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This article was contributed by Jason Paau, Senior Director of Program Management at digital consultancy Publicis Sapient.
As with other industries, the pandemic has triggered digital acceleration in the insurance sector, allowing some insurtech startups to benefit from their agile and innovative digital offerings. Lemonade, for example, has introduced a new car insurance offering, backed by its acquisition of insurance startup Metromile. Rather than watch these small insurance upstarts continue to rush, spin and grow, incumbent players must seize this moment to harness the power of their brands and co-opt the inevitable disruption of the sector.
Big players need to adopt a more innovative and digital mindset, and fast. While they have their competitive advantages, including scale, resources, and trust, incumbents need to improve their customer service and advanced data analytics and take better advantage of digital platforms. The insurance industry, especially in the property and casualty category, hasn’t changed much in recent decades. We are also seeing large amounts of capital continue to be invested in insurance technology. The opportunity is huge for traditional insurance companies that embrace innovation, and the potential irrelevance for those that don’t.
Apps and platforms are the future
In our recent insurance survey, we found that the number one reason for switching providers was customer experience; this outweighs concerns about price or even the coverage itself. Specifically, consumers want faster claims, better digital experiences and more personalized offers. With more than 26% of people surveyed saying they have switched providers in the last year, these concerns send a strong message that can link digital transformation to customer retention. Additionally, 48% said that a particular incident of poor service prompted them to switch providers.
Companies can improve customer service and satisfaction by modernizing their platforms and applications. Coupled with an innovative culture and strong ecosystem of digital partners, key activities such as onboarding or claim filing can be personalized, simplified and accelerated. Seamless experiences, especially across digital platforms and channels, are crucial to retaining and growing business. In fact, we found that while only 55% of respondents currently rely on insurance company apps to complete and receive updates on the claims process, 93% cite apps as their future communication channel favorite.
The apps will need to enable video and photo communications, as well as voice calls and messages, along with easy access to customers’ past communications, claims, data and coverage details in one place. For example, an insurance company app could provide customers with a list of nearby approved auto repair shops after an accident, as well as provide regular updates from the garage when a car is in for repair. Some companies are building SuperApps as a controlled gateway to the ecosystem of customer needs, particularly in Asia where such apps are increasingly a part of daily life. Businesses must constantly review their digital strategy to determine how best to meet the changing needs and expectations of their customers, mirroring the easy and convenient experiences customers have grown accustomed to when banking or shopping online.
Using data to navigate instability for insurance reliability
At a time when customer behavior is changing so rapidly, when more users may be looking for insurance coverage they can trust, traditional insurers can benefit from their legacy of reliability. But at the same time, insurers must also embrace new data sources and ways of analyzing data to ensure risk is understood. Leveraging telematics for driver habits, IoT sensors for home protection, or weather data to inform localized risk in specific areas are examples of using data to inform higher quality assessment. Insurers taking advantage of this increased supply of data must also consider the exchange of value for the end customer. Consumers expect organizations that use these new types of data to provide benefits in return, such as optimal, personalized coverage and premium discounts based on personal driving habits or responsible uses of connected appliances. When premiums rise, insurers will also increasingly need to provide data to justify the price change to consumers. This protects insurers but also ensures that customers receive optimal coverage.
Data is also key to improving customer service, including the new customer onboarding process and the claims process. Automatic import of approved customer information through APIs or interfaces from customers’ other online services, including their bank or social media accounts, can substantially improve pain points such as manually entering information, creating user profiles, or providing signatures and documents.
When it comes to improving the claims process, again, data will play a central role. Organized and used well, data can help speed up the claims process. In our survey, we found that payment delays were the most frustrating aspect of the claims process. To speed this up, all relevant claimant data needs to be accessible in one place, similar to how Salesforce and Epsilon offer a one-stop shop for data profiling. Insurers can also integrate other technologies, such as auto parts price databases, to avoid overpayments.
Insurance company platforms will also need to absorb and use real-time data; for example, with the rise of connected cars, sensors in vehicles can immediately send damage information for assessment moments after a crash or other incident. Drones and mobile phone video footage will also provide key and immediate data for assessment, replacing some of the tedious and time-consuming human-led inspection processes now needed to assess damage. These new data sources and data integration platforms will make the claims process more efficient, saving time and money for both clients and insurers.
Humans and AI working together
In the race to harness new digital capabilities and applications for competitive advantage, it’s important to remember that insurance remains connected to the physical world and human emotions. Technologies that can “read” the world, such as AI and computer vision, hold particular promise for industry to speed up assessment and adjustment processes. By leveraging data sent from sensors, IoT devices, or other sources that store information, such as a data lake, insurers can quickly create not only a damage report for a home or car, but also an estimate of repair costs and an assessment as to whether the damages are correct. covered by insurance.
At the same time, insurers must not fall into the trap of relying on so-called black box models of machine learning, where humans don’t fully understand how computers arrive at answers. Insurers must also ensure that data is relevant and current, not outdated, and understand its origins. Data governance and understanding of data lineage are essential to avoid ethically or legally questionable practices. After all, insurance company decisions affect people’s lives, so the process must be fully understood based on legitimate and appropriate data sources that both consumers and insurance companies are fully aware of.
Many people also want peace of mind and human support when filing a claim. This can also become more efficient; Behind the scenes, AI and data triage can quickly identify and prioritize which customers need the most human empathy, along with service, and route them to the right person, while submitting other, simpler claims through AI-assisted automated processes. This hybrid approach to claims handling and customer service will allow companies to maximize talent and technology while meeting different customer needs with the right resources.
There is no doubt that implementing such technology and uses of data requires a significant initial investment, one of the main reasons why digital transformation has been relatively slow in the insurance sector. Partnering with insurtechs that often rely on such AI technology can be an effective and immediate way for some established players to implement more data-driven processes and decisions. Whether partnering with startups or expanding their own operations, the use of data and AI, along with the right security measures, will add tremendous value by saving time and money and creating more seamless customer experiences.
If ever there was a time for established insurance companies to evolve to meet customer needs, it is now. With an increase in loss events and the rise of insurtech companies, they can no longer rely on their resources, scale, or trust to maintain the status quo. They can take advantage of these advantages to maximize the benefits of data and technology and take insurance, and the customer experience, to the next level.
Jason Paau is Senior Director of Program Management at Digital Consulting Sapient.
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