February 3, 2020 by Greg Meckbach, Associate Editor
If you are not thinking about artificial intelligence (AI), changing the way you engage with customers, or getting better insights into the data that insurers have on your clients, you can bet that some of your competitors will be.
AI use will continue to progress in 2020, industry watchers predict. AI applications include natural language processing, automating labour-intensive tasks, and deciding which of your clients are too risky to underwrite, to name a few. You may have already run across this when placing commercial risks: if you are not thinking about AI, the decisions the computer makes could come as a surprise.
We put the following two questions to vendors, brokers and consultants: What major technology trends do you foresee in the property and casualty insurance industry in 2020? What new technologies will insurance brokers adopt in 2020? Here is what they told us.
Vice President, Financial Services
There is this whole concept of improving customer engagement and experience.
We are finding that in some instances, the turnaround time is going from days to minutes – getting quotes, getting approval, process it, and you’re done. A lot of insurance companies are starting to realize that they’ve got to pick it up. They are seeing threats from other market entrants with non-traditional business models – folks like Amazon, for example. So there is definitely some disruption going on.
Some are deploying what we would call artificial intelligence virtual assistants. In that scenario, you are taking the personal interaction out of the process, at least initially. You are making it more efficient and making it more self-serve from a client perspective. Your clients can ask questions, file a notice of loss, check on payments or claims status, get quotes – all of the things that would normally involve human interaction and taking a lot of time from start to finish.
These processes are becoming automated because insurance companies will have the ability to leverage these cognitive platforms. That’s a trend we are seeing.
National Sector Leader, Insurance
Brokers are trying to get better insights into the data that insurance companies have, such as telematics, for example.
It is conceivable that a broker would look at a client’s driving data, gleaned from telematics, and then call the customer and say something like, ‘If you change your driving behavior this way, you might get an opportunity for a better discount.’ As a broker, you would have the information available to you in terms of what the carrier is providing, but you are relying largely on the information from a historical perspective.
If driving patterns or things of that nature are available to you from an insurance carrier, better access to that information can provide the broker with a better opportunity to improve the underwriting experience for the customer. In addition, the broker would be aware of how customer behaviour is potentially influencing their underwriting experience, and ultimately the premiums on the policy. Obviously, however, there are privacy matters.
Senior Vice President, Strategic Marketing, Industry Relations and Innovation
Leading-edge technologies are going to change insurers’ traditional processes.
Traditionally, a client would submit an application. The underwriter would rate it, give the client a quote, and, if the client agreed, the policy would be issued. You bill it, you collected the premium on it, and then you collect a claim.
That linear process is not necessarily how real people live, nor does it reflect how a business operates. It doesn’t really allow for engagement of the customer – whether it’s a person or a business – in an innovative or digital way. New, leading-edge technologies could help create a customer experience to engage customers on a regular basis – not just when you quote them, bill them, or handle a claim.
We are going to see an intensification of that going into 2020. I don’t see it stopping any time soon.
Senior Vice President, Commercial Insurance and Risk Management
Centre for Study of Insurance Operations
Insurers are starting to invest in AI for underwriting. This is so new to the industry that I think it’s going to take us a few years to figure it out. In 2020, for the first time, we are definitely going to see a much greater influence of this technology.
For brokers it’s going to be quite an adjustment. This will be especially true in instances when a broker thinks a client is a good risk, and yet the application gets rejected by the computer – and even the underwriter doesn’t know why. This happened to one of my clients, who was ambiguously declined. I called the underwriter to understand why, and [the underwriter] admitted to me that she never saw the submission.
A recent report predicted 80% of underwriting will be done through AI and machine learning within the next couple of years. This will potentially reduce the number of underwriters by 50%; humans will only look at applications that end up in the “exception” pile. That’s going to be an interesting dynamic: now you are going to have insurers fighting over a much smaller piece of the pie.
As profit margins shrink and customer expectations rise, finding new ways to automate high-volume, repetitive manual tasks will be key for brokers.
Successful brokers will adopt intelligent workflows, powered by AI and natural language processing, to automate and digitize time-consuming, error-prone manual processes such as checking an application, submission, quote, and binder against a policy. These new technologies will pinpoint errors and omissions in seconds. They will bring new operational efficiencies, mitigate a broker’s errors and omissions (E&O) exposure, and accelerate the time it takes to issue a policy, thereby freeing up skilled knowledge workers to focus on what matters most – serving customers and growing the broker’s book of business.
In the coming year, you’ll see P&C insurance brokers and carriers doubling down on insurtech investments. Digital transformation initiatives will delve deeper into the back offices of the insurance companies, making the industry much more customer-centric. Market and competitive differentiation will no longer be based on product or price, but rather on customer experience.
Managing Director, Financial Services
Customers will be directed by insurers towards self-service digital channels, heightening the importance of customer relationship management platforms, multi-source data profiling, and predictive analytics for determining purchase patterns, needs and changes.
Insurers are now looking at how to position themselves to optimize their use of social, mobile, analytics and cloud platforms to meet the quality of service delivery that their customers expect. This expanded set of tools is also opening up the use of non-traditional partners and platforms, as companies seek to enhance their market reach.