Fu­ture of Pol­icy and Un­der­writ­ing

Digital Insurance - - STRATEGIES - Cara McFar­lane So­lu­tion Mar­ket­ing Man­ager Cara.McFar­[email protected]­land.com Hy­land

Re­ac­tive to proac­tive: the chang­ing roles of pol­icy ad­min­is­tra­tion and un­der­writ­ing

We of­ten talk about how the in­sur­ance in­dus­try is rapidly chang­ing. How in­sur­ers who have em­braced dig­i­tal trans­for­ma­tion are be­com­ing dig­i­tal hun­ters, pre­par­ing for the fu­ture, search­ing for – and find­ing – so­lu­tions that in­te­grate with mod­ern pol­icy ad­min­is­tra­tion sys­tems and busi­ness ap­pli­ca­tions while also ex­tend­ing legacy sys­tems. So­lu­tions that sim­plify in­for­ma­tion ac­cess and con­trol, breathe new life into out­dated legacy sys­tems, and keep in­for­ma­tion se­cure. A quick Google search turns up so many new sto­ries about In­surTech start-ups it makes your head spin and your smart­phone stor­age reach ca­pac­ity. They all touch on the same top­ics. How cloud com­put­ing, the In­ter­net of Things, ad­vanced an­a­lyt­ics, telem­at­ics, GPS, smart­phones, con­tent ser­vices plat­forms, drones, blockchain, ar­ti­fi­cial in­tel­li­gence – the list goes on and on – how they are all fu­el­ing this up­heaval of change and, in many cases, mak­ing the world of in­sur­ance ex­cit­ing. In­no­va­tive prod­ucts and ser­vices are pop­ping up all over. Con­sumer-cen­tric tech-en­abled of­fer­ings in­clude pay-per-mile auto in­sur­ance (Metro­mile), crowd-sourced peer-to-peer in­sur­ance pools (Friend­surance), fast and low­cost renters and home­own­ers in­sur­ance (Le­mon­ade), on-de­mand ride- and home-shar­ing cov­er­age (Slice), life in­sur­ance tar­get­ing younger con­sumers (Lad­der) and even by-the-flight drone cov­er­age ap­plied and paid for on­the-spot through the cus­tomer's smart phone (Ver­i­fly). The good news for in­sur­ers is that the right tech­nol­ogy can help them keep up with the com­pe­ti­tion, and, in many cases, leap frog com­peti­tors to be­come dig­i­tal dis­rup­tors them­selves. The chal­lenge, how­ever, is that there is a lot to keep up with, most no­tably pres­sure from cus­tomers, who ex­pect some­thing vastly dif­fer­ent from in­sur­ers than pol­i­cy­hold­ers did in the past.

What cus­tomers want to­day – and what they will want in the fu­ture

Cus­tomers' needs and ex­pec­ta­tions are chang­ing. Gone are the days when pol­i­cy­hold­ers in­ter­acted with their in­surer when it was time to re­new or file a claim. To­day, in­sureds want a per­son­al­ized in­sur­ance ex­pe­ri­ence and ex­pect on-de­mand ser­vice, from the mo­ment they re­quest a quote to the res­o­lu­tion of a claim. The promi­nence of so­cial me­dia in the daily lives of Mil­len­ni­als – and Gen Xers and Baby Boomers – fu­els those ex­pec­ta­tions. More than 90 per­cent, ac­cord­ing to re­search, en­gage with so­cial me­dia reg­u­larly – 22 per­cent of Amer­i­cans do sev­eral times a day. Com­pa­nies with which they have a per­sonal con­nec­tion are of­ten in­cluded in their so­cial me­dia cir­cles. If they don't fol­low the com­pany di­rectly, they may fol­low their lo­cal agent, a com­pany rep­re­sen­ta­tive, or even a mas­cot (Flo, Pro­gres­sive In­sur­ance's fic­tional spokesper­son has nearly 50,000 fol­low­ers on Twit­ter). More­over, when they send a tweet, 53 per­cent ex­pect a re­sponse within an hour. If they have a com­plaint, that num­ber jumps to 72 per­cent, ac­cord­ing to re­search from Mill­ward Brown Dig­i­tal, com­mis­sioned by Lithium Tech­nolo­gies. “When com­pa­nies don't meet these lofty re­sponse ex­pec­ta­tions, 38 per­cent feel more neg­a­tive about the brand and a full 60 per­cent will take un­pleas­ant ac­tions to ex­press their dis­sat­is­fac­tion,” study au­thors write. Bet­ter communication with the cus­tomer – and faster in­no­va­tion to meet their needs, es­pe­cially when it comes to book­ing new busi­ness and an­swer­ing pol­icy ques­tions – is at the very heart of dig­i­tal trans­for­ma­tion. It is what it will take to be a suc­cess­ful in­surer in the 21st cen­tury. All at once, ev­ery cus­tomer in­ter­ac­tion be­comes a chance to win or lose fu­ture busi­ness. To­day's con­sumers are look­ing for poli­cies and prod­ucts that res­onate with their per­sonal needs. They want a sin­cere re­la­tion­ship with their car­rier. Car­ri­ers should want the same, so they can an­tic­i­pate needs and com­mu­ni­cate changes - both good and bad - be­fore cus­tomers ask ques­tions.

Why pre­par­ing your in­sur­ance com­pany for the dig­i­tal fu­ture is so im­por­tant

For the mod­ern in­surer, this is a chal­lenge. Where the in­dus­try was once con­tent with a slow ap­proach to tech­nol­ogy adop­tion, dis­rup­tion from al­ter­na­tive providers en­ter­ing the mar­ket sug­gests slow-and-steady will not win the race.

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