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How 2020 Has (Finally) Forced Insurance Providers To Put People First

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This year’s series of extraordinary events have forced insurance, a notable digital laggard, into action. Experts claim that the insurance sphere has experienced the equivalent of five years’ worth of digital acceleration in a matter of months, having adopted a remote workforce, developed new digital customer journeys and embraced AI and data-driven technology. Importantly, this trend looks likely to stick, with IBM predicting that insurers are now on a mission to use this tech to shape a more human approach to their service.

Customers, for their part, remain skeptical. The industry’s decades-long track record of inefficient, analog processes is all too fresh, with a recent study showing more than 40% reporting they don’t fully trust their insurer and a further 64% saying they want their insurer to understand them better.

(Related: Some Consumers Would Still Let Life Insurers Track Them With Smartphones)

There is a clearly long way to go before insurance can win back the hearts and minds of consumers, but legacy giants and small players alike believe the rapid rise of innovation within the insurance industry will pave the way toward personalization and customer-centricity. Let’s look into how these solutions could, at long last, bridge the gap between providers and the people they serve.

Legacy Players Have Been Shocked Into Action

COVID-19 has exposed some of the biggest cracks in insurance. As demand for health and life insurance has risen, companies that have been unable to send healthcare professionals to customers’ homes have added cases to their backlog of tasks or simply refuse coverage to the customers. This inefficiency and impersonal attitude towards customer experience notably comes from established businesses.

Why? Well, for a long time, major players in insurance had faced little competition and little real need to update their offerings. Their risk-averse mentality often prevented them from growing with the times, so they continued to function using antiquated processes. That includes analogue practices like photocopying, scanning, and faxing, and favoring paper insurance applications requiring in-person signatures, confirmation phone calls, and physical delivery.

In 2020, however, these steps simply aren’t plausible. People have been sheltering-in-place, courier services have been delayed, and the new urgency of applications means they cannot take weeks to be approved. In turn, customers have grown increasingly anxious about insurance processes, and legacy companies risk seeing dissatisfaction levels rise if they don’t switch to a more customer-centric, caring model.

What’s more, consumer expectations have evolved. With so many aspects of life moving online, people anticipate fast, streamlined processes that weren’t being met by legacy players. In fact, in a mid-2020 survey by PwC, 41% of respondents were inclined to switch carriers because of their lack of digital capabilities.

Insurtech Is Fueling Technological Advances

In Q3 this year, health and life insurtech startups accounted for half of the total invested capital in insurtech++which was up 69% from the previous quarter.

Unlike legacy insurers, startups in health and life insurance have been experimenting with ways to make insurance more human for a while. The main driving force for innovation has been forward-thinking technology that not only responds to customers’ needs, but will lead to a complete digital transformation of the insurance sector.

For example, advanced targeting is empowering startups to customize their communication with people. In contrast to earlier tools that sent blanket messages to customers, segmentation tech lets startups build meaningful relationships with users at every touchpoint (specifically virtual channels that are now the norm). According to Deloitte, this level of hyper-personalization is only the beginning for insurance providers, who are set to tailor their interactions based on individuals’ needs and preferences.

Startups have also been fast to integrate AI and machine learning. In contrast to legacy companies++which have vast amounts of data that is typically stored offline++startups have digitized the majority of their data and can therefore readily apply algorithms to boost data collection and statistical analysis. By automating these time-consuming processes with a greater degree of accuracy, friction between customers and insurers is alleviated as customers can receive approvals much quicker. Not to mention, as this tech becomes more sophisticated, customers can start including a broader range of supporting materials to influence the decision from insurers++which makes them feel like providers really care about the details of their case.

Partnerships Between Legacy Companies, Startups, and Outsiders Will Empower the Digital Shift

Data will be the foundation of the insurance industry’s turn towards personalization, layered with AI and machine learning tools that will generate new paradigms for applications. McKinsey predicts that as companies use such data for a more human approach to life and health insurance, product sales will shift from one-time purchases to longer-term relationships with customers.

Established insurance companies and early-stage ventures can help each other understand customers better and connect with them on a deeper level, through partnerships. On the one hand, insurtech startups can supply accelerated electronic medical data and the infrastructure for automating tasks; and on the other hand, legacy companies have the financial might and influence to standardize new digital processes across the industry.

As cutting-edge technology becomes commonplace, older and newer insurance companies will benefit most from tech that integrates seamlessly with third parties. Interoperable tools will optimize the customer lifecycle in the most impactful way, especially as insurance companies open up to other data-oriented industries, like fitness technology. Insurance platforms like Principal Lifestyle and John Hancock Vitality, which additionally track customers’ fitness through smart devices and offer financial incentives for customers to be active, are already leading the charge. By leveraging the greater health ecosystem and its technological capabilities, insurers can maximize their personalization attempts.

Insurance is a basic human need, and now more than ever insurers are under pressure to reflect the people they serve and be more human themselves. By utilizing technology, companies can gain essential insights about their customers (both existing and new) and bridge the gap between providers and people. Only then, will they be able to truly put customers first.

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AAndrei Popndrei Pop is the founder and CEO of Human API, a health data network that helps consumers share personal data.