As smart carriers continue to leverage cognitive and digital computing technologies to better understand, mitigate and absorb customers’ property and casualty risks, the insurance industry is primed for transformative changes.
Executive SummaryInsurers cannot win without innovation, writes QBE NA SVP Jude DiBattista. Here, he explains why his firm has allied with several InsurTech firms and made significant investments in technological advancements. Key to his vision for the future is an ecosystem in which carriers seamlessly interact with customers—including agents and brokers—and with numerous third parties to better understand risks and provide superior experiences and service anywhere and at any time.
Absent this metamorphosis, however, the industry confronts a threat given the expressed intent of major technology companies to carve inroads into the property and casualty insurance market. To maintain customer share, carriers must do what large tech firms are planning to do—only better.
As insurers pursue this goal, startups in the growing InsurTech sector also promote innovation, disrupting traditional insurance norms and practices. These companies are undertaking parallel research into the use of artificial intelligence (AI), data analytics, telematics, machine learning, image recognition software, robotics processing automation and other tools to enhance operating efficiency and forge closer connections with customers. Carriers that stay on top of these innovations will enjoy a competitive edge, while those that maintain the status quo and do little—or nothing—will fall by the wayside.
That is a provocative prediction, of course. But studies affirm that embracing change is critical for insurers to preserve their value as the industry trails behind the broader financial services sector in providing customers with technology-based, personalized experiences. For instance, a 2014 report by PwC stated that “[n]on-life insurers are struggling to engage with customers.”
Seventy-one percent of consumers want the ability to use web-based solutions—i.e., an app—to compare insurance pricing, buy policies, receive risk management advice, and file and review claims, according to the PwC report. The repercussions for not responding to these interests are serious. Consultancy EY’s 2018 global insurance report cites such rapidly shifting customer expectations as “hindering the business of less agile insurers.”
The industry at large is starting to make strides, introducing fully mobile and frictionless app-based customer-facing technology. For example, at QBE North America, we recently partnered with an innovative technology company to launch a customer conversation platform easily connecting people with their insurance companies on any mobile device. (Editor’s Note: The author declined to disclose the identity of the InsurTech.) The solution combines intelligent messaging and human touch to offer a frictionless customer experience.
Other carriers are undertaking similar technological enhancements, as are large technology companies and InsurTech startups. Customers are likely to be interested in their wares. According to a report by Capgemini, nearly one-third of insurance customers would consider buying insurance from a big tech firm. Many InsurTech startups, on the other hand, have had no trouble attracting both interest and capital to refine their innovations into novel insurance solutions. We are all in a race to develop the best technology solutions first.
A Team Effort
As new competitors take on traditional industry players, EY has offered smart advice to carriers, urging insurers to relinquish their traditional role of “just being a capital supplier” and transform into “owning the relationship” with customers. To achieve this state, carriers must align their strategies with the innovations coming out of the InsurTech sector. The good news is that many tech startups are eager to collaborate with insurers to help strengthen the value chain—from sales and distribution through underwriting, pricing and claims administration.
While insurers have made progress implementing technology to make operations leaner and more efficient, there are equally exciting opportunities to deploy tools that enhance the customer experience. Paramount in these aims is the development of a digital ecosystem, in which insurers seamlessly interact and transact with customers, partners such as brokers and numerous other third parties on any mobile device, anywhere and at any time.
Certainly, more customers are looking for insurers to be technologically savvy and equipped. They want to do business with carriers able to connect with them in the ways in which they are accustomed—real-time, frictionless chatbots, social messaging, texts and apps.
The opportunities to build a more future-focused industry are endless. Imagine an ecosystem in which data from image recognition software reduces the time it takes to underwrite property risks or quickly settle a claim? Or cameras equipped with telematics on board a truck that can detect evidence of driver weariness to reduce the risk of an accident? Or a range of sensors in a smart home connected to the Internet that can spot a moisture problem before it results in mold contamination? Or a data analytics tool that can ferret out possible evidence of workers compensation fraud in one-tenth the time it takes human beings to unearth these crimes?
In our increasingly interconnected world, a digital ecosystem is imperative for another reason. Insurers, brokers, customers and third-party organizations like claims administrators, weather bureaus, smart-home appliance makers, news organizations, government agencies and regulators, among many others, can gather in a trusted environment to share their data. Routine insurance interactions and transactions that take days or weeks to commence and conclude can occur on such a platform in near real time.
Here’s an example of what this might look like: Say a commercial truck is in a collision. Sensors on board the vehicle detect the accident and instantly send this data over the Internet to the insurer, agent and claims adjuster, as well as other parties in the ecosystem, such as law enforcement, a tow truck operator and a partnering repair shop. Armed with the insurer’s app, the driver takes photographs of the damage and the accident scene, triggering the first notice of loss claims process. The onboard cameras simultaneously upload images of the events leading up to the accident. Claims can be paid within minutes.
This is the sophisticated service that many customers want from their insurance carriers. They also want greater choice when it comes to buying insurance policies, with coverages tailored and priced to their specific needs. Successful carriers can achieve these aims by partnering with customers in using technology to better understand their risks and provide superior experiences and service, as opposed to just providing stellar coverage.
This is tomorrow’s insurance industry from the vantage of today. The best carriers will embrace the technological output of the InsurTech sector at an increased pace. The reason is clear: One cannot win without innovation. Toward this end, we’ve allied with several InsurTech firms and made significant investments in our own technological advancements, implementing customized solutions into our processes to provide customer experiences in line with their expectations. And we continue to see technology as an enabler of future growth and prosperity.