Insurance Technology Archives

Tag Archive for: Insurance Technology

Jama Software is always on the lookout for news and content to benefit and inform our industry partners. As such, we’ve curated a series of articles that we found insightful. In this blog post – P&C Industry’s Future Hinges on People & Technology – we share content sourced from Insurtech Center, which was originally published on May 4, 2022, by Mark Breading.

Property & Casualty (P&C) Insurance Industry Future Hinges On People & Technology

Some people may conclude these developments crowd out humans as automation and AI take over. Nothing could be further from the truth in the P&C industry. The value of insurance professionals will be elevated due to two primary factors: expertise and empathy.

Digital transformation has been an overarching theme in P&C insurance for several years. Carriers recognize the future of distribution, underwriting, policy servicing and claims all are dependent upon digital operations. In fact, every part of the P&C insurance business is affected by the march of technology and the way it is changing customers, risks and operations. The pandemic accelerated tech and digital trends, causing carriers to rethink and reshape their plans. SMA research shows that 100% of carriers in all P&C segments have significant digital transformation plans underway as they increase competitiveness for today and prepare for the future of insurance.

Driving this transformation is the way that digital, connected technologies and artificial intelligence are changing the world around us. We are still far from the science fiction scenarios of robot overlords and androids that are indistinguishable from human beings. But the world we inhabit today is dramatically different from just a decade ago. The average person has many digital interactions every day, from ordering dinner or groceries online to shopping for goods and communicating with family, friends and business colleagues. Real-time video, speech-to-text translation for email or texting, online chat and a vast array of social media platforms are readily available and pervasive in their use.

Every day, individuals and businesses benefit from automated driving and safety features and the ability to remotely monitor and control their homes and businesses via a mobile app. The next 10 years promise to usher in just as much or even more dramatic change than the last decade as we progress toward autonomous vehicles, augmented/virtual reality for daily interactions and the instrumentation of the world — connecting everything insured by the industry to the internet.

The implications for P&C insurance are enormous. While all this tech-driven change may seem overwhelming, it is useful to think about what it means for insurance in three categories: customer expectations, the evolving risk landscape and operational efficiencies.

Related: The Emergence of Technology for Insurance Product Development

Customer expectations

Carriers have been on a path to gaining a deeper understanding of customers (including policyholders and agents). The pandemic has enhanced expectations across the board. By necessity, the world shifted to a virtual, digital mode during the pandemic. Now, instead of asking if you offer remote, digital, omnichannel capabilities, the question is, why don’t you offer these capabilities? Customer journeys have been reshaped and expectations altered for everyone interacting with a carrier, including business partners and employees.

Evolving risk landscape

AI and the digitally connected world have already surfaced new risks, chief among them being cyber risk. As digital data from billions of connected sources flows through the business ecosystem, the cyber exposure increases exponentially. It is a great opportunity for P&C industry leadership. However, there are many new or evolving risks on the horizon. The risk picture is shifting for increasingly autonomous vehicles and homes, businesses, farms, vessels and their cargo, and many more things, as well as people and workers. Will these reduce claims dramatically? Or will they introduce new, unanticipated risks?

New options for insurance operations

Operational efficiencies are already receiving a boost from automation and technologies such as robotic process automation (RPA). Now solutions for data pre-fill, automated decision-making and advanced communication capabilities yield big benefits for insurers. In addition, the potential is high for carriers to gain new insights to improve risk selection, policy servicing and claims.

Related: Simplify and Optimize Processes in Complex Insurance Product Development

The future of humans in P&C

Some may conclude these developments crowd out humans as automation and AI takes over. Nothing could be further from the truth in the P&C industry. The value of insurance professionals will be elevated due to two primary factors: expertise and empathy. Certainly, many simple activities will be automated and taken out of the hands of insurance professionals — to their delight.

However, insurance is a complex business that is foundational to society and designed to meet customers at their greatest times of need. There may be fewer agents, underwriters and adjusters in the future due to demographics, but those roles will be more focused on adding value through their deep expertise and the human touch when advising customers on how to address their risks and guiding them through a claim. The roles will evolve, to be sure, as carriers seek the best tech/human blend, but there will still be a great need for expertise and person-to-person interaction that will not be automated away.

The P&C industry’s future is bright. The world only gets more complex, and the need to aid individuals, businesses and governments in navigating the risk landscape, being proactive in risk management and providing indemnification when bad things occur is likely to increase. This provides a great opportunity for leadership — especially for those willing to take bold action today.

Mark Breading is partner, carrier transformation, at Strategy Meets Action, a ReSource Pro company. He specializes in advanced and transformational technologies.

The opinions expressed here are the author’s own.

Jama Software is always on the lookout for news and content to benefit and inform our industry partners. As such, we’ve curated a series of articles that we found insightful. In this blog post, we share content sourced from Insurance Business America – Insurance Tech Adoptions- What To Consider Before Taking The Leap – which was originally published on March 9, 2022 by Surina Nath.

Insurance Tech Adoption – What To Consider Before Taking The Leap

The industry has been sprinting towards technology adoption over the past few years, but carriers and brokers still need a helping hand when it comes to utilizing newly integrated digital solutions.

There are so many new and shiny platforms coming into the space, and insurtechs are making big promises to insurance companies about how easy the process will be.

“All the noise right now creates a lot of distraction and confusion,” Gilad Komorov, CRO at Lightico told Insurance Business. “Insurance companies have long lists of problems they want to solve, but it’s important to first define a strategy around what to prioritize.”

Breaking down digital goals in a realistic and manageable way enables streamlined processes, and the right tech partners will make sure everything is executed in the right way.

It is too easy for insurance companies to be pulled in a million different directions when it comes to insurtech, but if strategic priorities are established, it helps keep focus on the right aspects.

“A big challenge for insurance companies is doing the homework before evaluating solutions, which is why defining decision criteria is essential,” he said.

Asking how a solution can integrate with an existing technology stack, and how it is compatible with internal processes is vital if an organization is looking for a mature, holistic solution where all boxes will be ticked off.

Related: Accelerate Financial Risk Management and Simplify Complex Insurance Product Development

“Understanding the true business outcome a company is striving for, and assessing what KPIs will be impacted by technological solutions helps drive a much more strategic decision and facilitates a more focused buying process,” said Komorov. “Then comes commercial criteria like budget and ROI.

“If a carrier does their homework, it is easier for the vendor to align with what they’re looking for. I’d advise any carrier to define what they are looking for before looking for solutions. It will help make a more accurate decision.”

To create a comprehensive strategy, a collaborative top-down approach is essential. Middle management needs to ask executives for guidance on what the strategic priorities are for the next two to three years to create a straightforward road map for tech vendors to follow.

“If you don’t think long-term, a company will end up with a stack of solutions that may not work well together to solve the overarching strategic goal,” he said.

Ensuring that a vendor has open APIs that can integrate into back-office systems is another thing carriers and insurers need to consider in the selection process, especially if there is data involved.

“You want that data to be passed from one system to another, and see that APIs not only exist, but are well documented so IT teams can internally know what to do with them,” Komorov explained.

Vendors also need to prove that they have strong technical solutions that will support a company’s infrastructure, as it will help save time getting the new system up and running.

Related: Your Guide to Selecting a Software Requirements Platform for Financial Services and Insurance

“Another thing is the workflow automation, and we put a lot of emphasis on investing time to build a powerful engine that allows different systems to talk to each other. If you can’t build logic across all systems, it will slow down workflow,” he said.

Training and enablement are two key components to consider when implementing new technology, and carriers that partner with vendors that have training programs in place will help drive the adoption process for anyone who needs to engage with the updated platform.

“Evaluating a vendor’s training program is so important,” said Komorov. “A software could be amazing but if it’s not adopted properly, it’s no value for carriers or brokers.”

This blog is part of a series written by Alan Demers, founder of InsurTech Consulting and author of Insurance Thought Leadership. For part one of this series, visit: The Top Challenges of Property & Casualty Insurance Product Development. Stay tuned in the coming months for more.

The Emergence of Technology for Insurance Product Development

It seems that the volume and variety of analysis describing P&C Insurance industry trends and predictions have been on the rise over the last few years which happens to coincide with the insurtech movement itself. In this, new meets old paradigm there is much discussion about adoption rates, whether by consumers or insurance carriers themselves, privacy concerns, legacy systems and a host of other barriers. There’s an even greater volume of excitement for all the amazing possibilities to drive revenue, improve bottom-line results and modernize customer experiences. Terms like transformational, industry disruption, and reimagine (everything) were hardly, if ever used, to describe insurance just a few years ago.

Over the past 5 years, insurtech investment has soared with consecutive record-setting levels each year. According to Forrester Research, Inc., over $15b was invested through Q3 in 2021 surpassing global insurtech investments for all of 2020. The gravity of capital infusion has inspired a wide range of technology, new insurance models, and more digital deployment, in turn, raising consumer and business owner expectations. So, it only makes sense that the volume of predictions, speculation on winners and losers and everything insurance news-related, is simply amplified. Well, for 2022 that is changing too with greater attention on climate change, cyber risks, and emerging embedded insurance models just to name a few highly talked about trends. And many of these trends call for new insurance products which are still mostly developed and deployed by each individual insurance carrier, whether with external provider support or not.

Popular 2022 Predictions:

Among the numerous insurance industry trends and predictions for 2022, some of the more popular and noteworthy themes include:

Cyber exposure, demand for protection, products and services
Climate change risks and rising insurance costs
Changing definition of insurers with the likes of Amazon, Tesla, and Toyota selling insurance
Embedded insurance models by combining insurance at point-of-purchase with other products
Parametric insurance for events, travel and the first layer of protection
Digital adoption and demand for new products
Usage-based, sensor technology and reward-for-behavior offerings

There are several other trends extending beyond 2022 that are expected to impact how insurance is bought and sold, serviced, experienced and priced for years ahead. Artificial intelligence is already being deployed, however early on, for many of the more complex use cases. Meanwhile, image analytics are being widely leveraged throughout underwriting and claims, reshaping the customer journey processes with great success. Blockchain continues to be cited as having lots of future promises and autonomous car features are making driving safer and increasing the cost of repairs simultaneously. A common question is, “which emerging technology(s) and startup(s) are most exciting?” The answers range from pragmatic to futuristic, like completely automated and instant underwriting might be someday.

Editor’s Note: In our 2022 Industry Predictions Series, we asked Alan Demers, to weigh in on product and systems development trends he’s anticipating for the insurance industry in 2022 and beyond. Visit 2022 Insurance Predictions Banning Credit Scores Automation and A Highly Competitive Marketplace to read his full insights!

Demand for new products

A common denominator for each of these trends, especially among incumbent insurance carriers, is mounting pressures to launch new and/or modify existing insurance products at a much faster pace. Historically, insurance product development has been relatively slow and methodical, where it can take a carrier months or even longer from start to launch. Thus, speed-to-market remains a top challenge. Complex and individual state regulations, sophisticated pricing segmentation models and nuanced policy language are just a few reasons that explain why insurance product development is so difficult. Add in insurance carrier IT backlogs and competing programming priorities and it all begins to explain why new product development takes such time and effort. Yet, the pace of new product launch is not keeping up with the tempo of new market entrants and changing consumer preferences. Those companies that can launch faster and more efficiently will have a clear advantage moving forward.

Legacy systems and ways of working

In recent years, most of the large carriers have upgraded or are just completing retirement of core systems, replacing far outdated legacy insurance policy administrative, claims and billing systems for new and more adaptable platforms. Such transformations are extremely expensive, in the tens of millions of dollars, and can take several years to complete – and that’s just to contemporize 30+-year-old technology and does not contemplate cloud migration and other investments. The upsides of modernizing core systems are numerous, including ease to integrate new technology which enables insurers to partner with additional solution providers, startups and others relevant to modernizing agendas. Consider leveraging real-time data to better price and manage risk, for example. This can hardly be done with legacy systems and without integration but comes to life with a modernized platform and numerous data integrations from various sources and providers. Much like everything else these days, businesses and consumers demand things to be instantaneous and real-time or insurers run the risk of missing on new business.

In reality, the insurance industry has evolved at a steady pace from the 1980’s conversion from paper to desktop computing, in the 1990’s moving from highly regional to centralized service centers, 2000’s mobility and more recently toward digital and automated. Many in the industry say that more changes have occurred in the last 5 years than the last 20 combined and that is an accurate statement.

When factoring industry trends – insurtech, changing consumer demands, emerging risks and insurer investments, and all other related dynamics – it’s easy to see how new product and product differentiation will play an important role going forward. Partnership insurance models – such as OE car manufacturers paired with an insurer leveraging data sharing, usage-based insurance, and possibly with financing and even connected car payment options – call for product and pricing features much different from traditional insurance policies. Sensor data to predict, avoid, and detect losses will reshape insurance from a reimbursement model to insurance-as-service and likewise will influence new and different insurance products.

Now that the insurance industry is tackling legacy systems, it’s opportune to address legacy ways of working. The seemingly never-ending aftermath of Covid 19’s impact to working environments is still very much unsettled. Despite employee survey results suggesting most office workers prefer work from home for some or all of their work, insurance executives are challenged with measuring productivity and uncertain about sustaining team collaboration going forward. Team collaboration, especially given insurance carriers’ highly specialized and siloed constructs, is imperative when it comes to developing new products. In fact, the speed and efficiency of development cycles is a direct outcome of how well departments and people collaborate, move and approve work, make decisions and move the ball forward. Yet, Excel spreadsheets, email, and meetings are cited as the main ways of working when it comes to product development. So, there is much room for new tools and forward-thinking team collaboration ahead for the insurance industry.

No matter how 2022 insurance industry predictions pan out, it will be another exciting year for insurtech adoption, new tools, and new products alike.