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Customers’ Digital Expectations

Insurance Europe’s International Insurance Conference touched on some critical friction points between government and industry. Capital standards, consumer protection and climate risk resilience have grabbed the headlines, but important new ground was trodden when industry leaders began adding a new policy challenge to the industry’s agenda: the intersection of insurance and technology.

Axa’s Cecile Wendling summed up the challenge when she asked how we are going to regulate this new world of a fully digitized insurance market. But it was XL’s Mike McGavick who put it in context — as only CEOs can do — by suggesting insurers could be “the next taxi cab industry” if they don’t get their regulatory issues right.

These are fundamental questions that deserve greater attention in the growing dialogue around technology and insurance. Tomorrow’s insurance buyers — more tech-savvy, empowered and diverse than today’s — are already demanding an insurance market that reflects the full potential inherent in technology-enabled disruption; the question is whether the industry and its regulators are prepared to meet that demand. Early signs suggest no.

See also: 4 Technology Trends to Watch for

According to a BCG study, insurers rank near the bottom of online customer satisfaction, a reflection of how little the industry has invested in digitizing its approach to engaging customers. Similarly, a recent J.D. Power survey captured consumers’ frustrations with insurers’ web-based services, the most basic of all digital engagement platforms.

However, despite this track record, one soon-to-be-dominant demographic still trusts the sector to get it right: millennials. Consumers in the 18-35 cohort actually trust the insurance sector 16% more than the public at-large does. This “trust premium” is at risk, though, if insurers are unwilling or unable to make the transition to a tech-enabled market.

In fact, two Willis Towers Watson surveys illustrate just how comfortable millennials are with where the market is going — even if so many of us are still just starting the journey to get there. First, millennials prefer usage-based insurance to coverage based on conventional determinants (such as age and gender) 19% more than the general public. And second, millennials are nearly 60% more likely than anyone older to change their driving behavior to obtain cheaper car insurance. To exceed these expectations, insurers are going to need to fundamentally alter their approach to sales, underwriting, policy administration and claims (another speaker at the Insurance Europe conference provocatively suggested many of these functions will actually merge, as technology allows the consumer to become her own underwriter); regulators — particularly those fixated on rate and form approval — will need to fundamentally reassess their approach to consumer protection.

See also: How to Redesign Customer Experience

This tension was evident during a spirited afternoon panel that pitted consumers’ expectations of executing a transaction in less than four clicks against the traditional insurance view that its products are so complex and important that enhanced levels of consumer protection are needed.

These are real issues, but posed this way, they offer a false choice. It can’t be EITHER a digitally enabled seamless customer experience OR a regulatory paradigm that maintains the trust so fundamental to the insurance promise. It must be both. To get there will require leadership — and a constructive dialogue on these challenging topics in Dublin was a good start.

What Limelight Shows on InsurTech’s Future

Limelight Health, the winner of our start-up Showcase at our first Insurance Disrupted | Silicon Valley, gives a sense of what’s to come with innovation in insurance.

Limelight Health has a product called QuotePad, which is one of the first real-time, mobile, all-in-one quoting platforms for health insurance and benefits professionals. (The others highlighted at the Showcase are RigGroupHubroostJumpstart RecoveryZenehomeSureify.)


Jason Andrew, CEO of Limelight, says what his company is doing is a harbinger of even bigger changes: “We are witnessing one of the largest transformations in the history of a multitrillion-dollar industry. New technology is changing the game for the entire insurance ecosystem. Quicker, more seamless data integration is changing the insurance process, from the way consumers research and purchase insurance to how claims are underwritten. As a result, companies large and small are sprinting to keep up with the demand for agile and integrated technology platforms that can harness this growing data volume and extract real value from it.  The largest carriers are now paying attention to big data, spending more money on research and bringing on data scientists to analyze and shape the future of insurance. “

As the industry moves from a legacy framework to a series of more connected systems with intelligent logic built in, all parties involved in the selling and decision-making process will be allowed to spend more time executing decisions and much less time on the administrative work that is a large and protracted part of the process today.

Andrew says, “For the health insurance market, which is fragmented with a lot of outdated systems that don’t connect or communicate easily, and where redundancy often leads to a high probability of error, we see this as being where QuotePad will make a significant impact on the insurance industry.”

Limelight Health was born in February 2014. Before that, the insurance technology boom had not fully launched, and it took several years of pitching, partnering and persistence to gain the attention of an industry that now supports the cause. Prior to 2014, no one was really interested in investing in insurance.

What we now know as #insuretech and #fintech was not the sexy vertical it is today. And we’re just getting started.

If you’re in the industry you are probably keenly aware of some of the changes that are coming, but not all. Please consider joining us for future Insurance Disrupted conferences, with our start-up Showcases. The next will be held March 22-23 in Silicon Valley. ITL readers receive a 15% discount here.

Organizer and host of Insurance Disrupted Conference: Silicon Valley Insurance Accelerator – SVIA

Innovation Partner: Insurance Thought Leadership

Conference sponsors: Aflac, Munich RE, Captricity, Zendrive, XL Innovate, Saama Technologies, CRC Insurance Brokers, Novarica