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While our industry tends to adapt slowly, new technologies can improve productivity, enhance customer experience and provide valuable marketing tools and insights. Here you'll find articles to help you understand and choose the technologies that are the right fit for your agency. For an overview of all PIAK posts, visit our "Blog Post Library List" at "All Blogs"

 

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How Your AMS Can Be Your Best Friend

Posted By Kelly Donahue-Piro, Wednesday, October 23, 2019

from AgencyPerformancePartners.com

Technology: it’s great when it works and totally frustrating when it stops working. For many agencies, embracing the features in the agency management system takes a back burner to all of the work that has to be done. Unfortunately, due to insurance agents’ mentality around this, we are often inefficient. We fail to maximize our customer experience and we pay too much for systems that we don’t use to their full potentials. As you read this blog, ask yourself, “Do I want more people? Or do I want more efficient people who can handle more work with technology?” I bet I know your answer. In this blog, we will break down 5 ways that agents can better use their system of choice. 

Someone Has To Be In Charge

Technology is moving fast and, often, agents don’t designate the time to keep up with their systems. We strongly recommend that there is an SME (System Matter Expert) for each of your systems. The SME is in charge of keeping up-to-date on technology changes and outages, as well as training any new team members on the system. The SME can update the team routinely on cool new features and developments. It’s strongly recommended that every other year you send them to the system’s conference, if they have one. 

Someone Has To Hold People Accountable

In our agency assessment, we have written dozens of process documents. They are great! They solve the agencies challenges, but all too often, they sit on the share drive, only to be referenced when a new person arrives. The bottom line is that process documents need to be the way the agency runs. Now in insurance, it’s complicated and the documents can end up lengthy. The agency leadership needs to identify the correct reports, run them consistently, and inform team members when they aren’t on track. We recommend your agency agree in advance upon the process for handling someone who isn’t following the processes. This helps take the emotion out of the situation. 

Make It Mandatory

Once you all agree on how to use the management system, people can have a small trial window of 30 days. This allows you to get the reporting accurate and to answer questions. After the 30-day period, this is when the bill becomes a law. Your processes must go into effect and you, the leadership team, must continue to consistently run reports to hold the team accountable. 

Get a System You Like

There is no doubt that changing management systems is a year-plus process. There is cleaning up the current data for prep, building templates, and team training. I don’t say this lightly, but changing management systems should only be done once you have explored your current system. Remember, the devil you know is often better than the devil you don’t know. However, if you are engaging in the systems and you’re still left unsatisfied, that is when it’s time to make decisions. 

Lunch and Learns

Even the agencies who embrace their systems the most understand that the system is always going to evolve. Taking one hour per month to invest in your team’s development is critical to your success. If you’re not sure what to train on, ask the team. Also, make this meeting where each team member must take one meeting and review how they do things in the system. You may find some awesome shortcuts that were hiding!

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The Importance of Strong Passwords

Posted By Steve Anderson, Wednesday, October 23, 2019

from SteveAnderson.com

A couple of weeks ago, I was teaching a class on Cyber Security. I always talk about the requirement of using strong passwords. Here is the slide I use:

The most common answers to “Which is a more secure password?” are the second password, which is correct – to a point. Yes, it is a much more complicated password, but you will not be able to remember it, so you will write it down. The first password is complicated, harder to hack, and easier to remember.

During my presentation, there were several questions about passwords and password management options. This is why I thought it was worth addressing this topic again.

"Complexity is the enemy of security"

Creating and using strong passwords is one easy way to help prevent bad people from accessing your accounts. Bad guys collect passwords in many ways, such as by malware that scans the system and monitors Internet usage for usernames and passwords. Dictionary attacks are also used to guess passwords from a list of common ones. Most email systems are tough to attack with dictionary attacks because they won’t let you attempt login after login while trying different credentials.

The best defense is to use a good security suite and to keep it updated. These will make it much harder for malware to get on your system or to run unimpeded if it does. Most of them also detect and block phishing attempts.

However, you still want to have strong passwords. There are places where weak passwords can be compromised, such as the login for your PC. Now, very few people, including the experts, do all the things experts tell them to do in this regard. After all, it’s inconvenient.

Here are some guidelines for choosing a secure password:

  • The longer, the better: At least eight characters.
  • Mix upper and lower case, punctuation, and numerals.
  • Avoid passwords that are words in a dictionary, especially common words.
  • Also, avoid common passwords like “12345.” You’d be amazed how many people use passwords like these.
  • Avoid reusing passwords, especially those for critical resources like your email, on other sites. Doing this exposes you to a broader compromise than necessary.

Even with these suggestions, please don’t make your passwords so complicated that you can’t remember them. Most of us don’t have the memory bandwidth to deal with a large number of obscure passwords.

An excellent next step is to use a password management program, such as Roboform or the open-source Password Safe. I have personally used Roboform for many years and recommend you try it out. There are several other very good password management options you should also explore. These programs let you auto-generate strong passwords, and it remembers them for you; you only need to remember a master password.

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It's Innovation Season

Posted By Tony Grosso, Tuesday, October 1, 2019

from PropertyCasualty360.com

Autumn brings that magical time of year when innovation conferences are in full swing. On stage are the latest and greatest InsurTechs, and in the audience are eager insurance innovators.

Innovation groups seek out the newest and most disruptive technologies while identifying tremendous possibilities to change the fortunes of their companies. After a short courtship of pitching demos to one another, they decide to move aggressively to incorporate this or that great technology into their product, or business process or customer experience. They are ready to change the world.

Hold on

Not so fast. I know of at least one instance in which it took two years for the insurer to execute an InsurTech POC. Innovators are having the same problems all over again. It is not uncommon for innovation to break down to such an extent that precious time is lost before real test-and-learn can take place.

It comes down to organization, prioritization and agility. Changes in culture can influence the first two factors. But agility? That’s another matter altogether.

In today’s world, agility is all about technology enabling ecosystems and operations, and that’s what needs to change.

It’s the same as 10 years ago.

I remember back in 2010, I was doing innovation at a national insurance carrier. We identified a great innovation that we believed was going to revolutionize how we price and underwrite policies and dramatically change the complexion of our book. We wanted to run a large-scale pilot to determine the efficacy of the technology.

We had everything ready. All we had to do was to make one small change in our legacy systems to track the results.

Then, IT told us that it would take one year and $1 million to complete, and that was “if” we could get the business lines to de-prioritize a few of the projects they’d been waiting for.

That’s when I learned that the words “all we have to do” and “legacy systems” should never be used in the same sentence.

Agility in the ecosystem

The insurance world of tomorrow is part of an ever-evolving, ever-growing ecosystem of partners — often technology partners. Carriers who understand this are partnering with the technology innovators instead of trying to build something new from scratch.

Back in 2017, a Capgemini survey found that 53% of insurance executives around the world prefer partnering with InsurTech firms to leverage digital technologies, as opposed to 36% who favor in-house development.

That’s why the insurance innovation conference circuit is growing so rapidly.

Extracting the agility provided through an ecosystem requires carriers to be agile themselves. Paradoxical, I know, but unless the carrier can connect to the ecosystem and incorporate its innovations, that organization will always be on the sidelines, with plenty of great ideas but limited results.

Tellingly, the same Capgemini study found in 2019 that only 30% of carriers have projects that are implementing open APIs — a critical component of connecting to an ecosystem and agility.

Agility in technology

So much about innovation comes down to the technology. The platforms of yesteryear served their purpose when insurance was an island and the carrier had all they needed to process business; they simply didn’t need to connect to the outside world.

Platforms of tomorrow are designed with the base understanding that connectivity is key; they are designed to be accessible with APIs that open the platform up to the outside world.

In such platforms, the ability to connect to an ecosystem partner and bring the innovation into the carrier’s core processing systems and customer experiences are natural and often straight forward.

Agility in operations

The platforms of yesteryear were built for a static insurance model where upgrades could take place in 5-year increments and business would continue to be processed. But in tomorrow’s insurance industry, the ecosystem is ever-growing and ever-evolving. Consumer expectations continue to shift, and carriers need to adapt — or better yet — set the pace of innovation.

Innovation is about test-and-learn and adapting. That means having the ability to upgrade frequently without interruption. By frequently, we’re talking about on-demand frequency, the push of a button type: weekly, daily, hourly — as soon as the new technical capabilities are built they are deployed. This requires an efficient DevOps practice where development, operations and product management are in sync, operating as one and letting the technology do the work of testing and deployment. It’s about automation.

To support transformation with any seriousness, and expect lasting results, insurers need to make a commitment to open operating platforms that can absorb the innovation currently on offer.

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Today's Technology is Changing the Future

Posted By Patricia Harman, Tuesday, October 1, 2019

from PropertyCasualty360.com

Imagine being able to train your staff on how to investigate a water or fire damage using virtual reality without them ever having to leave the office? Or having a camera that provides real-time information in the event of an auto accident or theft? And if your insured’s car is in an accident, how do you seamlessly move it from the accident site to a garage or wholesaler? Believe it or not, there’s an app for that.technology

The technology options available today for insurers are geared toward solving a host of problems — both the simple and the complex. Some InsurTech expedites gathering information for the first notice of loss (FNOL) and assists policyholders in capturing the damage to their homes, cars or businesses. Other tools allow policyholders to go from FNOL to payment without ever encountering a human being unless they want to speak to someone about their claim, and even then it could be a chatbot rather than a live person. And other services allow for a claim payment to be made directly to an insured’s bank account instead of cutting and mailing paper checks. The right innovations can have a positive impact on whether or not a policyholder renews with a carrier after a claim.

“A positive customer experience in the claims area can be game-changing,” explains Sankar Narayanan, chief practice officer at Fractal Analytics. “Think about how you can reduce the overall customer effort. Creating a positive outcome comes from helping carriers streamline the claims settlement process, and many are using artificial intelligence in significant ways.”

Machine learning and artificial intelligence are just two of the technologies changing the claims experience, and as insurers update their computer technology and the programs used to interact with policyholders, vendors and adjusters, there are a host of new innovations providing unique solutions to some old problems. Here is an introduction to several of them.

Talespin 

Teaching new adjusters how to identify water damage and its causes, or how to fire a difficult employee requires training and expertise. There’s a new tool that can help to effectively train employees on a host of hard and soft skills. Talespin is using artificial intelligence and extended reality, which includes augmented, virtual and mixed reality to create real-life scenarios for training purposes. Trainees can learn through task-based scenarios or gamified simulations to understand how things work, as well as leadership and communication skills.

The company creates training scenarios that can be retooled to teach new skills-based training as employees’ responsibilities change. One carrier utilizing this type of virtual reality training has found it is a more effective way for adjusters to learn, fully engages employees in the training process, helps them to better retain what they’ve learned and actually improved their decision-making accuracy by 22%.

Each scenario takes approximately four months to create and the company is building a library that encompasses topics such as water damage, fire damage, mold inspection and claims investigations across several different types of damage for property and casualty, in addition to process and object training related to autos and construction. It is a new way to cost-effectively train employees without having them lose time for travel and it allows them to schedule training in between other responsibilities.

Owlcam

Video cameras provide eyes into many places, delivering security and information. Owlcam is a video camera for vehicles that is able to automatically send video to a cell phone. In the case of a break-in, the camera can send an alert through the 4GLTE network, plus turn on LED floodlights to illuminate the vehicle and hopefully scare off the would-be thief. The camera is able to store two weeks’ worth of video, which can be helpful in the event of an accident or theft.

If there is an emergency, such as a medical issue or accident, it can call 911 to request help if needed. The product is interactive and asks questions of the driver such as: Are you safe? Do you need me to call 911? Do you want the video? And, should an enterprising thief steal the Owlcam, it can be tracked with GPS and the video downloaded remotely to help law enforcement capture the offender.

Omadi app

By combining technology, analytics and rules-based intelligence, Omadi has found a way to use software to blend the needs of consumers and insurers following an accident with towing and automotive services.

Depending on the severity of the accident, the Omadi app provides access to a towing network that will move the vehicle to a designated repair shop or to an auto auction site. It can also dispatch claims for adjusters, optimize routes for tow trucks and schedule a tow after a claim has been written. The goal is to provide a simple solution to connect all of the critical players after an auto incident and give them an easy way to communicate.

Premonition

No one wants a claim to go to litigation, but as insurers know, it happens all too often. However, there are some new tools that can provide carriers and their legal teams with insights on opposing counsel and how they may proceed. ClaimsScan can help insurers identify claims at risk, provide data insights into those types of claims and analyze different aspects of the claim to help improve outcomes. It analyzes data based on the county where the claim is filed, the type of claim, the plaintiff lawyer(s) involved, the cycle time for these types of claims and the possible outcomes. LitigationScan analyzes the court, the judge assigned to the case, the type of case involved, looks at opposing counsel and provides insights into the best lawyer to handle this type of case for the defendant.

Insights include determining whether or not opposing counsel has a winning record in a particular jurisdiction on certain cases; how the judge has ruled in similar cases; the likelihood of an attorney to file, litigate or settle; and the attorney’s win-loss record overall in that jurisdiction. It provides data-based predictions about future actions based on past performance.

KATANA Personal Safety System

In a world where claims adjusters and other emergency responders are often called to go into unfamiliar and dangerous situations after a disaster, this personal alarm can help warn others if you’re in a threatening situation or need help. The KATANA safety system attaches to your cell phone so you’re never without it.

The system offers three different aspects of defense: a quick-trigger alarm, the option to connect to an on-call response center, and an app that can notify friends or family that you need assistance. The alarm offers two options — a piercing alarm to attract attention and scare of would-be attackers or a silent alarm that notifies the response center in case of a physical or medical emergency. It can track your location and text a map to those you’ve designated to be contacted in the event of an emergency.

All of these technologies provide options to improve performance, keep employees safe or capture information related to a claim. Finding ways to work more efficiently or close claims faster and smarter can be the difference between losing or keeping a policyholder after a claim.

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How to Get Personal With Technology

Posted By Ike Kavas, Tuesday, August 13, 2019

from PropertyCasualty360.com

We live in a world of disconnected connection. Our personal devices provide constant access to a boundless trove of information and communications. Our perspectives have become increasingly global in scope. Yet, we find ourselves longing for the same basic sense of community that once united our cave-dwelling ancestors. Leading organizations in insurance, finance, healthcare and technology know this new reality quite well. They ask how they can cut through the noise and provide a great customer experience that ties their brand to basic human emotions.

A Harvard Business Review report concluded that emotionally connected customers are more than twice as valuable as highly satisfied customers. “Companies deploying emotional-connection-based strategies and metrics to design, prioritize and measure the customer experience,” the report said, “find that increasing customers’ emotional connection drives significant improvements in financial outcomes.” Advertisers and marketers are no strangers to courting the human psyche. In these professions, there is little else besides the customer experience. But now the customer experience must become a mandate in all business departments, including engineering and IT. 

So, the grand plan to overcome the omnipresence of technology is…more technology? Let’s go through the rationale to why this is the case. While the abundance of technology and data is seemingly at odds with our desire for human connection, technology has also fundamentally changed human nature. Consumers and businesses — and not just millennials — want products and services quickly, if not immediately. On top of that, we still desire a connection to other people.

To this end, innovation departments, data scientists, IT departments and line of business leaders are exploring automation technology from robots (digital workers) to make business processes, workflows, customer support teams, engineering and other departments work smarter and faster. 

Their work to automate and improve these processes has already come to fruition in a few key areas. In the insurance industry, the claims processing department deals with a high volume of documents, forms, packets and images. Some of the largest insurance companies wanting faster response times are employing intelligent technology that uses AI and machine learning. They have done away with manual processes that slow them down, particularly those involving physical paper and electronic documents, such as emails and PDFs that are not in a structured format. Their tools automatically capture the data from claim files, recognize and categorize different types of forms and export that data into another intelligent system, such as an automated workflow or claims processing software.

We work with insurance companies around the world undertaking digital transformation projects and incorporating these types of automation processes. Insurance customers using automation tell us that they are processing claims about 87% faster than through legacy processes, ingesting seven times as many documents and claims per year. These organizations are also decreasing document preparation efforts by 50% and indexing by 75%, reducing fraud and cutting improper payments by about 2%, and driving positive ROI within six months.

The automation frees these insurance companies from mundane, time-consuming tasks, allowing them to respond — and make connections — to claimants or billing-related questions quicker. This ultimately yields an improved customer experience. The customers don’t see the technology powering that experience, but they reap the benefits and remain loyal to the company. From that seed, we can grow the emotional connection that all customers want. 

We know that emotionally connected customers are the most valuable customers. This seems to be especially true in the insurance industry. Bain & Co. surveyed close to 30,000 P&C customers and found that highly loyal insurance clients: retain at 97%, buy 25% more insurance, consolidate almost 90% of their insurance with one provider and refer 250% more than neutral clients. Bain found that loyal clients deliver 300% more lifetime value than neutral clients and 700% more value than low-loyalty clients.

Therefore, it’s both strategic and advantageous to connect with your customers in their own technological worlds and provide great experiences. What isn’t so obvious (but should be now) is that technology and a better handling of business data is the key to unlocking these great customer experiences.

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Combating Robocall Spammers

Posted By Tara Kelly, Tuesday, August 13, 2019

Reclaiming Automated Calls

from PropertyCasualty360.com

Email spam first became a serious problem about 20 years ago, and junk mail had been an annoyance for years before that. Now, unscrupulous operators have hijacked yet another platform, this time flooding mobile phone networks with billions of robocalls that make people reluctant to answer their phones.

According to the FCC, almost half of the calls Americans receive on cell phones this year will be unwanted robocalls.

Not only are robocalls annoying. When done right, automated calls are welcomed by consumers and can achieve listener-ship rates exceeding 90%. But automated calls are getting a bad rap due to robocalls. That’s why it’s time for businesses, including insurance companies and agencies, to reclaim automated calls from spammers.

Robocalls aren’t going to go away on their own. Combating them will likely take regulatory action and businesses standing up to reclaim the medium. Without intervention, the problem will get worse. Robocall-blocking software firm predicts the number of robocalls made this year will exceed the nearly 48 billion made last year — by a whopping 57%, according to CNN.

Consumers are subject to increasingly sophisticated ploys to lure them into answering spam robocalls — including “neighbor spoofing.”

It’s also bad news for insurance businesses that want to engage customers via automated calls for legitimate purposes.

But there’s a huge difference between automated calls and robocalls. Here are a few ways insurers use automated calling:

  • Appointment reminders: A reminder of an upcoming appointment with an insurance adjuster or agent can be a welcome service for busy people, who can use a touch-tone option to either confirm the appointment or connect to reschedule the visit. Automated reminder calls work well for businesses too because it’s less expensive than no-shows or assigning live calls to staff.
  • Policy and claim status updates: Obtaining a policy or getting an insurance claim paid often involves third parties, and when things go wrong, it can damage the company’s relationship with the policyholder. An automated call can keep customers in the loop, informing them along the way and managing expectations at each step of the journey, from policy confirmation to claim payment.
  • Emergency alerts: When dangers like a weather event threaten, emergency alerts can give customers a heads-up, protecting the customer and the insurer’s financial interests. Messages can include tips on preparing for a storm, reminders about documentation or claim submission processes and more. Alerts also signal that the company is looking out for customers.

These are just a few examples — automated calls can be used for good in a number of other ways, like conducting customer satisfaction surveys, enabling continuous service improvement or improving retention by alerting delinquent policyholders of a pending lapse date and warning them of the impact a lapsed policy could have on future insurance rates. Automated calls can help insurers reach customers in a timely, affordable way with messaging that is consistent and on-brand. The problem isn’t automated calls — it’s unwelcome robocalls.

So, how can companies fight back? It’s simple: Respect customer preferences and provide valuable information. The examples above are just a few ways insurers can provide information customers want or need, and when businesses consistently deliver valuable messages in a highly personalized and emotionally relevant manner, they can achieve listener-ship rates that average 93%. Even better, regular communication from a company’s main number increases the likelihood of being added to a customer’s address book, ensuring you’re differentiated from unwelcome calls moving forward.

Like email spam and junk mail before them, robocalls are a scourge. They use an indispensable communication platform to harass consumers with unwanted contact. But it’s important to keep in mind that automated calls can be a helpful and welcome customer communication tool. That’s why it’s time to reclaim automated calling from unscrupulous robocall spammers. Let’s make a medium that works for everyone.

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InsurTechs Drawing Investors' Attention

Posted By Mark Hollmer, Tuesday, June 25, 2019

from CarrierManagement.com

Below, we’ve gathered highlights of 10 noteworthy InsurTech financings from January 2019 through mid-May. They offer a curious read in combination with each other.

For one thing, the list gives a good idea about what kinds of startups are drawing investor attention.

Also, most of the investments are relatively small, reflecting venture commitment to concepts that haven’t quite proven themselves yet in the marketplace. Then there’s CoverHound, the online insurance comparison shopping platform, which pulled in $58 million earlier this year, bringing its total fundraising haul to $112 million in order to fuel a global expansion.

Another company – the upstart carrier Lemonade – raised a whopping $300 million in late-stage venture cash, more than 10 times the average InsurTech financing in the last few years. It has pulled in nearly $500 million total since its launch just a few years ago. Some observers predict Lemonade will reach the big leagues in the coming months, either through an IPO or sale to an old-school carrier seeking a cost-effective way to modernize. You can read about that here, in a recent Carrier Management analysis.

The question is, which InsurTech startup will be the next one to raise a large investment, with an eye toward public company status or selling itself to an interested buyer? It could be one of the companies listed below.

 

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As InsurTech Takes Over, Insurers Must Train the Humans that Remain

Posted By Jim Sams, Tuesday, June 25, 2019

from ClaimsJournal.com

As technology eliminates claims jobs through automation, insurers will need to build new skill sets for the employees who remain, speakers said during the second and final day of the Insurance Nexus Connected Claims Conference.

Eric Brandt, managing director and chief customer advocate for Esurance, said menial, repetitive tasks are being eliminated through technological advances such as chatbots to field routine calls and virtual appraisals to estimate repair costs. That means the humans who are still around will have to be highly skilled.

“What’s left is really, really hard,” Brandt said.

Claims adjusters of the future will be superheroes, he said, and they will need superhuman managers. He said as they employ new technologies, insurers also need to update the way they manage employees.

He suggested that managers use video to communicate instead of telephones because its harder to be distracted when looking at somebody face-to-face.

“Don’t have meetings,” Brandt said. “Establish a routine where you stay in touch with the people who report to you everyday.”

Kiara Graham, a learning strategy consultant for Desire2Learn, said “digital disruption is the new normal for the financial services industry.” To keep pace, insurers must be ready to “upscale and rescale” their employees’ skills. She urged that they be mindful of how they teach in an age of instant information.

“If I want to learn how to do something, I don’t enroll in a course, I watch a YouTube video,” she said.

Insurers also need to find sensible metrics so they can measure progress as they build a “more resilient claims workforce,” Graham said.

“What does good look like?” she said. “You use that to build out a rubric that can be used for feedback and gauging outcomes.”

During a panel discussion, a member of the audience asked whether insurers are having trouble finding good employees because of the widespread knowledge that insurance jobs are being eliminated through technology. Andi Dominguez, global insurance and healthcare product marketing manager for Quadient, said she’s not personally worried about it.

“We’ve been hearing that for years and we are still talking about it and we’re still here,” she said.

Brandt said at Esurance all of the employees receive ongoing training. “It’s never as scary as it seems,” he said. He added that Esurance hasn’t eliminated any jobs, but it also hasn’t been hiring new claims adjusters as it grows market share.

Implementation of technology often requires a cultural change within an organization, said Ian Thompson, group global chief of claims for Zurich Insurance. Thompson said he directed his claims shop to embrace technology because he feared his own job might be eliminated if the carrier did not adapt to rapidly changing customer expectations.

To illustrate his point, Thompson displayed a photo of a man using his cell phone to scan a display of grocery items at a commuter rail station in South Korea. Thompson said customers are able to use their phones to choose items to be delivered to their homes.

Thompson said insurance customers have become accustomed to speed and convenience and insurers have no choice but adapt or perish. The first step toward change is a transformation of the organizational culture, he said.

Thompson quoted author and management consultant Peter Drucker: “Culture eats strategy for breakfast.” He titled his presentation, “Does Claims Culture Eat Digital Strategy for Breakfast?”

Zurich started its digital journey in Ireland. Thompson said the carrier is using a photo appraisal tool developed by Snapsheet to speed up the auto damage estimates. He said Ireland was chosen because the claims shop was the optimal size for a pilot project and the management there was anxious to implement technological solutions.

He said Zurich plans to build on the success of the pilot project.

“Peer to peer selling has more impact than presentations from management,” he said.

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InsurTech Predictions for 2019

Posted By Nathan Pacer and Dong Liu, Tuesday, June 25, 2019

from CarrierManagement.com

The insurance technology, or InsurTech sector has seen much technological and investment development over the past few years. Traditional insurance business lines such as health, auto, and commercial are being revolutionized by new digital-centric startups. New technologies such as AI (Artificial Intelligence) and IoT (Internet of Things) are re-architecting insurance data, the underpinning of the insurance industry. New business models, such as P2P and on-demand insurance, are disrupting the entire ecosystem on all fronts.

This blog post aims to examine how the rest of 2019 can shape up for the insurance technology industry. After conducting a thorough analysis of the sector, we have arrived at three predictions for 2019:

Prediction 1: 2019 Will See The Highest InsurTech Funding On Record

The graph below shows the total VC funding into InsurTech startups by year.

As you can see, InsurTech funding is on a general upward trend with a 5-year CAGR of 19 percent.

What’s most noteworthy on the chart is Q1 2019 funding coming in at $1.7B, a whopping 2.5 times higher than Q1 2018 and the best yearly start to date. A straight line projection would put the full 2019 funding at $6.7B, which would represent a 70 percent year-over-year growth and the highest annual funding on record. The largest InsurTech funding events in Q1 2019 include a $500M round into Clover Health, a $129M round into FRIDAY, and a $125M round into the Wefox Group.

The dramatic funding growth and our 2019 projection demonstrate investor confidence in technology startups fundamentally advancing the insurance industry.

Prediction 2: Health Insurance Technology Will Continue To Dominate The Industry

Venture Scanner classifies chaotic startup landscapes into understandable groupings. These groupings are organized by functional categories, which are intended to get at the core offering of the startups categorized therein. For InsurTech, we have broken the sector down into 14 functional categories. Analyzing them reveals a clearly dominant function: health insurance technology.

Health insurance technology startups lead the InsurTech sector in overall funding at $8B. This category accounts for 33 percent of all InsurTech funding and has almost twice the funding of the second highest category–life, home, P&C insurance. In addition, health insurance technology startups raised the most funding this past quarter (Q1 2019) at $650M. Some of the largest funding rounds into health insurance in Q1 2019 include a $500M Series E into Clover Health, a $74M Series B into Shuidihuzhu, and a $45M Series B into Alan.

Health insurance technology startups focus on producing innovative business models and technology products. A notable example in the space is Oscar Health. They provide customized health insurance plans for individuals and businesses. Their website and mobile app enable you to manage all your health information and access doctors 24/7. The Oscar Health mobile app also incentivizes healthy behavior. For example, it tracks your daily steps and if you meet your daily step goal, you earn money for gift cards.

Prediction 3: InsurTech Startups Will Scale Up In 2019

Our third prediction is that InsurTech funding events will shift to later-stage financings as a result of InsurTech startups experiencing increased market traction. Over the past 5 years, seed-stage funding events made up roughly 50 percent of all funding events into InsurTech. In Q1 2019, seed-stage events dropped to 20 percent, while mid and later-stage funding events grew to represent a much larger portion of total funding events.

By the same token, the average funding per deal in InsurTech has been growing steadily. Specifically, over the last 5 years, average funding has grown from $9M to $39M per deal.

The movement towards later-stage funding events and an increase in average deal sizes lead to the natural prediction that InsurTech startups will continue to gain traction in the coming years. Realizing that their returns are directly tied to the scale of their bets, VCs are not hesitating to double down on their investment sizes to gamble for greater payoffs. These follow-on bets in the form of later-stage investments will help InsurTech startups scale their operations and amplify their market share.

Conclusion: 2019 Will See Unprecedented Innovation In InsurTech

In conclusion, the observations and analyses above lead us to predict that InsurTech startups are primed for explosive growth, scaling, and maturation. We predict that 2019 will be the highest funded year on record, that health insurance technology startups will continue to dominate the industry, and that InsurTech funding events will increase in maturity and size over time.

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How to Partner With Insurtechs

Posted By Mike Fitzgerald, Tuesday, June 25, 2019

from insurancethoughtleadership.com

Incumbent insurers face both challenges and opportunities from concurrent forces. Dramatically changing customer expectations and low investment returns threaten both property and casualty and life insurers. Declining participation rates and indifference from millennial consumers restrict growth in life companies. Technologies such as driverless cars and sensors (Internet of Things) promise to shrink revenue in P&C.

To evolve their business and technology models, insurers are diversifying their approach to automation. Historically, in most insurance technology initiatives, the projects were fairly well-understood and had likely been implemented before. Policy, claims, and billing administration replacement efforts were typical of these automation investments.

In contrast, emerging digital approaches are uncertain and require new service models, products and capabilities. The continued rise in insurance-related technology startup funding reflects the changes that are underway in insurance IT. Insurers need advanced skills in emerging technologies. Technology startups need industry and regulatory compliance knowledge. The result has been an increasing number of partnerships between insurers and startups that go beyond a supplier-buyer relationship.

However, there are significant barriers to success on both the insurer and the startup sides of this equation. Insurers must address risk-averse behaviors and increase decision speed. Startups need to scale (gain customers), understand the regulatory environment and navigate opaque insurance products. Left unmanaged, partnerships do not work as well as expected.

The report titled Insurer-Startup Partnerships: Key Success Factors presents the feedback of 89 insurers and 78 insurance-focused startups from online surveys regarding best practices in partnership management. The major finding is that the two groups are generally aligned in terms of the importance of insurance innovation, but that there are key challenges related to initiative definition and accommodation of different cultural norms that must be addressed.

It will take time to work out the best ways to accomplish this new partnership model, but the barriers faced by both sides will force each to adjust. An analysis of survey results indicates that success will be improved by recognizing the following:

  • Cultural alignment and a shared vision are key.
  • Startups perceive that they are being more disruptive than they actually are.
  • Leaders of innovation initiatives must seek and implement bridging activities that join the two worlds.

Success will come to those insurers and startups that can make the necessary adjustments to their own preferences, cultures and working models to create meaningful partnerships.

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