The Connected Business of Insurance
October 26, 2016
Humans and technology are inseparable. Each impacts the other, in both predicted and inexplicable ways. The co-evolution of humans and technology continues to progress exponentially through time, and currently, the interdependence of the two is bringing society into an era of customer immediacy. But this era is not unfolding at the same pace everywhere in society. It is well-documented that the insurance industry adopts technology at a much slower speed than other industries.
Customer immediacy is becoming the new currency
This slow adoption of new technology by insurance firms will become a strategic obstacle to provide customer satisfaction as “immediacy” – immediate response and access to information – becomes the new currency to achieve competitive success. The emergent set of future technologies continues to enable customer immediacy and in so doing, continues to pile relentless pressure on insurers to provide customer immediacy.
The wave of technology currently driving the marketplace encompasses communication, collaboration, and analytical capabilities all enabling a more fluid marketplace. As importantly, this wave is a major inflection point in the manner in which society lives and works, because the latest capabilities are primarily consumed on a smart mobile device always seemingly available at a person’s fingertips.
“The quickening of the marketplace metabolism is being driven by technologies that are reshaping the infrastructure of society.”
3 trends that are shaping customer immediacy
Taken as a holistic portfolio, these new technologies are being exposed through a variety of rich media-enabled apps, rich messaging platforms, physical objects connected to the internet, real-time voice recognition, interactive and personalized video streaming, and neural network-based analytics (i.e. deep learning), taking decision-making well beyond predictive analytics and into the realm of the human mind. Simultaneously, the deployment of these capabilities is informing three mega trends contributing to the era of customer immediacy.
Quickening marketplace metabolism
The quickening of the marketplace metabolism is being driven by technologies that are reshaping the infrastructure of society and providing a foundation that significantly changes one or more aspects of how people live. Central heating, the telegraph, refrigerator, radio, and television are all technologies that have previously reshaped the infrastructure of society. The new set of technologies that will accomplish the same societal reshaping includes drones, on-demand economy transportation network companies (i.e. Uber and Lyft) and hospitality platforms (i.e. Airbnb), and real-time voice recognition.
- Drones: Drones are becoming increasingly more important assets for insurers to inspect property immediately after severe weather events and provide voice and/or visual real-time wireless communication in areas that have impaired or destroyed communication capabilities. Insurers can use on-board visual analytics to estimate remediation costs of damaged or destroyed property to accelerate claim reserve estimation and integrate specific client loss detail in real time into an insurance agency/broking firm’s AMS and/or to an insurance company’s systems of engagement and systems of record.
- On-demand economy: The on-demand economy is reshaping the nature of commerce. Transportation network companies, hospitality platforms matching homeowners and prospective renters, food delivery firms and others redefine a person’s role from individual consumer to commercial business person in hours (if not in minutes). This new hybrid reality presents P&C insurers with the real challenges of deciding whether and how to cover (as well as create, price, deliver, and service) a quick-changing client persona needing personal coverage at one moment and commercial coverage the next moment. The on-demand economy demands a fusion of personal and commercial P&C insurance available on a moment’s notice by an insurance client.
- Voice recognition: We are surrounded by a growing number of platforms (i.e. Siri, Google Now, Microsoft Cortana, Amazon’s Alexa) that can understand and respond to a person’s voice. In September 2016, Insurance Journal reported that “Liberty Mutual has launched the first insurance-focused service for Amazon’s Alexa from its Liberty Mutual and Safeco brands. The new Safeco and Liberty Mutual Alexa skill will grant users instant, voice-controlled access to get a quote through Liberty Mutual or direct them to a Safeco-appointed independent agent, along with other automated services during the insurance selection process.”
“The major transformation that will come during the era of customer immediacy is when messaging capabilities blur with real-time voice recognition platforms.”
Software solutions that are part of the robots rising mega-trend include messaging platforms and chatbots. Messaging is being used by millions of people around the world and is increasing as messaging capabilities move beyond conversation, communication, and collaboration to accepting payments for commerce interactions. The major transformation that will come during the era of customer immediacy is when messaging capabilities become “neural network-enabled rich messaging” and blur with real-time voice recognition platforms: the result will be more natural interacting chatbots able to support a wide variety of customer-company interactions. Insurance firms should consider deploying chatbots in systems of engagement (SoE), including agency management systems or producer productivity systems, and systems of record (SoR) to enable customers to interact with their own policy, billing, and claims records (in an authorized and secure manner).
Deep learning, otherwise known as cognitive computing, enables insurance companies to use their ever-expanding data with the company’s experience to sense-and-respond in real time. According to TechTarget, “Cognitive computing are systems capable of solving problems without requiring human assistance. Cognitive computing systems involve self-learning systems that use data mining, pattern recognition, and natural language processing.” Think of cognitive computing as applying a more capable Watson to all the data flowing into, stored in, and out of an insurer’s entire stock of digital records regardless of where the data originated (i.e. phone calls, claim adjuster notes, medical provider x-rays and other records) and data type for real-time analysis and action.
Nature of the 2020 insurance firm
What should insurance firms do to compete in the emerging era of customer immediacy? There are three major paths that an insurance firm can take to conduct business in 2020:
- Maintain: Keeping the same processes albeit with some improvements, having the same types of people using the same technology as deployed in 2016 (or earlier), and continuing to plan for faster workflows within the firm and faster uploads/downloads between the insurer and agency/broking firms.
- Augmented: Streamlined and/or rationalized workflows and replacing all paper with digital flows deployed on mobile platforms, but simultaneously delivering service to producers and clients with video, voice recognition, messaging platforms, and chatbots.
- Unrecognizable: A combination of “augmented” initiatives allied to the use of algorithms, mobile apps, and real-time interactive, personalized voice recognition and video streaming using only digital flows among and between departments in the insurance company, the agency/broking firm, and clients.
Obviously there is a gradient of change initiatives, but it is our hope that insurance firms now start to become “unrecognizable” by 2020.
This blog post is based on the 2020 Trends presentation delivered during the Executive Management Program at Applied Net 2016. If you would like a free PDF copy of the presentation, please send me your request using a company email address.
Barry Rabkin, president of the insurance technology analyst firm Market Insight Group, is known for his research focusing on areas where current and emerging technology affects insurance commerce, markets, customers and channels. He has been involved with the insurance industry for more than 35 years. Before rejoining his own company in April 2014, he was a principal analyst at Ovum, where he was responsible for leading the global insurance research stream. Before that, Rabkin lead the global insurance advisory team at Financial Insights, an IDC company.