It is an exciting time for the Insurance and InsurTech industry. Ahead of the Global InsurTech Summit on April 28, FinTech Global spoke to some notable leaders in the industry on what areas are most exciting, the technologies that are being implemented, and what they would like to see from the industry.
What areas of insurance are companies most interested in?
Lori Pon, director of claim strategy and innovation at The Auto Club Group (AAA), recently attended a JD Powers Claim Satisfaction Survey debrief meeting, in which the primary issues impacting customer experience were revealed to be speed, convenience and overall frictionless service. “With this in mind, the area of InsurTech that is most interesting are technologies that reduce or eliminate customer friction and effort and leveraging predictive AI to drive better outcomes,” she said.
To this end, some InsurTech and insurers are shifting their focus from a detect and repair strategy, to a predict and prevent strategy instead – this is particularly taking off in the auto insurance market. Pon said she is excited to see this shift. AAA is offering its telematics-based product, AAADrive, to customers who purchase an AAA membership. Through the AAA mobile app, the product measures driving habits and produces a safe driver score. Pon said this will improve the safety of our roads as well as provide additional member value such as providing insights into the driving behaviours of young drivers.
Global analytics provider Verisk is also looking to reward customers who drive safely with discounted rates. The company partnered with Ford Motor Company to offer standardised insurance-ready connected car data in Europe, with the aim of assisting insurers with assessing driving behaviour. Tech-enabled financial services company Buckle also partnered with Cambridge Mobile Telematics (CMT) to bring its telematic platform to gig economy drivers. CMT’s DriveWell Score provides safe driving measurement and fast feedback through an online app, with discounts available for careful driving behaviours.
George Beattie, head of incubation underwriting at specialist insurer Beazley, said he is mostly interested in InsurTechs addressing new markets, whether that is by geography or by the type of buyer, particularly in an embedded context.
For example, Beazley partnered with Gaia, an InsurTech offering an insurance and financing product for those undergoing IVF treatment. The startup, which recently closed a $20m Series A round led by London’s Atomico, aims to offer accessibility, transparency and community for people undergoing IVF treatment. The Gaia model means that those who do not have a live birth pay lower costs for the treatment, and those who do, spread the cost of their total treatment cycles into monthly payments.
Another good example of an InsurTech addressing new markets, is US-based Roamly. The company offers “travel enthusiasts” embedded RV insurance products, but recently, it also launched a pet insurance productspecifically tailored to the 78% of Americans who travel with their pets each year.
What technologies are insurers implementing?
AAA has a myriad of technologies it is looking to implement or is already implementing. This includes enhancing payment options with more real-time and virtual methods, such as push to debit, VenMo, CashApp, and PayPal. AAA’s Pon said, “Speed to payment is an area that has a major impact on NPS [net promoter score, a measure of customer satisfaction], the overall customer experience, and claim cycle time.” She added that AAA has a “great relationship” with its FinTech partner to facilitate this.
Other technologies the insurer is keeping its eye on is leveraging AI to aid decision making processes. For example, deploying AI or machine learning algorithms to evaluate the appropriate vehicle inspection method based on year, make, model, and impact point to determine whether a car is repairable, borderline, or a total loss. The company has also implemented virtual claim processing to improve cycle time, customer experience, and triage. This includes photo estimates, virtual inspections experiences and AI-enhance appraisal.
InsurTech Tractable is also leveraging AI, the company launched an AI solution that can access a vehicles external condition and damage. It has since partnered with numerous insurers such as Root Insurance and PZU, to deploy the technology in the claims process.
Genoveva Pérez Lijó, head of global customer segments at B2B2C insurance company Allianz Partners, said the company is predominantly interested in improving customer journeys, API connectivity, and data management. “I believe we are quite advanced in the implementation of the usual technologies in the insurance industry.” At the end of 2021, the company entered into an agreement with London-based InsurTech Cytora to enhance its commercial insurance business with AI-based digital risk processing solutions.
For Beazley, Beattie said, its focus is to work with InsurTechs that have an expert grasp of their target market and the technology needed to distribute within it, and hence to complement that with its own insurance knowledge and capacity. “This means we have less appetite for technology solutions looking to embed into our current products and tech stack, because our role is to discover, develop and underwrite solutions that the market hasn’t seen before,” he said.
What are the challenges ahead and how can InsurTech help solve them?
AAA’s Pon said a key insurance challenge it faces is customer transparency. “Customers want transparency into the process and for their insurance company to keep them proactively informed and expectations set throughout customer touchpoints,” she said. Technologies can be explored to achieve this. Pon likened the processes to how Domino’s Pizza has a ‘Pizzometer’ that tells the customer when the pizza is being made, when it goes in the oven and when its ready to be picked up. InsurTech can be leveraged to set expectations and proactively notify the customer throughout the journey.
Another challenge the insurance industry must step up to is the increasing frequency of natural disasters. Pon said the industry must improve analysing and predicting natural disasters, catastrophic events to assess, avoid, mitigate and better price risks. Indeed, this is something that is well underway in the industry and more partnerships are emerging with natural disaster solutions in mind. ICEYE, an expert in natural catastrophe (NatCat) solutions, received an investment from Tokio Marine Holdings to develop insurance products. Also this year, GeoX, which supplies geospatial data to insurers, partnered with P&C insurer Sompo Holdings to develop AI-based automated underwriting platforms.
AAA’s Pon said that the use of AI and automation from InsurTech could also help to combat some of the industry’s challenges surrounding efficiency and the claims process. Automating the transactional, she said, will allow human talent to focus on empathy, engagement and more challenging tasks. Moreover, AI-enabled, human assisted claims processing can also be leveraged. She said the industry should ask, “How can we blend tech in a reimagined way when it intersects with traditional ways or working or complex processes? Technology can be leveraged to identify the next best action.”
One InsurTech who is acting upon this advice is Tractable with its AI tool for auto insurance claims. Poland’s oldest insurer PZU recently signed a deal with Tractable to leverage the AI tool to speed up its vehicle damage assessment process. Global data analytics provider Verisk also set out to streamline its auto claims process, by acquiring InsurTech Automated Insurance Solutions (AIS). The acquisition included AIS’s flagship solution BAIL, which provides automated assessment and analysis of motor accident liability. The solution provides accident information including Google Maps integration for location and weather at time of incident, local highway code, case law and imagery, together with a forecasted liability outcome.
More generally, Beazley’s Beattie said the industry needs to deliver more breakthrough innovation. “We need to fight the urge to reconstitute old news as new innovation – we should be asking ourselves ‘how have we succeeding in closing the protection gap this year?’”
To do this, he continued, companies need to think about how they can cut bureaucracy around innovation while maintaining healthy oversight – therefore removing the disincentives to innovation. “This is something the insurance market has always struggled with: the conflict between the conservatism of the insurance mindset to ‘keep to what you know’ and the economic reality, which is that if we continue to trade the same products we have for hundreds of years and fail to address the gaps in modern insurance, we will continue on the current downward slide to redundancy.”
What do insurance leaders want to see from the industry?
Allianz Partners’ Pérez Lijó said she would like to see the industry pursue improved customer experiences and focus on services rather than insurance. She said the industry is currently facing the challenge of orchestrating different platforms and data sources to provide a single unique customer experience, whilst also navigating increasing regulation.
Beazley’s Beattie champions an explorative attitude. “I think the industry needs to fund the investigation and underwriting of new products on an exploratory basis – not because we are certain that something will work, but that we have enough understanding to believe it may be of value to the buyer and the offeror.
“We have to allow our innovators to fail and to treat those failures as learning experiences. I would like to see insurers investing in talent and removing barriers to innovation, such as reporting silos and management buy-in. In a market increasingly defined by homogenous products forcing companies to compete at scale and in which value is being destroyed (many insurers are not earning their cost of capital- according to McKinsey), we need to reinvent what our service looks like and how we are relevant to buyers.”
AAA’s Pon said she would like to see greater collaboration across the industry to solve critical issues. This includes partnerships across the industry to deliver innovative products, such as embedded insurance, pay-per-mile insurance, parametric offerings, and behavioural-driven incentives.
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