Automobile Insurance, Insurance Technology
Article | December 19, 2022
The worldwide marketplace is undergoing a host of structural changes and insurance companies are consistently working to capitalize on them. The past few years posed a number of new challenges. For an industry whose primary promise is to “be there when customers need us,” delivering top-notch timely services is not only crucial for business continuity but the most urgent goal. Inspiring trust through every process of the policy lifecycle is a significant factor for insurers to be able to maintain goodwill in the market. Recent pressures proved that the industry needs a systemic metamorphosis and digital solutions may be able to provide them.
This is also why many industries are jumping on the bandwagon of digital transformation and insurance is no different. With a barrage of new technologies, solutions and software, it has become easier to automate processes and eliminate inefficiencies that hamper day-to-day-operations. One such area of transformation is insurance policy management. Forward-looking insurers today, can start by rethinking their policy management framework.
The Importance of Automated Policy Management
Simplifying all internal processes is a priority for many insurance providers worldwide. Much of the insurer’s business outcome hinges on streamlined workflows, seamless document management and effective use of different tools. In policy management, mitigating risk is another significant aspect that impacts the bottom line. Today, insurers are heavily investing in new technologies like artificial intelligence and machine learning, robotic process automation, data analytics and much more.
Policy management entails the comprehensive process of administering policies. From pre-sale to renewal to claims, at every stage of the policy lifecycle, insurers must ensure a smooth process at every stage. Some of the stages of policy management that can be enhanced by using automated policy management tools which include:
It’s clear that insurance policy administration system (pas) encompasses all the main business processes of an insurance company and the importance of policy management is enough to invest in high-quality solutions that span the policy lifecycle.
The Must-Haves of Policy Management Software
A smart insurance policy management simplifies the process for both the insurer and the insured. For insurers, it should be able to optimize resources and save time in administering policies. For example, life insurance policy management system can help a provider scale their operation, introduce flexibility and administrative simplicity. Here are the components of a policy management solution that is a must-have for every insurance provider. For the insured, the solution can help organizations not only provide a smooth experience
Policy Issuance, Update and Cancellation
The most significant must have that an effective policy management solution should have, is the ability to digitalize every aspect of policy administration. This includes being able to generate documentation, centralize records and oversee all operations across the policy lifecycle.
For instance, everything should be synced so that any updates are made universally across all documents. This eliminates doing manual changes to all the records. In addition, with technologies like robotic process automation (RPA), repetitive tasks can be automated and reduce the time it takes to process documentation.
Underwriting is a process where individuals or firms take financial risk for a fee. In insurance, underwriters are responsible for evaluating the degree of risk to the insurer’s business. It is in essence a manual process that comprises extensive research and assessment of the prospective policy holder. For instance, medical underwriting consisted of ascertaining the charges to levy or even whether to provider coverage to them based on an applicant’s health condition.
Even though underwriting is a time-consuming process, it doesn’t have to be tedious. Underwriters need to access data that is spread across a range of different platforms and sources. Automated policy management enables organizations to accelerate the process of data collection and collation. This is why, automation in underwriting functionalities is one of the most important features of a policy management software that is a must-have.
Estimates and Quotes
Holistic policy management tools are incomplete without quote estimate capabilities. Quoting allows insurers to generate leads. With automated quoting features, insurers can provide estimates without having to directly contact customers, saving time and money in cold calling. In addition, it helps insurers to gather the information they need to then target their leads and tailor solutions that meet consumer expectations.
Quality policy management systems include these capabilities. They work by letting customer input their information and receive a quote estimate based on it. For insurers, in addition to providing leads, it lets them engage customers from the start itself.
Renewals is a critical stage in the policy lifecycle. Overseeing renewals and reducing customer churn is something every insurer must prioritize. Renewals handling amplifies the importance of policy management software that offer renewals management tools.
Renewals management features allow insurers to alert policy holders about the ending of their coverage and provides a timely reminder to renew it. Since renewals management tools offer ready information for insurers to access, customers need to update fewer fields. It not only reduces customer churn but contributes to an easy, fast, and customer-friendly process.
Claims processing is when an insurer reviews a claim process to verify and authenticate the claim made by the policy holder. As a core business process, claims management and processing needs intelligent systemization. Insurance policy management tools that integrate claims processing will enable insurers to automate the settlement process.
Modern policy management tools sync different systems so insurers have a centralized database and can simplify tasks like assigning claims, detecting fraud, record payments issued and automatically generate reports.
Regulations and Compliance
Insurance is a heavily regulated industry and insurers must keep up with the many compliance and location-specific regulations to avoid hefty fines. Regulatory policies are also subject to change and can often realign processes to protect consumers. This may sometimes cause insurers financially. However, complying with new regulations is a business necessity and policy compliance management solutions help immensely.
Insurers must be able to monitor any changes in global and local policies or keep an eye out for announcements regarding the change in rates or regulations. Many insurers have a team to do this but maintaining a team is costly and causes operational complexities.
Modern policy management tools offer the automation capabilities that eliminate the need for extensive overhaul or insurers to keep up with new regulations. These policy compliance management tools help in detecting breach and minimizing it. They also enable better resource allocation as teams no longer need to monitor new and upcoming regulations and plan for implementing the change.
Customer support is one of the most critical aspects of policy management. Beyond software and applications, being able to meet your customers’ demands, address their concerns throughout the customer lifecycle is vital in order to meet business objectives on time.
With digitalization transcending platforms and devices, policy management tools today need to be able to keep up to meet customer demands. This is why mobile-ready policy management solutions are a must. They allow insurers to respond to customers quickly and keep channels of communication open and flowing. In addition, features like quoting estimates and claims processing that accelerate policy administration and management in a streamlined manner are bound to keep customers happy and reduce churn.
Some policy management tools come with marketing automation capabilities as well as a CRM that lets insurers deliver a great experience right from buying decision to ongoing support.
There is no denying that digitalization is the future and insurers need to be ready to adapt to new challenges and evolving demands from consumers. Policy management tools not only enable insurers to overhaul their core process but simplify it and eliminate operational inefficiencies.
The importance of policy management cannot be understated. Age-old challenges and bottlenecks of managing millions of policies can be mitigated with comprehensive policy management solutions. The above components are the most critical process your organization should look to simplify. These essential features ensure you are able to optimize resources, improve operational efficiencies, streamline processes and translate all these into enhanced customer experiences.
Frequently Asked Questions
How does insurance policy management differ from other policy management tools?
Insurance policy management is a specialized solution that caters to insurance companies and enables them to manage renewals, claims, underwriting and all other processes associated with managing an insurance policy for their customers. Other policy management tools help organizations frame policies and management internal policy documents.
What is an insurance policy lifecycle?
An insurance policy lifecycle starts with generating a quote for the customer, onboarding the customer’s application, and finally setting the payment of premiums and renewals. When a policyholder claims insurance, the insurer has to process the claim, verify its authenticity then accept the claim fully or partially or reject it.
What are the ways the insured can choose to pay for the insurance policy?
The insured can either pay a lump sum amount or choose to pay monthly, yearly or quarterly. These payments are called premiums and are calculated based on certain condition set by the insurer.
Article | August 9, 2022
Insurance customers look for result-driven insurance services and products. To meet those demands and grow revenue, insurers need to move beyond conventional methods and envision their insurance business' customer interaction as aiding in the management of product and service deliveries. This necessitates a cloud-based strategy for future-ready operations. This is where the concept of cloud insurance comes into play.
Insurers are receiving signals that the moment has come to invest heavily in the cloud ecosystem. But how? Read about it in the following points.
The revenue landscape is shifting
Investing in cloud infrastructure allows insurers to gain a competitive advantage in new revenue streams. In addition, it depicts a protected sphere where all the insurance business operations are risk-free, free of cyber risks and intrusions.
Digital distribution appeals to customers and capital
Customer-centric innovations, such as product distribution or cloud-enabled services, draw investors' attention. This results in increased revenue production.
Why is There a Need for Cloud Insurance Solutions for Businesses?
Insurance businesses face numerous obstacles in a continually shifting market position each day. As a result, insurance companies must primarily respond to the demanding and rising needs of customers. Cloud technology provides accurate solutions for the same.
Let's look at the need for cloud solutions amid the trending approach.
Customers expect personalized products, services, and experiences to support chosen communication channels like social media, a website, or a portal. Consequently, insurers need to improve their “speed to market” approach, which is possible through cloud technology and provide competitive products and services.
Furthermore, sales growth remains under constant pressure. As a result, cost reduction is another eye-catching feature for insurance companies. By streamlining procedures and operations under one roof, decentralized, and digitalized, cloud insurance best suits to decrease costs and expenditure.
Not to forget, globalization demands insurance businesses be more flexible and agile to win new markets and obtain new prospects. Cloud insurance infrastructure solutions are critical today and, in the future, to achieving all of these objectives.
The Insurer’s Viewpoint is Critical for Success
According to the report, leaders are more likely to use Cloud SaaSs, big data, AI and machine learning, and the Internet of Things (IoT). However, given the findings of the aforementioned study, it is clear that moving to the cloud is merely a baby step on a long journey of technological advancement.
Cloud computing has emerged as a critical tool for digitization, and the significant challenges posed by the COVID-19 issue have highlighted the benefits of cloud computing."
Peter Heidkamp, Head of Technology at KPMG.
The Internet of Services and SaaS as a service is particularly appealing to insurance businesses when it comes to cloud insurance (SaaS). In addition, SaaS licensing options allow customers to obtain software to reduce internet and operational costs.
The real use cases or benefits of the cloud are:
Business scalability and flexibility
Increased customer satisfaction
Optimizing business processes
Encourages business backups
Cloud Insurance: A Wake-up Call for Opportunities
Cloud technology and its solutions enable insurers to leverage cloud capabilities and resources to stay abreast with market developments. The technology meticulously encourages customized products and services on time, develops corporate networks, and implements new business processes with high revenue.
However, adopting cloud solutions is not always an easy decision for insurers, but those that overcome security worries can reap the benefits of cloud insurance. Therefore, utilizing cloud solutions is a continuous journey that necessitates constant innovation and adaptability.
Core Insurance, Risk Management
Article | August 4, 2022
As AI becomes more deeply integrated into the industry, carriers must position themselves to respond to the changing business landscape. Insurance executives are expected to understand the factors driving this shift and how AI in insurance will impact claims, distribution, underwriting, and pricing. They can start to learn the skills and talent they need, embrace new technology in the insurance industry, and build the culture and perspective they need to be successful in the future insurance market with this grip.
While there are four types of levers that might help with productivity efforts—functional excellence, structural simplification, business transformation, and enterprise agility—insurers typically focus on the first two. Those levers are the foundation of efficient and effective operations, it isn't easy to leapfrog them. Traditional industry barriers are dissolving while technology advances and customer expectations vary dramatically. Ecosystems, which are groups of services that work together in a single integrated experience, are becoming more common across industries. Platforms that connect offerings from different industries are also becoming more common.
In an interview with Media 7, Darcy Shapiro, COO of Americas at Cover Genius, talked about the changing expectations of consumers in the insurance industry.
“Consumers expect brands to provide the same high-quality day-to-day experiences directly within the digital platforms they use most. Insurance should be no different.”
Darcy Shapiro, COO of Americas at Cover Genius
The Increasing Acceptance of Parametric Insurance
In contrast to traditional policies, which are paid based on actual loss incurrence, metric insurance has been around for a while, providing payouts when a specific event exceeds an agreed-upon threshold. Previously being used specifically for natural disaster coverage and supplied to countries and large corporations, parametric insurance is making a comeback today. Advancements in sensor technology, data analytics, and Artificial Intelligence (AI in insurance) create broader information indexes on various levels, which opens up parametric risk applications in novel ways.
A reinsurance company recently introduced a parametric water-level insurance product to shield businesses from the financial consequences of high or low river water levels. The program considers measured water levels at specific river gauges and agrees to pay a fixed amount for each day that the index remains below a predetermined threshold value. Other new-generation parametric solutions include terrorism protection for cities and airports, protection for retailers when transit strikes cut down on pedestrian traffic, and help for hotels when there are outbreaks.
The advantages of parametric insurance include faster delivery and avoiding lengthy claims investigations. Furthermore, since parametric products have less uncertainty than traditional insurance, premiums can be significantly lower. In terms of technology, parametric insurance is best suited to blockchain technology, with smart contracts that pay out automatically when certain parameters are met.
A Flood of Data from Connected Devices
Fitness bands, home assistants, smartwatches, and other smart devices are rapidly becoming a part of our daily lives. In addition, smart clothing and medical devices will soon join the fray.
Sensor-equipped equipment has long been common in industrial settings, but the number of connected consumer products is expected to skyrocket in the coming years. Existing gadgets (such as automobiles, fitness trackers, home assistants, smartphones, and smartwatches) will continue to grow. In contrast, new and expanding categories (such as clothing, eyewear, home appliances, medical devices, and shoes) will join them. According to analysts, interconnected devices will reach one trillion by 2025.
The data generated by these devices will result in a flood of new data that carriers can use to understand their customers better, resulting in new product categories, more customized pricing, and an increase in real-time service delivery.
The insurance industry can mine the data generated by these smart devices to better understand their customers’ preferences. This information can also assist insurers in developing new and more personalized product categories.
The Rise of the Insurance Ecosystem
According to McKinsey, insurance ecosystems will generate 30% of global revenue by 2025.
With an expanding array of data sources and a data-driven culture, many insurers will soon be able to plug into and exploit data from complementing firms. These agreements are evolving to involve traditional insurers as well as technology companies. For example, an insurance firm in Europe teamed up with a smart-home technology vendor to improve its home insurance. The latter's technology can detect smoke and carbon monoxide, preventing losses. In addition, a global initiative of a major reinsurance company is developing an ecosystem for InsurTech start-ups and digital distributors. Recent McKinsey research also shows that the insurance business has been having a hard time making efficiency gains for a long time.
Moreover, the operating expense disparity between the best and worst performers in P & C and life has widened over the last decade. Functional excellence, structural simplicity, business transformation, and enterprise agility are four productivity levers that insurers often focus on. Those levers are essential to efficient and productive operations. Ecosystems, which are groups of services that work together, are formed across industries and platforms that connect offerings from different sectors.
Insurers may use ecosystems to integrate their products into seamless client experiences. Ecosystems are essential in today's interconnected world, whether you want to build direct relationships with customers or work with companies that act as the customer interface.
Advancements in Cognitive Technology
Cognition is a critical component of AI in insurance. AI cognitive technologies mimic how the human brain functions. In addition, new technology may make it easier to process huge amounts of data, especially from active insurance products that are linked to specific people.
Carriers can constantly learn and adapt to the world thanks to cognitive technologies. As a result, it can enable insurance companies to introduce new product categories and engagement techniques and respond in real-time to changing underlying risks. In addition, convolutional neural networks and other deep learning technologies, which are currently used primarily for image, audio, and unstructured text processing, will be used in various applications in the future of insurance industry.
Automobile Insurance, Insurance Technology
Article | December 19, 2022
The blockchain has penetrated the mainstream. We predicted this in our 2019 article “Blockchain-as-a-Service: the Accelerator for Blockchain Adoption” where we talked about the technology's ease of integration. Companies can seamlessly adopt blockchain technologies by referring to existing use cases like smart contracts, data authentication, and asset management. They can also take advantage of open-source materials.
With the blockchain's accessibility on top of its formidable qualities, it’s no surprise that the digital ledger system is being integrated into every industry–from banking and healthcare to gaming and cybersecurity. As a cornerstone of the rise of financial technology or fintech, another industry it’s now serving is auto insurance. Here’s how the blockchain is revolutionizing the auto insurance industry:
Benefits of the blockchain in auto insurance
Multiple back-and-forths can slow down the manual processing of both insurance contracts and filed claims. Blockchain-based tools can speed this up by accessing necessary information through the data network. Insurers can easily access and verify the personally-identifiable information (PII) required for insurance contracts via the blockchain, as well. This means no lengthy coordination with other parties, shorter queuing time, and less paperwork.
Moreover, the blockchain helps those who buy auto insurance worry less about their PII being used by malicious individuals and organizations. Monash University asserts blockchain security effectiveness by pointing out how its design can alert any network of even the most minor changes to the data it contains. This is because blocks containing data are marked with hashes–input strings of computation characters–that become invalid when information is modified. When hashes become invalid, the network is notified. With such a prompt and responsive alert system, insurance agencies can easily detect hacking activities to protect sensitive data.
Blockchain applications in auto insurance
The most significant benefit of the blockchain’s application in auto insurance arguably lies in optimizing property and casualty (P&C) insurance verification processes. Sound Dollar defines property and casualty insurance as coverage for any damage the possessions stipulated in your contract incurs. Blockchain-based tools, like smart contracts, can immediately gather relevant information from an insurer's network to verify damaged possessions. It can also identify which ones are covered by your insurance contract. This streamlined verification process saves insurers billions of dollars in operational costs and makes filing a claim much easier for the client.
The blockchain can also be used to minimize and prevent fraud. Some of the best blockchain-based tools can identify whether an individual claims payouts from multiple insurers. These tools cross-check PII and non-PII with salient information from claims filed elsewhere to check for similarities. Moreover, the Insurance Innovation Reporter found that advancements in anti-fraud blockchain technology can detect third-party helpers, such as garages and brokers. This enables insurers to expand their data on fraudulent networks and prevent future cases of fraud.
Challenges to full implementation of the blockchain in auto insurance
Before full-on integration, developers and businesses have to address data integrity. While blockchain data cannot be edited, it does not ascertain that encoded information is true. This means data has to be verified before it's encoded on the blockchain. Blockchain-based technology is also expected to become more expensive in the coming years. As it becomes mainstream, demand for the technology and relevant development research will further drive operation and maintenance costs upwards.
There is still much work to be done if the auto insurance industry wishes to fully integrate the blockchain into its workflows. But with the long-term benefits it brings, insurers and clients alike will undoubtedly look to blockchain-based technology for improved services and a better overall experience.