ADVICE TO INSURERS ENTERING THE SMART HOME MARKET BUILD TRUST, PARTNER, INVEST

WERNER RAPBERGER | June 21, 2018

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Smart-home devices are gaining favor among early adopters and there is a growing opportunity for insurers to leverage smart-home technologies to create innovative new solutions that can transform the insurance value proposition. While entering this market is not simple or easy, there is a considerable advantage for first movers. Insurers are increasingly recognizing the ability of IoT devices and data to enhance their offerings and improve outcomes for their customers. Data from these devices, combined with analytics and responsive applications, can facilitate real-time risk monitoring and modeling, and incentivize behaviors that mitigate risk and help prevent claims.

Spotlight

Alabama Public Automobile Insurance Agency, Inc.

Alabama Public Automobile Insurance Agency, Inc. (APAIA) is a managing general agency and wholesale broker headquartered in Birmingham, Alabama. Founded in 1950, for over 65 years APAIA has been a stable and reliable business partner for Alabama and Mississippi insurance agents. APAIA works only with independent insurance agents to help them insure commercial trucking and auto accounts. Available coverages include Auto Liability, Physical Damage, Cargo, General Liability and Occupational Accident.

OTHER ARTICLES

Will your insurance IT investments pay off?

Article | April 12, 2021

Automated claims processing, price comparison platforms, mobile bill paying—these are just some of the digital services that insurance customers expect and insurers want to provide. As the demand for digital skyrockets, so does the need for insurers to invest in IT. In the past seven years, the share of IT in total operating costs of property-and-casualty (P&C) insurers increased 22 percent. The rise of digital means technology is no longer a cost center. Rather, it is an asset that, if managed well, can increase growth and profitability. But do these IT investments pay off? As the COVID-19 pandemic exacerbates already increasing cost pressures, insurers’ IT budgets are under scrutiny; they want to see the business impact of their IT investments. Insurers with targeted IT investments achieve better growth and performance Data from McKinsey’s Insurance 360° benchmarking survey provide strong evidence of the positive business impact of targeted IT investments. In fact, insurers that invest more in technology outpace competitors that don’t pursue targeted investments in business measures such as gross written premium (GWP) growth, return to shareholders, and expense and loss ratio (exhibit). As an example, in life insurance, companies that invested more in IT saw a greater reduction in expense ratios (by 2.0 percentage points) and higher returns on technical reserves2 (1.7 percentage points) when compared with insurers with lower IT investments. Insurers achieved these outcomes within three to five years of making their investments. For P&C insurers, those with high IT investments achieved approximately twice the top-line GWP growth of low IT investors. High IT investments also produced a greater reduction in combined ratios when compared with those with low IT investment. Four areas for targeted IT investment So what kinds of technology investments can help insurers achieve growth and improve productivity and performance? Investments in four areas are critical: Marketing and sales: Marketing technology solutions can increase sales and processing efficiency, improve the quality of core customer-facing processes such as policy inquiries and policy applications, and improve customers’ overall experiences. McKinsey’s Insurance 360° benchmarking data show that tech investments in this category can facilitate top-line growth for P&C insurers by up to 20–40 percent; for life insurers, that growth could be 10–25 percent over a three- to five-year period. Underwriting and pricing: Automated underwriting fraud detection can improve the likelihood that insurers correctly identify fraud and set accurate prices. A pricing tool kit that analyzes pricing across competitors and enables a flexible, more segmented market versus technical pricing further improves profit margins. Insurers that deploy these and other product, pricing, and underwriting technologies have seen improvements in their profit margins by 10–15 percent in P&C insurance and 3–5 percent in life insurance. Policy servicing: Workflow automation, artificial intelligence–based decision support, and user experience technologies in policy servicing and within IT can improve the customer self-service experience and automate back-office processes, thus reducing IT and operations expenses. And state-of-the-art self-servicing options will reduce processing times and even improve customer experience. An analysis of programs for large-scale insurance IT modernization finds that insurers that deploy these and other product, pricing, and underwriting technologies have seen improvements in their profit margins by 5–10 percent in P&C insurance and 10–15 percent in life insurance. Claims: P&C insurers can use automated case processing—machine-learning technology trained to process basic claims cases—to segment more complex cases and significantly improve claims accuracy. Combined with better partner integration and steering technologies embedded in a transformation of the claims operating model, such technologies can help P&C insurers improve profit margins by 25–40 percent, according to McKinsey analysis of large-scale IT modernization programs. To realize the full value of IT investments, insurers must strategically allocate their resources and view tech as an asset, not a tool.

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The impact of Coronavirus on the insurance industry

Article | March 20, 2020

Unsurprisingly, that has had a knock on effect on financial service providers across the board and those in the insurance industry are no exception. In some cases insurers have started taking action to protect their businesses which, while sensible, left many consumers in the lurch as airlines failed to cancel flights and governments issued conflicting advice as to whether people should travel or not. Others in the insurance industry meanwhile are being forced into action to customers’ benefit by governments’ emergency responses to the virus.

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AI and Virtual Assistant for Insurance Sector: 10 Ways to Maximise Performance

Article | February 17, 2020

Evolution in business concepts and implementation of the latest technology trends are driving the thriving growth of businesses. Among all, artificial intelligence is best known to transform a business by automating the processes and making the tasks seamless. And the inventions like virtual assistant and chatbots are practically implementing these concepts to showcase results that promise skyrocketing growth and boost in business.

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Why Germany Is Becoming a Global Hotspot for InsurTech Firms

Article | February 25, 2020

For the uninitiated, insurance technology, or InsurTech, is the system of tools and technological innovations that are used to drive improved efficiency compared to older insurance industry models. In 2019, Germany had already begun to position itself as the de-facto hub for InsurTech firms, largely due to the uniquely collaborative nature of InsurTech startups in the country, in combination with extreme interest from international investment firms, which recognize the disruptive potential of many nascent German InsurTechs.

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Spotlight

Alabama Public Automobile Insurance Agency, Inc.

Alabama Public Automobile Insurance Agency, Inc. (APAIA) is a managing general agency and wholesale broker headquartered in Birmingham, Alabama. Founded in 1950, for over 65 years APAIA has been a stable and reliable business partner for Alabama and Mississippi insurance agents. APAIA works only with independent insurance agents to help them insure commercial trucking and auto accounts. Available coverages include Auto Liability, Physical Damage, Cargo, General Liability and Occupational Accident.

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