How are insurers staying on top of their game?


In an increasingly challenging yet competitive market, how is the insurance industry holding up and what are insurers choosing to prioritise?

According to Tom Chamberlain, vice president customer and consulting at SaaS platform for insurer hyperexponential, there has been a huge emphasis in the insurance industry lately on data. “It’s all about data,” he said, “the emphasis is on increasing data and analytics capabilities to enable insurers to stay competitive in the current fast-moving risk landscape.”

David Da Costa, CEO at insurance software company Risk Control Technologies (RCT), concurred. He said that RCT has recently seen companies focus on projects that are low-risk, high impact, and are able to digitise processes and data. “The future leaders of the industry will be determined by those who can access the highest quality and quantity of data and any project undertaken must be able to adapt and grow after implementation,” he said.

As part of this drive to improve data capabilities and hence stay competitive, there have also been many partnerships in the industry. hyperexponential’s Chamberlain said this is because InsurTechs are helping to accelerate technology and data transformation in legacy insurance companies, “We are seeing more partnerships across the ecosystem between InsurTechs and legacy insurers for data ingestion and analysis.”

Although harsh economic conditions globally mean some companies have struggled to raise funding, Chamberlain said company’s investments in technology seem to have increased. This, he said, demonstrates that insurers are taking advantage of their options to help them be more data-driven.

Innovation and customer-centricity

Jenny Cohen Derfler, co-founder and CEO of travel and medical InsurTech Air Doctor, said the three key focus areas of insurance companies recently have been digitalisation, personalisation, and embedded insurance.

Not only are InsurTechs stepping up to the data challenges by partnering with incumbents, Derfler said they are also levelling up these three areas. “As more and more insurance providers continue to seek out and keep up with this level of innovation, more and more InsurTechs will be able to continue to help build and improve the insurance landscape,” she said.

Digitalisation, personalisation and embedded insurance form part of the greater overall drive to provide a better experience for the customer.

Rob Frederick, president & COO of Zinnia, a provider of end-to-end insurance software solutions, said strong customer relationships are the future. “The days of selling a policy and having limited to no interaction with the customer again until a benefit is requested is a relic of the past.”

Carriers understand the importance of building stronger relationships with customers, having ongoing touch points, and offering more than a payout, Frederick continued. This ongoing engagement can also generate returns in the form of upsell/cross sell opportunities, brand loyalty, and an increase in referral business, he added.

RCT’s Da Costa said that this ability to interact with customers successfully, especially outside of claims, will be a key differentiating factor. “Projects must always have a direct impact on the customer experience and provide a personalised touch,” he said.

Moreover, it is important to keep a personalised touch with increasingly digital experience. “As the world goes digital, those experiences need to continue to have a human touch and be tailored for their account and situation. Typically, customer interactions are only through claims, but the ones that can expand that reach will be the ones that will be the most successful at attracting and retaining their customers,” he added.

Shifting mindsets

It has also become apparent that many insurers are shifting their risk approaches to be more preventative. This is most prevalent in the cyber insurance industry. Melanie Hayes, cyber insurer KYND’s chief marketing officer, said that insurers and insureds have shifted from a “once-a-year box-ticking” approach to more continual proactive cyber risk management.

An InsurTech, such as KYND, enables early engagement and collaboration with the organisations that goes beyond traditional pre-submission preparations and fosters a more proactive risk management.

Hayes added that there has also been an increasing trend towards reviewing a business’ ESG (environmental, social and governance) performance as one of the indicators allowing their access to the cyber insurance market.

“In today’s business world,” she said, “ESG considerations are critical for legal, corporate and financial risk assessment to ensure business sustainability. Cyber risk is no longer a mere technology issue, but a business issue that must be considered and managed as a critical part of an organisation’s ESG strategy.”

A host of obstacles

The challenging economic, political and global environment this year thus far has created a climate of uncertainty for many businesses.

Zinnia’s Frederick said in the life and annuities business this is no exception. He said that whilst the sector is used to volatile market cycles and benefit from longer return time frames than other industries, the unpredictable nature of the future has made it hard to make decisions about where to invest.

At the same time, he continued, it has become clear that the piecemeal solutions most carriers adopted to stay in business during the depths of the pandemic need to be re-evaluated, consolidated, and integrated into a larger digital strategy. “There is little chance that we’ll return to the same pre-pandemic sales models, and that some combination of digital and advisor-led interactions is now the new norm.”

Air Doctor’s Derfler agreed that the past few years, including 2022, have been particularly turbulent. “From the impact of the pandemic, to the Russia-Ukraine conflict, and rising global inflation, there has been a host of obstacles” she said. “But for an industry that’s experiencing quite a few intense hurdles, there is also something to be said about the incredible leaps and bounds it has made towards innovating and implementing sustainable products.”

According to RCT’s Da Costa, limited resources and project capacity is making it difficult for insurance organisations to achieve their digitisation objectives. “The biggest challenge remains how to prioritise all these important projects. Trying to balance the top priority projects, with the lowest risk projects, while getting the fastest time to value for multiple departments. This is no easy task!”

Reducing claims is the most direct way of impacting the bottom line, he continued, however finding ways to do this is becoming increasingly difficult. “The industry is continually battling the objective of lowering loss ratios to maximise profitability. Everyone mostly agrees that aggregating high volumes of critical data and then using sophisticated analytical tools and skilled people are the answers. But the question remains, how will they execute this,” Da Costa said.

The data challenge

hyperexponential’s Chamberlain said that one of the most pressing challenges for the industry currently surrounds making use of the vast amount of data that now exists.

In fact, he said that 90% of all the data in the world was created in the last two years. According to Statista, there will be 13.1 billion IoT devices by the end of 2022 and up to 29.4 billion by 2030. “As an industry that relies on data to model the future, this is excellent. However, turning what is now over 90 zettabytes per year into something meaningful is where the challenge lies.”

Every insurer has been using data for many years to price and underwrite, but some are more successful than others. According to Chamberlain, this all comes down to how well they analyse their data. Many actuaries and underwriters still spend vast amounts of time attempting to ingest and analyse data from multiple sources. “Looking to the future, insurers need to leverage technology to support data management and processing, freeing up actuaries and underwriters to focus on analysis.”

For RCT’s Da Costa, the key is understanding which data is most beneficial and can be used across the organisation. “For the industry to evolve,” he said, “it needs to have a better understanding of the hidden sources data that have been overlooked for years that can need to be leveraged in decision making and ultimately the bottom line.”

Despite the myriad of challenges the industry faces, Zinnia’s Frederick said that savvy carriers perceive these as opportunities. He said they may ask themselves, for example, how can we make consumer interactions and ongoing engagement with carriers a more seamless experience? Or, how can we support advisors through a new sales model and enable them to write more business? And for carriers, they may be asking themselves, how can we improve efficiencies in the back office while also generating actionable insights for the business?

Similarly, Air Doctor’s Derfler was also keen to highlight the positives, despite the challenges experienced in recent months. “As a whole, the industry focus seems fairly fixed on providing more value to customers and leveraging technology to streamline both internal and external channels to do so.”

Looking ahead

Looking to the end of the year and into 2023, Air Doctor’s Derfler said she would like to see insurance companies continuing to partner with InsurTechs and non-insurance entities. “Only by working together can we ensure the industry, and its products remain valuable, accessible, and relevant,” she said.

hyperexponential’s Chamberlain said insurers should continue to look to invest in automation technology. “The industry is still largely dominated by manual processes and data rekeying across what seems to be an increasing number of systems and spreadsheets, resulting in a waste of valuable time and resources,” he said.

However, with the right technology, he continued, automation and integration are made easy. “API connections and web scraping eliminate most manual entry and rekeying. Insurers can also take this one step further by leveraging technology to automatically ingest broker data and upload it to the pricing platform, getting risks ready for underwriting in no time and eliminating data entry altogether.”

According to Zinnia’s Frederick, the most important element for insurers is that they possess a willingness to change. This is already evident for many. “Not to change the business of insurance, much of the work is prescribed by core processes that aren’t going anywhere as well as regulatory factors. Rather it’s a willingness to change the experience of insurance, and we’d like to see this continue to grow through the end of the year as carriers plan for the future… there should never be an expiration date on progress.”

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