Tag Archives: transformation

Insurtechs’ Role in Transformation

Given the nature of insurance, and the possibilities that data analytics and technology offer, there should be little doubt that the industry is moving toward becoming a technology industry.

It is therefore only natural that insurers are looking for ways to reinvent themselves as technology companies, running corporate-wide digital transformation projects to ensure adjustment to the changing markets and secure a competitive position in the future.

This white paper demonstrates how insurtechs are important for the development of the industry but also underlines that insurtech does not address all challenges faced when creating a future successful insurer – insurtechs are digital instruments to be used in the transformation journey, but it’s still up to the incumbent to get the real transformation done.

This paper explores how to use insurtechs to address current incumbent pain points and what to look for before entering a partnership with insurtechs.

The Insurtech Landscape Mid-2020

Given the pace of the market development, it makes little sense to provide a fully updated and detailed state-of-insurtech – it does makes sense, however, to understand the underlying nature of the insurtech landscape to examine how insurtechs are entering and affecting the insurance industry.

This understanding will provide insurers with a future outlook and enable the development of adequate strategic responses – this will also help insurers to identify if and where insurtechs can fit into insurers’ value chain.

More than 75% of total dollar investments are invested in insurtechs offering products and services within distribution, and a total of 79% of all investments are in single-line insurtechs.


Table 1: 2019 total insurtech investments
Source: Coverager 2019 insurtech investments in review

These two numbers, 75% of investments in products and services within distribution and 79% of all investments in single-line insurtechs, combined with insurtechs’ focus in the insurance value chain (see below) clearly show that insurtechs are focusing on specific areas of the total insurance value chain and not in creating new, full-fledged insurers.

The insurtechs seems to be zooming in on the areas that have the greatest business and growth potential and leaving out the less lucrative parts of the entire insurance value chain, which makes perfectly good business sense. You would only enter into industry areas with high inertia and potential for fast improvements.


Figure 1: Insurtech focus in the insurance value chain (Quarterly Insurtech Briefing January 2020)

Following the numbers from Figure 1, it appears that the structural issues impeding insurers to realize transformations at scale and speed are not addressed in particular by the insurtechs in the market.

Successful transformation of incumbent insurers requires more than a digital front end or various, isolated digital innovations – granted, it may add to the overall value provided to the customers or partners, but the underlying structural and process challenges still exist in the incumbents and still need to be redesigned for the insurer to reach the future virtual and digital state.

As shown later, some insurers are already partnering with insurtechs and benefiting from improved, isolated processes within distribution, sales, policy servicing and claims management, but very few – if any – have created a cohesive end-to-end experience for the customers and partners.

Partnering with an insurtech for a specific element of the value chain still leaves it with the incumbent insurer to realign, adjust and connect surrounding processes in an effort to create a complete customer-oriented solution.

Besides ensuring technical and operational integration, the incumbent should also carefully understand the cultural and organizational changes required when aligning and redesigning core processes.

In other words, and put provocatively, insurtechs are acting as digitally advanced middlemen or brokers – their disruption primarily lies within customer experience and service, while some leverage Internet of Things to refine pricing and improve service offering (health, home, car, travel).

Most insurtechs greatly rely on the backbone of the insurer – an important point to make and for incumbent insurers considering partnerships with insurtech to be aware about.

Successfully integrating with insurtechs

As mentioned, it does make good sense for incumbent insurers to look towards insurtechs for partnerships, as a partnership can fast-track the digital development process. Apart from being aware of the organizational changes required to make the partnership work, it is beneficial to create a gap analysis to evaluate existing competencies against competencies required to deliver on the insurer’s overall strategic direction and targets.

While looking at the elements in the value chain, and apart from identifying the gaps, noting down current pain points can detail the requirements for an insurtech partnership further.

A starting exercise can be mapping the insurer against the “three-speed” insurer model to have a point of departure in defining the gaps and requirements for an insurtech partnership, followed by identification of current pain points throughout the value chain.

The three speeds of insurers

Insurers can broadly be divided into three different categories, reflecting their current digital strategy and ability to react fast to changes in the market from both users and competitors/partners.


Table 2: Insurers in the industry can be broadly divided into three different ‘speeds’

You can fill out Table 3 below to get an idea of how fast your insurer is capable of reacting to market changes.

Both internal factors as well as external factors are evaluated, as external factors play an important role in an insurer’s commercial success and viability.

Process change refers to the ease of changing internal processes within the insurer, such as claims services, approval processes, etc. An important part of innovation in insurance is to offer a seamless and very fast experience for the users, which requires incumbent insurers to change their existing processes – this will not be a significant issue for insurtechs due to their startup nature and very quick decision processes.

Innovative incumbents acknowledge this need and change their internal procedures to accommodate this – but they are still far from the nimbleness and flexibility of the insurtechs because the innovative incumbents require the innovations to integrate with existing systems and processes.

The rationale behind product changes (agility) is similar to the process change described above but needs to be treated separately, as some products and services can be integrated at arm’s length and thus require less integration and internal adjustments to work.

Organizational agility is the insurer’s ability to react on changes, internal as well as external, and is generally an indication of how fast the organization can get projects approved and begin implementing them. It’s also an indicator for how fast the projects can be implanted once approved.


Table 3: A simple framework to assess the insurer’s current level of development and transformation speed

The organizational agility depends on the formal hierarchical structure and numbers of approval nodes each change request must pass before finally being approved and ready to implement.

Insurtechs have a flat structure with very few formal approval nodes, which means they’re able to approve and begin implementation of changes almost immediately, where laggards are at the opposite end of the spectrum, being slowed down by a large number of approval nodes and long- lasting approval processes.

The innovative insurers are placed in between, again because they’ve realized the need for agility and adjusted internal structures and processes to accommodate this somewhat.

The level of an insurer’s digital flexibility is based on how open and flexible the IT systems are, especially the customer facing systems.

The laggards are basing their development almost purely on legacy IT systems, which most often are inflexible monolithic structures, making it a long process to carry out changes, let alone introduce products and functionalities.

See also: Secret to Leadership in Insurtech Innovation

Innovative insurers have typically been through one or more digital transformation projects, making them far nimbler than laggards in terms of IT connectivity and development, but they still lag behind the insurtechs, who have full control of each and every bit in their digital control room.

It takes cutting-edge talent to drive innovation through, regardless of company and industry, and here again the insurtechs are in front, as they wouldn’t have been insurtechs if highly competent people hadn’t gotten together to create the insurer.

Innovative incumbents are partly innovative and forward-reaching because they’ve managed to hire the right key talent to develop their new digital universe, but even the best talent is bogged down by the existing organizational structures and processes.

Even laggards with exceptional talent will find it difficult to perform due to the organizational structures and systems.

Given this, it’s unlikely that they’re able to attract the right talent and in the right numbers as the right talent is focused on deliveries, which is too complex in laggard insurance companies.

The presence of talent, and the insurer’s willingness to invest, is key to determine the insurer’s level of innovation.

Laggards don’t possess the talent and cannot have an innovation strategy due to their choice on building evolutionary on existing IT systems, where innovative incumbents very much have an innovation strategy, as this is the basis for their future development.

The delivery on the innovation strategy is still not as fast as with the insurtechs for the same reasons.

Mapping current pain points

A quick analysis of the insurer’s current speed and flexibility, combined with the identification of current pain points, sets the basis for understanding what kind of insurtech would add the most value in a partnership.

Pain points are generally specific processes or procedures that cause customers – or the organization – difficulties in getting their job done, whether it is buying a policy from the insurer, filing a claim or encountering bureaucratic red tape stopping marketing or sales processes required to keep – or establish – a competitive market position.

A fast and easy way to identify the pain points throughout the organization is to use the value chain and for each element to write down what is causing delays, inflexibility, challenges or downright customer issues.


Figure 2: Examples of mapping pain points to the elements in the insurance value chain

It is often a good idea to identify the pain points with colleagues to get a more accurate and unbiased view of the pains throughout the organization – done alone, the exercise can be biased toward specific areas that may not be representative for the organization.

These two small company analyses — the speed of the insurer and current pain points — provide a great starting point for understanding how insurtechs can help in the transformation of the insurer to a virtual and digital insurer. The next step is to search the marketplace for insurtech companies that offer products and services that match the insurer’s planned transformation journey.

Benefits of partnering with insurtechs

It should already now be clear that partnering with insurtechs can make very good sense for the insurer to speed up and improve the digital transformation of the incumbent. There are at least four distinct advantages for insurers partnering with insurtechs.


Figure 3: Four major benefits for insurers by partnering with insurtechs

Business development

An obvious advantage of partnering with a tech- savvy professional is the opportunities it creates for new ways of selling existing products and introducing new products to the market.

However, as previously discussed, many insurtechs are building products and services that focus on optimizing existing business processes, including operational efficiency and claims costs savings (direct as well as indirect through reduction of operational expenses).

Business development can therefore be both in terms of increasing revenue through new sales channels or new products and in terms of improving business processes and hence reduce operating and claims costs.

Organizational advancement

It’s important again to underline that successful integration of an insurtech partner requires significant adjustments of the insurer’s organization to fully cater to new processes and products that are introduced through the partnership.

This is, of course, especially true when the insurtech’s product is focused on internal process development, where the full participation of the organization is required.

When done correctly, these organizational advancements will lead to a changed organization with a broader understanding and acceptance of new and more efficient ways of working.

Creating a future state of business

The organizational changes pave the way for creating a more advanced organization, capable of dealing with complex partnerships going forward.

This will not only benefit potential future insurtechs but also improve the way the incumbent insurers are handling their partnerships – the learnings from the insurtech partnership enable the insurer to revisit existing agreements with fresh eyes and new ideas on how to optimize for the future.

The insurtech partnership helps direct the attention on a future state, and a successful integration will instill a “can-do” attitude in the organization.

Working with insurtechs creates a source of continuous learning and organization development, enabling the insurer to stay competitive.

Supporting a new breed of companies

Apart from direct business and organizational benefits, partnering with insurtechs sends a strong message from the insurer to the market, a message of being at the forefront of the industry, which increases the insurer’s ability to attract talent, partners and customers.

Furthermore, the insurtech partnership actively supports the development of the next generation of insurers and partners, thereby supporting the development of the industry long into the future – the insurer leaves its mark on the industry.

Will all insurtechs do?

There are several areas the incumbent insurer should be aware of before venturing into a partnership with an insurtech.

The insurtech must be a real new technology service/product provider, and partnering with it should demonstrate a clear business leap for the insurer, as opposed to an incremental change.

Incremental changes and improvements are required and should be part of any company’s improvement programs, but to reap the full benefits, the insurtech must offer a truly innovative leap for the insurer.

Partnering with the insurtech should match the company’s current strategic direction – or actively be part of a new strategic direction set by the management. It makes little sense to spend time, money and organizational effort to partner with an insurtech if the partnership will not take the incumbent insurer a great step toward the set strategic targets.

Following the discussion on organizational learning and culture, it’s an extreme benefit if there’s a people/culture match even before the partnership is agreed upon.

How to integrate: four basic ways

It’s imperative to understand that this is two very different worlds: an agile and very modern small-business environment and the more bureaucratic and institutionalized environment of the incumbent insurer. At some point, these must match to make the partnership a success, and positive vibes between the partners beforehand will ease this process.

There are different ways of considering structuring the partnership between the insurer and the insurtech, all of which have different advantages and disadvantages to consider – and to be aware of when the partnership hits the insurer’s organization.


Figure 4: Four different ways insurers can integrate or partner with insurtechs

Arm’s length

Partnering with an insurtech and managing the relationship at arm’s length makes it little more than an external distribution partner or an outsourced claims management function. It is very easy for the insurer to administer, as there will be minimal disturbance and interruption of the daily operations, processes and organization.

The arm’s length will have very limited transformation effect on the insurer.

Satellite integration

A high level of systems integration with little organizational integration is typical for insurtechs that connects to the insurer via APIs or using the insurer’s microservices for a specific set of transactions.

In this scenario, there will be little organizational red tape, but some IT challenges can be expected as the IT unit must work and integrate with the insurtech.

Partnership

Insurtech partnerships with little systems integration and high levels of organizational integration typically rely on the technology from the insurtech and require a high level of cooperation and coordination between the insurtech and the insurer – advanced use of artificial intelligence for underwriting or fraud detection could be examples of this, where the insurer in many cases only needs to export simple data sets for the insurtech’s solution to work with.

This can have quite a few organizational challenges as the incumbent organization can get the “not invented here” syndrome and feel the insurtech is coming and interfering with the daily work.

Inclusion

Integrating the insurtech into the insurer will most likely be the partnership model with the biggest return on investment, but at the same time this model poses the greatest challenges, as both systems and organizations must be included and aligned with each other.

It’s safe to say the most significant risk is a clash of cultures between a well-established, well-regulated, experienced incumbent insurer and a newly founded, agile, dynamic and “free-of-rules” insurtech.

See also: Planning for the Unknown Unknowns

Performance indicators – the cornerstone of success

The organizational and cultural strain caused by introducing external parties to the organization – or simply caused by digital change initiatives – can be somewhat reduced by creating a set of clearly articulated targets and goals for the company, the units, the teams and the individuals.

To be successful, the targets and goals must be connected, so the teams and units will be depending on each other to achieve them. This will initially force collaboration that, over time, if managed, will reduce the cultural tensions – working toward the same target is a strong motivator.

A fast way of setting up a framework for target and goal setting is to use the principles from the balanced scorecard, illustrated below.


Figure 5: The balanced scorecard high-level structure Source: Balanced Scorecard Institute

One of the major strengths of the balanced scorecard is that targets are set for the organization as a whole and then cascaded down to the business units, teams and individuals. This provides an overview of how each goal and target is supporting the organization in achieving the end targets.

Given the insurer already has a set of financial performance targets, the balanced scorecard is used to set underlying goals for the units working with the digital transformation and insurtech partnerships, all aiming at supporting the insurer in reaching the overall targets.

This approach can further be used to create business cases for investments and calculate return on investments, because of the specificity of the targets and goals required to create a successful balanced scorecard.

When setting the goals in the scorecard, it can be defined how investments help move the performance indicators toward the goals and therefore illustrate the value of the investment.

Final thoughts

Insurtechs are not the only answer to transforming incumbent insurers into virtual and digital insurers, but they may be able to play a very important role for the insurer in achieving the virtual vision.

When embarking on a continuous transformation journey, it is vital for insurers to keep the overall picture of the organization, its interdependencies, culture and modus operandi in mind.

For insurers to become agile, virtually and digitally competent organizations, they must ensure proper adjustment and development of the underlying key systems, which include organizational structure, management processes and culture.

Merely partnering with insurtechs or other companies does not make these challenges disappear, though – and conquering these challenges are key for future and sustainable success.

3 Industry Ideals, Via Claims Payments

Instacart, Netflix, Zoom. It’s hard to imagine our lives without the companies that provide digital experiences and services so we can continue with our everyday lives amid the pandemic. Almost overnight, in-person, paper and manual processes became obsolete, forcing industries like insurance to embrace and reprioritize digital transformation across all business functions at an accelerated speed and as a new reality, rather than just an out-of-reach goal.

Yet, despite advancements in digital payment technologies and offerings, there still has been minimal adoption across the insurance landscape when compared with other industries. Even before the pandemic, the majority of customers preferred instant payments, but just 11% of insurance claim disbursements were paid instantly last year while 52% were sent via paper check. Within P&C, carriers mail paper checks for more than 75% of their claim payments, which can take weeks even without the recent U.S. Postal Service delays.

The most obvious reason to ditch this antiquated, siloed and inefficient approach for a digitized payments process aligns perfectly with insurance carriers’ core focus: their customers. By giving policyholders the options they’ve come to expect from nearly every other company they interact with, carriers can provide a seamless customer experience for added satisfaction. And providing the best payment experience and digital payment method helps carriers because digital payment platforms can cut transaction costs by a whopping 10X compared with paper checks. Leveraging a digital payments platform also enables carriers to achieve industry ideals such as automation, transparency and centralization to create simple, cost-effective outcomes for everyone involved.

Automation streamlines pivotal moments in the payments process, decreases cycle times and reduces payment creation effort.

Today, 85% of businesses believe automation helps prepare for future business continuity needs. Not only are carriers looking to automate sub processes, but they are also embracing this new environment to revisit the entire end-to-end process and imagine the value and operational capacity that automation can unlock. 

  • Carrier-branded, automated payee enrollment better engages beneficiaries and claimants, while driving adoption of digital, real-time payments.
  • Digital authorizations and releases with e-signatures enable a faster, fully digital claims settlement and payment workflow. 
  • Inclusion of third-party processes into the claims file automation removes excess touchpoints, communication and manual payment entry—increasing the velocity of the payment process, payment posting and claim closure. 
  • Automated verification of claimants’ tax information, as well as digital payments issued to multi-party claimants, vendor plus claimant and law firm plus client payee scenarios, increase a carrier’s digital payment universe and allow for greater overall digital adoption.    

Digital platforms and payments make the lifecycle of a payment more transparent for claimants and carriers alike.

Another critical component of achieving claim payment transformation is transparency. Leveraging digital payments platforms instead of manual processing provides an inclusively transparent experience for both carriers and their claimants. 

  • Through a digital payments process, customers have more visibility into claims payment choice, settlement posting and real-time payment status—ultimately increasing payees’ satisfaction with their insurers and decreasing inquiring phone calls and emails to carriers.
  • Increased insight and access to granular payee response and experience data helps carriers inform decisions around their payee experience based on behaviors.
  • Additional data inside the claim system and carrier staff visibility outside of claims increases transparency and actionable information to the entire organization. 

See also: Payments at the Speed of Light

A centralized platform enables all payment types, engagement and reconciliation to serve as the source of truth for an entire organization.

Adopting digital payments lets insurance companies leverage payment platforms to achieve centralization of multiple workflows and use cases. Carriers need a centralized payments system to ultimately maximize benefits and efficiency across all business, payment and system channels. 

  • Centralized payments systems empower carriers to leverage economies of scale and add claim types, policies, premium refund and reinsurance payments with incremental effort. The systems also allow carriers to maximize their existing third-party partners such as bill reviewers to streamline and automate system reconciliation and the payment process. 
  • Multiple payment options and payee self-service allow customers to select their preferred payment method for multiple use cases and reuse that profile in the future. 
  • Duplicate payment checks, payee identity validation and a unified payment channel reduce losses from payment duplication and fraud. 
  • Centralized digital payments platforms provide payees with a consistent, engaging and digital process no matter the creation path, line of business or core system limitations.

We may be living in uncertain times, but the pandemic has made one thing clear: The digital future is here. While insurance carriers are recognizing the need for digital transformation and ramping up efforts in certain areas, the industry as a whole has a long way to go, and digitizing payments is a critical part of that process. By embracing a fully digital payments process, the insurance industry can provide innovative, streamlined and convenient experiences that all parties involved expect today, while positioning for the future.

Why COVID-19 Must Accelerate Change

While the COVID-19 pandemic and the ensuing economic downturn have prompted consumers to curb their spending, consumers are increasingly mindful of risk and therefore more inclined to purchase insurance. 

A recent survey conducted by Lightico and Sapiens found that a fifth of consumers are exploring purchasing new auto, home and life insurance products amid the pandemic. Those directly affected by the coronavirus – meaning they or someone they knew tested positive – were even more likely to be considering more spending on insurance products. These consumers were 2.3 times as likely to plan on spending more on property and life insurance and 1.8 times as likely to say they would spend more on healthcare and health insurance.

Given that nearly half of consumers in the survey reported that their incomes had plunged by at least 20% since the pandemic started, those figures are remarkable – but for insurers to truly meet the needs of these consumers and stand out from the competition, they must deliver streamlined digital experiences, powered by strong core systems.

Here’s what today’s consumers expect from insurers, and what insurers can do to provide the quality digital journeys that customers crave:

See also: Strategic Planning in the COVID-19 Era

Living in a Digital World

Long before the novel coronavirus outbreak began, consumers were living in a world digitally transformed. Thanks to innovations in e-commerce, content streaming, mobility and beyond, people now enjoy rapid access to consumer goods, groceries, movies, music, car services and much more, all available at their fingertips. 

After months of widespread remote work, millions more now have first-hand experience with a virtually overnight shift in workflows, collaboration and company culture, enabled by innovations in cloud computing, information technology and business software. 

Not surprisingly, 68% of consumers surveyed in the Lightico-Sapiens study indicated that they expect businesses, including insurers, to enhance their capabilities for serving customers remotely. When it comes to purchasing new products and policies, today’s consumers have little patience for analog practices: Three in five consumers surveyed said that they now have less patience for filling out and sending paperwork, and 51% had already e-signed documents within the previous month. 

What Insurers and Carriers Should Do

How satisfied are consumers with insurers’ track record of meeting their expectations for seamless digital experiences? In key areas, insurers are falling well short. According to the survey, insurers are 50% behind consumer demand for online chat servicing and 25% behind demand for website servicing.

The takeaway? While it’s vital for insurers to digitize their business processes and strengthen their core systems, these steps alone won’t suffice to meet the market’s needs. Ramping up online communication capabilities is an absolute must, and insurers can boost the effectiveness of that outreach by getting smart about data.

Robust customer data collection – supported by efficient core systems – yields critical insights for understanding customer behavior, diversifying product offerings and unlocking revenue opportunities. This is especially important amid the pandemic, with the public set to continue practicing some degree of social distancing for the foreseeable future and predictions that COVID-19 will permanently alter consumer behavior. 

Accenture consultancy points to much greater use of digital commerce as one of the most consequential of these changes. While face-to-face sales and customer interactions aren’t going the way of the dinosaurs, insurers seeking to thrive in this new normal must make room for a more prominent role for AI-powered chatbots, personalization and cloud-powered services. Each of these is only possible with a granular understanding of how customers behave, what they want and how insurers can make their offerings meet customers’ needs and expectations.

Necessity, the pandemic has harshly reminded the world, is the mother of invention. For insurers, the crisis has driven home the reality that innovation is a fundamental matter of survival. Through creative partnerships, investments in technology and a commitment to improving customer service, insurers and carriers will propel lasting industry changes and position themselves to meet evolving consumer demands.

5 Transformations for a Post-Pandemic World

There’s been a lot of talk about how the coronavirus pandemic may permanently affect aspects of daily life and fundamentally alter entire industries. The future of the insurance industry deserves particular attention, considering its critical ability to help businesses weather times of extreme hardship and uncertainty. It’s also a sector that, for the most part, has clung to outdated manual processes and, like many long-established industries, has been reluctant to fully embrace digital transformation. Recent blossoming of the insurtech sector has led to what feels like the beginning of a revolution, but, for most insureds, the experience has been as time- and paper-intensive as it was decades ago. COVID-19 may prove to be the much-needed impetus for change for insurance organizations that have been operating (and largely thriving) based on decades-old procedures and tactics.

According to a recent NFIB survey, 92% of small businesses have been hurt by the outbreak of the coronavirus. 80% of those employers report slower sales, and 31% are experiencing supply chain interruptions. A survey by Goldman Sachs found that, while 81% of small businesses are continuing to operate, the pandemic has forced them to cut their workforce by 37%. The promise of insurance protecting businesses has clearly not been fulfilled during this crisis. Insureds are left holding the bag, and, worse, there’s no recipe available for protecting businesses more effectively during any future crises. To survive in a post-pandemic world, insurance organizations can’t continue to conduct business as usual. Businesses are too shell-shocked from pandemic-induced loss of income, forced layoffs, supply chain interruptions and remote work challenges — not to mention the stress of maintaining some semblance of mental and physical well-being. 

Below are five key characteristics insurance organizations should prioritize to remain relevant and most effective to customers and prospects in the months and years ahead:

  1. Be customer-centric.
    Being customer-centric isn’t just a mindset or facet of company culture. There are concrete steps insurance organizations can take to be truly customer-driven and provide meaningful support, such as taking the time to ensure all user experiences and customer funnels are easy to navigate, designed with quality and enjoyable. Insurance organizations should also responsibly collect customer feedback and execute on it as much as possible, and provide free resources such as informative and relevant blog posts or webinar content. Another example of being customer-centric is to prioritize customers’ needs first. When a crisis like COVID-19 hits, insurance organizations need to look out for their customers by offering coping mechanisms such as payment flexibility and premium givebacks. Everything else — including the threat to insurance organizations’ books — needs to come second.
  2. Go digital.
    Going fully digital and providing an online experience aligns with how consumers purchase goods and services, now more than ever. Also, by providing a digital experience, insurance organizations can be more nimble in accommodating customers for whom time really matters. Small businesses and contractors, for example, typically require insurance (or even the ability to display proof of insurance) very quickly. They also often request immediate changes to their policies as a result of bringing on a new client or taking on a new type of project. By going digital, insurance organizations can satisfy such customer requirements in a seamless and scalable manner, even offering instant price adjustments if needed. 
  3. Leverage cutting edge technology.
    Technology like artificial intelligence (AI) and machine learning is vital for simplifying historically complicated, human-intensive and time-consuming purchasing processes. For instance, the technology can be leveraged to automatically assess and determine what a prospect truly needs to thoroughly protect the business. AI, data science and analytics can enable 24/7, instant, customized purchase experiences and products, as well as providing more accurate pricing, thereby improving affordability for prospects and customers. The way to truly transform the industry and customer experience is to provide a technology-driven full stack service that can address the entire value chain all under one roof. 
  4. Learn from unprecedented events.
    One of the many things our industry has learned from the coronavirus is that there’s an appetite for insurance coverage that helps address once-in-a-lifetime events. Now is the time to investigate how some form of government assistance or a consortium of reinsurance providers can be leveraged to provide such coverage and help share the risk so that insurance can remain affordable for smaller businesses — even during tumultuous times. This is a hard problem that hasn’t been solved yet. Insurance organizations and government entities may need to collaborate (as was done with TRIA) to obtain a solution for this very real need. 
  5. Simplify customer experiences.
    For small businesses, acquiring and maintaining insurance coverage has always been an incredibly complex task, as they typically have multiple policies and carriers involved. There’s a timely opportunity for insurance organizations to simplify and streamline the small commercial insurance experience, especially given all the challenges this demographic will continue to face as a result of the pandemic.

See also: We Are Open for Business; Now What?

Ultimately, insurance is a social good. To adapt to our “new normal” and be successful over the long term, the insurance industry needs to embrace this ethos and prioritize helping businesses in practical, meaningful ways. Rather than focusing solely on getting our revenue numbers back up, let’s collectively invest more in optimizing customer experiences and providing digital offerings that are fast, intuitive and transparent. This doesn’t mean losing sight of foundational priorities like ensuring profitability and compliance — those pillars are as important as ever — but they’re no longer sufficient on their own. By using technology to take insurance ownership into the future, we have the potential to significantly contribute to the rebuilding of our economy and better equip our customers for whatever lies ahead.  

Digital Outbound Payments Heat Up

The heat of summer is kicking in around the U.S., and the temperature is rising, too, in the digital transformation in one area of the market: digital outbound payments in claims.

Since February, the pace has accelerated beyond what we even thought fathomable. COVID-19 has been horrific, but it has brought clarity about the areas that are urgently in need of digital transformation.

SMA recently published findings from our latest market pulse survey, titled P&C Tech Plans in the COVID-19 Era. The report reveals that fully 81% of personal lines insurers and 57% of commercial lines insurers are investing in digital payments. 

In January 2019, I wrote that this area was positioned to explode. The focus on enhancing the customer experience was pushing P&C insurers forward. The digital payment process possessed the potential to provide operational improvements, especially in efficiency. The flexibility around payments became the target of many critical initiatives.

See also: Cloud Computing Wins in COVID-19 World  

Fast forward to May 2020. When we went into lockdown, we quickly realized which activities required intervention – those that required people coming into the office to print paper checks to be sent to customers and third parties. It becomes obvious that this is low-hanging fruit, and a plethora of vendors have solutions in the market today.

Join SMA and TDI on July 15 for a first-of-its-kind industry event that showcases the capabilities of digital payments and how vendors are bringing these capabilities to life.