coming up with new business models that build on these new capabilities in surprising and powerful ways. Third, the effects will spread to what is sometimes referred to as “the next billion” (and the billion after that). Those of us in the developed world won’t have all the fun; the rest of the world will join in.

Sensors and Cameras

Fitbit et al. track every step you take and every calorie you burn, and they’re just the beginning. People have begun talking about the “Internet in Me.” The idea is that you might ingest some small sensor that will report from inside your blood stream about blood pressure, blood sugar, etc. A wireless signal – powered by the abundant electricity inside us – would send the information to your phone or watch, which would relay any necessary information to a doctor or some sort of healthcare provider.

Drones are everywhere. They can check crops, monitor disasters or do whatever. In fact, woe to the next generation of teenagers – parents can now just keep a drone in the home and have it fly around from time to time to see if Junior is having a party while they’re away.

Our mobile phones constantly provide information on traffic flow, based simply on how fast they’re moving in our cars. (When is the last time you saw a traffic copter, let alone a thin rubber hose across a road that tripped a counter every time a car ran over it?) Waze has layered crowdsourcing on top of the data from mobile phones, encouraging people to report accidents and other delays, to fine-tune maps and so forth. Nauto, a start-up, is trying to add another layer by getting fleet operators—and, eventually, individual drivers—to put cameras in vehicles (one looking at the road, one looking at the driver) with the initial goal to improve safety. If enough of Nauto’s cameras are on the road, they will provide a real-time look at the world. Want a parking spot right now? Nauto can tell you about the one that opened up 30 seconds ago a block away.

Google is gathering information in real time about diseases like the flu – it can report when and where a lot of people start searching for information about certain symptoms. Even our thoughts and emotions are getting wired. Historically, in presidential elections, people conducted the occasional opinion poll, so you’d have a sense of the result of the debate a week or so later. Now, people monitor Twitter streams and Google searches in real time to assess who won and who lost. Those feelings then get aggregated in prediction markets that are far more accurate than political observers ever were. Of course, a lot of effort gets put into figuring out presidential elections because of the stakes involved, but this kind of wiring and immediate response will spread into other areas, as well.

The physical world is being folded into the digital one through hacks such as QR codes, which let magazine readers scan them to figure out where they can purchase an outfit or whatever else is in an image. Amazon’s voice-activated Alexa sits in the middle of a room and allows people to buy something through Amazon right when they think of it, even if they don’t have their phone near them.

Our lives divide into two parts these days: Those that are wired and those that will be wired. 

New Business Models

Just Google “the Uber of,” and you’ll see how much a single inventive business model can change things. You’ll be prompted with companies offering the Uber of trucking, dog walking, laundry, snowplows, tennis partners dentistry and much more. There is a powerful example in the insurance industry: WeGoLook, which is being called the “Uber of claims handling.” If a carrier needs a picture of a car, it can send someone out from the office, or it can draw on the tens of thousands of freelancers affiliated with WeGoLook and have one of them take the necessary pictures and gather the information. Especially in rural areas, it can be a lot cheaper to have a local person gather the information than to send someone out from a regional office. And, through the wonders of information technology, WeGoLook can be so thoroughly integrated into a carrier’s system that the person asking for the photos, etc. doesn’t need to even think about whether the request is being fed to an internal person or to WeGoLook.

Even without totally new business models, tweaks are accelerating the pace of the economy. Seamless, the on-demand food delivery service, has shaken things up by making it much easier for customers to order food for takeout or delivery. Venmo has become popular among millennials by greatly simplifying the process of sharing costs and, in general, making small payments to each other.

Amazon went from “delivery some time” to mostly two-day delivery, via Prime. Now it is working hard to get to same-day delivery and is even experimenting with drones that could deliver within perhaps 20 minutes.

These business model changes will keep unfolding, too, in many cases like a slow-motion train wreck. You can already see some of the ways that 3D printing will step up the pace – you just click on the image of a hairbrush you want and have it start printing in your office immediately. Or look at the news business. Remember weekly news magazines like Time, Newsweek and BusinessWeek? Not only have they gone away but even daily publications like the Wall Street Journal have had to switch to instantaneous publication online – no more holding the big stories for the print edition the next morning. Those of us of a certain age remember what a big deal it was when Monday Night Football showed highlights from the day before. Now, we don’t even have to wait for Sports Center at the end of a game. We can just call up a highlight on our phones. If you look at the changes going on at CNN, you can see that its mission has changed, because there is a new form of 24-hour news network: It’s called the Internet, and it’s “on-demand” — no need to keep Wolf Blitzer droning on in the background.

The Next Billion

As more and more people from countries such as China and India and places in Africa enter the middle class, they will get access to all the technologies that drive the on-demand economy in the rest of the world. In some cases, they will even leapfrog us. In Kenya, for instance, growth in the traditional sort of banking is stunted even as the economy grows, because people use their mobile phones to exchange money. Who wants to go to a bank and wait for a teller?

And these changes in technology, business models and demographics are just the things we know about. You can be quite sure that lots of clever people are already at work on other ways that will speed the move toward the high-speed economy.

Think of the shift in the economy as the move from the demand curve to the on-demand curve.