Future of Policy and Underwriting
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 Solutions that simplify information access and control, breathe new life into outdated legacy systems, and keep information secure.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.