How Innovative Tech Partnerships Will Change Insurance Forever
By Tricina Elliker
Insurance and risk management are poised to make big changes to their industries. Old and new challenges are being solved with new creative startup partnerships. This year a report from PricewaterhouseCoopers found that insurance CEOs are eager to harness technology to solve a wide variety of challenges. “61% are exploring the benefits of humans and machines working together,” a much higher percentage than any other financial services sector.
That’s a significant leap forward, especially for an industry that — simply by its nature — struggles to keep at the forefront of innovation.
Challenges, old and new
Insurance companies are known for adopting new technology slowly. It’s partly because it’s a large and long-standing industry that’s perfected the way they do business over time. But this steady industry has been facing staffing challenges for a long time.
Younger generations expect very different working environments than boomers. Not only, do they expect more digital tools, they expect the mobile ready lifestyle that comes with digital. Working remotely and other common startup practices are still rare in insurance. But that doesn’t mean the industry couldn’t run with a more flexible work approach, they’ve never had the opportunity to really try it. Until now. By folding new technology into day-to-day business, the industry could tempt vital potential employees to make the leap to insurance and fill those open roles.
Up till now, the insurance industry has mainly prized experience and establishing a more seasoned workforce largely filled with boomers, an enormous generation that’s currently retiring in droves. Very quickly, the industry is seeing strain like never before. According to a McKinsey whitepaper on the property and casualty industry, “The number of insurance workers 55 or older has increased by 74 percent in the last 10 years, compared to a 45 percent increase for the overall workforce.” That’s a fifth of the insurance workforce hitting retirement age, and it’s only increasing.
Incidentally, when it comes to insuring small to mid-market businesses with a few sites or enterprises with dozens of commercial or manufacturing sites, sending a professional to inspect each individual property during the underwriting process gets expensive. The resources required to fully inspect every site insured with a commercial plan has become one of those impossible problems. It’s often not cost effective to send an inspector to a particular location — And the cost of travel is only part of the challenge, there’s also the time investment required by each inspector.
The industry simply doesn’t have enough boots on the ground to visit each site as often as the properties need. This is where innovation can introduce a more efficient way to manage the process, like a virtual surveyor of sorts that could review photo and video data from afar and provide thorough inspections more often to their customers. Faster feedback, coupled with the ability to check on property updates will encourage customers to stay up to date with maintenance assessments as insurers get more insight into the properties that hold policies.
Our own CEO Robert Chea has been discussing these challenges with leaders in the industry quite a bit lately. The numbers just don’t add up for in-person inspections. “Roughly 80% of the time, premiums are not high enough to warrant a site visit,” he says. “Like one carrier said — out of 300,000 policies a year, 240,000 never get a site visit, so there is no visual data at all.”
Even those that do get site visits, don’t get them very often. “The remaining 60,000 policies that get a site visit happens roughly like every five to 7 years,” he adds. “And when those companies that do receive a site visit are asked to make changes for risk improvement, there is no way to know if the customer has even implemented those changes for another five to 7 years.” Hashtag: SMH.
Basically, only a small fraction of insured properties receive thorough inspections and none are receiving the kind of thorough inspection they really need to stay clear from risks. But that was already the case before staffing challenges emerged, adding additional worry to this drawback.
A perfect partnership
Technology has long been an evident place to look for solutions for the challenges faced by insurance. At times the industry’s slow-and-steady pace gets in the way of quick tech innovation. Startups move much faster. They can design and build a prototype in the fraction of the time it would take to build an in-house innovation department.
Recently, a new strategy has been popping up all over the insurance industry and tempting many executives with the possibility that it could solve these new problems along with the long-standing challenges. Large insurance organizations are partnering with smaller, agile tech startups who can provide cutting-edge products and services that push the industry forward by leaps and bounds.
These partnerships are a creative way to streamline work for better decisions and stay current without the massive investment and hassle of attempting to manage technology in house. The same PwC report discussed above highlighted these exact kind of partnerships as a way for insurance to continue flourishing:
“Early stage start-ups develop and deploy full-functioning prototypes in near-real time and go-to-market with solutions that evolve with market feedback. In this scenario, the development cycle is shortened, which allows startups to quickly deliver solutions and tailor future releases based on usage trends, feedback and/or to accommodate more diverse needs.”
In other words, tech startups were made for this and the insurance industry is taking notice. Solutions like Mirror, with live streaming and photo and video capturing capabilities are providing ways for insurance brands to gather valuable data and assess and monitor properties more carefully. Rapidly increasing the amount of information available while eliminating travel costs and allowing employees to inspect a property from anywhere. All which help to broaden the opportunity to recruit new employees that would be able to do more remotely with complimentary digital tools and spend more time actually doing the job that fits their lifestyle.
Looking ahead, Insurance will focus on risk management and loss prevention through at least 2020. And the good news is that the increased frequency in reporting and the ability to stay more involved in the spaces insured will give insurers better insights, make it easier to find talent in the current job market, and — to top it all off — the properties themselves will be better maintained and offer safer working conditions. The insurance industry is facing some big challenges, but the brands that choose the right tools will find a myriad of benefits that could help them launch them to the next level.
