Missed a Data Summit session? Watch on demand here.
This article was written by Jason Paau, Senior Director of Program Management at digital consultancy Publicis Sapient.
As in other sectors, the pandemic has triggered a digital acceleration in the insurance sector, allowing some insurance technology (insurtech) startups to benefit from their agile and innovative digital-focused offerings. Lemonade, for example, introduced a new car insurance offering, bolstered by the acquisition of insurance startup Metromile. Instead of watching these small insurance startups continue to jostle, pivot and grow, traditional players need to seize this moment to leverage the power of their brands and take ownership of the inevitable industry disruption.
Big players need to adopt a more innovative and digital – and fast – mindset. While they have their competitive advantages, including scale, resources and trust, incumbents need to improve their customer service and advanced data analytics and better leverage digital platforms. The insurance industry, particularly in the P&C category, has not changed much over the past few decades. We also see large amounts of capital continuing to flow into insurance technology. The opportunity is huge for traditional insurance companies that embrace innovation — and the potential irrelevance for those that don’t.
Apps and platforms are the future
In our recent insurance survey, we found that the top reason for switching providers was customer experience, which outweighed concerns about price or even coverage itself. Specifically, consumers want faster claims, better digital experiences, and more personalized offers. With more than 26% of respondents saying they have switched providers in the past year, these concerns send a strong message that can link digital transformation to customer retention. Additionally, 48% said a particular incident of poor service motivated them to switch providers.
Businesses can improve customer service and satisfaction by modernizing their platforms and applications. Combined with an innovative culture and a strong ecosystem of digital partners, key activities such as onboarding or filing complaints can be personalized, simplified and accelerated. Seamless experiences, especially across digital platforms and channels, are key to retaining and growing business. In fact, we found that while only 55% of respondents currently rely on insurance company apps to make and receive claims process updates, 93% cite apps as their future channel for preferred communication.
Applications should allow for video and photo communications, as well as voice calls and messages, as well as easy access to past customer communications, claims, data and coverage details in one place. For example, an insurance company app could give customers a list of nearby authorized auto repair shops after an accident, as well as provide regular garage updates when a car is in for repair. Some companies are building SuperApps as a controlled gateway into the ecosystem of customer needs, especially in Asia, where these apps are increasingly part of everyday life. Companies must constantly review their digital strategy to determine how best to meet the changing needs and expectations of their customers, reflecting the simple and convenient experiences that customers are accustomed to in online banking or shopping.
Using Data to Navigate Instability for Assurance Reliability
At a time when customer behavior is changing so rapidly, when more and more users are looking for insurance coverage they can trust, traditional insurers can benefit from their heritage of reliability. But at the same time, insurers must also embrace new sources of data and new methods of analyzing data to ensure that risk is understood. Leveraging telematics for driver habits, IoT sensors for home protection, or weather data to inform localized risks in specific areas are all examples of using data to inform better assessment. Insurers taking advantage of this greater data offering also need to think about the value exchange for the end customer. Consumers expect organizations using these new types of data to provide benefits in return, such as optimal and personalized coverage, and premium discounts based on personal driving habits or responsible uses of connected home appliances. . As premiums rise, insurers will also increasingly need to provide data to justify the price change to consumers. This protects insurers but also guarantees customers optimal coverage.
Data is also essential for improving customer service, including the onboarding process for new customers and the complaints process. Automatically importing approved customer information via APIs or interfaces from customers’ other online services, including their bank or social media accounts, can significantly improve issues such as manual information entry, the creation of user profiles or the provision of signatures and documents.
When it comes to improving the claims process, again, data will play a central role. Properly organized and used, data can help speed up the claims process. We found in our survey that late payments were the most frustrating aspect of the claims process. To speed this up, all relevant applicant data should be accessible in one place, similar to how Salesforce and Epsilon offer a one-stop shop for data profiles. Insurers can also integrate other technologies, such as replacement auto parts pricing databases, to avoid overpayments.
Insurance company platforms will also need to absorb and use real-time data; for example, with the rise of connected cars, vehicle sensors can immediately send damage information for assessment moments after an accident or other incident. Drones and cellphone video footage will also provide immediate and key data for assessment, replacing some tedious and time-consuming inspection processes now required to assess damage. These new data sources and data integration platforms will make the claims process more efficient, saving time and money for customers and insurers.
Humans and AI working together
In the race to leverage new digital capabilities and applications for competitive advantage, it’s important to remember that insurance remains connected to the physical world and human emotion. Technologies that can “read” the world, such as AI and computer vision, hold particular promise for industry to speed up assessment and adjustment processes. By leveraging data sent from sensors, IoT devices, or other sources that store information such as a data lake, insurers can quickly create not only a damage report for a home or car, but also a estimate of repair costs and an appraisal indicating whether the damage is covered by insurance.
At the same time, insurers should not fall into the trap of relying on so-called black box models of machine learning, where humans do not fully understand how computers arrive at answers. Insurers must also ensure that data is relevant and up-to-date, not outdated, and understand its origins. Data governance and understanding data lineage are key to avoiding ethically or legally questionable practices. After all, insurance company decisions affect people’s lives, so the process must be fully understood based on appropriate and legitimate data sources that consumers and insurance companies are fully aware of.
Many people also want reassurance and human support when filing a claim. This too can become more efficient; behind the scenes, AI and data sorting can quickly identify and prioritize customers most in need of human empathy, as well as service, and direct them to the right person, while sending other complaints more simple through automated AI-assisted processes. Such a hybrid approach to complaints handling and customer service will allow companies to maximize talent and technology while meeting different customer needs with the right resources.
There is no doubt that implementing such technologies and uses of data requires significant upfront investment, one of the main reasons why digital transformation has been relatively slow in the insurance industry. Teaming up with insurtechs that are often based on such AI technology can be an effective and immediate way for some established players to implement more data-driven processes and decisions. Whether they’re partnering with startups or growing their own operations, using data and AI, along with the right safeguards, will add tremendous value by saving time and money. and creating smoother customer experiences.
If there ever was a time when established insurance companies needed to evolve to meet customer needs, it’s now. With an increase in claims and the rise of insurtech companies, they can no longer rely on their resources, size or confidence to maintain the status quo. They can build on these advantages to maximize the benefits of data and technology and take assurance – and customer experience – to the next level.
Jason Paau is Senior Director of Program Management at Digital Consulting Publicis Sapient.
Welcome to the VentureBeat community!
DataDecisionMakers is where experts, including data technicians, can share data insights and innovations.
If you want to learn more about cutting-edge insights and up-to-date information, best practices, and the future of data and data technology, join us at DataDecisionMakers.
You might even consider writing your own article!
Learn more about DataDecisionMakers