Transformation is the new normal, particularly in the insurance industry. Staying relevant to customers and keeping up with peers and a new army of challengers will test the mettle of even the most seasoned of insurance executives. 2018 brought profound change. In 2019 the game gets faster and much more challenging. Here are three predictions for the year, courtesy of Seth Rachlin, Ph.D., Executive Vice President and Chief Innovation Officer, Insurance at Capgemini.
- Rethink: Operations
Smart insurers will rethink operations in 2019, focusing on how they process claims, service policyholders and engage more continuously—not just sell—with a 360-degree mindset.
Artificial intelligence (AI) and machine learning (ML) are evolving by leaps and bounds and are revolutionizing both the front and back office. Bots are doing more and more of the work behind core operations. And with machine learning, they are only getting smarter. A laser focus on back-end efficiency is now table stakes in an increasingly competitive landscape. And customers benefit too—from faster turnaround times, better service interactions and lower premiums.
The rise of the bots has organizational implications as well. Insurers will need fewer processors and more orchestrators trained in the new technologies and adept at re-imagining the value chain. The age of touchless claims, seamless servicing, and on-demand coverage is around the corner.
Claims is the key focus. As both the area of greatest expense and the most important customer touchpoint, it is a natural priority for automation and re-invention. Insurers are already using AI to estimate auto damage from pictures, adjust roof repairs from drone imagery, and process handwritten claim forms with next generation OCR machines. Others are even talking about a world where new technologies enable them to pay claims before they are even reported.
- Rethink: Product
Slower to change, but a key area of focus is the insurance product itself. A connected world powered by millions of smart devices demands a rethinking of the core insurance promise—protection and risk mitigation.
A full reimagining is in order. Products that addressed the needs of yesteryear cannot match the expectations of customers today. Look for big things with smart homes. How can this implementation of AI and ML in our personal lives enable insurance that is there for you before something bad happens? How can insurers move from payer to protector? How can they provide a sense of comfort and awareness to customers before a need ever has to arise?
On the commercial side, buildings monitored by sensors and other devices can enable a reduction in claim volume. The global smart building market is projected to grow from an estimated USD $7.42 billion to USD $31.74 billion by 2022, according to a study by MarketsandMarkets, so this trend is only getting bigger. Smart buildings are just one way insurance will transformation from payer to protector.
On a more personal level, John Hancock is continuing its commitment to use AI to enhance its product. Their Vitality behavior change platform rewards customers by reducing their premiums as their activity goes up, for an average savings of 15%. This is just one shift by a major provider that is harnessing the power of the latest technologies to reduce costs while helping their customers make positive changes.
- Rethink: The CX
The two trends above are important without question. But clearly and most critically, it’s customer experience that defines the new competitive playing field.
Contemporary customers insist on a seamless experience. The new technologies whether simple solutions like AI chatbots, or complex solutions like deep-data analytics in near real-time when well executed can drive higher levels of engagement.
Poor execution risks a cold experience. The points of engagement must feel fresh, convenient and familiar amid their daily lives. Not surprising that insurers are rushing to deploy Alexa-based skills to enhance the mobile voice experience.
In this age of automation and digital transformation, it is easy to fall behind. Our 2018 World InsurTech Report noted that automation and AI will allow companies to systemize across layers, and there are some already attempting to seize such an opportunity. Of incumbent insurers, 67% said they could “redefine customer experience.” Almost 96% of insurers replied they were actively looking to collaborate with InsurTech firms, primarily with a partnership and SaaS approach. These are moves in the right direction.
If companies do not join the wave of change, they risk being left behind to witness more agile entities reap the rewards on the digital age. The industry as a whole simply will not wait, and neither will your customers.
Seth Rachlin, Ph.D., is Executive Vice President and Chief Innovation Officer, Insurance at Capgemini, a global leader in consulting, technology services and digital transformation. For more information visit https://www.capgemini.com/.