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State of Diversity, Inclusion in Insurance

Diversity and inclusion (D&I) have been priorities for the insurance industry for years. However, there have been fundamental limitations on progress that have gone under-addressed. While the state of D&I in the insurance industry is stronger than ever, we limit the potential to advance these issues without having a meaningful, clear-eyed examination of a few basic issues.

Cultural Disconnect

Organizations are only as strong as their culture or brand. Prior to joining Zurich, I owned a consulting firm. As a consultant, I learned first-hand that no matter how great the marketing efforts might be, if a company culture or brand is lackluster there will be always be a fundamental disconnect with customers.

Company culture is one of the areas where we see more prominent diversity and inclusion issues plaguing the insurance industry. As a young woman, I had experiences in being heard, or unheard, that have shaped my perspective. While I believe there are opportunities to make a mark in the industry if you put the effort in, I also see barriers in corporations that don’t allow for people to be their authentic selves. Organizations that adhere to a rigid hierarchy, with leadership teams unable or unwilling to innovate, throw up roadblocks to D&I due to preconceived notions. These are the companies that fail to seek diversity of experience, culture, education, personality, perspective and thinking. These organizations rarely embrace authenticity in employees, seeking conformity instead. This approach limits worker experience and professional growth opportunities.

Successful company cultures are lived, as are toxic and limiting company cultures. Companies that are sincere about D&I have to live it.

COVID-19 Side Effects

When the pandemic pushed the U.S. workforce to go remote, it became clear the virus was hitting the Black and Latinx communities more harshly. Access to high-speed internet, availability of space in the home for one or more remote workers and students, healthcare accessibility and urban food deserts, among other matters, were all existing obstacles. But, while not always apparent in the workplace, these issues became clear challenges for many workers and their employers after the pandemic shutdown. 

As an industry focused on managing risk, we need to consider the risk of not properly supporting the communities we represent and their well-being. Our leaders, both in the insurance industry and beyond, must remember that not everyone is experiencing the events of 2020 equally. We may be “in this together,” but we are not in it together equally. Greater empathy is essential to greater diversity and inclusion. 

It Starts at the Top

One of the clearest signs of the lack of progress on D&I issues in corporations is the lack of diverse talent at the leadership level. The standard response for most industries on this point is to note the lack of diverse talent available. This bias has been consistently used to justify a lack of executive team diversity. Another defensive argument is that companies work to ensure all employees have the same opportunities to advance their careers. This latter rationale has been used to justify maintaining the same systems and processes that have been in place at corporations for years. We may add employee resource groups, mentoring programs and programming, but the systems have not changed.

In my role focused on diversity, inclusion, equity and belonging at Zurich, I invite leaders to question these biases. What if there was ample, diverse, executive-level talent available? Would the company’s leadership look dramatically different? Would it be more diverse? Would the systems and processes currently in place to nurture and advance careers change if we proved not all employees have equal access to opportunity? If the answer is no, then we have to acknowledge our inherent biases and make changes.

These biases are overcome when leaders are open to and can rely on those around them to provide critical insight. Recruiting is one example. What efforts have their organizations made to find great talent? If the slate offered by recruiters is not diverse, do they push back and request a more diverse pool? Do they leverage their industry relationships to find that talent? Does the executive team hold leaders to account for seeking talent that mirrors the individuals and communities they serve? 

See also: Industry Still Lags on Diversity

Recruitment is just one priority. Expanding in-house talent is also essential. To complete my doctorate, I spent a lot of time researching what companies do to advance diverse people in their careers. Do diverse professionals have the same access? The same mentor opportunities? The same advocates? In my experience, the answer is often no.

This could be an affinity bias. We naturally want to help those who remind us of ourselves. We need to understand that some people advance in their careers, and some do not, precisely because of these biases. Insurance industry leaders need to face this difficult reality to create better opportunities for our diverse talent. 

What Can Change?

One solution Zurich has embraced is called the Inclusion Cohort, a program we launched last year. It’s designed to better prepare diverse talent for potential leadership roles, offering them leadership assessments, identifying strengths and areas for development and providing them with mentors. Our priority was to build the cohort so members would have a sense of camaraderie and shared success. Today, more than half of the initial participants have been tapped for new responsibilities, with another earning a leadership position. Our goal is to scale similar programs across the company.

We are also working on extensive anti-racism programming for our executive and leadership teams to help them better understand diverse experiences, which helps build empathy and motivation to change. 

These and other efforts are steps Zurich is taking to promote a more diverse industry future, and they are shareable.

Organizations like the Insurance Industry Charitable Foundation (IICF) have proved critical to highlighting the industry’s D&I efforts. Their meetings and events, like the upcoming virtual Inclusion in Insurance Forum, are instructive on the challenges commonly faced across the industry in building equity and belonging. These events allow individual organizations like ours to work together to share and adopt meaningful strategies. 

Recognizing the role that culture, global events like the pandemic and leadership and its priorities have on diversity, inclusion, equity and belonging within the industry is the first step to meaningful change. That change can sometimes be slow in coming, but it does come. Now is our chance as an industry to step up and create the diverse and inclusive future we need.

COVID-19: Next Steps in Construction

Construction never stopped in some cities and states during the height of the COVID-19 outbreak — and some airport and public works projects, in fact, gained some efficiencies because of fewer travelers and passers-by on the periphery of job sites.

Where work continued, contractors adjusted on the fly to help reduce coronavirus health risks to their crews. Now, as more construction projects are permitted to resume, contractors can incorporate lessons learned so far and factor in new variables to help manage risks and rebuild momentum in a world transformed by COVID-19.

Contractors deal with unexpected challenges frequently, often weather-related. That experience will serve the industry well as it adjusts to new safety requirements along with complexities of returning to sites where work perhaps started but then was halted.

Costs may increase, and schedules may stretch to compensate for additional steps that must be taken each day before hammer meets nail. Simply doing what’s compulsory shouldn’t be the focus.

See also: How Risk Managers Must Adapt to COVID

Contractors should develop and refine a comprehensive COVID-19 exposure control plan, which may include:

  • Appointing a COVID-19 officer at every job site, even if it’s not mandatory.
  • Integrating COVID protocols into a virtual or online training program for workers.
  • Adjusting management procedures to avoid communication gaps, given that project managers and other personnel may continue to work remotely.

Two key issues: Temperature screening and face coverings

You will need a high level of detail in COVID-related operating procedures. Take temperature screening at job site gates:

  • How will you take temperatures so as to avoid breaching the six feet of social distance?
  • Will workers be trained to take temperatures using no-contact thermometers, or will a third-party medical service or portable testing centers be brought in?
  • What temperature threshold will send a worker away?
  • What documentation, if any, will be kept of workers’ test results, and how will confidentiality be preserved?
  • Do workers need to arrive earlier than in the past, and does that have ramifications for overtime?

There are lots of decisions — and that’s just for temperature screening.

The protocols for face coverings require similarly detailed decision making as well as awareness of state and local mandates. Are face coverings required at all times, or only when it’s not possible to keep six feet of social distance? Are cloth face coverings sufficient, or are respirators approved by the National Institute for Occupational Safety and Health (NIOSH) mandated in certain circumstances?

Note that these new protocols may lead to new risks, such as fogging of eye protection and creation of blind spots. Consider applying anti-fog solution to the lenses, or use helmets with face shields, if appropriate.

This planning may seem daunting, but establishing protocols and communications materials now will make it much less onerous to enforce going forward.

Review financial and supply chain status

Contractors who complete a post-shutdown risk register or hazard analysis should expand their focus beyond health issues. It’s wise to ensure financing, permits and insurance policies have not expired. Consider requalifying subcontractors to check financial status. If there are red flags, consider using joint checks to ensure that lower-tier subcontractors and suppliers receive payment. And is your own cash flow sufficient to make payroll, or have you made other arrangements?

Note that some supply chain and labor issues resulting from the shutdown have not yet been resolved. Make sure you have the materials and crew you need to keep the sequence of work on target.

New reasons to adopt emerging technology

In the hierarchy of technology adoption, many contractors are starting by converting to virtual training and orientation to enable social distancing. Make sure you adequately test your technology and distribute clear instructions to help your workers adjust to using it.

Next, consider the use of technology such as wearables that allow contact tracing, which could help ensure that workers are complying with social distancing guidelines. Wearables for construction are being modified so that, for example, a worker could receive an alert when less than six feet from another worker. Some systems also allow you to identify what workers may have come in contact with an infected worker, should someone later test positive.

There also are opportunities to increase your use of offsite and onsite prefabrication, in part to reduce the number of people on a site at one time and possibly to contribute to efficiency.

Finally, this may be a great time to experiment with emerging technology, such as using robots to do floor layout, which has the potential to improve accuracy as well as reduce the number of people on a job site at one time.

There are some silver linings

No one would have invited coronavirus into the world, but new protocols to reduce health hazards may produce additional benefits.

Limiting the use of elevators to materials and creating one-way pathways for personnel may not only assist in social distancing but also contribute to increased productivity.

See also: 4 Post-COVID-19 Trends for Insurers

These steps could become a best practice worth keeping, along with many other new procedures.

It’s too soon to gauge the net impact of the coronavirus pandemic. But in terms of the business outlook, potential positive developments could include:

  • Construction opportunities increasing in sectors such as healthcare, infrastructure, warehousing (which was already going strong) and manufacturing.
  • Growth in modular, off-site construction, in part because it can help reduce the number of people on a job site at one time.
  • More U.S. manufacturing of construction materials, in response to coronavirus-related supply chain delays associated with offshore providers.
  • Regional population shifts in response to the hardships endured during the pandemic. These may result in increased residential construction in areas of growth, followed by additional commercial and infrastructure development.

In the near term, some projects will be under pressure to accelerate to get back on schedule. But COVID-related mandates may force a slowing of the process, which could enhance overall site safety and quality of work.

Vigilance, as always, is key — and not just about coronavirus. We need to remain attentive to typical construction-related injuries and issues such as heat-related illnesses. Caring for people will help us take care of business now and during the months of recovery ahead.

Visit Zurich’s COVID-19 Resource Hub for more information.

Time to Focus on Cyber Resilience

From a cyber security standpoint, the move back to a work setting for employees should not be the challenge that moving to “work from home” may have been for many organizations. Network security in the workspace is already in place, and employees are quite familiar and at ease working in the work environment.

By now, businesses should have already addressed issues of remote access, the use of multifactor authentication and virtual private networks (VPNs). But in the wake of COVID-19, as businesses return to the workplace, organizations should take some lessons from the COVID-19 pandemic. We recommend they use this information to shore up potential weak spots in their cyber security program’s incident response plan.

The greatest lesson to take away from the pandemic has to do with preparedness. What has been witnessed over the last three months is crisis response, on a global level, taken to its extreme. Every business and local, county and state government, and even individuals were forced into some form of crisis management. Some were able to respond better than others.

“Something like this will never happen”

One of the reasons that many were not prepared for the pandemic and did not respond well was because they believed that “something like this will never happen.” It’s a phrase that is heard often by those in the cyber security industry. Organizations often rationalize they are able to live with less than optimal cyber security because they feel they are too small to attract hackers, or they don’t have anything that anyone would want to steal. We know now that “something like this” can happen, and the results can be catastrophic.

Additionally, an organization does not have to possess something that a hacker wants to steal, to be a desirable target. All it has to possess is an opening; some vulnerability that allows a bad guy entry to exploit the opportunity to interrupt business and maybe even demand a ransom.

See also: How to Fight Rise in Cyber Criminals

Lessons from the COVID-19 pandemic

As businesses begin to return to workplace operations, now is a great time for them to reevaluate their approach to cyber security as a whole, and cyber resilience in particular, while drawing some comparisons to what the world has experienced in the pandemic.

1. Identify assets

Using the National Institute of Standards and Technology (NIST) Cyber Security Framework as a guide, consider the first risk category of IDENTIFY. The first objective of cyber security is for an organization to understand its assets. A business must ask itself, “What do we have that needs to be protected? What are our high-value/high-criticality assets? What are the risks and vulnerabilities associated with those assets? Where are those assets located? Are they on the cloud? On the premises? Do we have all of our assets accounted for in an inventory? Do we verify that inventory regularly?”

When the pandemic hit, many entities found themselves without a full understanding of the assets they possessed and what they still needed. Assets including hospital beds, ventilators, usable test kits and procedures and personal protective equipment. In many cases, the result was a scramble over a long period to acquire the necessary assets.

2. Protect assets

Following the NIST framework, once assets have been identified, and risks assessed and ranked for criticality, what protective controls are in place to protect those assets? In the towns, cities and states that we live in, there are healthcare systems, networks of healthcare providers, nursing homes, pharmacies and other components all geared to providing protection to our countries’ most valuable assets: people.

What about in the business community? Are businesses providing their most critical assets, such as data, hardware, software and even business processes, with the protections aligned with their importance? Do these businesses segment their critical assets or encrypt critical data? Do they educate their employees about cyber security and the roles they play in maintaining it? Do they provide their employees with the proper amount of access to IT assets?

3. Detect the problem

The third risk category in the NIST framework is DETECT. How can businesses know when something bad might be happening? How do businesses monitor for indicators of compromise within their networks? In the pandemic, the World Health Organization has been acting as a parallel to a managed security services provider (MSSP) or a security operations center (SOC) for the network of countries around the world. The job is to detect the initial outbreak and alert the rest of the world to the danger.

4. Respond to the crisis

Each business needs to assess its ability to detect potentially malicious activity in corporate networks. Is each organization engaging a third-party MSSP? Is it performing up to expectations? If a business is doing its own monitoring, is that monitoring complete and effective? Is the business monitoring the most valuable or risky assets closely enough? Is it processing all the right information? Does the business even know what malicious behavior looks like or how to find it?

5. Find a path to recovery

With these steps developed, businesses can finally consider what response and recovery will look like. NIST suggests considering how to handle response and recovery in our networks compared with how the various government agencies have handled theirs.

See also: 10 Tips for Moving Online in COVID World

First, businesses should have a documented incident response plan for their networks and should make sure it has been reviewed recently for adequacy. The incident response plan needs to clearly define roles and responsibilities for all participants. It needs to include procedures for identification, containment, eradication, recovery and lessons learned. The plan should also state how the business will communicate information about the incident to internal and external audiences. In developing the incident response plan, it is key for businesses to line up and perhaps even contract with third parties for technical response services that they don’t have in-house.

Businesses also should make sure their incident response plan is designed to consider a “black swan” event, which is an unexpected, catastrophic event that forces a complete shutdown of a company’s network and its services. As rare as black swan events may be, they do occur. Many remember the first outbreak of ransomware just a few years ago and how it caused the complete shutdown of some global networks. Even some companies with what might be considered very good cyber security were severely hurt. Why? Because they did not contemplate such an event and therefore did not build their response plan for effectiveness against a black swan event. The development of an incident response plan is not complete until it contemplates and prepares for such a rare and devastating event.

Finally, with respect to response and recovery, testing plans is incredibly important. Plans that are in place, but have not been tested for several years, are likely to be missing some details that will limit their usefulness when it really counts – in a cyber event. Businesses that test their plans regularly – minimally once per year – and update the plan based on lessons learned from both tests and actual events will have experiences in actual cyber events that are probably much less painful than if they did not plan and test the plan regularly.

The COVID-19 pandemic of 2020 is real – it’s not a test – and the lessons learned from the event are substantial and painful. The phrase “Never let a good crisis go to waste” has been repeated in a cynical manner many times, but it does have value in the context of current events. City, state and federal governments will certainly be revisiting their pandemic crisis management policies and procedures in the near term. It’s also a good time to revisit cyber risk management and incident response procedures.

Visit Zurich’s COVID-19 Resource Hub for more information.

Reconnecting With Customers Via Claims

While every carrier manages claims operations in a slightly different way, there are three consistent technology setups currently in practice: Green Screen, Home-Grown and Modern. The back-end operational workflows for each of these practices are generally the same: The adjuster manually enters notes, manually sends emails or makes calls and manually ties documents from the document management systems to the claim systems. The challenge here is that the adjuster is the centrally intelligent component. Relying on an adjuster to connect various systems mires the adjuster in overly manual steps, leaving claims processing vulnerable to reduced speed, mistakes and inefficiencies – all of which lessen customer satisfaction.

Green Screen

While more common overseas and in smaller markets, green screen systems are still found in many claims operations today. The green screen is a simple claim database that only accepts user inputs from a text-based screen with minimal capabilities to integrate into any other systems. Adjusters are forced to use a separate document management system to store files and photos and use a separate email system for outward communications.

Carriers relying on green screen systems see inefficiency with data transfer. Adjusters have to hunt for documents that are not tied to a claim number, annotate the decisions they have made in the green screen system and communicate in a separate system to the customer. Most of the mindshare of the organization is spent on teaching the humans the rules of the claim and how to document their thoughts in the system.

See also: Visual Technology Is Changing Claims  

Home-Grown

Some organizations have managed to build their own systems internally over the years. In these systems, various IT projects over the years have been spliced together with complicated business rules that aim to reduce the human error and ensure legal compliance. Carriers with a home-grown system face significant IT spending to maintain their complex infrastructure. Even with a large IT staff, it is nearly impossible to launch new technology initiatives because change affects rules buried deep in the system. The result is a system that is expensive, inflexible, complex and generally oblivious to the customer experience.

Modern

Recently, carriers have consolidated their legacy systems into one modern platform. These setups require a large engagement with a third-party system integrator and many years of thoughtful planning and data migration. However, the output is rarely a truly consolidated system. Carriers with modern systems are bound to long-term, third-party support contracts and face many of the issues that home-grown carriers face. Complicated business logic is embedded in the software to try to avoid human errors, but it leads to complexity and rigidity that ensure internal compliance while ignoring the customer experience.

Carriers and Customers

As customer needs are changing, carriers’ technology should be changing, too. Today’s customers expect a seamless tech experience with clear communication, automation and the ability to input via apps, photos, phones and inboxes. There are several new tech solutions that aim to ease a challenge of current carrier tech configurations. At Snapsheet, we have already built software that eases nearly all of these customer expectations.

Here are the capabilities that are critical to advanced claims technology – all of which will help meet customer needs:

  • Cloud-Based Architecture: This feature is important for a flexible design, which eases the implementation. There is no data migration, no system integration and no multi-year project plan. Claims software is launched stand-alone around existing systems or as a full-on replacement. It enables carriers to track, with real-time precision, all of the customer interactions, how the customer engages with the claims process and how the adjuster is engaging with the customer. Immediate insights are gained and can be operationalized.
  • Intelligent Claims Files: Instead of relying on the adjuster to tie systems together and shepherd the customer through the claims process, the Snapsheet platform has advanced capabilities that understand the expectations of each step in the claims process and guide the customer through the appropriate actions. An intelligent engine coordinates the communications and documentation needs for each file and advises the adjuster when to take action. If all of the requested information is provided, the engine may choose to automatically move the work to the next stage.
  • Real-time metrics and operational transparency: It enables the carriers to track, with real-time precision, all of the customer interactions, how the customer engages with the claims process, and how the adjuster is engaging with the customer. Immediate insights are gained and can be operationalized. The result is an enhanced customer claims experience, led by automation and real-time customer engagement to provide a tailored journey through any claim in any language in any country.
  • Customized roll-out: Customization is key. Even with a single consistent platform, such as Snapsheet’s, it is important to customize implementation for whatever legacy IT configuration exists. This adds flexibility and ease-of-use to each project. Snapsheet’s recent strategic collaboration with Zurich is an example of taking a new software approach by putting the customer experience first. Various county entities in Zurich use each of the three software setups mentioned above. Snapsheet software can be leveraged across any configuration, activating software modules that smooth or plug efficiency gaps in the current process, or completely replace existing claims systems.

See also: How to Use AI in Claims Management  

As we kick off 2019 and insurtech continues to expand, the industry will see even greater advancement in the technology space for carriers and claims processes. Automated systems are important to guide the customer through the correct claims journey and ultimately allow carriers more time to innovate.

New Power Shift in P&C Insurance

P&C insurance carriers have witnessed a lot of changes in the past decade, but few have been as surprising as the shift of power currently taking place across the industry.

According to Dennis Chookaszian, the former CEO and chair of CNA, carriers maintain only 40% of profits today, representing a drop of 20 to 25 points from the 1960s. An equal share now goes to the distribution system, as carriers line up to acquire and maintain more customers.

What’s behind this shift in profitability can’t be summed up in a single word, but increasing competition, new market entrants, improving technology, changing customer expectations and continued consumer price sensitivity all play a role.

To remain competitive, carriers will need to gain more control over distribution, a goal that even Chookaszian admits will not be easy to achieve.

Why the Power-Shift Toward Distribution

In the mid-part of the last decade, insurance carriers required two primary competencies to operate: data and capital. Because neither was easy to acquire, competition was less robust, and incumbent carriers found greater profitability, taking in roughly two-thirds of insurance transaction profits.

Today, data is everywhere, and through the use of analytics, simpler than ever to understand and use. Capital is also easier to acquire, as is evidenced by the growing number of insurtech players in the industry. According to Willis Towers Watson, $2.3 billion was invested in new insurance tech companies in 2017.

According to Chookaszian, the core competency for insurers now lies in distribution and control of the customer.

“It’s become so competitive that the carriers basically are always out looking for new accounts,” Chookaszian says.

That means higher commissions are paid to agents as carriers battle it out for market share, resulting in shrinking margins.

“Given the shift in profitability to distribution, the carriers that will be better off will try to regain some control over distribution,” Chookaszian says.

Admittedly, that is not an easy thing to do. The agent enterprise is part and parcel of most insurance operations. Directly selling insurance to consumers will require insurers to set up their own distribution systems, while still supporting their vast networks of independent or captive agent forces.

See also: The Future of P&C Distribution  

Distribution Goes Digital

When Benjamin Franklin started the first successful U.S.-based insurance company in 1752, he was dealing with a localized Philadelphia population, but, by the end of the 18th century, citizens were moving westward, making it necessary for insurers to expand their distribution networks.

The Hartford made the first foray into direct distribution by offering insurance through the mail, but few consumers of the time were willing to give up the personal services of an agent when it came to purchasing something as critical as insurance. Carriers of the time faced a similar dilemma as carriers do today: how to acquire customers in a changing marketplace.

According to the J.D. Power 2018 US. Insurance Shopping Study, insurers are aggressively courting customers with new options and amenities as auto insurance rates remain stagnant and the number of consumers seeking coverage declines.

“We’re entering an era of consumer-centric insurance that will likely be marked by a surge in new digital offerings and serious efforts by insurers to improve the auto insurance shopping experience,” says Tom Super, director of the property and casualty insurance practice at J.D. Power.

This shift is happening across all lines of coverage, even small commercial.

While citizens on the new 17th-century frontier may have been hesitant to buy coverage without the guidance of an agent, many 21st-century buyers have no such qualms. Nearly half of consumers responding to a survey conducted by Clearsurance said that they would purchase an insurance policy online, while 65% believe this will be the primary channel for purchasing coverage within the next five years.

According to research conducted by Accenture, consumers are open to a number of new possibilities when it comes to buying the policies they need:

Power in the form of profits may have shifted to distribution, but consumers are making a power play of their own, demanding greater service and amenities and taking their business to the carrier most capable of meeting preferences and price points. In a world of shifting power, creating an active, online distribution channel puts more of the profit back into the carrier’s bottom line and allows it to attract more customers in three distinct ways.

Cutting Transaction Costs

According to a report from the Geneva Association, the leading international insurance think tank for strategically important insurance and risk management issues, 40% of P&C premiums are absorbed by transaction costs, leading to inflated policy pricing that drives away potential customers. PwC pegs distribution as a heavy culprit, reporting that 30% of the cost of an insurance product is eaten up in distribution.

On the other hand, Bain predicts that insurers could cut the cost of acquisition by as much as 43% through digitalization. Underwriting expenses could drop as much as 53%.

Reducing these costs allows insurers to present a more attractively priced product to consumers, an important consideration given that 50% of customers base their loyalty with an insurer on price.

To understand how costs are reduced through digital distribution, it helps to understand how a leading digital distribution platform works to raise efficiency. According to PwC, up to 80% of the underwriting process can be consumed by administrative tasks that require manual workarounds, such as re-entering information into multiple systems.

Much of this re-inputting of data is due to the siloed nature of insurers’ administration systems. Digital distribution platforms create a layer between the front-end online storefront, where customers enter application data, and the back-end systems used to store information.

As consumers enter their personal details into the online application, all back-end systems are populated automatically, eliminating the need for manual work-arounds. Everyone across the organization has the same view of the customer and access to any information that has been provided.

Digital platforms are also masters of straight-through processing, automating the quote-to-issue lifecycle and reducing the need for manual underwriting. By automatically quoting, binding and issuing routine policies, insurers reduce costs and also provide a more “informed basis for pricing and loss evaluation,” according to PwC.

As costs drop, insurers are also able to more competitively price insurance coverage. Lower prices win more customers allowing insurers to take back some of the profitability of distribution.

Improving Customer Experiences

When it comes to insurer-insured relationships, there is a gap between what consumers want and what insurers provide. Consumers rate the following points as very important aspects of the insurance buying experience:

  • Clear and easy information on policies
  • Access to information whenever it is needed
  • Ability to compare rates and switch plans
  • A wide range of services

But few consumers agree their insurer is meeting these expectations:

27% see clear and easy information on policies

29% report access to information whenever they need it

21% say there is the ability to compare rates and switch plans

24% see a wide range of services

The customer experience is becoming a key differentiator across the insurance industry. McKinsey reports two to four times higher growth and 30% higher profitability for insurers that provide best-in-class customer service, but here’s the rub. Only the top quartile of carriers fall into this category.

Becoming a customer experience leader requires insurers to understand that the separate functions associated with policy sales and distribution appear as a single journey to consumers. They expect to quote, bind and issue multiple policies through a single application, using as many channels as they feel necessary to get the job done.

While 80% of consumers touch a digital channel at least once during an insurance transaction, 45% of auto insurance shoppers use multiple channels when making a purchase. They expect to be recognized across these channels, picking up in one where they left off in another.

The multiple back-end systems employed by most insurers present a strategic dilemma here, as well as in the area of cost containment. Without transparency between channels, consumers are forced to restart a transaction every time they change their engagement method.

“It amounts to a great deal of frustration for the consumer,” says Tom Hammond, president U.S. operations, BOLT. “You start an application online and then call the customer-facing call center, and they can’t see what you did through the online storefront.”

Hammond explains that digital distribution needs to be omni-channel distribution, seamlessly integrated with a single view of the customer. It’s the only way to meet consumer experience expectations now and into the future.

Thanks to advances in analytics and artificial intelligence, the amount of data that is available to carriers has grown significantly, and consumers expect that information to be leveraged for their benefit. Eighty percent of consumers want personalized offers and pricing from their insurers.

Progressive is one of the 22% of carriers currently making strides to offer personalized, real-time digital services, having recently released HomeQuote Explorer. From an app or computer, consumers can enter information once and receive side-by-side comparisons from multiple homeowners insurance providers. According to the company, they leverage a network of home insurers to make sure customers can find the coverage they need at a comfortable price.

Oliver Lauer, head of architecture/head of IT innovation at Zurich, believes these collaborative networks are an integral part of the digital future of insurance.

“Digital innovation means you have to develop your insurance company to an open and digitally enabled platform that can interface with everybody every time in real time – from customers to brokers, to other insurers, but also to fintechs and insurtechs,” Lauer says.

Using a digitally enabled market network, insurers can fill product gaps and even meet customer needs when they don’t have an appetite for the risk. The premise is simple. By offering coverage from other insurers, they maintain the customer relationship and reap the rewards of loyalty.

As society changes and consumer needs evolve, the ability to personalize bundled coverage to the needs of the individual will become increasingly important. Consumers are now looking for coverage to mitigate risk in previously unheard-of areas, such as cyber security, identity theft and even activities related to legalized marijuana.

When an insurer is unable to provide the coverage a customer needs, it risks forfeiting that relationship, and any other policies bundled with it, to another carrier. But when the carrier takes part in a market network, it can bundle the appropriate coverage from another insurer with its own products, personalizing the coverage to better fit the needs of the customer.

See also: Key Strategic Initiatives in P&C  

Digital platforms offering market networks also set the stage for insurers to offer ancillary services, such as roadside assistance, that make their insurance products more attractive to consumers. We see this happening with increasing frequency as carriers seek to improve the customer experience and lift their acquisition efforts.

DMC Insurance, a provider of commercial transportation insurance solutions, recently announced a partnership with BlackBerry Radar. The venture would provide transportation companies with real-time data on vehicle location, as well as cargo-related information, such as temperature, humidity, door status and load state. Information like this will help companies better manage risk.

In the personal lines market, insurers are partnering to offer services that enhance the life of their customers. Allstate’s partnership with OpenBay allows consumers to review repair shops and schedule an appointment from an app. Allianz is helping home owners safeguard properties by partnering with Panasonic on sensors that monitor home functions and report issues. Customers can even schedule repairs through the service.

Digital Distribution Benefits All

J.D. Power reveals that digital insurers are winning the intense battle for market share in the insurance industry, starting a shift that could help level the profitability field between distributors and carriers. In a recent insurance shopper survey, overall satisfaction was six points higher for digital insurers over those that sell through independent agents. This lead grows to 12 points when compared with carriers with exclusive agents.

According to research by IDC, digital succeeds on the strength of its data. The ability to collect and analyze the vast stores of data available through these interactions, including such variables as the time of day the consumer shopped for coverage, the channel the consumer used, and stores of information collected from third-parties as part of the automated application process, provides the key to improved customer service.

“By analyzing this data, insurers can understand each customer’s lifestyle, behaviors and preferences in order to engage with them at the right time and place, offer personalized service and offers and more,” says Andy Hirst, vice president of banking solutions, SAP Banking Industry Business Unit.

As insurers create omni-channel engagement, they’re strengthening distribution from every angle, giving consumers the option to quote coverage online when it’s most convenient for them, and then buy it right then and there or to seamlessly call an agent to discuss their options and their risk.

Customer experience is rapidly becoming the foundation of success in the industry, and digital distribution provides the first link in building that base of core customer satisfaction. By providing consumers with multiple channels of engagement and the ability to meet more of their needs at any time, day or night, carriers are taking back the lead on profitability.