Three InsurTech trends rapidly transforming P&C insurance
Using data to gain a deeper understanding of policyholder behavior can be one of the most effective means of building trust with insureds.
The property and casualty (P&C) insurance sector represents $1.6 trillion in premiums and makes up one-third of the insurance industry, according to McKinsey & Co.
S&P Global Market Intelligence reports that the P&C industry recently saw the largest-ever quarterly decline in surplus during the first quarter of this year, fueled by the fallout from COVID-19. An above-normal hurricane season also is wreaking havoc across the industry, with many independent adjusters unable to access properties due to travel and social distancing restrictions. Losses from Hurricane Isaias alone are estimated to reach up to $5 billion.
Commercial property lines are expected to experience a sharp fall in premium income over the next several months, as customers cut costs by consolidating assets and inventory into fewer buildings and grapple with the challenges of a volatile recessionary market.
According to McKinsey, the small size entities, which account for about one-third of global commercial markets, will be hit hardest on average as they are the most sensitive to challenging economic conditions. Depending on the length of the U.S. recession, this segment will be heavily impacted. Small companies will struggle to sustain activity in the long run, and many will go out of business. Only the most agile will survive.
The pandemic has heightened the sense of urgency for P&C companies of all sizes to accelerate their digital transformation journeys and collaborate with partners that were former competitors: InsurTechs. Many of these efforts were being implemented pre-COVID to weather future disruption and to enable carriers to attract and retain customers who expect the highest quality experience with every interaction. This has now sped up exponentially given the “new normal.”
Brand agnostic consumers now want more personalized products and services to match how they live and are willing to turn to non-traditional brands if their needs are not met. From January to May, the switching rate amongst consumers in the U.S. who requested premium relief was 19% for P&C products.
Below are three InsurTech trends that P&C insurers can leverage to build business resiliency and appeal to the new age customer.
Data analytics
Leveraging data analytics within business operations is a major business differentiator and will be the key to providing more effective customer experiences. According to recent data from global advisory Willis Towers Watson, insurers have broader ambitions for using data to improve their customer focus in the short term than two years ago.
Whilst insurers have implemented advanced analytics in areas such as claim triage and fraud identification, they are ensuring claim management applications take priority. Artificial Intelligence-driven analytics are helping insurers to process claims in seconds — not hours — acting as a preventative measure against delays, human errors, and consumer dissatisfaction.
Insurers also are utilizing external data sources and adding details about a claimant from social media channels and images. More importantly, P&C insurers can track their own data to see how well certain policies are selling and which receive the most number of claims, ensuring they are in a prime position to deliver responsible recommendations and customized policy offerings.
During these unprecedented times, using data to gain a deeper understanding of customers’ behavior can be one of the most effective means of building trust within the customer-provider relationship. While users crave insurance services to be responsive, they also want to feel reassured that their sensitive data is being monitored in a way that benefits them.
An omnichannel customer experience
Worldwide, 39% of insurance customers surveyed by Bain & Company currently utilize one device (I.e. mobile, tablet or computer, etc.) to connect with providers about their homes. Reports show, however, that customers who own at least one connected device interact five times more with providers than customers who do not own any connected devices – and are more loyal. More consumers are now eager to use digital platforms to engage with their providers to check on routine items such as the status of claims. By giving customers the freedom of self-service, spanning across different applications, insurers can provide more personalized interactions in real-time.
Insurers are now looking to innovate their typical customer service offerings to appeal to the new-age customer, who requires not only an omnichannel experience but an interaction that is accurate and anticipates the next question. According to Accenture, over 79% of insurance executives believe that artificial intelligence (AI) will revolutionize the way their companies interact with customers. Conversational AI service chatbots, in particular, will meet the needs of customers and dramatically change how they interact with their insurance providers. According to Servion, AI bots will power 95% of all customer service interactions by the year 2025.
A conversational chatbot, for example, can engage in human-like conversations, support the lifecycle of an insurance customer and handle queries at any time of day — with very little risk and a very low error rate. Chatbot development has evolved with artificial intelligence, machine learning and natural language processing, enabling them to become more sophisticated.
Chatbots are often used in customer-facing front-end processes such as onboarding; this crucially frees up agents’ time to handle more complex tasks, for example, expediting insurance plan drafting or handling inquiries requiring research. To deliver an optimal omnichannel experience with digitization, businesses should monitor the overall customer life cycle and the correlating journey, rather than individual communications by channel, to ensure a low effort human-centric approach to leveraging chatbots.
Insuring and managing risk
The fast-moving risk landscape is creating many new, extreme threats that most P&C insurers were not prepared for — most notably related to the pandemic, cybercrime, and natural disasters. Unfamiliar insurance gaps are presenting P&C insurers with a rare opportunity to innovate in order to analyze and manage new risks effectively in line with environmental, social, and governance (ESG) factors. The increasing accuracy and sophistication of AI and telematics, capable of capturing insights in real-time, will prove critical for insurers to safeguard customers as crises unfold. With hurricane season rife in the U.S., these technologies can flag early warnings for potential exposure to damage and enable insurers to become more accurate and sophisticated in how they premeditate, assess, manage and ultimately reverse risk.
Turning change into opportunity
The COVID-19 pandemic has become the call to action for P&C insurers to accelerate digital transformation projects, from the bottom-up, to reduce operating costs, shield themselves from future crisis disruption, and continue to service customers seamlessly. With a greater focus on hyper-personalization and pre-emptive risk analysis, new opportunities are opening up for insurers to better cater to the needs of new-age customers — and ultimately transform the user experience.
Monica Spigner (monica.spigner@teleperformance.com) is executive vice president of Business Transformation at Teleperformance Group.
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