8 Things That Will Never Be the Same in Insurance After COVID-19 – Carrier Management
More than any human, COVID-19 is driving a digital transformation of the insurance industry. Everything about the way the industry has traditionally worked is under challenge due to the quarantine, and it will never be the same again.
Below are eight changes that will likely become permanent within the insurance industry as a result of COVID-19:
1. Work From Home (WFH) becomes the norm rather than the exception.
Consider the positive experiences of the past few weeks as businesses moved to a work-from-home model. Longstanding management resistance to remote work has been overcome by Zoom and other simple videoconferencing applications. The result:
- Teams are closer and more personal, perhaps in part from seeing into each other’s living rooms while taking calls in their pajamas but also from bonding over a shared experience.
- Starting a business relationship via videocall rather than just audio creates a faster bond and basis for future interaction, as the interaction is more personal and similar to a face-to-face meeting.
- Operational costs fall in the long run due to reduced rent and overheads.
Companies will see enhanced employee loyalty and tangible financial benefit by having a flexible approach to WFH.
2. The entire home inspection process will be automated.
Home inspections add delay to the purchase process, create stress for home- and business owners, and now with COVID-19 are a complete non-starter. Insurers will embrace the existing and evolving technology that enables remote inspection and validation. Insurers may gather inspection-type data without an invasive visit, such as by using apps where the potential policyholder can conduct a virtual inspection and upload the results to the insurer. Other examples include going full e-docs and e-signature, as paper is not only a useless waste of resources but also a potential contagion point. A different form of home inspection is claims assessment and validation. Insurers will accelerate the use of mobile phone apps where the homeowner can record damage via video, and insurers can validate damage and loss via drone.
3. Shopping for insurance will become an online experience.
The trend was already happening, but COVID has massively accelerated it. Consumers expect to be able to order groceries, home supplies, clothing and services online. They now also expect to be able to shop for and buy insurance online, and if they find barriers like annoying multi-question forms, they will go elsewhere with their business. Insurers must evolve quickly from “enter all your info and we’ll call you or email you back eventually” to one-stop engagement where the consumer starts the quote and finishes the bind in the same simple online transaction.
4. Data will be regularly supplied by third parties rather than the purchaser of the policy, thereby speeding up the purchase process.
Today, most insurers require the purchaser to fill out a painful application with at times 50 or more questions. Many times, the insured does not know the answer, and as a result the data used for underwriting is incorrect. For example, a low percentage of consumers know the exact square footage of their house or the true definition of a crawlspace. Third-party data providers, using public data from municipalities, counties and states, provide higher-quality data on an automated basis, eliminating the need for the consumer to fill out many of the questions. In essence, never ask a question that you can already know the answer to.
5. The API will be the standard for industry data exchange.
Online web forms are so last year. The Application Programming Interface (API) format is already becoming the basis for most InsurTechs and many insurers to exchange data and is certain to become the industry standard because:
- Automated data calls provide data to quote forms, pricing engines, commission registers, payments, card validation, compliance and many other aspects of the insurance workflow.
- Agencies can easily embed carrier APIs into their agency management systems to automated quoting and binding, increasing producer productivity.
- Companies that don’t have a simple API, and don’t have the IT bandwidth to prioritize API links to partners and customers, will fall by the wayside.
6. Artificial intelligence (AI) and machine learning (ML) will become embedded in sales and service workflows.
AI and ML get consumers and agents to the answer much faster than traditional methods and require fewer resources. In addition, AI and ML will enable predictive channeling of sales requests and give carriers and agencies the tools to perform proactive unsolicited marketing. The benefit to the consumer is more choice and more targeted solutions that are aligned with their unique circumstances.
7. Regulators will be challenged to accept new operating practices.
Prior to COVID, regulators have been working hard to get their arms around black box raters, artificial intelligence in pricing and sales, and social inflation topics like Assignment of Benefits. Now with COVID, they are having to respond to business interruption expectations outside the specific approved language in a policy form, as well as numerous other issues. The regulators, including state commissions, federal insurance entities and elected representatives, will need to adapt to the new world with additional flexibility for rating models that add choice for consumers, compliance relief such as allowing online new agent testing rather than in-person only, fewer barriers to the surplus lines sector that brings so much innovation and choice to consumers, and ultimately expansion of the industry distribution channels to non-traditional sources such as retailers or real estate industry professionals.
8. As trust becomes a vital buying attribute, carriers and agents will humanize the industry, helping to establish trust with consumers and the general public.
COVID-19 has contributed to a resurgence in buying from trusted sources, as consumers look for businesses that “do the right thing,” are referred by trusted friends and associates, and have a respected brand. As insurance buying moves more and more online, insurers need to be able to build trust via their website, social media and business partner network. Agents are critical to this connection, as they are the trusted adviser and respected professional in most insurance purchase decisions. This will require insurers and agents to:
- Post reviews and ratings directly on their website.
- Use understandable language rather than industry jargon in online and face-to-face communication.
- Integrate website, social media and agent messaging across all channels.
- Emphasize their humanity through community engagement.
There is no doubt the world has changed due to COVID-19, and the changes will continue to ripple through business, markets and people’s lives for years to come. The companies that read the tea leaves and embrace the new normal, much different than “the way it used to be,” will be the survivors and winners in the next phase.
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