Next Gen Insights
| Paula Mazzotta |
27 October 2020
Last week I had the opportunity to attend the InsureTech Connect Global 2020 virtual conference. I was amazed that around 12,000 people worldwide were able to virtually attend as well as by the number of qualified speakers and the variety of interesting topics. In addition to 6 solid hours of content per day, there were also up to 4 different channels running concurrently with different topics per channel. There was a multitude of fascinating topics to explore, and below I will touch on some of those I found most interesting.
INSURETECH: INSURANCE MEETS TECHNOLOGY
Let’s take a look at the origins of the Insurance industry. It began in Europe about 400 years ago in order to protect merchants against shipwreck and loss of goods when trading with the New World. As a result, Marine coverage is the first reported line of insurance – and the industry was born. As the years passed and people’s needs changed, so did insurance types, giving us the expansive offering we know today, including Property & Casualty, Life, Commercial, Auto, Specialty, Cyber, etc.
In the 21st century, the landscape changed for insurers (e.g. demographics, sharing economy, social networks, digital experience, alternative capital, pandemics). As a result, we are in an era of digital transformation with a need to adopt digital technology to transform services or businesses through replacing non-digital or manual processes with digital ones.
Due to the nature of the industry and the fact that it is highly regulated, Insurance is known for its conservative and risk-averse culture. Many of the large, established insurance carriers (particularly those in the Life and Financial Services lines) are heavily invested in core applications that are built on legacy technology which is difficult to upgrade and modernise. As a result, the Insurance industry is ripe for innovation and disruption.
InsureTech companies aim to fill this gap and to enable innovations in the Insurance sector using technology. They are known to explore avenues that large insurance firms have less incentive to exploit, like ultra-customisable policies, social insurance and using data streams as alternative sources. The concept of InsureTech was formed in the global market around 2010 and has grown by about 41% annually between 2019 and 2020, and it is expected to do so until 2023.
CHALLENGES AND MAIN CONFERENCE THEMES
- Insurance carriers are slow to embrace innovation and digital transformation due to their conservative nature.
- Innovation and technology rates grow exponentially as each year passes.
- Insurance company infrastructure needs to keep pace with the accelerating rate of technology change, i.e. cloud computing, leveraging AI.
- New insurance carriers are at an advantage over legacy carriers as they enter the market using digital technology from the start, which gives them a big leg up over many established carriers.
- “Made for me” economy: Millennials expect to do business the way they like to, i.e. directly with the insurance carrier, when and how they want to, i.e. any time of day or night on a phone, tablet, laptop, etc.
- There is more data available in the world than ever before. Analysing, understanding and utilising this data is critical to:
• make sound underwriting decisions
• be able to predict claims
• appreciate and plan for risk
• maintain a competitive advantage. - There continue to be huge areas of opportunity for expansion in the Insurance markets stemming from growing cyber risk and business interruption.
- It is critical for insurance carriers to have a digital strategy and plan to successfully transform their existing businesses in order to remain relevant in the industry.
- Many insurance companies are setting aside capital for the purpose of developing partnerships with InsureTech providers in order to resolve business challenges via digital technology.
EXAMPLES OF INSURETECH SUCCESSES
Church & Roost: A partnership made in IoT Heaven – In this session we learned about Church Mutual, an insurance company founded in 1897 in Wisconsin that provides specialised insurance to religious organisations. The significance of this story is that churches are often vacant 5 days a week, and if a problem occurs, it may take days before it gets noticed, which often results in large claims. For example, in the winter pipes can freeze and cause water leakage problems. Roost, the global leader in property telematics for insurance carriers, partnered with Church Mutual to improve their claims history and expenses. The strategic agreement was to deploy Roost’s Property Telematics Service to Church Mutual policyholders, who now benefit from a 24/7 alert management system focused on water leak, freezing temperature and power outage situations. When losses are detected, the policyholder is immediately notified, so they can address the issues immediately. As a result, claim costs have been mitigated and claim expenses have been significantly reduced.
Ping An’s ‘Ecosystem Approach’ to Insurance – Ping An is a Chinese holding conglomerate founded in 1988 and headquartered in Shenzhen, whose subsidiaries mainly deal with insurance, banking and financial services. Their story is impressive because of the sheer size of the company and the technology used to support the number of employees and policyholders. As of 2020, there are 400,000 employees globally, 1 million agents and 196 million customers, 35% of which have multiple contracts with Ping An. The business is supported by a high-tech digital infrastructure and ecosystem of applications, but regardless of the level of technology, when customers have a question, they want to speak to someone in the call centre. As a result, Ping An was struggling with the volume of calls. Furthermore, the number of different Chinese dialects made it almost impossible to effectively staff the call centres. They solved the problem using robots to answer the calls. This was highly effective because the robots can quickly scan the caller’s voice to determine the dialect and are able to answer questions using the same dialect. In addition, robots are able to scan data quickly and provide answers to highly complex questions in a more timely manner than most humans. And the moral of this story: you don’t always need humans to provide “the human touch”.
Future-Proof Your Business, the Time for Digital Transformation is Now! – This session presented the partnership that John Hancock created with One, Inc. in order to innovate and digitally transform their claim and payment processing applications. The timing for this transformation could not have been more appropriate! Because of the pandemic, mail delivery was unpredictable, and people did not want to leave their houses to mail insurance premium payments. On the other side, John Hancock employees were working remotely as well. With the transformation of these processes to digital, employees were able to continue processing payments and claims from their home offices with little to no negative impacts for the customers.
CONCLUSION
The future of successful insurance carriers is in their culture. Carriers must demonstrate a strong ability to communicate their digital strategy and goals between all people in the organisation, from CEO to mail-room personnel. They will also need the ability to develop strong partnerships with InsureTech companies in order to integrate ready-made digital solutions.
Developing a digital strategy and creating a digital infrastructure are the first steps to a digital transformation. Leveraging Artificial Intelligence to accelerate innovation will be important, so that new patterns in unstructured data can be translated into structured insights to be used in more effective underwriting and other processes. Designing seamless customer and agent experiences that take users on an end-to-end journey with reduced friction through fewer manual processes and touchpoints is also critical to a carrier’s success. After all, truly knowing and understanding the needs of your customer is key.
Paula Mazzotta
Delivery Manager, US Insurance industry
Paula has nearly 40 years of IT experience within the US Insurance and Financial Services industries. She has managed project teams consisting of various discipline experts like Developers, Business Analysts, Testers, and Architects, both on- and offshore and now nearshore. She has also performed the role of Account Manager and IT Partner to a number of business executives over the course of several years prior to joining Endava. When not working, Paula likes to travel and to read while sitting on the beach.