Agent Acceptance of Core System Changes

Chuck Ruzicka

Carriers should expect some agent skepticism whenever they announce the intent to modernize or replace their core systems, and proactively take steps to improve the acceptance of their proposed changes. Most independent agents have moved books of business to new systems. This movement temporarily causes additional work for the agency and can be very disruptive. Agent acceptance of a modern core PAS system, and the related processes and products, is critical to the success of major transformation projects for those carriers in the independent agent channel. Most carriers expect new business submissions to increase as a result of their transformation project and include this assumption in their cost benefit assumptions.

Discussions with carriers reveal differing success rates that appear to be independent of the solution vendor chosen and the choice of Portal component. Some carriers have been very successful extending a variety of core systems directly to agents, and some modern Portal implementations have been unsuccessful. Results can be mixed with the same solution provider, with one carrier getting very positive feedback from agents and other carriers getting negative feedback. Clearly in this case, there are other factors impacting acceptance rates than the choice of core system. So what are the most important factors in determining agent acceptance of a business transformation solution?

Here’s what we recommend:

Separate disruption caused by product and underwriting changes from the impact of new work flows and systems. A company that can’t implement product changes due to legacy system limitations often has a book which reflects adverse selection. A good example might be the average credit scores for a given customer’s base when compared to the average population. Incorporating credit into underwriting guidelines for the first time to address loss ratio concerns will be disruptive from an agent’s perspective regardless of what system it is implemented on. Carriers may consider easing in new factors to reduce disruption rather than fully taking all the required rate indicated by actuarial analysis. Proactive communication of product changes separate from system announcements, as well as clarifying market appetite and offering new products, helps to offset this disruption.

Focus on user experience from an Agent perspective. Engage user experience experts in design and review of the critical functions within a core suite solution. Small companies have demonstrated the effectiveness of just having one or two people designated as having this responsibility or focus. Outside services are readily available. Minimize the number of questions asked during application process by leveraging third party data sources and challenging the value of each and every question asked. Involve Selected agents or customer service representatives (who will actually use the system) in prioritizing functionality and review of early designs and business process.

Don’t communicate unrealistic or premature target dates. Agents often put pressure on carriers to deliver new products quickly. However, they would much rather have a quality implementation and smooth conversion than deal with customer or performance issues. Agents do not like uncertainty. Planning to move business only to have it delayed undermines credibility and irritates the agents.

Pilot all implementations with subset of the targeted population. Pilots should be actively monitored and support teams should be fully engaged in responding to feedback. Too often firms conduct pilots without having a mechanism for obtaining feedback or allowing adequate time to respond to suggested changes. Listen and respond without rushing changes to production. Changes must be implemented with quality and reflect the opinions of a broad audience, not just one user.

Execute. In addition to configuring functionality correctly, carriers must allow adequate time for testing of both the external facing capabilities of the new system as well as the processes for supporting and responding to questions and submissions. Testers should have various levels of technical knowledge and should utilize multiple browsers and access functionality from multiple points within the system.

Create communication plans stressing the benefits of the new system from an agent’s perspective. Ease-of-use, Real time policy issuance, shorter underwritings cycles, and limiting agent entry before knock out rules are invoked all benefit the agent.

Make sure that the project team understands the importance of agent acceptance, defining scope of releases and prioritizing features with this in mind.

Make the above items part of your culture. Once a base Portal or external facing functionality is implemented, keep the focus on User experience, implement incremental changes and pilot changes using A/B testing techniques.

Applying these principles will improve agent acceptance and will benefit the agent, the consumer and the carrier.

Metromile and CoverHound Partnership Shows There’s Room for Experience in Innovation

Jeff Goldberg

The announced partnership between Metromile and CoverHound shows how innovation and disruption can work within the paradigm of traditional insurance industry modes of business. Metromile is a “creative carrier,” with new ways to productize auto insurance policies. CoverHound is a “digital distributor,” bringing a new, web-based approach to the agent channel. It turns out even a modern insurance carrier like Metromile with a new approach still benefits from an expert agent that can help distribute their product to the right clients, and that’s where CoverHound steps in. Within the industry innovation, there is also room for the lessons of the last hundred years.

Vitality Incentivizes Life Insurance Policyholders to Becomes Less Sedentary With Cheap Apple Watches

Tom Benton

John Hancock announced this week that it will be subsidizing the cost of an Apple Watch for policyholders through its Vitality Active Rewards program. Vitality life insurance policyholders will have the opportunity to purchase a new Apple Watch for an initial fee of $25 and, depending on how active they are, will either pay off the remaining balance in monthly installments, or pay nothing beyond the initial fee. John Hancock and Vitality initially provided fitness tracking devices to policyholders, but changed the program to just collect data from insureds via device interfaces like Apple’s Healthkit.

Typically, healthcare payers and the Vitality program have provided incentives via discounts for providing the data. This new Apple Watch initiative, however, now adds in monitoring of movement data in return for a low initial cost for the device.

Vitality says it has seen positive results in studies done in South Africa, where they report that the 17,000 participants increased physical activity by 46% in a similar Apple Watch program. For those who don’t meet activity goals to earn the “Vitality Points” that fund the 24 monthly payments, there could be negative sentiment toward the program. Still, the up-front incentive to make lifestyle changes is very strong.

This program continues a trend of insurers collecting more detailed information about insureds and providing incentives to change behavior. Over time it will provide some valuable data for assessing the effectiveness of these changes on risk.

When it Comes to Driving, the Future is Not Now

Chuck Ruzicka

Intel CEO Brian Krzanich spoke at the Los Angeles car show this week about a new $250 million investment Intel Capital is making in autonomous-car software, touting the company’s ability to build processing systems capable of processing the vast amounts of data self-driving cars are expected to produce and consume. Even more more futuristic news came this week in the form of augmented-reality windshields, inspired by sci-fi movies, being developed at several car companies to help make people better drivers.

It’s important to keep in mind, though, that the same risks that auto insurance carriers have always had to take into consideration are still around. If anything, they may even be amplified by today’s technology. This week, the National Highway Traffic Safety Administration reported the largest annual percentage increase in highway fatalities in fifty years. The chief culprit, according to the article, is distracted driving due to smartphone usage. The future of driving is rapidly approaching, and is in some ways already here. But it’s important for carriers not to let themselves get so wrapped up in what’s coming in the next decade that they lose sight of what’s happening right in front of them.

What if Startups Worked *With* Governments?

Steven Kaye

Nexar Limited announced it would be using its app users’ smartphones for vehicle-to-vehicle communications, warning other vehicles of road obstacles or sudden stops. Smartphone accelerometers and gyroscopes are sensitive enough to register potholes or other road damage. Nexar monetizes data, offering it to both insurers and to municipal governments. It also provides data to autonomous vehicle manufacturers for testing and training purposes.

Autonomous vehicles face many challenges, including decaying U.S. transportation infrastructure as noted in this Reuters article from March. Maybe startups can do better working with municipal governments, rather than pursuing regulatory hacks.

Question Assumptions

Matthew Josefowicz

Sometimes, the received wisdom is just wrong. Even if there is a ton of data to work with, the key assumptions that drive the analysis are not valid.

Sometimes, senior practitioners can be blinded by their own historical experience, and can miss the importance of signals emanating from a rapidly changing market.

Of course, electoral politics moves faster and more erratically than the insurance industry does. But last week’s election provided a stark reminder that the unimaginable can become real very quickly when a major market participant stops playing by the rules that everyone “knows” are true, and when an underserved market segment suddenly has a new option that they never had before.

Insurers should take care that they are not blinded by their own histories as they seek to understand the demands of tomorrow’s customers and the impact of disruptive forces.

Results, Regs, and Rates

Source: 11/9/16

Matthew Josefowicz

Well, a few things certainly look different this morning. Here’s some quick thoughts for insurance technology strategists in light of the coming Republican administration and congressional majority.

1. Stop worrying about the DOL. A Republican administration is likely to reverse the pending DOL regs requiring investment product salespeople to act as customer fiduciaries. While this may still happen long-term, it’s unlikely to be implemented in the next two years.

2. Start worrying about healthcare again. However flawed the ACA may have been in the industry’s eyes, at least it was a known quantity. With the incoming administration’s plans to “repeal and replace” facing no opposition, everything may be up for grabs again.

3. Start worrying more about the states. With Federal regulations likely to be eased over the next few years, powerful regulators in democratic-leaning states are likely to get more aggressive. New York’s proposed cyber-security regulations may be just the beginning.

4. Keep worrying about interest rates. While the incoming administration has said they favor higher interest rates, market uncertainty, a global low interest environment, a rhetorical focus on jobs creation, and a Fed chair whose term lasts until 2018 may indicate that the current ultra-low interest rates will continue for the next few years at least. Insurers will remain in the double-bind of being resource strapped while badly needing to invest in new capabilities.

Self-Driving Truck Makes First Delivery

Tom Benton

Last weekend, Uber’s Otto self-driving technology arm completed a live test delivery of 50,000 cans of Budweiser beer from a brewery in Ft. Collins, CO to Colorado Springs, 120 miles away on Route 25. The trip was monitored by Uber engineers, but once the truck was on the road, the driver engaged the self-driving mode on the truck, outfitted with $30,000 in technology focused on autonomous highway navigation.

The live test is the first where a Level 4 autonomous system was used to complete a live truck delivery. Level 4, as defined by the National Highway Traffic Safety Administration and SAE (formerly the Society of Automotive Engineers), means that conditions are limited — in this case, to a well-defined highway with good weather and known construction zones — and a driver takes control when the conditions are not defined. The Uber/Otto-outfitted truck had a driver present, but not behind the wheel for the majority of the delivery trip. The driver had the ability at any time to retake control of the vehicle, but otherwise was free to read, text or almost anything else (except ironically he would certainly not be allowed by state law to pop open any of the almost unlimited cans of beer being delivered).

Self-driving trucks can have a significant and quick impact on highway safety, reducing the estimated annual 400,000 crashes and 4,000 fatalities, according to the article. Drivers are still required for ensuring safe movement of the trucks to and from the highway, but can be otherwise occupied during the long runs on interstate highways, which are manageable for companies like Uber to map and monitor for conditions that may require human interaction.

This successful test is another step toward acceptance of self-driving technologies for both commercial and consumer use. Insurers need to consider the risk-reducing potential of these systems and the increased level of repair costs due to expensive self-driving technology that could be damaged during accidents, whether in autonomous mode or not. The future of trucking is here -– it may not be long before you see driverless trucks rolling along your local interstate.

What a New European Blockchain Consortium Could Mean for Insurers

Mitch Wein

This week, B3i was announced for a consortium of reinsurers in Europe. These carriers will pilot anonymized transaction info and qualitative data to pilot inter-group retrocessions between a network of peers to evolve standards and processes. This is not the first set of carriers to be interested in using blockchain’s distributed ledger for reinsurance. We have heard of other carriers looking at using blockchain for the tracking of negotiations for facultative and treaty arrangements. Reinsurance is a natural use of this technology since a carrier and an insured can obtain transparency around who is keep the risk. However, we know that reinsurance is being disrupted by alternative capital and insurance link securities (ILS) in areas like property catastrophe insurance. The real question is can blockchain take enough cost out of the value chain and create enough efficiency to remain competitive against alternative capital and ILS?

News and View Roundup: Penn Mutual and Vantis Life Merger, Root, the DDoS Attack

Rob McIsaac

Rob McIsaac on the recent merger between Penn Mutual and Vantis Life

Steven Kaye

Steve Kaye on what auto insurer startup Root can teach insurers about customer service

Tom Benton

Tom Benton on the recent DDoS attack and how insurers should be adjusting security to better protect consumer data.