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Past, Present, Future of Telematics, UBI

Insurers have spent the last 20 years exploring the potential of telematics with alternating curiosity, commitment and disillusionment. Last year, 8.2 million U.S. auto policyholders shared their driving data with an insurer, according to the IoT Insurance Observatory, a global think tank.

Insurer participation in the telematics space has been consistent for the past several years, according to annual surveys of insurer CIO members of the Novarica Research Council. Insurers that have deployed telematics generally indicate positive experiences; this includes a majority of larger insurers (more than $1 billion in annual written premium), 63% of which have measured positive ROI from their telematics programs. This is fairly rare for emerging technologies, where insurers are more likely to generally recognize value than formally measure it; the ROI places telematics alongside technologies like machine learning and robotic process automation in terms of the value created for insurers that have deployed it.

Given this activity, it’s useful to example the past, present and future of insurers’ use of telematics in personal auto lines, contextualizing current activity in light of insurers’ past approaches and speculating on future developments based on insurers’ present actions. As the article profiles the stages of telematics adoption, the focus will be on what is changing and why.

The Past (1998-2016)

Insurers in this phase were exploring telematics and the insights it could provide. Progressive’s Snapshot program has been the pioneer in OBD/dongle telematics-backed programs. The company’s journey has motivated other tier-1 insurers to engage with usage-based insurance (UBI). Several other top-10 insurers had introduced similar programs by the end of 2012, at least in some states.

These programs went out of their way to avoid scaring off initial adopters. They offered discounts to opt in and monitored driving behavior only temporarily, and many even didn’t impose surcharges on poor drivers. The value for insurers largely came from self-selection: only good drivers were interested in enrolling. However, insurers that were better able to effectively manage the usage of telematics data for pricing not only obtained better economic results thanks to surcharging the worst risks but were also able to keep an average retention rate above 94%.

The number of policyholders sharing data with an insurer grew to 3 million in 2014 but then leveled off. Insurers’ commitment subsequently vanished, and market sentiment about UBI became pessimistic. After almost 20 years and relevant investments, only about 1.5% of U.S. drivers were sharing telematics data with their insurers.

Number of policies sending data to an insurer by year in the U.S.

The Present (2017-2021)

While many market analysts with a little literacy about telematics data were speculating whether UBI would die before its potential was realized, in 2016 forward-looking insurer Allstate created Arity, a company dedicated to telematics and focused on the usage of the smartphone as a sensor.

Mobile-based data collection has vastly increased the reach of telematics programs by simplifying sign-up. The market has grown at 30% per year in 2019 and 2020. The COVID-19 pandemic has further increased awareness of UBI among the media, agents and customers – especially about pay-per-mile mechanisms – and is likely to support even more robust growth in 2021, as presaged by new mileage-based programs like that from American Family Insurance (MilesMyWay).

At first, it wasn’t clear mobile was a suitable source for telematics data: A leading telematics conference in 2016 included a session titled “Royal Rumble: Dongle vs. Mobile vs. Embedded Data Collection.” But mobile-based solutions have been the growth engine for telematics over the last few years, and quality of OEM data hasn’t yet met expectations. All the new successful approaches rely instead on the sensors present in the phone – sometimes paired with a tag positioned in the vehicle – and monitor the policyholder for the full duration of the coverage, rather than using a dongle for a single initial monitoring period.

See also: From Risk Transfer to Risk Prevention

Continual monitoring has allowed many of the top insurers to expand the way they use telematics data. In recent years, U.S. insurers have:

  • Introduced mechanisms for structured behavioral change– such as cash back earned on each trip – to promote less risky behavior;
  • Leveraged telematics data in claim processes to improve customer experience and increase both efficiency and effectiveness of claims management;
  • Introduced “try before you buy” apps for more accurate pricing at first quote, to attract better risks in each pricing cluster and reduce the premium leakage from bad risks.

Additional use cases like these allow insurers to build more robust UBI business cases, creating value on insurance profit and loss. This, in turn, allows insurers to create more attractive value propositions for customers: The more value created, the more there is to share with policyholders in the form of discounts, rewards and cash back. These incentives in turn attract new customers, driving further adoption.

Forward-looking insurers investing in these innovations today are progressively building the set of competencies necessary for mastering the usage of telematics data in the insurance business. This will not only create faster-growing and more profitable UBI portfolios but also address the transition to future mobility, as suggested by the story of Avail, the car-sharing service created by Allstate.

A large portion of the market hasn’t reached this level of maturity, however. Underwriting is still the most common area where insurers use telematics, although a few are beginning to explore other areas.

Many insurers are still watching the space, especially midsize insurers, which have engaged with telematics at roughly a third the rate of their larger counterparts. The percent of insurers deploying or piloting telematics has been roughly unchanged since 2018. (Insurers that are already participating, many of which have measured positive ROI, are continuing to innovate.)

Insurers whose internal technology environments are still mid-transformation may have a harder time supporting value-added telematics features; for these insurers, the value proposition for telematics as a whole is less clear. In particular, insurers need substantial data capabilities to manage UBI data at scale and innovation capabilities to transform the way business has been done for decades. As insurers continue to improve their data capabilities, and as more and more consumers adopt telematics, insurers that aren’t yet in the space may have more ability and more reasons to enter it.

The Future (2022-2030)

An insightful postcard from the future has been delivered by Tom Wilson, Allstate CEO, in a recent Bank of America Securities virtual conference: “If you’re not leaning into telematics, you’re not going to be in business for very long, at least on a profitable basis.”

We believe that in 10 years it will be the norm in the U.S. personal auto market:

  • For customers to download their insurer’s app on their phone to be insured. This app will continuously use the smartphone’s sensors to deliver a superior customer experience regardless of what product a customer chooses: pay-per-use, telematics-based renewal pricing or a policy with a traditional rating based only on traditional variables such as age, credit score, etc. This telematics app will have more than 40% daily active users, as some international insurers have already demonstrated. These interaction frequencies are not far from social media.
  • Telematics will prevent risks, both by real-time warnings in risky situations and by driver improvement via rewards for safe driving. Some international insurers have already put these into practice and created a reduction of their expected losses. Insurers will create an overall benefit to society by making drivers safer.
  • Claims touchpoints will be enhanced by the usage of telematics data and a virtuous collaboration between humans and AI. Policyholders will enjoy more accurate and efficient processes, from FNOL when accidents are detected, to claim triage, to adjudication and repair and payment. Customers are already demanding this, as shown by a 2019 customer survey conducted jointly by Cambridge Mobile Telematics and the IoT Insurance Observatory.
  • Customers will use their insurers’ apps to select among personalized offers of telematics-based services and additional contextualized risk-transfer solutions.

See also: Personalized Policies, Offered via Telematics

Forward-looking insurers are already preparing for this kind of scenario. This will in turn require transforming processes to most effectively use telematics data. It may not be enough to simply have a UBI product: The technology itself has a cost, and value-sharing (e.g., through discounts), can start at 10%. Insurers will need to use telematics data effectively to generate a return on this investment.

Insurers will have to educate both externally and internally: Not only will they need to communicate the benefits of telematics to potential customers, they’ll need each internal functional area to have a basic literacy about telematics. We expect that the next 10 years will see a tremendous degree of innovation and adoption, so telematics and the value-sharing it enables will be necessary to compete at the leading edge. This in turn should create a sense of urgency: Although simple telematics products can be replicated quickly, effectively leveraging telematics data to generate profitability can take years of iteration and concerted effort across organizations, and capability gaps will require years to be closed. After 20 years of experimentation in the U.S. personal auto market, telematics is ready to take flight.

From Risk Transfer to Risk Prevention

Recent developments in technology and the corresponding availability of data can improve risk prevention. A key driver is the Internet of Things (IoT), the growing network of connected devices ranging from consumer wearables to industrial control systems.

According to a recent report by Kaspersky, 61% of enterprises already use IoT applications. So, nearly two-thirds of insurers’ corporate customers can potentially integrate IoT data into insurance services. And a recent study by Aviva revealed that the number of internet-enabled devices in the average U.K. home has increased by 26% in the last three years to over 10.

Insurers can use the newly available data from IoT applications to reduce risks for customers, whether directly – through real-time risk mitigation solutions – or indirectly, by promoting safe behaviors over a longer period.

Prevention services are not new in the insurance industry; for years, insurers have provided consumers with loss prevention advice, and risk-engineering teams advise businesses in commercial lines. Ways to prevent risk, however, are changing. IoT allows risks to be better managed. This can be seen as the very essence of the evolution from pure risk transfer to a “prescribe and prevent” scenario.

See also: The Human Risks in Insurer/Broker M&A

Real-time risk mitigation

Real-time risk mitigation results from the direct use of IoT technology and can either consist of:

  • Automated actions by IoT actuators that affect the risky situation without any human intervention, like autonomous driving systems in cars, or
  • A warning to trigger some kind of human intervention, such as a water leakage alert that activates an emergency repair service.

These risk mitigation actions can be triggered by the detection of three different situations:

  1. Missed safety tasks, such as scheduled inspection or equipment that needs preventive maintenance, or a diabetic patient who has left insulin at home or missed a check of blood sugar level.
  2. A risky situation, such as a frozen pipe; a cold storage door that has been left open; spilled liquids on a supermarket floor; workers without adequate equipment in the workplace; unsafe lifting by an employee; a distracted driver.
  3. The consequences of an event that has already happened, such as a water leak; an unsafe worksite; an injury; or the failure of a patient to adhere to a treatment. A mitigation action is then initiated by the IoT system.

Real-time risk prevention is most mature in commercial lines, driven by the loss control culture present in commercial insurance. Field inspections by engineering teams are well-established, and enhancing this work with new technologies seems like a natural step.

A few personal auto insurers around the world have integrated real-time warnings in their telematics programs. This live feedback – from line departure warnings to alerts about coming risky intersections – influences driving behavior and allows insurers to reduce expected losses.

Water leakage sensors are one of the most cited preventive services in home insurance. However, as of today, insurers have struggled to introduce approaches that generate substantial demand and a sustainable business case. Finding a sustainable business case in the smart home insurance market is challenging, but innovations should make homeowners the ultimate winners.

Figure 1: Leveraging IoT data for multiple use cases

Source: IoT Insurance Observatory & The Geneva Association

Bundling risk prevention with other customer services, such as security, has been the most successful approach to date. The sustainable business case is built on a bundle of different services – some sold after the purchase – and on the reduced churn rates built through customer engagement.

Life and health is the least mature field for real-time risk mitigation services. There have been many insurance pilots over the past few years around early detection, care optimization and medication adherence, but only a few examples have scaled to market level. Reasons for the slow adoption include: 

  • Health costs in most countries are not fully covered by insurers but by a public health system. 
  • Entering into the medical device space would mean entering into the medical regulatory field. 
  • Medical advice comes with significant responsibility and requires deep and specialist knowledge.
  • Execution at scale needs insurers to deal with many different medical service providers. 

Real-time risk prevention services and approaches to them are very heterogeneous. The only common denominator is that all successful services are based on a multi-year journey. 

Promoting less risky behavior

The second way to prevent risk is to encourage less risky behavior. Insurers have a role to play in creating a positive safety culture and raising awareness in society.

We can distill a three-pillar concept from the successful examples: 

  • Pillar one: Create awareness of the current risk level
  • Pillar two: Suggest a change in behavior
  • Pillar three: Offer incentives for changes in behavior

The sustainable adoption of safer habits for the benefit of all stakeholders can only happen when all three pillars are successfully implemented. 

The first two pillars are closely linked and depend on feedback to customers. Awareness of the current level of risk leads to the question: What change will make the activity safer? Before changing our behavior, we need to be aware of our current behavior.

Raising awareness of risky behavior and identifying ways to change it are not enough. There is a need to encourage people to instigate real and sustainable changes in their behavior through rewards.

The customer’s perception of the value of the rewards, their cultural context and frequency and the intersection with behavioral economics are all integral. Changes in human behavior are also instinctive; A combination of behavioral economics and gamification to engage individuals is therefore needed to help to drive behavioral change.

The most mature business line is life and health. Fully individualized suggestions and challenges are provided to customers based on the number of steps registered by their mobile phone or physical activity data from wearables.

In personal auto telematics, customers often receive a detailed analysis of their driving style via a dashboard in a mobile app. Many insurers also automatically display tips for improving the driving score, or introduce contests on specific issues – so-called leaderboards. 

See also: Despite COVID, Tech Investment Continues

In commercial lines, IoT data is being used to enhance the activities of the loss control teams and to provide periodic safety insights to risk managers and supervisors of the insured companies.

The real-life case studies on promoting safer behavior afforded the following key findings:

  • The reward system needs to be set up to reinforce positive behavior. The reachability of the reward is key. 
  • There are cultural aspects to incentives. It is important to find compelling benefits and rewards that engage target customers. What works in one country does not necessarily work in another. The rewards must be explicit and tangible. For example, monthly cashback on fuel costs is effective, but a free weekly coffee also materially influences behavior.  
  • Frequency is key. A yearly premium discount is not enough. Positive engagement must be nurtured on a short-term basis. This mechanism gives people a reason to come back to the platform. 

Enablers of prevention services

The integration of technology into prevention services greatly increases complexity. As a result, the enablers for success are the effective business transformation, cultural change and understanding of the corresponding financial management rather than the technology itself.

Figure 2: Complexity of the financial management of IoT-driven prevention services

Source: The Geneva Association

We identified the following as the main success factors:

  • C-level commitment
  • Development of vision and strategy
  • Development of culture and capabilities
  • An effective value-sharing scheme with the customer
  • Management of new and complex financials

Several new elements need to be considered in the financial management of this new paradigm, such as service fees, partner contributions, self-selection effects and net IoT costs, which are harder to integrate into the economics of traditional insurance products.

The full report from which this article is derived is available here.

The Key to the Future of Mobility

For the past few decades, mobility innovation has trended in one direction: empowering the individual consumer. Google Maps and GPS have made navigation simple and paper maps obsolete, while rideshare apps offer options that traditional taxi services could not. Autonomous vehicles aren’t yet commonplace on the street, but experiments have logged millions of crashless miles. We’re living through the greatest change in general mobility since the invention of the jet engine. 

Insurance has a traditionalist reputation; insurers often reassure customers by advertising that they’ve been in business for several decades or even for whole centuries. The industry’s emphasis on past practice and proven traditions is admirable and necessary. But so is innovation, and we see insurers from every corner of the globe excited to build smart new products and programs based on new technologies. 

Telematics, the practice of analyzing mobility data for special insights, can help solve some of insurance’s oldest problems. Conventional actuarial models struggled to differentiate between individuals and types. If twin brothers live at the same address, work jobs with comparable salaries and share the same red sports car, they’re going to look equally high-risk to an insurer. One brother may be a thrill-happy daredevil, while the other shuns speeding and is conscientious about his turn signals, but the insurance company has few ways to recognize this. The responsible brother and the irresponsible one will pay the same fees despite their wildly different risk profiles. Telematics can make a huge difference here – it personalizes an insurance policy to each driver, providing the most equitable way to price premiums possible.

This is good for drivers, because it encourages good driving, and for insurers, because they’re much better able to predict costly car crashes. 

See also: How Tactile Sensors Can Help in Auto

The uses for telematics in insurance are obvious, and dozens of companies have partnered with telematics providers or founded in-house telematics operations. The customer’s phone is the central infrastructure element for telematics, but much remains to be built.

First, there’s the matter of what you might call social or trust infrastructure: Although most of us transmit huge amounts of data to Apple, Google and Facebook every day, potential telematics customers need to know that they are not being spied on. Explaining why telematics doesn’t compromise privacy is essential.

Second, telematics needs to be as simple and unobtrusive as possible. If a driver must open an app every time they step into a car, that’s an issue.

Finally, customers must be able to easily track the benefits of their participation. If, for example, a customer learns that their adherence to speed limits has earned them a 10% reduction in their premium, they’ll feel persuaded they’ve made the right choice. 

The insurance industry is evolving, but it doesn’t do it as noisily or quickly as the tech, automotive or mobility industries. We can see the changes happening, and the infrastructure necessary for the transformation grows firmer every day. As the insurance market becomes ever more competitive, telematics and related innovations offer the prospect of a more efficient industry that works better for everyone, giving insurance consumers better choice, service and prices.

Personalized Policies, Offered via Telematics

Mass individualization. Is it an oxymoron? Or a new perspective when attracting customers? With a growing number of connected cars on the road and 74% of new vehicles featuring advanced driver assistance systems (ADAS), it’s becoming easier to see the differences between policyholders. Increasingly, insurance carriers can understand how and when people drive, as well as the ways vehicles themselves interact with the road and their drivers. The growing variety of advanced safety features affect driving patterns, adding a layer of complexity as carriers navigate pricing, claim frequency and severity. So, how do insurers attract and retain customers when faced with so many new variables, while at the same time delivering a personalized experience to meet growing customer expectations? 

In a word — telematics. Telematics can unlock an insurer’s ability to:

  1. Better identify and reach high-intent customers
  2. Offer consumers new experiences that meet their expectations
  3. Deliver superior customer service in a way that ensures prospective customers feel confident in making a decision

Leveraging Telematics Data to Reach the Right Customers

High-intent customers can arise from common scenarios, such as the purchase of a vehicle in a state where securing insurance is legally required. In fact, for 29% of customers, a new car is what prompts insurance policy research to begin.

To catch consumers’ attention during this critical point, carriers can gain valuable, personalized insights from connected cars, given that the latest vehicle models can chart and share data at every turn (not to mention each brake, acceleration and more). Equipped with this data, carriers can better determine which customers to target and what incentives to offer them up-front, helping customers increase confidence in their decisions and potentially improving carriers’ bottom line. 

Going a step further, by having this information readily available at the time of quote, carriers can offer competitive pricing personalized to how an individual drives and to the vehicle the person is driving. This eliminates the need to first educate the prospective buyer about the plus side of usage-based insurance (UBI) and then make the buyer wait weeks or months to learn what discount he or she is being offered. Accessible connected car data can help carriers stand out from the competition, win a customer and simultaneously reduce marketing costs. Because about one-quarter of insurer marketing/customer engagement departments spend all of their marketing budget and time on customer acquisition, these cost savings are critical. 

Offering New Experiences to Attract New Drivers

Today, most consumers navigate a variety of services digitally without a second thought — from filling prescriptions to buying groceries to banking — and have come to expect a seamless interaction with almost every brand. The insurance industry is no exception. In fact, according to McKinsey, customers cite convenience as the second-most-common reason for switching brands. As a result, insurance providers may want to adapt to meet customer expectations. The good news is that more than half (51%) of auto insurance marketing professionals list “designing new customer experiences” as their top priority, behind acquiring customers and improving the claims experience.

While driving may be down over the past year, accidents are still occurring, and have actually gone up in severity, possibly because less traffic encourages faster driving. By using telematics, carriers are not only able to detect a crash and provide on-the-scene assistance, but can help resolve a claim faster. These are the types of services consumers are looking for. In fact, 47% of consumers said access to telematics-enabled claims submissions would make them more likely to purchase usage-based insurance. Intuitive, personalized experiences drive so many of our daily interactions; the same should be true for submitting a claim. 

See also: Telematics Consumers Are Ready to Roll

Going Beyond Digital to On-Demand

Just as it has in other industries, digital adoption has allowed insurers to speed and improve existing processes, enabling inspections, appraisals and repair estimates virtually. Beyond this, AI is creating dynamic experiences such as near-immediate total loss vs. repair decisions, repair vs. replace-parts decisions and injury prediction. AI also helps underwriters identify risk at the point of quote. The evolution of data analytics and AI guiding the estimating process will only accelerate efficiencies in operations and customer satisfaction, allowing policyholders to participate in the claims estimating process. Research shows that 36% of customers are dissatisfied with the initial claim filing process, highlighting the significant opportunity for improvement.

For example, by using telematics data that detects an accident, the carrier can reach out to the driver in the way the person prefers — via text, in-app or through a phone call. The consumer can then decide when and how to respond. From there, the driver receives a link so her or she can take photos of the damage, upload the data, send it back to the carrier, receive a list of nearby repair shops and talk to a live person if there are questions. These improvements expedite the claims process and create a better customer experience: one that is on-demand and mimics interactions consumers have come to expect from other industries.  

Research already shows that 90% of current UBI customers are satisfied with their program, but carriers can take it a step further by using gamification to offer discounts while maximizing the convenience of app resources and more. This concept has shown success in a wide range of industries, helping companies achieve goals for creating awareness, increasing sales, simplifying complex processes and more. The interest, and opportunity, to expand to meet customer needs clearly exists, but to truly take advantage of UBI beyond pricing it is key that carriers differentiate to attract and retain customers. 

Carriers can begin to develop a strategy that allows them to innovate, reimagine the way customers see them and, most importantly, make offerings more personal and more appealing. The typical auto insurance customer requests three carrier quotes during the buying process. When the decision day comes and you’re among those three carrier options, these strategies can help your quotes stand out.

And, now that you’re more attuned to your customers’ expectations and their specific needs, you’re putting yourself in a position not just to win on decision day but to increase the likelihood of retention, creating brand advocates who may remain loyal for a lifetime.

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.