InsureTech Connect was held from September 23-25 in Las Vegas. The conference consisted of over 250 speakers and representatives from over 7,000 companies across 60 countries. Speakers were diverse in origin and industry, from tech start-ups to insurance incumbents. Three themes resonated throughout the conference:
- How can tech improve the customer experience?
- How can tech empower the insurer and its agents?
- How should insurers embrace tech?
How can tech improve the customer experience?
Now more than ever, insurers must ask themselves three key questions:
- how should we interact with our customers, and what is the value of human interaction?
- Does the market demand a tech company, in lieu of a traditional insurer?
- Is the path of insurance and technology similar to how the banking industry embraced technology?
Filing an auto claim, as Glenn Shapiro, President of Personal Lines at Allstate, illustrated lacks customer self-service. Because traditional carriers are all about selling the product of insurance, and not what insurance does, they must self-disrupt or face the forces that have already disrupted the banking industry. To demonstrate, Allstate presented three changes which have had a significant impact on claims processing. These are:
- Customer Power – Allowing the customer to take control over the process by, for example taking a picture of the damage producing a 50% savings in processing time
- Automation – Eliminating the manual process of taking the claim from one step of the process to another, saving another 10% of processing time
- Artificial Intelligence – Building a database that can compare damage from the photo to the parts and time needed for repair, saving another 20% of processing time
These three steps allowed Allstate to reduce total auto claim processing time from 10 days to 3 hours. Allstate believes that continued disruption will shorten claim processing time even further to nearly instantaneous. In terms of improving the customer experience, the technology is there, the variable is how insurers choose to implement it and how they navigate regulatory restrictions.
How can tech empower the insurer and its agents?
When self-service is offered for claims filling and underwriting speed is improved, the insurer will realize huge efficiency and customers have higher satisfaction. Furthermore, the role of agents will be more critical as they can focus on income driving tasks. Small improvements to customer experience reverberate through the insurer. If your competitor can file a claim faster you, they have more time to write policies and drive income.
The final question is how do insurers embrace tech?
A panel discussion that included staff from Softbank noted that in recent years they have seen an overabundance of capital chasing after “shiny objects”. The Softbank representative encouraged attendees to not get distracted by the “shiny objects” and to instead focus on the solutions the products provide. The panelists believe that there will be more disruption in the next few years driven by the abundance of capital at Silicon Valley. The dark side of capital abundance is that in some cases, Silicon Valley has acted “drunk and disorderly” with its actions and investments. In the days since Insuretech, many of the recent developments around unrealistic investment seem to have come to fruition, not always in the insuretech space, but likely there as well.
When it comes to evaluating insuretech, there are many questions that companies must ask themselves about the present and the future. Is partnering with a proven goliath like Salesforce the proper route or is it incubating/acquiring a tech start-up. What is the appetite for risk?
Many companies have sought to embrace disruption by acquiring emerging start-ups. The theory about this is that the small acquisition can become a “retrovirus” which will instigate change in the entire company. One issue with this process is that it is more likely that the acquired company will be treated as virus and expelled. This was cited as a common cause for failure in the acquisition. An InsureTech Connect speaker highlighted a rare example of a successful “retrovirus” situation where States Title, a 20-person start-up, acquired an industry incumbent, North American Title Group
The four themes addressing improving customer experience, embracing tech, leveraging disruption, and empowering the insurer & agents impact all insurers and have strategic implications. For example, how will Progressive and other P&C insurers react to Nationwide’s new digital insurance platform, Spire, which targets a younger demographic. How can the incumbents stay abreast of innovation amid new market entrants and industry disruptors? How should your company react when your top-competitor acquires a start-up?
At the end of the day, InsureTech Connect was the place to be to understand how technology was impacting insurance. It was a unique sight to observe the combination of start-up optimism combined/clashing with incumbent risk-aversion. What was shared regardless of insurance line and years in the industry was an understanding uncertainty in the future and a multitude of questions.
Authors: Erik Glitman, CEO, Fletcher/CSI & Chris Conley, Senior Research Analyst, Fletcher/CSI