In this second part of our special feature this month, we look at technical innovation that’s affecting the sector and how brands can make the best use of it. Insurance is all about fixing problems, unravelling knots in the customer experience plus responding to new demands from the market. Then there’s a whole stack of data flowing in, just asking to be utilised to refine existing products and help develop brand new ones. IE takes a look at how tech is affecting Motor, customer service and building the future.
MOTOR: TOGETHER IN ELECTRIC DREAMS
The rush towards electric vehicles is something that many countries have embraced. But it also creates challenges, in terms of safety, repairs and recycling. As ESG and sustainable investing becomes part of everyday life for insurers and brokers, the question of how your claims are dealt with will become an integral part of the company’s annual accounts and other statements.
Jane Pocock, Copart UK and Ireland MD offered some insights:
“As the world leader in vehicle recycling, Copart has written the book when it comes to innovation in our sector. Whether it is re-engineering our digital auction platform in order to increase the annual throughput of 500,000 cars and $1bn dollars’ worth of vehicles for re-marketing or recycling, or making sure that we can include thousands of overseas buyers on our site, to implementing a state of the art process for recycling electric vehicles, Copart has led the rest of the industry.
We have also innovated in the way we deliver returns to our insurer partners. Unlike the purchase model our profit incentive programme has the benefits of realising the true market value for the vehicle. Vehicle sales are fetching really high prices and it’s great to be able to share our success. It’s one of the many reasons we retain our customers – who doesn’t like continuous growth and world class service?
Copart has embraced and leveraged technology since our inception in 1982. Technology enables us to serve our customers more efficiently and to achieve superior results through a process of continuous innovation. When the pandemic struck, the Automotive Industry were compelled to adapt their auctions to a virtual format, but we had made this specific migration over 17 years ago.
Much of our innovation comes from our own highly skilled people, who are encouraged to come forward with ideas, our teammates also work together with our customers to continuously deliver transformational projects; digital transformation is accelerating and it’s a really exciting time for this industry.
And we have a duty to think ahead, anticipating what the next phase in automotive will be. For example, we expect HGVs will have to be powered by hydrogen as electric batteries cannot be used on this size of vehicle, so we are planning for our own green transport fleet and researching training for staff on how to handle hydrogen powered vehicles.”
ADAS SYSTEMS WILL REGROUP CAR INSURANCE
For decades most of the risk surrounding motor insurance has been based on postcode, occupation and the car’s Group rating, with the high performance/value vehicles up at the top end of the charts. But all that is set to change when driver data gets racked by ADAS, stacked by AI-powered software and then funnelled into quote engines.
How can insurers make sense of that car data provided by lane changing alerts, automated braking, locations, fave routes, speed and cases where the driver over-rides some systems? Alex from LexisNexis has some thoughts;
Alexander Manov, Manager Data Science, LexisNexis Risk Solutions, UK and Ireland said:
“Focused on predictive analytics, the LexisNexis Risk Solutions data and analytics team is responsible for identifying new datasets and mining vast data resources to uncover new insights to help support insurance pricing and risk evaluation. The insights from our work is changing the way insurance providers support their customers, particularly in light of the new rules around pricing and delivering fair value.
“The ‘day job’ for our data scientists comprises normalising and cleansing data, intertwining multiple sources and bringing it to a point where it can be used to build a valuable solution. LexisNexis® Vehicle Build is a perfect example – to date we have analysed ADAS fitments and claims for close to 3m vehicles.
“Fundamentally, we are constantly looking for new data attributes, which provide an additional predictor or differentiator of claims or other types of loss, that can provide customers with an insurance quote that is a fair reflection of their individual risk. For instance, through predictive modelling the team has identified:
- The correlation between someone’s policy purchasing history and the likelihood of a motor insurance claim
- The likelihood of an individual to cancel their policy
- Indicators for fraud like fronting and ghost broking
- Flood and fire risks down to individual addresses and building ‘blocks’
- Subsidence risks based on specific location based data
“It’s also important to highlight that LexisNexis Risk Solutions has its own unique identifier, LexID®, together with a proprietary linking technology it is able to resolve, manage and match information to create one consolidated view of the customer. The value of this single customer view in the new regulatory environment, cannot be overstated.”
NEW THINKING NEEDED ON CLIMATE TARGETS
LIIBA CEO Christopher Croft recently observed how policy wordings and definitions will have to change. Comparing the development of motor insurance and the insurance products needed to address climate change, Mr Croft said:
“I am reminded that, when the first motor insurance policies were being drafted as the nineteenth century turned to twentieth, the approved Lloyd’s wording for defining an automobile was ‘a ship that sails on land’. We may need to achieve similar levels of innovative thinking to meet the challenges of insuring this new wave of disruptive technology.
Already I have sat in on discussions about electronic ferries and electronic airliners. If these as yet relatively untested new inventions are to come into commercial use in time for 2050, we will need to find innovative ways of insuring the risks inherent in that.”
LATERAL THINKING ON PRODUCT BUILDING
Andre Symes, Co-CEO at Genasys Technolgies told IE that sometimes really simple solutions and a bit of lateral thinking can really deliver.
“You don’t have to re-invent the wheel each time you want a new insurance product. For example, for years there was a problem of getting clean water to remote villages in Africa. You can’t take it by hand, there aren’t diesel trucks available, might not even be roads. So how do you fix that problem? Well one guy adapted a cricket pitch roller. Basically made from plastic, filled with 40 gallons of water and then two people can roll it several miles across the land. Simple. It works. And there’s a lesson for all of us insurtechs out there in that story; sometimes you can adapt what you already have for the market conditions, just by re-thinking the problem from the ground up.”
THE NEW NORMAL MEANS MULTI-CHANNEL COMMS
Wrapper Insure is a new brand that’s purely online, no call centres, no expensive offices. CEO and Founder John Garrard told IE;
“You visit some company websites and it still says `click to call,’ and you wonder why that is always the best option. So we tested that theory with our Motorhome product launched earlier in 2021 during lockdown. No click to call, we replaced that with a chatbot, which learns as it gathers data. The response has been amazing, with policyholders of all age groups using the chat feature and getting the info they want, when they want it.
You know a live chat box does exactly the same as a phone call, but you have a written record of it, automatically backed up in case there’s a problem. Every little step forward you take like that improves the service for the consumer and our philosophy at Wrapper is don’t try to build new tech, but instead keep pace with how it’s being used in the market. That’s what works.”
HOW WE COLLATE DATA WILL REFINE PRODUCTS
Right now, some insurance products are still being sold as standalone policies and that’s especially true of say Life, Commercial, Business Insurance and more. But as working from home becomes the norm, does the homeowner actually need a hybrid Business/Contents/Buildings/Cyber policy? As electric cars gradually replace ICE vehicles, will some consumers require a multi-vehicle, multi-use and two drivers policy – but not all the time? Sometimes, just laid-up fire & theft could be all that’s needed on one car, with on-demand road use once a week.
The big challenge for insurance brands is to deploy technology that can truly blend and create flexible products, with inception/cancellation on demand, and true personalisation at the core.
Nigel Phillips, CEO at insurtech, CDL has some ideas:
“Insurance providers have long grappled with the challenge that consumers perceive their product as a grudge-purchase, driven by cost rather than value, and will consequently hold car, home, travel, and other insurance policies each with a different provider.
“Addressing this challenge, CDL has invested significantly in developing its insurtech ecosystem to deliver proactive insurance experiences driven by data insights, most recently augmenting its Strata retail solution with the integration of its Chorus customer experience platform.
“Underpinned by CDL’s Proactive Insurance technology, Chorus simplifies insurance purchases by drawing on a wide range of data sources to anticipate consumers’ needs and eliminate traditional form-based data collection.
“Instead, Proactive Insurance creates opportunities to add value to customer relationships in new ways, such as automatically adjusting premiums based on the true value of a vehicle as it depreciates over time or on up-to-date mileage readings.
“It is already delivering tangible benefits for retail partners, including British Gas, which has doubled direct channel sales of home insurance since deploying proactive quoting to make intelligent insurance recommendations to its utilities and boiler care cover customers.
“This ability to make personalised product recommendations and attract customers to build a portfolio with a single provider is hugely exciting, creating unprecedented opportunity for insurance retailers to expand their policy count, build brand loyalty, increase customer retention and reduce acquisition costs. We are continuing to work with a range of insurance brands to build out insurtech ecosystems that offer compelling customer experiences and drive value for consumers and providers alike.”
The future in terms of pure technology is hard to predict, but 2022 will see more new ideas fail fast, whilst others hit the brand awareness motherlode, or partner up to extend their reach. What is certain is that making sure customers feel valued, and listened to, in a highly regulated market, is going to be the cornerstone of so much product development in a remote, digital era. The days of `sell and forget for 11 months’ are long gone and insurance brands of the future are likely to be much closer to their customer base, simply because there are so many ways now that the policyholder can reach out. Perhaps then biggest tech challenge of the 2020s will be developing the tools to triage consumer data, but with a human touch.
PROPERTY: THE AERIAL VIEW, PLUS AI, IS THE FUTURE
How can data help build new insurance products in the property sector? Izik Lavy, CEO at GeoX has some thoughts;
“The insurance industry revolves around data. Without it, leaping into the digital era and keeping up with market demands can become a difficulty for insurers. The challenge is that, as insurers drive innovation and start their digital transformation journeys, data accuracy is extremely important. The insurance market is hardening, resulting in tightened underwriting standards and the need for insurers to closely monitor revenue and risk. Currently, insurers are relying on questionable and incomplete data and this has an effect on the bottom line profitability.
At GeoX, our mission has been to provide the most accurate and affordable Property Data to strengthen the business performance of each of our customers. By interpreting aerial imagery using AI and 3D computer vision technology, we are able to provide accurate data and insights about a property. These tools have opened a new generation of accuracy and richness of built environment data, leaps and bounds ahead of the usual property assessment methods.
Our technology is also leveraged into an accessible web service portal so that every organization in the US can access reliable and advanced property data. The resulting instant response of the platform to any property data request leads to a smoother, faster, and more effective end customer experience, with no limits imposed upon scale, infrastructure, and impact. Ultimately, more accurate data and clearer correlations lead to better customer service.
As insurers reshape themselves and future-proof their businesses 3D property intelligence derived from aerial imagery will become a tool to prevent rather than predict risk.”
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