When you run a start-up, you travel a lot. It’s a wonderful thing. Over the past few weeks my itinerary included Wilmington, Boston, New York, Charlotte, Milwaukee, Green Bay, Philadelphia, Des Moines, and soon one of the last destinations, sunny Boca Raton, Florida.
This seems like the type of travel to drive people crazy. Back to back, intense, and yet, extremely pleasant from an innovator’s perspective. Why? Simple. Insurance Innovation is a Yes!
Here is what I learned in my past few weeks meeting many wonderful people and organizations that I’d like to share. Everyone in insurance is looking for change and adoption. Though startup’s barriers to entry in Insurance remain to be quite high, the industry is moving in the right direction – revisiting its traditional processes and seeking opportunities.
We can always talk about technologies that Insurance Industry finds to be “hot” – drones, IoT, Data Analytics, and many others. Rather than recite the same list, I’d like to focus not on technology and solutions, but rather on what insurance carriers would like to achieve!
There is a shift to revisit customer experience in everything insurance. From the education, awareness, policy purchase to ongoing customer communication, access to vital information, billing and lastly to the claims process.
Driven by other industries that have acquired and continue to maintain a much closer relationship with their clients, insurance is looking to do the same. Yes, it’s playing catch up, but the path has been cleared by other industries in creating various “standards” of ideal customer communication and relationship management. So now it’s all about execution.
Efficiency & Productivity
Insurance Industry relies on revenues made from financial investments of collected premiums. With economy making it hard to produce the type of returns acquired through investment in the past, the focus is shifted on simplifying the process and achieving efficiency that drives down the operational costs.
This means investing in technology and modernization and simplifying many of traditionally complex business processes that exist today. It also means enhancing many aspects of the claims life cycle, from collecting of claims information to handling restoration, to disbursing payments. Of course, this area is aimed to be redefined with close consideration of customer experience.
Risks and Exposure
The next insurance carrier goal pertains to risks – writing smarter policies that identify the risks using data – lots of data, to help understand the customer, the environment, and any expected and unexpected possibilities. It also means offering customers the means to deliver their own data to the insurance carrier to help attain policy accuracies necessary to reduce the costs of the premiums.
Again, the goal is to deliver value to the customer with optimal operational efficiency by being a smart and analytical consumer of many sources of data.
Investments and Returns
Another area of insurance carrier focus is making smarter investments. Traditionally, this has been the focus of the fintech sector, however insurance carriers are themselves innovating in this space by thinking outside the box by utilizing their capital to establish their own venture capital arms. The goal here is to diversify the investment from traditional stock market by investing in startups that aim to deliver change to insurance.
Though the early focus around these types of investments has not been to drive a significant return, but rather to achieve a strategic position in areas of promising growth, organizations that took this leap found that these types of investments can be quite beneficial and profitable and have since been adopted to be a part of the overall growth strategy.
Many have recognized American Family Insurance as an early leader in this space, but there are more that joined the pack. Most recently, AXA, Assurant, Jeweler’s Mutual, Northwestern Mutual, and many more have made significant progress in this area.
Think about it, would you invest in a startup that delivers immense value to your organization, helping differentiate you from the competition and helping achieve desired goals? Absolutely, especially if the entire industry can benefit from it as well.
Insurance Innovation is a Yes!
Everything points to steps forward in insurance. And those of us who are up close and personal in exploring many pains of insurance organizations are seeing the transformation.
As one executive in insurance put it “Yes, Alex. We move at the speed of Insurance.” Thought change takes time, the incremental acceleration has begun and carries with it lots of inertia for the future.