This is fifth in a series of posts where we’re discussing the origins and evolution of insurance industry outsourcing. In this post, we’re focusing on technology trends.
As in all industries, technology continues to disrupt the way we do just about everything. We recently asked some of our own experts to give us their take on how technology trends are impacting the insurance industry and outsourcing.
Which gaps in the insurance industry is technology looking to address?
For the last 20 years, Insurance has been largely a “low tech” industry. Increasingly we’re seeing a greater influx of technology companies focusing on the insurance industry, understanding that there is an opportunity to modernize it. There are many companies entering all different kinds of spaces, ranging from cloud-based agency management systems to risk management assessment and analytics. Here are the areas that we see a lot of activity:
- Increasing the Interoperability of Systems – this will increase efficiency, and allow companies to leverage existing technologies.
- Improving Customer Experience – this is a key area of focus for many consumer focused InsurTech companies like Lemonade, CoverWallet and Embroker.
- Supporting Insight-driven Decision Making – Analytics are increasingly being used to improve underwriting decisions or improving operational efficiency (i.e., taking on better risks, prioritizing business that is most likely to be bound).
- Improving Operational Efficiency – this includes many things, including everything listed above.
How is technology addressing those gaps?
Because Insurance Technology (aka “InsurTech”) is expanding and evolving, there are lots of technology solutions in the market being tested to address any range of issues. Some of the more interesting ones include:
- Educating Insureds – on coverage needs in a scalable, customer-friendly way (versus traditional policy legal language).
- Mobile – Bringing insurance closer to the Insureds by enabling mobile access including buying insurance directly on the phone, or immediately submitting claims.
- Internet of Things (“IoT”) – Adding sensors to enable “usage based” insurance, while providing Insureds additional value by using data to offer risk prevention advice.
- Leveraging Analytics – to identify the necessary coverage for insureds based on data and their needs.
- Digitizing Information Flow – between carriers, agencies, and brokers to improve operational efficiency, improve information capture, and the speed at which decisions (i.e., quotes to insured) can be made.
- Robotic Process Automation (RPA) — automates previously manual steps that can eliminate many repetitive, low-value processes, for cost savings.
What are the biggest challenges to successful implementation of new technologies?
While the new technologies coming into the industry have the potential to provide significant benefit and value, there are considerations and challenges in being able to leverage them.
- Market Fragmentation and Lack of Standardization – Many of the parties involved in Insurance distribution lack the incentives to create standardization and an eco-system that allows for sharing of information. It is in many of the insurance distribution network parties best interest to maintain closed off. This is one reason why it is difficult to implement technology in the insurance industry.
- Regulatory Compliance – Insurance is regulated at the state level. Different states regulate in different ways, and therefore the processing of insurance may have 50 different variations to ensure compliance.
- Legacy Technology – Existing technology is often difficult to get data out of, customize, or have interact with other companies or software.
How are outsourcing companies taking the lead to help insurance organizations?
While we’re not sure what other outsourcing companies are doing, at ReSource Pro we’re very focused on innovation and technology. Here are several of our current focus areas:
- Innovation Lab – We’re partnering with our clients to create new, innovative solutions. Clients bring their needs and unique perspective as the end user, and ReSource Pro provides the expertise, technology and resources. Essentially, the Innovation Lab enables insurance companies to outsource their R&D.
- Data Analytics – While ReSource Pro traditionally works within our clients’ systems so their data never leaves, we still interact with it and are uniquely placed to help companies leverage that data. We’ve developed Analytics solutions that provide valuable insight. And because of our position, we help clients with the collection of data and then can help them implement improvements as a result of the insights they’ve realized.
- Standardization – Standardization of workflows makes operations in general more efficient. Moreover, it enables the implementation of certain technology. For example, you can automate high volume and standardized task steps through Robotic Process Automation (RPA).
While there are certainly other technology trends, the ones listed above will have a major impact on operations and the insurance outsourcing industry, as a whole. Are you well-equipped and prepared to usher in this new age of tech?