Technology has disrupted a multitude of industries, ranging from automotive and travel to publishing and music. That phenomenon has finally reached insurance. In the first half of 2016, venture capital-backed technology investment deals in the Property & Casualty (P&C) sector hit a new high of $1 billion.1
No matter the line of insurance, in order to secure and service a client, brokers and agents rely on a series of forms and applications coupled with multiple emails or calls to coordinate with an underwriter. The industry has traditionally been manual and paper-driven.
Many brokers and agents would prefer to process business outside of the traditional office hours maintained by their industry partners. This is especially common with smaller shops that are driven by entrepreneurs and those facing stiff competition. These brokers want to be able to do things when it is convenient for them, and have a more difficult time waiting around on an email response.
In a time where technology and modernization has rapidly accelerated, brokers are looking for features that make it easier to conduct business. While wholesale insurance offers a variety of services to the retail insurance audience already, the industry as a whole is still working to strengthen interaction with brokers on a number of digital channels for overall convenience.
Enter the web-portal
A key opportunity for the insurance landscape is understanding how to leverage technology while maximizing insurance expertise. To many, the obvious answer is a web-based portal for brokers and agents. While some may assume a portal approach will phase out the wholesaler, it is quite the contrary—both underwriters and specialized brokers possess expert knowledge and experience that must coexist in order to properly service the industry.
Insurance is a knowledge and relationship-driven business structure, especially within specialty insurance where coverage is outside the standard market. Maximizing efficiency is not solely about centralizing common knowledge in a portal—it is about creating meaningful digital client engagement and connectivity.
To automate complex risks through a portal would require powerful computing with artificial intelligence and deep learning to analyze and calculate whether a particular application is a good risk. However, the sustainability of that model is unproven, as the expertise necessary to evaluate all of the risk characteristics and provide appropriate coverage recommendations is something that cannot easily be coded into a web-based application. We cannot ignore expertise for the sake of technology, and vice versa.
Algorithms that enable online quotes can generally produce multiple options for users. However, if for instance, a client purchased the cheapest coverage, the system may have overlooked or excluded critical coverage, leaving the potential to expose a business or family to a significant loss.
Technological enhancements have guided consumers to expect a fully digital experience. The general public is constantly bombarded with modern self-service and always on, engaging digital information. As a result, people expect the ambiance of mobile games and apps to translate to apps and experiences in the business realm. Professionals seeking to digitize their business essentially have to compete with apps that are coming out of other spaces, like social media platforms, and that expectation grows annually.
As an industry, we need to build upon consumer expectations and drive usability while simultaneously analyzing how to streamline the insurance business transaction. This means providing self-service digital experiences on more straight-forward risks while using digital technology to empower agents on larger, more complex risks. It is about finding the right balance.
So what does balancing digital trends with consumer and retailer demands look like?
No single solution
A one-size-fits-all approach simply will not work.
InsureTech and increased market competition are driving insurance companies to merge traditional business operations with digital experiences. However, not every startup or technology firm has interest to reinvent the insurance market.
While attending this year’s Las Vegas InsureTech Connect Conference, an observation was made that an estimated eight out of ten disruptor companies are planning a quick exit strategy. Yet, it is universally clear that technology will change our industry. For this one conference, nearly 4,000 attendees and insurance startups gathered to talk about how to disrupt the industry. During a CIO forum, many attendees noticed that currently there are a large number of companies offering supporting or smaller services to plug into the process, but very few are trying to change the insurance world completely. It appears that the value of products and services for many InsureTech companies has shifted to focus on automation or creating digital solutions that compliment processes for specific segments in insurance. This may include programming image analyses, such as a roof inspection, or computerized submission applications and forms processing.
For now, it is perceived that none of the emerging online insurance companies fully understand the impact of being a highly-enabled tech company in insurance. Most have only handled small claims and have not yet experienced a major loss or catastrophic event – something that could completely change their operating model.
Until the insurance world has landed on the right technology mix, brokers should continue to lean on their trusted relationships. Reach out to one another to discuss the preferred method of collaboration and find the tools necessary to empower business. Working together to maximize efficiencies should be an integral part of insurance sales. The immediate future will be less about creating a portal, and more about developing a collection of engagement utilities that support the unique needs of the marketplace.
Michael Paulin is the Chief Information Officer and Vice President of Information Technology at H.W. Kaufman Group. With more than 20 years of experience, Michael is uniquely positioned to understand, interpret, and foresee technology trends.