The word innovation is everywhere: in technology, in industries, in products and services, markets, etc. There are industries where innovation is the name of the game in order to remain relevant and thrive, and there are industries where innovation is not considered as important and traditional ways of doing things is the norm. Even these industries have been forced to embrace innovation in one way or another.
Where in the world is insurance?
When we look at rankings of the most innovative companies in the world, across all business sectors and industries, we find that the insurance industry is not represented at all. Why is that? Are we not innovating enough or at all? As an industry, we are innovating and doing great things to make the insurance business and processes more efficient. This includes addressing customer needs to make interactions easier – from purchase through claims.
The strategy of innovation in insurance has been focused on many factors, but we can easily narrow down to two:
- The customer: I need to be valued. My time is valuable so it must be quick and easy. I need to find a competitive price as I explore my options. I need to understand exactly what I am purchasing.
- The insurer: Insurance is complex but my processes need to be straight forward, easily adjusted, easily maintained, and intuitive. I should be able to automate all processes such as raters, form processing, and analyzing of data. All my systems should be able to integrate seamlessly. And lastly and most importantly, my processes and systems should not get in the way of addressing the customer needs mentioned above – rather they should enhance them.
Let’s look at some of the innovation already happening at software vendors and carriers:
Expert System: Usage of AI services in order to reduce risk, improve rates, and increase capacity for commercial insurance carriers and brokers. Expert Systems explains that only 1% of the data insurers have is structured and used, while 80% is unstructured and sitting outside the core applications. By using AI insurers can increase the speed of risk report examination, have 95% accuracy on automated policy review, reduce the time of claims reviews by extracting relevant claims data and be able to highlight fraud. As well, AI helps provide a better customer experience by enhancing time of policy review in both the underwriting and claims process.
AXA XL collaboration with Slice Labs and Microsoft: The idea behind this project is to improve cyber health and work on mitigating risks for small and mid-size business customers of Microsoft 365 Business, Office 365 Business Premium and Office 365 Business. The service will give critical support in responding to a cyber-attack incident, including aid towards remediation, but most importantly help insurers secure their environment.
Swiss Re CorSo digital parametric natural catastrophe platform: The platform is geared towards the US market, for small and medium sized enterprises. The platform offers an efficient and user-oriented way to access coverage within minutes. Initially only wind was the parameter of coverage but as of May 2020, Swiss RE expanded its offering to include hail insurance. Using all available data, whether hurricane or hail, the customer does not have to wait for a damage evaluation rather its dependent on a provider that confirms the Impact of the weather on the area. When the insured contacts Swiss RE payment is released. A process which took months can now offer aid to customers within days.
Insurers AI use to predict fire risk in California: California wildfires are unpredictable, destructive and cause high coverage costs. Insurers have had to get creative and use all data they had been available but not used. Data such as building permits, building codes, satellite photos, drones, and aerial views lets insurers analyze risk better. To better use this data, partnership between insurers and startups have come up with such possibilities as property scoring, similar to MetLife’s partnership with Zesty.ai.
These are but a tiny fraction of the initiatives insurers and technology vendors are working on to bring and to sustain innovation already happening. The insurance industry is large and varied, part of everyone’s lives and innovation is not only happening but is at the forefront of investment.