It’s been reported that the insurance industry has lost over $750 billion in market capitalization worldwide just over the past few years. As we’ve seen so often before in other industries, when major trends like this occur, big players in the industry are forced to shake things up and start planning new and improved approaches to their existing models and processes.
But what exactly is driving these current changes in insurance?
Let’s face it, right now in 2020, our industry is overwhelmed with change. From pandemics, to new insurance models; technology advancements to unprecedented weather patterns, change seems to be the word of the day. While it can be hard to keep up with all the latest news and trends that are happening in the industry right now, it’s not impossible if you’re willing to scour industry news – at the end of the day though, we’ve seen that most of the forward thinking in the industry seems to boil down to two big categories:
- Rapid changes in customer expectations
- Major shifts in technology
So what does this mean for carriers? And how and why should they look to their IA Partners for help in these changing times? In the following sections, we’ll break it down.
CHANGING CUSTOMER EXPECTATIONS
Across all sectors and industries, client expectations are shifting. And it’s a given, that companies who don’t react, and pivot to best meet these morphing customer expectations, are more likely to lose business to competitors who may be more prepared, or more welcoming of these shifts.
But how, and why are these changes even happening in the insurance industry? We think there are a few key trends related to customer success emerging, and offer some strategies to address them:
TREND 1: Evolving Customer Desires for Holistic Solutions
Several studies show that apart from price considerations, many carriers are finding that including adjacent, or even non-insurance offerings in addition to their core insurance product add incredible value to their offer, and stickiness to their consumer. These additions may come in the form of a variety of add-ons, such as
home security and smart home mitigation offerings for P&C
financial planning or wellness programs for the health and life sectors
car maintenance and roadside assistance offerings for auto.
Research suggests that these additions may be carrying heavier weight when consumers consider which providers to choose. As a result, many insurers are shifting from focusing on simply providing a product, to putting more emphasis on providing a more holistic and complete solution to their consumers.
For example:
Current trends towards fitness and the usage of technology to achieve it can help to inform the life and health markets. One example is life insurance start-up yulife, which engages with its customers by gamifying its platform, and offering clients rewards for staying active and engaging in various wellness milestones. For completing these tasks, the company offers its yucoin currency as rewards, which can be exchanged for vouchers at Amazon, Apple, Nike and various other retailers.
Ideally, this helps bring premiums down and reduces the costs of future claims by promoting and rewarding clients who actively seek a healthy lifestyle. It’s a solid example of how the industry is moving towards proactive prevention, rather than the classic model of reactive payments to cover losses.
How an IA Firm can help:
Many carriers have started looking at their IA firms outside of the traditional context of “just handling claims”. By doing so, they’re often able to leverage and test other offerings and better customer solutions like those above that might be too time-consuming or resource intensive to try to develop at the carrier level. Some examples of these types of claim-adjacent programs that forward-thinking IA’s have begun to offer include mitigation resources, managed repair partnerships, and housing placement services. Engaging with an IA that offers these types of services allows carriers to use the IA relationship as a test-bed of sorts, and to evaluate the impact on claim resolution and customer satisfaction that these services have, before bringing these them into the fold as an offering at the carrier level.
TREND 2: Forming More Meaningful Customer Relationships
As insurance purchases become less à la carte and more focused on the consumer journey, the usual ways of carrying out the business activities won’t cut it for long. Carriers are realizing they need to take a closer look at the relationships they’re building with their end consumer in new and different ways.
Put simply, “you must win at every interaction the customer has with your organization, whether that is a marketing campaign, a call to a contact center, an invoice, or a delivery reliant on the supply chain,” wrote Gartner Research Director Olive Huang. “Every department must play its part in a coordinated fashion.”
Say a consumer wants to buy a car, go on vacation, or buy a home. What methods can a company offer to help the consumer at every step of the way towards the goal? How can these new communications be integrated alongside or in lieu of the traditional sales process? More and more, companies are focusing on improving their overall customer relationships with their prospects, both before, during and after the sale.
Increasingly, one way that insurance carriers are doing this is by communicating how, where, and when the client wants. Consumers as a whole are becoming used to unlimited access to data, forcing carriers to think of new ways to allow consumers 24/7 accessibility to perform a variety of functions, such as downloading ID cards, viewing policy details, getting updates on claim status, etc., and allowing these actions across a variety of platforms, from phone to desktop to mobile.
Additionally, many younger consumers are communicating in whole new ways, with channels that are more increasingly focused on real-time, social, and mobile conversations, requiring many companies to come up with increasingly out of the box strategies on how to engage with consumers who grew up in the arms of today’s technology.
How an IA Firm can help:
Many IA Firms are embracing communication methods in their daily processes that could potentially be beneficial to their carrier clients as well. Examples include text and email notifications for a variety of events, from first contact to scheduling to progress updates. Additionally, some firms are even going so far as to make these communications a 2-way interaction, with smart, responsive text messaging making its way into the claim handling process as a way of better connecting with consumers. A company might text an insured for example, with four options for appointment times, and be able to track the consumers selection based on their response, and automatically set the time as well as notify the adjuster. Not only can this method of communication create a better connection with today’s technology focused consumers, but it also can cut costs in phone center staffing, and bring a speed to the process that allows the customer to immediately respond in cases where they may not have been able to take a phone call.
Changing Customer Expectations: Summary
As carriers compete to capture and retain their customers, the industry is shifting to a state where price may be just one of the determining factors for the new insurance consumer (on-demand and usage-based coverages being just some of the newest examples of this). Customer retention has always been front and center in the carrier’s strategy, but these new ways of communicating are changing the customer conversation. Coupled with the ability to quickly add additional non-coverage related offerings to their existing portfolio through IA partnerships, these new strategies give those who are embracing these changes a greater chance of being successful in standing out from the pack, as well as finding and retaining new customers.
CHANGES IN TECHNOLOGY
There’s no denying that advancements in technology are changing the insurance industry more than ever before. This is seldom more evident than when we look at the number of new marketplace players that are embracing technology as a core component of their business model. Many new-model start-up insurers rely heavily upon machine learning and artificial intelligence informed by industry data in their platforms, and often pair this with text and chatbots to deliver a new wave of customer service experiences for example.
These new entrants, some of which are backed by traditional insurers, typically begin with several competitive edges. They’re not tied to legacy technology that has been expanded, patched and built upon for years. They often have lower operating costs due to virtualization, automation or other reductions in parts of their model. Additionally, start-up companies that are backed by major carriers may also use the wealth of historical information provided by their parent companies to better inform their decisions. These advantages, combined with a lack of historical boundaries can enable them to innovate rapidly while also potentially offering lower rates due to cost controls, all without losing flexibility in their offers.
As a result, more than ever, traditional carriers are investing in data, analytics, and technology to keep up. However, to fully realize the benefits of this investment, carriers often must also figure out how to modify their models. This may mean testing new technologies for claim processing efficiency or to better the customer experience, investing in data analysis and machine learning to better understand and react to customer and industry trends, or shifting their talent strategies from deploying a large workforce focused on transactional policy and claim work, towards teams focused on high-value activity that is more technology-driven. These tasks can be far from easy, but there’s no doubt that the industry is moving in these directions. So, what can carriers be doing? As with the changes in customer expectations, we think there are a few key trends carriers can focus on to reap some immediate benefits.
TREND 1: Embrace and Realize the Value of Technology
Successfully adopting technology doesn’t have to be a haphazard or painful process. In today’s world, the plan for effectively utilizing technology is actually relatively simple:
- Identify a business process or outcome that can or needs to be improved
- Build a system or partner with a technology provider that provides a best-in-class solution for improving this process
- Implement and test the solution and its effectiveness
- Refine and iterate to get the best results
Keep in mind, that the above steps assume a level of business research, some potentially difficult internal company evaluations, and an amount of educated pre-planning that are necessary to make any technology solution successful. Its long been common practice for companies to identify and understand their operational pain points. What’s relatively new to the insurance industry are the sheer number of options to address these issues with technology. Whether your goals as a carrier are reduced cycle times, operational cost reductions in claims processing, or safety and satisfaction of your customers, there are most likely solutions available today that will help you achieve them.
From initial FNOL communications, to customer involvement throughout the claims process, virtual and/or remote adjusting, intelligent triage and decisioning, to automated Q/A and claim lifecycle management, the seemingly limitless number of new technology solutions available today is impressive. And these solutions all have one thing in common – a focus on helping the carrier succeed in successfully executing their claim strategies.
How an IA Firm can help:
As a carrier, we believe you should be actively searching for firms that are a step ahead of the curve, so to speak. Firms that have taken it on themselves to research, develop, and implement technology processes that you can immediately bring to bear on the specific issues you’re trying to address. The benefits of working with a forward-thinking firm are numerous. For one, IA’s are often inherently able to be more nimble than carriers, and can be used as a testbed by your claims department for trying out new technologies and experiences on a limited scale, while gauging the results before bringing these solutions into the larger carrier operation as a whole.
Additionally, the most forward-thinking firms may be offering solutions that are ahead of industry standards that carriers can benefit from. Recent examples of this include rapid adoption by IA’s during the peak of Covid-19 to virtual adjusting platforms, increased usage of consumer-friendly interaction and messaging as it relates to appointment scheduling and policyholder communications, and even automation and analysis of traditionally manual parts of the process such as estimate quality and Q/A, designed to immediately notify field adjusters upon estimate submission when potential errors or mistakes are found.
TREND 2: Building a Technology and Operations Ecosystem
An ecosystem is an interconnected set of entities, processes and services gathered into one integrated experience. Across multiple industries, technology and process ecosystems have emerged out of the need to help companies increase productivity, improve operations, and to give their consumers better experiences.
The insurance claims ecosystem is no exception. But what does this look like in practice?
For most insurance companies, implementing this new thought process will involve substantial internal analysis, research into the current needs and results of their processes and a fair amount of forward-thinking into where they think their specific roadmap is leading them. This journey will typically result in investments into reorganizing their operations and technology infrastructure into a more flexible, connected environment.
In this day and age, most companies are pivoting away from “one size fits all” or “we’ll build it ourselves” approaches, and instead concentrating on building out their core frameworks, with an emphasis on integration – allowing the utilization of best-in-class solutions for each module / challenge they face, whether that be an internal or an external resource. Indeed, the shift to external partners for key components of the operations process is benefitting large and small carriers alike, by allowing them to utilize both startups and established industry veterans who are subject matter experts, and then to reap the rewards of highly-specialized solutions to their specific issues, while still retaining control of the overall process.
How an IA Firm can help:
Many carriers have started looking at their IA firms outside of the traditional context of “just handling claims”. By doing so, they’re often able to leverage and test other offerings and better customer solutions like those above that might be too time-consuming or resource intensive to try to develop at the carrier level. Some examples of these types of claim-adjacent programs that forward-thinking IA’s have begun to offer include mitigation resources, managed repair partnerships, and housing placement services. Engaging with an IA that offers these types of services allows carriers to use the IA relationship as a test-bed of sorts, and to evaluate the impact on claim resolution and customer satisfaction that these services have, before bringing these them into the fold as an offering at the carrier level.
- Does it integrate effectively into our current workflow, or will there be manual processes?
- Is it extensible? Can they adapt to our changing needs? Can it be customized to fit any specialized processes we might have?
- Is it modern, and user friendly? Does it provide effective integrations with industry-wide estimating and other platforms? Are there API’s we can utilize?
- Are there additional features / benefits that this partner’s technology provides that we can use to improve our time / quality / customer success scores that we don’t currently take advantage of or can test?
Once you’ve asked and answered these key questions, you’ll be in a much better position to evaluate and predict the long-term success of your IA partners, and how they will mesh, and may indeed better compliment, your internal roadmap.
OVERALL SUMMARY
The level of change occurring in the carrier market is unprecedented. Their entire value chain is being tested by evolving customer demands, new market entrants, disruptive technology, and increasingly unpredictable weather patterns. Even the largest carriers are buckling under the quickly shifting expectations to stay competitive. It is during times like these that carriers must build a coalition of partners to solve, invest, build, and integrate the process and technology required to win.
At first it may seem unnatural to move away from the historical arm’s length relationship with your IA firms but who knows your customer better? Who already knows your current processes and technology? Who knows your industry better? Who already has a vested interest in your success? Who has the agility to move fast? The right IA firm is uniquely positioned to move from vendor to partner and help drive the carrier’s transformation. An IA partner can be a crucial change agent by:
- Delivering a differentiated customer experiences during a key moment of the relationship
- Providing critical insight into customer satisfaction
- Embracing new technology and process to quickly test new approaches
- Delivering early insight into local impacts of policy tweaks
- Investing in new technology for the benefit of the carrier
The key is to partner with the right firm. A lot of insurers may struggle to measure and generate value through their daily efforts. Another set of carriers has concerns with their technology planning, evaluation and future-state. But regardless, for any carrier to succeed, we feel they need to expend some dedicated effort into evaluating and defining their IA relationships:
To put this all into context, our position is that there are currently 3 tiers of IA firms in the industry:
We at IAS Claim Services take pride in defining ourselves as a Tier 3 player and remain committed to bringing added value into our relationship with our carriers. We continually invest our resources to ensure success and innovation, and are dedicated to making sure that our solutions are able to be customized to work within specific guidelines and processes, and to meet the desired outcomes for each of our carrier partners.
IAS believes that insurance carriers not only need, but deserve a trusted, consistent partner to support them through everything that the industry has in store for them. A firm that acts as a true partner and leader, helping to guide and inform them on how to best to keep up with, and indeed stay ahead of, emerging trends in the industry.
Ultimately, the role of the IA firm has changed already, and it’s those firms that have adopted and continue to stay ahead of the trends that will be the most successful – on both sides of the fence, both carriers and IA’s. As a carrier, it’s up to you to understand the importance of not just working with but partnering with an IA that will help shape your operations and lead the way into the future.
