Matthew Josefowicz on reports that Aon is in talks to sell its employee benefits outsourcing group.
The recently-launched Argo Risk Tech Solutions looks at common causes and locations of accidents, like slip-and-fall, in the workplace. The idea is to use IoT devices like sensors to communicate to the employees to modify behavior and identify areas of risk like a wet floor, hot soup bowl or items blocking the halls. The IIR article indicates that companies using this technology have seen accidents reduced substantially over a period of time. This positions insurers not just to transfer the cost of risk to them for the cost of premium to an employer, but to actually prevent the risk from ever materializing. This in turn reduces the overall loss experience and allows the premium to be reduced. This approach will be adopted in more and more areas of commercial and personal lines insurance and will be widespread by the 2020s. Over time policy holders that do not deploy these types of sensors will be penalized by being put in different risk pools from those that have the sensors. It will no longer be an option but a requirement. Even further out, the analytics tied to the collection of this data from IoT devices might proactively communicate what to do and when to do it to minimize risk (ex. a commercial truck taking an optimal road to minimize an accident weighed against the time it takes to do the journey). There could be some backlash, however, as people may start to feel the technology is too invasive and not want to provide data or work with a company that does.
Automation that enhances the agent experience and ultimately their selling and service capabilities is fundamental to enabling their success. But with so many potential areas to focus on, from portals to licensing and contracting to mobile, it can be challenging to know what to prioritize. Here are some best practices to help CIOs and business partners focus attention on the most value-added elements of agent automation:
- Know your agent: A successful agent is someone who puts the needs of their clients first, has a positive impact on the people and community in which they serve, and takes pride in being counted on by their clients. Knowing the motivations of an agent provides a good base for understanding where you can get the most value from your investments.
- Create an inventory of opportunity: Given the complex array of systems that provide support for the agent, a significant step is creating an inventory. There are a mountain of touch points that leave a lasting impression for an agent.To fully realize areas of opportunity, CIOs and their teams should develop a process map covering the agent interactions with all the touch points during the course of a business day.
- Define metrics for success: The measures of success are likely to be a combination of things like improving the efficiency of submission to commission process, straight-through processing, aggregating access via single sign-on, and reducing agent onboarding times. Whatever the ultimate metrics may be, the process of working with agents and business partners to develop the metrics helps bring all parties together.
- Understand mobile use cases and value: Mobility for agents has grown beyond calendar and contacts to more of a full agent “mobile office.” Depending on the use case, agents may be looking to access all of their data and applications from any device from anywhere at any time. A well thought-out and well executed IT strategy can support mobile applications by leveraging an open, service-oriented architecture.
- Consider the impact of emerging technology: For most carriers, using today’s widely available digital technology and approaches will have the most immediate value in agent automation. But there are several emerging technologies, like gamification and wearables, whose potential values should be considered for inclusion on carriers’ roadmaps for the next few years.
Agents are heavily dependent on automation for every aspect of the engagement and service functions that support the ability and sell and service a client. The more CIOs can enable them through technology and process simplicity, the easier it is for them to do what they do best: develop relationships and provide peace of mind.
For more on this topic, see my recent CIO Checklist report: http://novarica.com/agent-automation/
Recently, innovation-focused startup insurers Lemonade and Haven Life both announced expansion beyond their initial states–Lemonade to all but 3 states and Haven Life adding five states and D.C., leaving only California and Montana to add. Both initially launched in limited states (33 for Haven and just New York for Lemonade). Add to this the announcement this week that Ladder has launched in its first market, California. The limited launch approach allows these companies to gather customer data and make the necessary process changes that will be critical to their data-driven approaches going forward.
As these insurance startups build their policy counts, more customer data will be accumulated that will provide better algorithm results. But, scaling up in size will offer different challenges for these “Creative Carriers”. Lemonade faces a transition of showing profitability while continuing to innovate, and Haven Life, backed by Mass Mutual, may face different pressures as they grow. In both cases, customers will continue to expect these startups to continue being innovative in how they approach customer experience.
Lemonade’s approach is centered on transparency to build trust. According to this recent blog post, they intend to soon release information on performance metrics and the impact of their ‘Giveback’ program (in which the company donates leftover money form premiums to causes customers choose). This is consistent with their focus on changing the industry by changing the dynamics of interaction based on behavioral economics principles infused in the organization by Chief Behavioral Officer Dan Ariely.
Haven Life on the other hand stays focused on creating the simplest and fastest possible experience–what they refer to as their “ridiculously easy process” for buying life insurance. Their value proposition also includes transparency, but more by providing a fast quote and enabling easy comparison price shopping.
With their expansion into new state markets, the continuing growth and adjustments at both of these innovators will be important for incumbent insurers and imitators to watch throughout 2017.
An interesting article came out over the weekend that delves into the consolidation that has taken place among publicly traded life insurance companies, and contrasts this trend with the relatively stable number of mutual carriers that are in the market today. We are now the better part of two decades past the period when there was a significant demutualization effort which included notable, name-brand, national carriers. In that period, we have weathered multiple recessions, one of them the worst economic downturn since the 1930s, and emerged into a world that has experienced persistent low interest rates. Taken as a whole, these factors have produced a series of economic outcomes which were outside of the planning corridors that many carriers executed against. As the article suggests, carriers face some very interesting challenges going forward. For those with long tail liabilities such as life and annuity contracts, the conflicts associated with quarterly earnings reports and maximizing shareholder value appear to be particularly daunting.
There is more to this story, however, which may suggest some additional advantages for mutual carriers. Almost without exception, life carriers are grappling with aging technology platforms which may date as far back as the Kennedy administration. The blocks of business on these platforms are themselves old, and may be closed to new business. But because they were at the heart of these businesses over multiple decades they have become, through the magic of cost accounting, blocks of business which absorb significant overhead for carriers. For many companies, these platforms represent a significant drag in terms of being able to implement new products and services effectively. At the same time, however, these platforms, if they are walled off, can become quite stable and relatively inexpensive to operate. This can meaningfully influence both operational and financial outcomes for carriers.
We recently unearthed a 1995 chronicle from MIT which provides a fascinating view of the first 35 years of policy administration utilization in North America. The fact that many of the systems that were deemed to be aging in that 22-year-old report are still being used by carriers should give cause for concern to some!
In any case, as carriers plot their technology strategy for the future, addressing these old systems and blocks of business running on them will become increasingly critical. The investments and planning horizon required to make them successful may be easier for mutually owned companies to execute than it will be for their publicly traded competitors given their respective focus on long- versus short-term results.
Even as market competitive threats loom large, it is not just a technology challenge that many life insurance carriers face. There is an accounting and a reporting issue which carriers would be well advised to consider as they put their strategic plans in place.
The major tech players are all betting that smart home automation and digital assistants will be the next big thing for consumers. Grange is taking advantage of this emerging area with their recent announcement that Amazon’s voice-controlled Alexa can now help users learn about Grange insurance or find local agents. It’s clear that the insurance marketplace has not always adapted quickly to improve the customer experience, so this is a great example of an insurer working to serve consumers in whatever way they prefer. It also demonstrates the necessity for insurers to think to the future when they modernize their back-end systems. Will a new core system support future channels? Over the last five to ten years insurers have poured a lot of time and money into building web-based consumer portals. Those that didn’t build for future flexibility had to start from scratch in order to create mobile-ready sites. Will they have to begin again to leverage voice-based home assistants or some as-of-yet unknown customer interaction? Insurers who are thinking in an omni-channel way will instead be architecting agile back-end systems that can support any number of channels and–just as importantly–can support transfers between channels when necessary.
Lemonade got some great press this week with their instant claims payment for a small property loss on a renters policy.
While Lemonade is spinning this a miracle of AI, it’s really more a miracle of intelligently-designed processes. Many insurers do rules-based, auto-adjudication for small property losses, but few have the ability to translate those automated decisions into real time payments.
The other thing that Lemonade has done successfully here is focus on the desired customer experience, and exploit the industry’s lack of willingness to do so.
Now if Lemonade can do the same thing with a $25,000 liability claim on a small renters policy, that’s a different story…
The potential for wearables in health and life insurance has been hindered over the past few years by lack of standards and slowing adoption by consumers. This week, UnitedHealthcare and Qualcomm announced they have “enhanced and expanded” the employee wellness program UnitedHealthcare Motion. UnitedHealthcare Motion is making progress in wearables use for wellness programs by leveraging the advantages of using the Qualcomm 2net platform, a medical-grade cloud-based infrastructure for medical device applications, with enhanced security and flexibility provided by standardization of end-to-end connectivity for wearables. The ability to quickly integrate in the Fitbit Charge 2, first shipped to consumers in mid-September 2016, shows the advantage of a standard platform that can respond to changing consumer demands and device capabilities. As mentioned in Novarica’s report on “Internet of Things, Wearables and Insurance Customer Experience”, security and standardization as seen with the UnitedHealthcare Motion BYOD capability will enable faster adoption of wearables for use by insurers to improve customer experience.
The consensus among those keeping an eye on the development of self-driving cars is clear: Autonomous vehicles are coming, sooner rather than later. Still, all the analysis in the world doesn’t speak as loudly as one of the world’s premier automotive brands, BMW, announcing it is releasing a fleet of self-driving cars onto U.S. and European roadways this year. BMW says its goal is to train the cars, equipped with computing systems developed by Intel and Mobileye, to drive in urban areas, with an eye towards full autonomy by 2021. As the article points out, automakers who hope to compete in the autonomous vehicles market space have a long way to go to catch up to Google and Tesla, whose vehicles have logged 2 million and 1.3 billion self-driving miles on public roads, respectively.
BMW’s move offers an important lesson about innovation. When starting to innovate with a new product, or any new way of doing business, learning about the space you’re entering is often more important than getting it exactly right from the start. BMW has made the decision that, rather than ceding the ground of self-driving cars entirely to early entrants like Google and Tesla, the company is better served by looking towards the future and starting to play catch-up now while the technology is still being developed. When it comes to innovation, the first movers don’t always win. Getting engaged with the right mind set of learning from the experience and data gathered is the key to proper execution.