September 3, 2019 by Adam Malik
What do Facebook, Google and Amazon do so well that remains a struggle for insurance?
They make the customer the centre of everything they do, according to Denise Garth, senior vice president of strategic marketing at Majesco, an insurance software company. They are jumping on all the latest technologies to cater their services to customers for the best experience, Garth added, while the insurance industry, in contrast, is not.
That doesn’t mean the insurance industry can’t do it, Garth said, but the right strategy needs to be in place to work in conjunction with your current process.
Garth spoke as a panelist recently at The Insurance-Canada.ca Executive Forum in Toronto. She observed that Silicon Valley platforms are using artificial intelligence, the cloud, machine learning and so on, allowing them to look at data in different ways and figure out pain points and areas for growth. They know how to deliver customers what they want, when they want it and how they want it, Garth said.
For insurance companies, introducing one technological enhancement while “putting out products the way you’ve always done it, [isn’t] going to change anything,” she added. “You’re not going to change your business, you’re not going to meet your customers’ expectations for the future, and you’re sure as heck are not going to be a successful leader in the future. You’ve got to figure out how to disrupt your own business before somebody else disrupts it for you.”
The value of data that companies can generate and use comes in part because it can be used constantly. It’s not a “one-and-done process,” Garth said.
“We’re going to be entering a phase in which it’s going to be about continuous underwriting – where data is going to be feeding in on a continuous basis to be able to assess the risk and re-underwrite and re-price what it is that we’ve got for different kinds of products … It will also be used to assess risk to be able to avoid risk – to lower the risk, and to be able to avoid claims or minimize the impact of claims.”
Why is this important? “You have to start thinking about that, because that’s going to become an expectation from our customers,” Garth advised.
Traditional insurance systems don’t allow for this to happen, Garth said. On one hand, they’re working and are paying the bills, but companies need to develop a “two-speed strategy.” That means optimizing today’s systems to do what’s needed to meet current needs, while also dedicating resources to innovate for tomorrow. For technological transtion to be seamless, the technology of tomorrow can’t be grafted onto today’s mishmash of legacy systems and outdated processes. The goal is to develop new technology to the point where it can run on its own, while keeping your current system alive until the time you can switch from one to the other.
“If you think you’re going to overlay a new business model and a new era of insurance on top of [your legacy systems], you’re going to sub-optimize both,” Garth said. “You got to start thinking about a two-speed strategy.”
Timelines have been crunched so there’s not much time to figure it out as well, which is adding to the challenge.
“The days of having the ability to actually create a new product, take it to market and be able to test it is not going to be years and it’s not going to be months. It’s going to be weeks. We’re already seeing that in the marketplace,” Garth said.