Data & Analytics

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Laura Drabik
Laura Drabik
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3 Themes of Insurance Tech Transformation

The insurance industry has evolved around three key transformation themes that can be achieved through the use of technology.

As a business transformation consultant for a software provider, I keep my finger on the pulse of the industry by reviewing hundreds of carrier’s RFPs and requests for scripted demonstrations, and by participating in role observations and carrier discovery sessions. Based upon my carrier interactions and industry research, I have noticed a marked evolution of the industry around three key transformation themes. In my opinion, these are themes that only technology can help carriers achieve. 

1. Micro-segmentation
Micro-segmentation is increasingly enhanced and granular knowledge of the policyholder and prospects for the purpose of product matching. By understanding the traits and behavior of an increasingly granular segment of the market, carriers can start to underwrite, price, and provide service with surgical precision each defined market segment. 

When I think of micro-segmentation, I think of Amazon.com. For many of us who work full-time and also manage a hectic family life, shopping is often a dreaded, time-sucking experience. Thanks to Amazon.com, this once-dreaded experience is now a breeze. When I log onto the Amazon app, it makes product recommendations for future purchases based on my past purchases -- in essence, product matching based upon my customer traits and behavior.  

An example of a carrier that has been incredibly successful in this domain is Suncorp. Managing 12 distinct brands within one central IT department, the carrier delivers a very unique customer experience through its individually branded websites. Take, for example, the Just Car website, which targets a youthful 18-34 market. This segment is comfortable with Web technologies and most likely prefers working with technology to talking with a person. All insurance processing can be handled for this target market on the website, including getting a quote, logging a claim or, my personal favorite, liking the brand on Facebook. Contrast that with the Resilium brand, which targets an older, more affluent segment that prefers personalized service. The look and feel of the website is completely different. For example, instead of flashy colors and images of racecars, Resilium has a cleaner and simpler look and feel. The site also highlights how to access personalized service. 

[Changing the Security Mindset]

2. Omni-channels
Omni-channel is providing enhanced channel options for both sales and service. It’s the ability for a single transaction to be processed across multiple channels. For example, a consumer might start a quote online, switch to a call center, but then issue through a producer. Omni-channel delivers optimal service for the consumer by ensuring that transactions can be accessed across the multiple channels. 

Immediately banking comes to mind as an example of an industry that delivers exceptionally on the omni-channel experience. When I want to complete a banking transaction such as depositing a check, I have the option of walking into a brick-and-mortar branch or depositing the check via my smartphone app or ATM. Now, after depositing that check, I can transfer funds via the branch, phone banking service, ATM, or, once again, the app. The service options are convenient and can be at a time that is convenient to me.

Having started my career in the industry working for State Farm Insurance, I never thought I would see the day that the carrier would sell or transact business outside of the agency. But, that day has come. State Farm now offers quotes online, and the abilities to file a claim, locate services, and manage account data like address. A policyholder still has the option to contact his or her agent to perform these services, but now the individual has more convenient options. Mercury is another excellent example of a carrier that initially transacted business entirely through the independent agency, but now also offers the consumer more convenient online options. 

Working with carriers over the past year, omni-channel is without a doubt the hottest trend in the industry. The typical boilerplate for the type of carrier that rates omni-channel as its number 1 priority is typically a carrier with a producer-based distribution channel and an image steeped in history of providing personalized service. It is looking for ways that technology can extend servicing via an omni-channel approach. So they don’t erode their brand equity, they are focused on introducing a new LOB with a leaner definition to a new market. Interestingly, the carrier stakeholder teams I typically work with on these types of strategic pursuits are comprised of experts from the online retail market, not necessarily insurance pundits. 

3. Analytical insights
Through algorithmic analysis of data, insight emerges into patterns and trends allowing the carrier to make better and more informed decisions. Insight provides the right information to the right role at the right time, allowing that insurance employee to be “brilliant in the moment.”

An example of analytical insight is the software a police officer accesses from his car to look up critical driver information when performing traffic stops. Before exiting the car, an officer can input a license plate number and find out whether the vehicle might have any red flags associated with it. By providing more information like driver’s license numbers, the officer can further determine infractions and violations of the operator of the vehicle. This vital information allows the officer to make more informed decisions on how best to proceed.

One tier-1 Canadian insurer exemplified analytical insight during the Alberta floods of 2013, which caused an estimated 3 billion to 5 billion in damage and left 100,000 people homeless. It utilized an application that allowed it to visualize and contextualize policies and claims in the expanding flood zone. Viewing its policy exposures in the flood zones allowed it to reach out proactively to insureds in order to provide guidance, instructions, and reassurance, as well as secure hotel accommodations for insureds. Visualizing claims in the flood zone enabled the team to quickly determine if there were any patterns in the claim categories and locations while also reducing claim-handling time by being better able to organize by severity adjuster and vendor services. 

Laura Drabik is the director of business transformation at Guidewire Software. She previously worked for State Farm, Deloitte and Andersen Consulting, and received her MBA from the Rotman School of Management. View Full Bio

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KBurger
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KBurger,
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10/31/2014 | 11:41:21 AM
Re: Two fed by one
Clearly, they are all interrelated -- the analytics enables the micro-segmentation, micro-segmentation requires omnichannel, and those multiple channels provide info and insights that fuel the analytics. Laura's reference to banks' adeptness with multi-channel (which is of course a mixed bag, some are executing more effectively than others) also underscores that technology is fueling all these new bases of comparison, where insurers expect to have the same kind of ease, customization, real time, etc. that they get from an e-retailer, online travel site ... or a bank. Thanks for the insights, Laura.
Kelly22
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Kelly22,
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10/30/2014 | 1:36:34 PM
Re: Two fed by one
These are all important themes, but I'd have to agree that analytics is critical to achieving micro-segmentation and omnichannel capabilities. Without the ability to analyze customer data, insurers can't determine the needs and preferences of individual consumers. 
Nathan Golia
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Nathan Golia,
User Rank: Author
10/30/2014 | 1:08:36 PM
Two fed by one
To me, it seems the third theme is overarching in the first two. You need to have data and analytics mastery to effectively work across channels, and identify customer segments that cross channels or react differently within singular ones.
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