A good example of hyper-personalization – and one that has garnered lots of attention throughout the coronavirus pandemic – is usage-based insurance (UBI), particularly in the auto insurance industry. When governments started ordering lockdowns and social distancing to prevent spread of the virus, the number of drivers on the road reduced dramatically. As such, many insurers offered premium rebates to reflect reduced vehicle usage, which could be seen as a version of UBI.
“Virtualization of all technology services and solution delivery, including an increased consumption of cloud-based services [is also key],” Sanyal added. “Pre-pandemic, most insurers were already pursuing a digital strategy. COVID-19 has not only accelerated this journey, but has also compressed the timeframe. What would have taken months and years is now taking days and weeks. The question is no longer: ‘Should we?’ It’s more: ‘How should we, and what should we do?’
“On the other hand, there’s another set of dynamics that are taking place in certain lines. Premiums are shrinking, operational costs are rising due to a need for crisis management, and there’s increased volatility in the financial markets. In addition, cybercrime is significantly on the rise, which means there is a need for a much higher spend on information security. This requires a specific focus on operating costs and business resilience.”
According to Sanyal, there are three simple things that insurers need to focus on in order to remain resilient through the pandemic and beyond: connection, prediction, and adaption.
“Insurance has not been an early adopter of front office customer experiences as compared to other verticals such as retail or high tech,” said Sanyal, “but customers who buy across verticals have begun to expect the same buying experience, which is natural. COVID-19 has only accelerated this need across the value chain, be it a buying trigger, a coverage question, or a claim.”
Many insurers around the world have responded to the coronavirus pandemic by accelerating investments in their digital journeys – some with more success than others. But there are still significant gaps for insurers to address in order to deliver customer experiences and connections built around loyalty.
She gave two examples of insurers that are ahead of the curve with this in the Canadian market (both are part of larger global entities). RSA Canada has, through a significant upgrading of their back-end systems, given brokers and customers the ability to track the status of a claim from first notice of loss all the way through to payment using RSA Claims Point. The P&C insurer now receives 25% of its overall claim submissions through this technology. Meanwhile, Aviva Canada introduced automated texting of status updates in April of 2020, resulting in a reduction of inbound customer calls by over 40%.
“Connection also means back-end technology virtualization to drive business resilience. Collaboration tools, migrating to the cloud, and global delivery models are all critical to ensure seamless transition between in-person and remote working. The ability to switch from an in-office to remote, depending on the need, requires a significant infrastructure upgrade,” Sanyal added.
According to PwC’s 23rd Annual Global CEO Survey, 42% of insurance CEOs are prioritizing intelligent automation (including data and analytics capabilities, as well as robotic process automation) over the next 12 months. As Sanyal explained, they expect it to “fuel group revenue,” and to “improve underwriting, pricing, risk selection, and claims.”
“Take Intact insurance – they have over 60 AI models built and deployed across the sales value chain, be it customer segmentation, pricing or underwriting,” Sanyal commented. “Similarly, multiple insurers are leveraging artificial intelligence to analyze damaged vehicle images, identify parts, and to classify vehicles as total loss versus repairable, and to then generate repair cost estimates in real time. This reduces not only the cost of a claim, but it also improves customer experience significantly.
“Personal data is being used by life insurers to reward customers for better lifestyle, and to monitor the health of participants. A great example is ambient assisted living, which uses devices to ensure the safety of the elderly at home. It includes a combination of smart devices, wireless networks, and medical sensors, all of which provides real time data which is monitored for the client’s safety.”
Sanyal gave other examples of insurers “using data for good”. Some are working with homeowners, using data to form climate change adaption strategies for their homes and offering financial incentives for consumers who take proactive measures. Others are using predictive modeling capabilities to shore up their insureds’ property resilience, for example, giving them a flood risk score and then recommending best practice risk mitigation like sewer backup prevention devices.
“Insurance companies have access to hordes of data and can play a large part in planning for damages caused by climate risk,” Sanyal added. “This will be key in shifting the role of the industry to proactive protectors and preventers. The global focus for the industry after the pandemic will shift from response, to recovery, to adaptation.
“Those who succeed will be organizations who build a connected ecosystem, and those who embrace external partnerships and create networks of innovation, collaborate with insurtechs and even competitors. Insurers who embrace open platforms share data and skills to ensure fair practices, personalized services, and seamless user experiences are those that will survive and thrive in this new normal.”