As we embark on this New Year, I find myself thinking back over the truly transformative advancements we made in 2018 across the insurance industry. A shift in the market to the practice of executing today with tomorrow in mind was firmly underway, and we certainly saw it integrated in all areas of our business! Here are a few observations we shared last year through our Insurance Insights blog.
It’s all about the Internet of Things
If one topic encompassed the most landscape in 2018, it had to be the Internet of Things (IoT) – the network of connected devices that exchange information over the Internet via embedded sensors. In 2018, LexisNexis released results of a study that explored the industry’s readiness for the IoT data influx. Findings show that while carriers seem to be knocking at the door of the new big data era, they’re still lagging behind. Changes are expected over the next few years, with 63% of respondents indicating that they have a long-term IoT strategy in place. Now is the time for them to step forward to seize the opportunity at hand.
Accurately determining retention potential impacts the bottom line
Effectively executing today with tomorrow in mind begins at acquisition. Identifying, attracting and retaining high-quality policyholders is a challenge that carriers across the industry face. The growth of digital channels that provide consumers with multiple choices, and it’s not unusual for them to switch carriers several times in their lifetimes. At the same time, consumers today do not exhibit the brand loyalty of even a decade ago. LexisNexis analysis indicates that only one in four households have not shopped their insurance in the last five years. It is crucial that carriers uncover potential blind spots and adapt their targeting and segmentation initiatives.
Contributory data looks to be a sea change in insurance
Every insurance company has data on their insureds, claims experience, cases of fraud and trends. All this information sits in isolation inside each company and it is of limited use for any individual company when looking for a broader, more accurate view of risk. When these companies join as an industry, however, to combine their respective databases into one massive pool of information, they can establish more accurate ratings and, for many consumers, lower rates.
Automating your loss run capabilities can help commercial insurers eliminate blind spots
Prior losses can be a strong indicator of future risk. Many commercial carriers, however, don’t have the visibility into a customer’s prior loss history needed to make this assessment. This leaves carriers vulnerable to common “blind spots” that may impact their ability to more effectively assess risk and improve overall profitability. In early 2018, LexisNexis Risk Solutions released the findings from a case study – Commercial Carriers Eliminate Blind Spots to Reveal an Additional $25 Million in Incurred Losses – to highlight the benefit of automated loss runs in commercial underwriting.
The life insurance landscape is changing
Insurers today face a changing consumer landscape—one that features new demands for speed and convenience. This, of course, contributes to an increasingly competitive environment. With the increasing prevalence of online shopping—not just for consumer goods—carriers must be prepared to adapt to and effectively address changing expectations for how life insurance can be bought and sold. When it comes to purchasing life insurance, consumers are no longer simply empowered through capabilities like online quoting—they are emboldened. While households of all kinds purchase life insurance, coverage types and amounts vary by family size and income level. Consumers may purchase term life as income replacement or to guarantee a mortgage payoff or college funding. They purchase permanent life products predominately to cover end-of-life expenses or to transfer wealth to their heirs. Insurers who take the extra step to get to know their customers will be the winners in an increasingly competitive sales environment.
Touchless claims made inroads in 2018
Last year, I wrote about how consumers are looking for the same easy digital experiences in their auto insurance – including how claims are processed – as they do in other parts of their lives. In 2017, LexisNexis Risk Solutions has introduced the concept of a future “Touchless Claims” process for the P&C insurance industry. In summer 2018, we again commissioned a blind study of insurance claims executives across large, medium and small insurers to learn how claims are processed today and – more importantly – how claims processing will be managed in the future. Key findings of the latest study include:
- Virtual Claims processing (via photo or streaming video technology) has been adopted by 95% of insurance executives surveyed in 2018 vs. 79% of executives surveyed just 18 months ago.
- Claims executives considering or open to Touchless Claims increased to 79% vs only 42% just 18 months ago.
- Claims executives who implemented some form of claims automation report fewer touches, faster claims service, increased customer satisfaction scores and up to 50% reduction in loss adjustment expenses.
Even though the concept of Touchless Claims is not yet fully adopted, it still provides insurance executives with a directional focus for future claims processing.
2018 certainly saw amazing advancements in technology and customer experience in the insurance industry. I look forward to how we – as an industry – will move the needle even more in 2019!