You can’t attend an insurance industry event anymore without mention of InsurTech, chatbots, robotics, artificial intelligence (AI), or any combination of the above. I have been in the insurance software business for over 20 years and I finally knew we were onto something when they came up with the name InsurTech; we are finally trendy, and I have lived long enough to see it.
David Tuffley described a great futuristic scene in a recent article, where insurance companies opting to use AI have a great sense of a policyholder’s complete lifestyle, through smart devices and their online activity, enabling them to provide a customer with more accurate policy premiums.
However, there has been a recent shift, particularly in the life and disability insurance arena, where it has become apparent that both claimants and policyholders still value human interaction, who’d have thought it.
Advice and Guidance for Life
I know that I personally am more than happy to do research online, using chatbots, quote generators, and forums for advice and guidance on coverage and the level I need at my stage of life. Now, for car insurance, would I be confident to purchase online without speaking to an agent? No problem! I’ve been purchasing car insurance for years, I know what to look for, and I always have last year’s policy details on hand to check for similar cover. But would I purchase a life or disability insurance policy on a website without confirming the details with an ‘expert’? I’m not sure I would unless we could create simpler products, but that would be heresy.
Every year I scan and email my GP bills to my health insurer for reimbursement, which is much easier than filling in paper files and submitting them by snail mail. But that’s because general insurance on items such as mobile phones, GP visits, or house repairs tend to be less emotional, easier to process, and policies are generally more standardized.
What about those policies that help to cover our livelihood? What happens when you discover you have a life-changing illness or your partner has sadly passed away, and you have to interact with a chatbot to log your claim online? Surely at such a difficult time, assistance from an actual person would be a nice touch.
But What about Tech Savvy Millennials?
Granted there are significant differences between demographics, with most millennials preferring to log a claim, submit documents and monitor payments using apps on their smartphones, or using online portals. Over dinner recently, my son (who fits into the millennial category) and I were discussing his health insurance plan and I innocently asked if he would like to call a person or log onto an app? He looked at me like I had lost my mind when he thought he might have to call someone for advice! However, I do believe that there will always be a small sample of the population that prefer to deal with more difficult life changes with human interaction, where compassion is valued.
When we imagine the insurance world of the future, we often conjure up images of robots, smart devices monitoring our every move, and a serious lack of human interaction. Rather than imagining a world controlled and run by robots, we need to imagine a world where technology improves our daily life.
For example, in the earlier scenario, when an insurer discovers that a claimant’s partner has passed away, automated tasks could be triggered to ensure an agent calls the claimant to offer condolences and help collect the required information.
For insurers, technology can significantly improve the customer experience in this type of situation, while increasing operational efficiency, without replacing the claims team. So, whether a claimant wants to speak with an agent or to access their information online, technology offers claimants the opportunity to choose their preferred option.
Where are Insurance Companies Today?
We know from talking to life and health insurers around the world that legacy systems, paper files, a lack of integration, and silos of data are still causing operational inefficiency. This often leads to issues with claims administrators having to access multiple systems to get information, or even worse, having to chase down paper files which can result in unsatisfactory customer experiences.
Some years ago, I met with an insurer, who shall remain nameless, in the Midwest and asked for a tour of their call center. I stood with an intake specialist, who had three screens on his desk, to see how he walked through the process. A call came in to log a death claim. He handled it very well; while talking to the claimant he checked one system to ensure that the policy was up to date, he checked the web for the death notice and scanned it, he logged a workflow task on another system, and finally created a correspondence package on another system. He was using five different systems to manage the claim process with no integration. He was very slick, but I was exhausted!
Moving to a modern cloud-based claim system is an excellent start to digitizing the insurance process. As a next step, insurance carriers can consider adding robotics to scan documents, implement chatbots to engage with policyholders, feed claim information to claimants via mobile applications, or even use AI in their underwriting to determine the level of cover a policyholder may require. All of these tools can significantly reduce the administrative burden on claims professionals, allowing them to focus on risk management by talking or interacting with policyholders and claimants.
The following two examples display how both established companies and newer market entrants are adopting InsurTech solutions today:
At the Life Insurance Forum in London, Robert Morrison, Chief Underwriter at AVIVA discussed how AI had improved their underwriting process so that 80% of claims are now automatically processed. The time an administrator needs to spend processing claims has significantly decreased, reducing overall business costs, while providing AVIVA with a superior competitive advantage. To me, this is an excellent example of how a traditional insurer has implemented an InsurTech solution today.
On the flip side, there are new market entrants such as Fabric which focus on specific benefits for specific segments of the market. Fabric offers new parents the opportunity to answer some simple questions online to obtain accidental death coverage, in as little as two minutes. However, to upgrade to a 20-year term life insurance policy, a policyholder can apply online but needs to schedule follow-up in-person medical testing.
Who knows where the future will take us - we may well be monitored by smartwatches, smart devices, car sensors, and be purchasing life insurance with no human interaction as David Tuffley outlined in his article. But for now, I think it’s safe to say that InsurTech will help improve human interaction, without replacing it.