The insurance industry is an old one.
Its roots can be traced all the way back to 1752 when the first mutual fire insurance company opened in America, financial writer Andrew Beattie says. And while it has certainly evolved since then, you could argue that the fundamentals haven’t change all that much — something that tends to favor larger insurance providers with deep pockets.
But one innovation that’s quickly changing things is insurtech. A term blending the words “insurance” and “technology,” insurance public relations specialist Tom Wetzel writes that the broadest definition of insurtech is: the use of technological innovations to increase cost savings and increase efficiency in the insurance industry. It can have a profound impact on the way you do business.
Here are some advantages that insurtech creates for independent agents along with some of the specific tools you can use.
Insight into Customer Needs
There are three critical aspects that contribute to customer satisfaction, Michael Urban at The Boston Consulting Group writes: speed, quality and transparency. While people most don’t expect companies to respond to their concerns in real time, they typically expect a turnaround time of hours rather than days, which is understandable.
When it comes to quality, most insurers deliver an error-free rate of 70 to 80 percent. This is quite a bit lower than the 95 percent expected by customers. In terms of transparency, consumers want to know the exact status of their application or claim at any given time. And this is something that factors in heavily to their overall level of customer satisfaction.
You could argue that insurtech is a natural catalyst for improved customer satisfaction because of the insights it can provide independent agents.
One example is Google Health, which is Google’s personal health information centralization service. Insurtech startup thought leader Rick Huckstep says Google Health has created an optical sensor that monitors a person’s cardiovascular health by tracking blood flow. Using artificial intelligence, the system can detect potential health issues early on, even before the person themself would notice.
Advanced technology such as this would let an agent know which specific types of health insurance would be ideal for a particular customer. For instance, if the device found that the person had a heart condition, the agent could recommend a certain form of insurance coverage specifically tailored to individuals with that issue.
Or say you’re selling business insurance. A customer would obviously want a policy that matches their needs but wouldn’t want to spend a fortune on unnecessary coverage. Insureon’s Policy Buddy tool allows a customer to choose statements that apply to them such as “I work from home” or “I rent an office or storefront.” It then takes that information and suggests the best insurance policy for that specific situation.
The Ability to Make Better Decisions Faster
Big data can be another major asset. Insurance carriers and agents are constantly generating large volumes of customer data, financial expert Alyssa Furtado writes. Intelligent data analytics are now at the point where they can condense that data and package it in a way that assists you in your decision-making.
She offers an example where an analytics platform allows you to view your customers’ portfolios in real-time and alerts you when whenever there’s a gap in someone’s coverage. In turn, you can reach out to that customer with a customized sales pitch to fill in the gap.
This way your offerings are ulta-personalized and relevant to each customer’s unique needs. Furtado says a computer algorithm can narrow your list of customers down to those statistically most likely to buy additional coverage.
Applied Systems is one specific analytics tool that provides agents with data-driven insights that can help you make more informed business decisions. It puts you in the driver’s seat in terms of understanding business operations and pinpointing customer opportunities that facilitate growth.
Besides laying the foundation for a positive customer experience, Urban at BCG also explains that insurtech improves operations for independent agents.
“When insurers reduce the number of negative customer experiences, they gain corresponding efficiencies and productivity in operations,” he writes. “Improved customer service results in less work, stricter processes and fewer additional customer questions to be answered.” This means less back-and-forthing and less wasted time.
But insurtech goes much deeper than that. AI and automation are key components of this technology and can help agents accomplish significantly more in less time. A good example is Spixii, which is a chatbot technology specifically designed for the insurance industry.
Insurance Times reporter Scott McGee looks at how leading global insurer Zurich UK experimented with Spixii’s chatbot system called “Zara” to expedite the claims submission process. During a six-week pilot period, Zurich UK used Zara to gather information 24 hours a day, seven days a week. The information was then sorted and delivered to a human claims handler who would then respond to the customer and quickly process the claim.
This ultimately resulted in the average claim process taking only three hours, which was a dramatic improvement from the targeted 24 hours.
Another example is Snapsheet, a mobile app for customers to submit their automobile claim. The platform allows them to settle the claim virtually using a simple, intuitive process designed for an optimal customer experience. By using Snapsheet, insurance customers receive an estimate within 2.7 hours on average, and there’s a 9/10 satisfaction rating.
This level of efficiency helps streamline things dramatically for agents and reduces the overall cycle time significantly. It makes it possible to take care of repetitive, often painstaking tasks in a much shorter amount of time.
When utilized correctly, this type of technology is a win-win for both customers and for agents, which brings us to our next point.
Improved Claims Transparency
Another key benefit of insurtech is the increased transparency in claims handling, the law team at Hogan Lovells writes. They point out that insurtech limits the potential for disagreements between parties and creates a framework where contracts are automatically enforced. Implementing technology in this manner creates a certain level of objectivity so that customers, agents and carriers stay on the same page with each other.
“From the filing of a claim to receipt of payment, we want the insured to rate the customer experience positively,” claims advocate Jenean Meier agrees in PropertyCasualty360. “The promise of insurtech could loom large as we work towards accomplishing this goal.”
This is important because the better the customer experience is, the stronger the relationships between customers and independent agents become. In turn, you can expect a higher retention rate and potentially increased referrals as customers will be quicker to recommend you to others. And this is important because, as Chris Duskin at the referral marketing platform Extole points out, people are four times more likely to purchase when they’re referred.
Reduces the Likelihood of Fraud
Insurance fraud is a serious problem. Estimates by the Coalition Against Insurance Fraud places it at $80 billion a year across the board on all types of insurance, and it accounts for anywhere between five to 10 percent of claims costs for insurers.
Although many cases of fraud can be spotted fairly easily, criminals are becoming more creative and sophisticated. So independent agents need to be on their guard and know how to sniff out bogus claims. Unfortunately, this can be a time consuming process. Rather than focusing on growing your business, you end up spending time investigating claims to identify potential fraud.
Insurtech can help with enhanced fraud detection. Shift Technology is one particular tool that helps agents fight fraud by evaluating data and using comprehensive analytics to identify suspect claims. The European Anti-Fraud Association reports that it has already helped them uncover fraud schemes that they hadn’t even imagined existed a year ago.
While this is by no means a replacement for human effort, it can be a tremendous help and a huge time-saver. And the promising thing is that technology like this is still only in its infancy and will become more sophisticated over time.
Harnessing the Power of InsurTech
Though a new phenomenon, insurtech is growing by leaps and bounds. The Insureon team points out that there were only 28 funding deals involving insurtech companies in 2011, but that number increased by 600 percent to 173 in 2016.
While there will certainly be challenges implementing this technology, independent agents stand to gain a lot. It can help you better understand your customers, recommend relevant coverage and make better decisions. It’s a matter of selecting the right insurtech tools and effectively harnessing their power. Doing so should give you a decided competitive advantage and help fuel business growth.
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