The thousands of insurance carriers in the United States and worldwide aim to distinguish themselves from competitors through new product offerings and risk mitigation measures. Lately, there’s another thing most of these organizations have in common: a greater investment in technology.
While the need to adopt new technology has long been pressing in the property & casualty insurance space, there are now more tools and providers than ever before. Insurance carriers and agencies looking to move on from legacy systems find there has never been a better time to transition their organizations to modern, digital business models. Although modernizing insurance systems can be arduous and daunting at times, the benefits that newer technology brings in both the short and long term cannot be understated.
“We’ve migrated to a state where it’s frankly a competitive disadvantage not to be looking at new technology,” says Matt Foster, chief operating officer at Duck Creek Technologies.
Out with the Old
The pros vastly outweigh the cons for carriers and agencies looking to implement new technology in 2020. One reason that some organizations resist moving from legacy systems is simply that change can be scary. Whether it’s a disruption to business operations or unforeseen costs and risks associated with the new system, some carriers would prefer that things remain business as usual.
Another hesitation relates to challenging system integrations. Many organizations are using closed legacy systems that don’t offer an open application program interface (API), so their options for working with different technologies are very limited, according to Liri Halperin, CEO of LeO, an insurance chatbot company. This is why insurance organizations must first explore whether potential vendors can provide solutions for their specific integrations or workarounds to otherwise overcome those challenges.
“Once a carrier has found a solution provider that has a full alignment, I would recommend starting with one use case.” — LeO CEO Liri Halperin
However, carriers and agencies now have little choice but to adapt. Today’s insureds compare their insurance experiences to offerings provided by Netflix and Amazon. So carriers must have the tools and know-how to engage with them quicker and provide a seamless service. Embracing new technology helps insurance organizations rise to those expectations while also increasing sales, profits and customer engagement.
“Technology can also provide new data sources. If carriers choose to create or upgrade direct channels or provide their agency partners with technology that will create data and analysis, this gives insurers the chance to know their customers better,” says Halperin. “That means they can price and underwrite their products more accurately and better identify fraudulent claims.”
Carriers and agencies that don’t replace legacy systems with new technology will lack the speed, agility and flexibility needed to participate in new and evolving distribution channels.
Additionally, as a portion of the industry’s workforce ages out and a more digitally savvy group comes in, carriers and agencies with newer technology will be better positioned to recruit, train and retain workers with more competitive skills.
How COVID-19 Amped Up Innovation
The pandemic catalyzed insurance carriers and agencies to reset priorities and accelerate greater adoption of digital tools for claims processing.
By Jason Verlen
The use of digital as a response to COVID-19 has resulted in a series of implications playing out across the insurance industry. As businesses look to the future, insurers that recognize and quickly adapt to these shifts are best positioned to emerge stronger.
Here are three dynamics we’re seeing unfold:
No. 1: Digital makes interacting possible; AI is making our interactions meaningful.
Social distancing and shelter-in-place guidelines created an increased need for tools that eliminate historically in-person tasks such as underwriting inspections, appraisals, total loss assessments, repair estimates, and more. Of course, mobile and digital channels are key factors in enabling these tasks to be completed virtually, but artificial intelligence (AI) is really what is advancing these interactions. It is the engine that, when used effectively, can help support dynamic experiences and provide hyper-customized insights and actions across insurance.
No. 2: The insurance experience is becoming more dynamic.
Insurers with large call centers are facing new challenges, including how to seamlessly up-level conversations across teams that are no longer in the same office. Similarly, supervisors need to be able to quickly and efficiently scale consumer requests based on worker bandwidth, consumer needs and more.
Dynamic chat platforms in development are being pulled into market to support immediate needs for insurers to help their virtual workforces manage consumer requests at market speed. These consumer experiences are not always so linear in this environment.
No. 3: This period will mark a tipping point for payments.
The restaurant industry offers a great example of an industry that has quickly adapted to remain in business. Consumers can now, at-scale, order ahead, pay, tip and alert the restaurant when they’re outside and ready to pick up their order, all online and without exchanging a physical credit card for a transaction.
On top of that, food delivery services, which were already growing and included payments in advance, launched contactless delivery and have been surging. Instacart, Walmart Grocery and Shipt saw their daily app downloads surge by 218%, 160% and 124%, respectively, compared to February levels, according to Apptopia.
In looking at these examples, our industry should take note when it comes to payments as COVID-19 just might be a tipping point. Those still processing checks will continue to feel the inefficiencies and likely fall short when it comes to delivering on customer experience. When companies from Amazon to the local pizza place can support digital payments, consumers will expect it everywhere.
What’s Next?
While we may still be in the early days of the pandemic, it’s clear that for many businesses, major shifts are already taking place. It follows that many carriers are resetting priorities to accelerate greater adoption of digital tools to support claims processing in the near and longer term. These insurance professionals are engaged in active discussions about how new virtual tools can support more dynamic collaboration.
While extremely challenging on many levels, COVID-19 has fueled the insurance-industry evolution that was already underway. As we emerge, a new baseline for business as usual will likely be established, giving an advantage to those that have embraced the technologies once deemed ripe for tomorrow, today.
Jason Verlen (jverlen@cccis.com) is senior vice president of product management, strategy at CCC Information Services Inc.
Preparing for Change
Before any insurance organization can incorporate new technology to replace a legacy system, they must have a plan in place that has considered how to conduct such a transition. Changing technologies will impact staff, clients, data collection, company culture and more. Carriers and agencies need to make sure the business case is clear for such change. They also need a precise set of objectives for the update as well as a solid understanding of what the end goal is.
“I think it’s really important to align the technology approach an insurer is considering to real business value,” says Brian Vannoni, strategic market insights director at Guidewire.
As the Number of Technology
offerings and vendors has exploded in recent years, carriers must take the proper steps to ensure the one they select is a good fit for their organization. To do so requires a clear vision of what they wish to achieve.
“Once a carrier has found a solution provider that has a full alignment, I would recommend starting with one use case,” Halperin says. “For example, they can integrate a chatbot for billing reminders to test the waters first and if they see the ROI there, they can then scale with more chatbot use cases.”
Another important aspect of the prep work is creating measurable, documented metrics as part of the value alignment so the team responsible for overseeing the transition can measure the progress along the way, adds Daniele Groves, strategic development programs director at Guidewire. These metrics will illustrate where the carrier is succeeding and where they need to pay more attention. Metrics also are helpful when making decisions throughout the implementation period. Prep work should identify the target market the carrier or agency is going after, customer demographics with the specific insurance products they want to promote, geography/distribution channels, any critical integration with partner solutions, among others.
“If those can be identified upfront, it will be much more helpful to the planning phase and being able to execute according to the plan,” Groves says.
Another consideration is the effect changing technologies will have on staff as well as the company culture. As the implementation timeline can range from months to years, getting a seal of approval from employees who will be directly responsible for using, running and administering the new system is just as important as approval from business leaders and managers.
What’s more, employees may be concerned that the new technology threatens their job security. So it’s important to share the message that new technology — and change in general — ushers in opportunities to create new roles for workers by eliminating certain responsibilities through automation, AI and other capabilities.
“One of the key things is to just continually reassure staff members that the key objective of the digital transformation, it’s not just about improving the customer experience,” Groves says. “It’s also improving employee satisfaction and bringing innovation to the work environment.”
While the reasons to replace legacy systems and adopt new technologies may vary, it ultimately comes down to an organization’s willingness to embrace change and become ready for any situation that may arise, including “black swan events” like the global spread of the coronavirus pandemic.
In a matter of weeks, COVID-19 disrupted all industries, brought the global economy to a standstill, and resulted in mass fatalities. As countless industries, including property & casualty insurance, work to adjust, COVID-19 has highlighted how critical it is that carriers and agencies have technology that can keep operations running through uncertain times.
“We’ve migrated to a state where it’s a competitive disadvantage not to be looking at new technology.” — Matt Foster, chief operating officer, Duck Creek Technologies
The pandemic forced insurance professionals to work from home. It also pushed carriers to rethink how work gets done and remote and virtual business processes accelerated. In such times of crisis, having modern technology and digital solutions enable insurers to better serve insureds. Even when the current public health emergency passes, insurance organizations (and other businesses) will likely continue updated operations. The event has energized carriers and agencies to begin or continuing transitioning from legacy systems in order to be better prepared for future worst-case scenarios.
“There’s been a move in our industry to leverage the cloud and to drive digital transformation leading up to this whole COVID-19 situation,” says Jonathan Victor, chief information officer at Insurity. “I think (the pandemic) will only accelerate that.”
Now more than ever, carriers are feeling the pressure to digitize experiences and provide customers with around-the-clock access to services from home. The final chapter of COVID-19 is still waiting to be written, but its lasting impact on the property & casualty insurance industry is already guaranteed — especially in regard to how carriers and agencies are using new technology.
Denny Jacob (djacob@alm.com) is an associate editor with NU Property & Casualty and PropertyCasualty360.com.