Now that we’re more than halfway through 2021, we were thinking about the de rigueur predictions that will soon be coming our way for 2022. For some reason, that put us in mind of the classic Budweiser commercial from 1999. After that, we decided to get serious; although, we really didn’t feel like it.

It’s safe to assume that most of the 2022 predictions for insurance will have to do with technology. The list will, no doubt, include:

• Artificial intelligence (AI). When more and more homes and cars contain voice-activated assistance, the insurance industry will continue to adopt AI as it can, particularly in the interests of personalizing the policyholder experience and the policyholder’s rates. How will AI do that? With …
• Machine learning. Simply put, machine learning is stored data that constitutes acquired experience. Combined with AI, that acquired experience can be analyzed and translated into actionable information and automated processing. And where will all this stored data come from? From …
• The Internet of Things (IoT). Given the connectivity of everything on the Web — including smart-homes gadgets, automobile sensors, wearables, online retail sites, referral-program software, and who knows what — insurers that don’t tap into IoT technology are going to miss the boat and then some.
• Telematics. See AI, machine learning, and IoT.
• Social media. Given the pace at which things evolve, it’s interesting to look at how quickly definitions of things like IoT seem to evolve. They used to focus on hardware devices. Now they include every social-media site imaginable, all of which are tracking us like bloodhounds in the woods or sharks in the water.

Sneak Peeks

Chances are pretty slim that we’ll end up in the fortune-telling business. We’ve been developing insurance technology for so long at this point that a career change might not be the most prudent decision we could make. But you really don’t need powers of prognostication to see what’s coming for the insurance industry, technologically speaking.

The industry will continue to follow its conservative nature, as it should. It’ll prudently adopt technologies as it can. It’ll wisely heed the needs of its policyholders. It’ll stay a few steps back from leading edges, which is a much safer place to be anyway. But in the end, it’ll come around, as it always does.

That’s what’s up.

Figure A

We seem to have been writing and speaking a good deal lately about change — the changes undertaken during the COVID pandemic, the changes that could have and should have been considered before the COVID pandemic, and the changes we should be undertaking now in anticipation of the next pandemic or the next catastrophic business interruption. In particular, we’ve been writing and speaking about digitalization, the adoption and adaptation of digital technologies for business processes. In other words, the conversion of text, pictures, or sound into digital form for automated processing on computers, as opposed to the manual processing of analog media like paper or whiteboards.

During all of that writing and speaking, it occurred to us that the lion’s share of the friction being experienced in the move toward digitalization is attributable to rates of change. In general terms, we’re referring to the technology-adoption curve that’s typically rendered like the image in Figure A. Somewhere between the so-called innovators and the early adopters, there’s a gap. Skepticism, fear of change, and fear of failure live in that gap. As people begin to creep across that gap, the early majority and the late majority adopt a given technology as it begins to succeed and make its adopters feel safe. By the time the laggards get around to adopting the new technology, it’s already being superseded by a newer technology. And on it goes.

Context, Please

In more specific, insurance-industry terms, the gap exists between policyholders (and prospective policyholders) and the insurance companies with which they choose to do business. And the insurance industry’s historically slow pace of technological adoption and adaptation is creating greater friction and lost opportunity. To be fair, individuals (like policyholders and prospective policyholders) can explore and embrace technological advancements — and change their behaviors and their expectations — more readily and easily than companies and entire industries can. But that reality notwithstanding, friction and lost opportunity exist.

We should bear in mind that there are numerous definitions of legacy. Two of them are:

• anything handed down from the past, as from an ancestor or predecessor
• a gift of property; a bequest

If we remain mindful of both of those definitions — and if we embrace the technological change that shapes the behaviors and expectations of our customers — we can transform #1 into #2.

That will bring our respective rates of change much closer to each other.

We’re old enough to remember the days when our grandmothers would come to our childhood homes to help out with some of the chores. As she was washing the dishes by hand, we’d say, “But Gram, we have a dishwasher.” As she was washing the clothes by hand, we’d say, “But Gram, we have a washing machine.” In response to both of those statements and referring to either of those machines, she’d invariably say, “That thing’s gonna blow up.”

We recalled those days and those grandmotherly conversations when we read a recent post from Celent. It was called, “WHAT HAPPENS WHEN? FIVE TIPS FOR FULLY DIGITIZING THE CUSTOMER EXPERIENCE”. We didn’t think it was important enough to put in all capital letters. But what do we know? The upshot of the post is this:

Too many live humans begin tedious processes that take too long and upset the customers. These processes are a drain on operating costs and keep the expense ratio high … institutions need to … utilize flexible rules-based systems with open integration protocols to automate human-based processes out of existence.

Well, yeah. If human beings are involved in anything, there’s the potential for errors. The more more human beings involved, the greater the potential for error. If that weren’t true, we wouldn’t have Murphy’s Law.

Can You Digit?

Here are some rules to live by and to run your business by:

1. Minimize the number of manual processes.
2. Digitize and automate as many processes as you possibly can.
3. The faster and more accurately you can perform any business process, the more responsive you’ll be (to say nothing of efficient and profitable).
4. The more responsive you are, the happier your customers will be.
5. If your software vendor can’t help you live and run your business by those rules — if the vendor can’t help you digitize, automate, and be as responsive as your customers expect you to be — you’re working with the wrong vendor.

Your grandmother didn’t live and work in a digital world. But your customers do. And if your customers do, you do, too.

Don’t worry: Digital technology isn’t going to blow up. But your business might blow up without it.

We’re in the midst of March Madness. We love the games and everything. But one of our favorite parts of the experience is that we get to hear any number of coaches and players in the innumerable post-game interviews saying things like this: “We have to take our game to the next level.” Or this: “Well, our shots were falling pretty good, but we have to take our defense to the next level.” But it’s not just sports. The subject could be business, personal finances, the landscaping around your home, the resolution on your TV screen, pet grooming, your relationship with your significant other — anything. People are always talking about the next level:

“Take it to the next level.”

“We have to get this thing to the next level.”

“If you want to get anywhere in life, you have to take your attitude to the next level.”

Are we the only ones who wonder what the next level is? Don’t we need to know the level we’re on before we can determine the next one? How many levels are there?

Deep Breath

In assessing any claims about or aspirations towards the next level, we need to separate rhetoric from reality. Let’s take our software for example. Do we want to take the Finys Suite to the next level? Absolutely. Do we know what the next level is? Not exactly. And the reason we don’t exactly know is that we’re not going to determine it in a vacuum. We’re going to look at what we’re dedicated to doing — property/casualty insurance administration.

We’re also going ask our customers what works well, what might not work so well, and what they’d like to see next. We do that continuously through the input of our Innovation Advisory Board. We’re going to remain as informed as we can by interactions at industry events, talking with prospects, constant reading and reviews of insurtech and industry trends, and maintaining advisory relationships. We’re going to assess the cost/benefit of what we can do and when. And we’re going to map out the next successive levels in the way that makes sense for all parties involved.

How about this? Let’s agree everything and everyone wants to get to the next level. But let’s also agree we have to evaluate where we are. We have to determine and define the next level. And we have to develop a plan to get there.

Are you ready for the next level?

Like seeing a car you’ve never seen before or learning a word you never knew before, as soon as you see the car or learn the word, they seem to be everywhere. Such is the case with digitalization. So, we weren’t surprised at all to see a Transunion consumer study, the results of which were published with the title, “COVID-19’s Impact on the Insurance Industry Will Continue Well into 2021”. Under trend #3, the Transunion survey revealed this:

Almost half of respondents (47%) filed an auto and/or property claim in the last year, and of those, nearly four in 10 (39%) used a mobile app, website portal or e-mail. Consumer preferences for interacting via digital/online platforms also support this trend. The survey found respondents preferred to communicate with an insurance provider primarily via e-mail (32%) and telephone calls (32%), followed by an insurer mobile app or website portal (18%). As digitization grows, insurers must balance introducing and expanding digital customer interactions while also delivering friction-right experiences and protecting against fraud.

It’s a little surprising that 64 percent of the respondents still preferred email and phone calls (2,015 of 3,148). But we can expect web and mobile usage to trend up. Forewarned is forearmed.

One Digit at a Time

We’ve talked about digitalization in the past. We’ve written about it, too. And we know it’s déclassé to quote ourselves, but we’re going to give ourselves permission, just this once:

Most insurers were relatively well-equipped for hybrid operating models and even WFH [before COVID]. But meeting the needs and expectations of their policyholder and prospects who live in a highly digital world? Not so much.

So, what’s to be done? First, make sure your core systems are modern (or modernized) enough to accommodate digital capabilities and interfaces. Second, make sure your portals and mobile apps are maximizing self-service capabilities for your policyholders, your agents, and your other constituents. Third, make sure you have a plan to get you optimally digitalized, starting with the steps you can take most quickly to yield the greatest benefit at the least cost, then work your way up from there. Fourth and most important, communicate with all of your constituents to make sure you’re giving them the functionality they want and to earn their trust and their loyalty.

The word, digitalization may sound daunting. And the phrase, digital transformation, may be downright terrifying. But with a sound plan and prioritized steps, you’ll get there. Transunion’s 64 percent won’t be able resist progress for long.

If you need help, we’re here when you need us.