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Moving from a Traditional to a Digital Insurer for the Future

By Ketan Pandit, CIO, QBE North America

Ketan Pandit, CIO, QBE North America

The move to digital has been very profound over the past few years across a number of industries like retail, consumer products, banking, hospitality and travel. But what does being digital mean and most importantly in the insurance context?

Digital is all about getting customers what they want at a time and place of their choosing at their willingness to pay and in the process delivering a unique experience that makes them want more. Digital has its roots in automation, customer-centeric technology, analytics and platform driven interactions that provide a unique and on-demand customer experience. The digital revolution began with the convergence of social, mobile, analytics, and cloud technologies in an environment of decreasing bandwidth costs. What began mostly in the consumer products and retail space, very quickly became the standard for customer interactions across industries. The pace of digital adoption in Insurance has picked up significantly over the past few years.

To have a meaningful digital interaction with customers and their channel partners, what insurance organizations need more than good data is IT and marketing. They must develop a digital brand that is authentic and constant. Some of the key attributes of this brand are:

a. Engaging Customer Experience – Engaging with customers as a trusted partner with empathy as they navigate uncertainties in lives and businesses. To achieve this, insurers need to proactively and constantly offer products and services that are timely and useful, and that protect or compensate individual and business customers on their terms. A number of technologies like big data analytics, machine learning (ML), and software as a service (SaaS) platforms enable insurance carriers to provide this unique experience at a fraction of traditional costs. Two examples highlight this attribute effectively.

"To have a meaningful digital interaction with customers and their channel partners, what insurance organizations need more than good data is IT and marketing"

• Personal/Commercial Auto Mobile Apps – Mobile apps enable a one to one interaction between the insurance carrier and the insured. The entire life cycle of an insurance product offering is only a few swipes away. A simple click and upload of a driver's license picture and a few questions is all you need to procure personal auto coverage in many states in the U.S. This has significantly cut down the cycle times for procuring insurance. The same app provides a simplified customer experience while filing a claim. All it takes is a picture of the damage and a few questions to get the claim process going. Additionally, location based services like an UBER ride home can be offered based on the insured’s interaction history. Even though personal insurance is a leader in this space; the commercial auto insurance industry is not going to be far behind

• Drone-based Crop Insurance – Crop insurance typically involves survey of large tracts of land and measurement of soil and weather parameters for underwriting and claims. Up until the recent past, this was a cumbersome and time-consuming process through physical site visits. The use of internet of things (IoT) technology coupled with commercial advances in drone technology has not only shortened the cycle time but also provides accurate information for underwriting, pricing and expeditious claims processing. The fact base for decisions are exhaustive and quick at the same time which in turn reduces disagreements during the claims process. The same concept will expand to specialty-based insurance (inland marine, aviation, agriculture among other areas)

b. Intelligent Personalization - By understanding and anticipating individual customers’ and businesses’ needs, and having the ability to change products and platform features to meet these needs, digital insurers can deliver relevant, context-matched offerings at scale.

• Rapid advances in sensor technology has enabled many insurance carriers to offer usage based pricing for personal auto. In return for installing tracking devices in automobiles, carriers are able to price risk based on usage patterns at a fraction of the cost of traditional pricing models. The same concept is also catching up with commercial and specialty insurance in the areas of fleet management insurance and aviation.

• ML and artificial intelligence (AI) are helping personalize customer service interactions. Very often these days customers interact with chat agents who are truly digital. The so called chatbots are virtual agents powered by ML algorithms that are able to mine terabytes of customer information across multiple channels to anticipate customer questions and guide them through the service process. Something like this would have been impossible in traditional data centers if not for advances in cloud technology.

c. Credible Transactions - Like many financial service providers, insurers have a trust deficit to address. A digital insurer has to demonstrate their commitment at every moment of truth, across every channel and end-to-end from submissions to policy and claims. This includes responding to feedback, participating in social conversations, and ensuring employees ‘live’ the brand values at all times. Credibility is built by getting the basics right all the time.

• This means providing transparency in the all the processes, policies, and interaction expectations. Robotic process automation (RPA) and analytics-driven business processes provide for consistency in customer interactions which in turn enhance brand credibility.

• Ability to offer new products and services across the customers' life cycle – as new technology-driven life style evolves, new risks emerge that need innovative solutions. Examples of such risks include cyber insurance, driverless cars, insurance for digital virtual assets, sharing economy – bike/car share, Airbnb to name a few. To be credible, the digital insurer has to be able to scale up operations to address these needs in a timely fashion.

• Credibility should also be demonstrated in all aspects of transaction processing. Nowhere is this more pronounced than in areas of payments, disbursements, and claims validation information. Credibility of information in support of a transaction has been a key source of delays in claims processing. Getting near perfect information to minimize losses and keep the integrity of customer interactions is typically prohibitive especially across geographical or political boundaries. Advent of blockchain technology that establishes a common ledger for transaction processing increases credibility of transaction parameters and facilitates real time acceptance of claims related information across multiple parties.

The benefits of digital technology in insurance can only be realized through a new breed of people skills that make this change real for our customers. Our employees and partners need to be comfortable in the ever-changing New. An attitude of healthy skepticism to challenge the status quo is needed to evangelize these changes. New skills and attitude in people also call for some extraordinary leadership skills. A brand of Leadership that incents calculated risk taking, agility, entrepreneurship, and constant learning is critical to making this real for our stakeholders.

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