We recently conducted our first executive roundtable since Covid.A momentous event for us! These invitation only events are for insurer executives only -representing both life and property casualty; business and IT, and a good mix of traditional and insuretechs – both large and small.
How the Economy and the Elections are Poised to Impact the Insurance Industry - Jay Dhru, Managing Director, Guy Carpenter
We started with an insightful presentation by Jaye Dhru, Managing Director at Guy Carpenter who laid out the implications of inflation and recent election results for insurers.
- Monetary Policy – Unlikely to change. The Fed remains committed to reducing inflation even at the risk of a shallow recession
- Fiscal Policy – Republican controlled Congress likely to keep tighter rein on expenses, especially Build Back Better. Raising the debt ceiling will continue to be a drama for the lame duck session
- Trade Policy – Unlikely to change, especially China and Russia policy
- Regulatory Policy - Current administration’s aggressive stance would remain but Republican controlled Congress would control the purse strings
Despite Covid,cats,war,and inflation, loss frequency declined over the last few years – but isnow increasing.Severity is also increasing and inflation is not yet fully accounted for.This means insurers should expect increasing losses
Transformation is Fueling Innovation in Insurance
Moderator: Keith Raymond, Senior Analyst, Life/Annuity Practice, Celent
Amjed Al Zoubi, Chief Information Officer, Amerisure
Rao Tadepalli, Chief Information Officer, Slide Insurance
This discussion focused on traditional insurance business models which are being challenged by a number of internal and external forces and why insurers are under pressure to adapt to these forces and must do so with new ways of thinking to stay differentiated from competitors and reimagine processes to automate and digitize. The last couple of years have brought transformational changes to the industry and the next wave of changes will bring new complexity and risk. Successful insurance leaders must embrace disruption and adapt to new needs and challenges through innovation.
They discussed AM Best’s innovation score which is the sum of two factors: an input score and an output score. Innovation input scores are based on leadership, culture, resources, and processes and structure. Output scores are based on results and levels of transformation. Innovation scores are then translated into five innovation capability assessment categories: Leader, Prominent, Significant, Moderate, and Minimal. Although the innovation score isn’t in the AM Best Rating yet, it is likely going to be. They discussed why should insurers be focused on this and what are ways they can maximize their score. Input from attendees revolved around working closely with AM Best for both a better understanding of elements contributing to the score and educating AM Best feedback on the challenges the scoring of certain aspects of the rating. Working closely with AM Best is also a great idea for an organization to be prepared for when the scoring becomes mainstream.
They also focused on the ways insurers get innovation activities off the ground because for many insurers just getting innovation off the ground is the first challenge. They discussed whether most use a centralized or decentralized model and starting small and working to work your way up to larger initiatives. There was a healthy mix of approaches but most agreed that the centralized approach worked well for organization and identifying value. The decentralized approach seemed to get the nod for more being more entrepreneurial. But the bottom line is companies realize the most value when the cultural change necessary for success comes from the top and become woven into the fabric of an organization. It was also noted that many insurers look outside their walls into the technology ecosystem of insurtechs, third-party service providers and platform providers for innovation. Partnerships are critical for innovation success.
The session wrapped discussing the continued investments from both insurtechs and insurers in the areas of claims, underwriting and payment processing, and expect tp see the same level of invest we have seen over the last couple of years to continue.
Extracting Maximal Value From The Insurtech Ecosystem Synopsis
Moderator: Andrew Schwartz, Analyst, Property/Casualty Practice, Celent
Michael Kearney, Vice President, Emerging Technology and Innovation Leader at The Hartford
Abel Travis, Vice President and Head of Fundamental Underwriters, Accident Fund
The conversation addressed various topics centered around how carriers can effectively understand and work with insurtechs amid a period of rapid change. One panelist said many insurtechs have thematically evolved from front-end customer experience focused to back-end focused (claims, policy, pricing, and analytics). There was also some debate on whether insurtechs are pushing carriers to rethink the insurance value proposition or if they are trying to optimize existing processes through the application of technology. The consensus was the latter.In terms of evaluating which insurtechs with whom to partner, the panelists said that experience and an environment where both sides benefit from the achievement of objectives were two of the top factors. Surprisingly, having prior insurance experience didn’t seem to matter. Overall, both panelists were sanguine about the evolution of the insurtech space. One panelist from an established tier 1 carrier said he’s never been more excited about the future of insurtechs and staked the bold claim that he expected a decade’s worth of technological innovation within the next 3-5 years.
The Evolving Landscape of Digital Distribution
Moderator: Karlyn Carnahan, Head North America Insurance
Aviad Pinkowski –President, First Connect (A Hippo Company)
Helena Gordon - Senior Vice President Chief Information (CIO) and Services Officer, The Baltimore Life Insurance Company
The landscape of digital distribution of insurance is evolving rapidly. Digital direct carriers and digital distributors continue to build market share but at a slower pace than expected. New players are emerging, previously high-flying startups are downsizing or pivoting, and the pace of mergers and acquisitions is accelerating. Amidst this volatility, carriers find themselves struggling to determine how best to allocate scarce time and resources across numerous choices for digital channels, partners, and platforms. In this discussion, we took a fresh look at the current state and likely future state of digital distribution, and how carriers should think about their own digital distribution strategies. While most in the room believe that digital distribution is continuing to expand, none were willing to concede the role of the independent agent believing that even in relatively vanilla business, agents will continue to play a large role.However, managing their costs is an increasing challenge and automation will continue to be a high priority for driving both ease of doing business and managing the costs for both agents and insurers.
Differentiating the Policyholder Experience
Moderator: Tom Scales, Life and Head, Health Practice, Celent
Kathleen Ziegler, SVP Operations, Copperpoint
Jackie Morales, COO, Security Benefit Life Insurance
Differentiating an insurance organization through service is challenging. The sale has already been made so the focus can be on retaining the client and, hopefully, adding business in other lines. In this conversation, Kathleen Ziegler, the SVP of Operations and Copperpoint represented the perspective of a P&C insurer. Jackie Morales, the COO of Security Benefit Life Insurance approached the topic from the Life and Annuity perspective.
Each has solid examples of improvements in the digital experience for their customers. These examples started early, in the sales cycle, and continued through the lifecycle of the policy. The discussion included comparisons of the post-sale experience across lines of business. P&C insurers often have more transactional post sales experiences with a higher frequency of claims. This provides more opportunities, or touch points, for the insurer with their customer. Life and Annuity carriers have less opportunity since there are fewer post-sale interactions. In Life insurance, beyond paying the premium or changing a beneficiary or address, there is little interaction until the claim.
The conversation was interesting and spirited. One topic resonated. In a world focused heavily on the digital experience, each had solid examples where the human touch was the actual game changer.
The Shifting World of Independent Agents
Moderator: Donald Light , Director, Property Casualty Practice, Celent
Callie Thomas, Chief Administrative Officer, Joyn
Jackie Morales, COO, Security Benefit Life Insurance
This session had two panelists, Jackie Morales, Chief Operating Officer at Security Benefit Life and Callie Thomas, Chief Administrative Officer and Co-Founder of Joyn Insurance. Security Benefit Life is a large, established retirement solutions provider distributing its products through multiple channels. Joyn Insurance is a recently established Managing General Agency underwriting small and midmarket commercial insurance submitted by brokers and wholesalers.
Despite differences in the two firms’ business models, they share many of the same challenges in working with the agents and producers that bring them business. One issue is that some individual producers and firms want high touch, largely non-digital transactions – while others insist on highly automated processes. Security Benefit Life and Joyn have to have people, processes, and technology to accommodate both groups. In addition, Security Benefit Life and Joyn both use business process outsourcing (BPO) firms to handle various tasks and workflows. This requires setting standards and service level agreements with those BPO firms to meet the wide range of expectations of producers and firms who are submitting business.
The key takeaway from the session is the necessity to meet agents’ expectations wherever those agents are on their digital transformation journeys.
Overall, in this volatile environment, insurers are laser focused on using technology to reimagine business processes, reduce their costs and create differentiation.The available distribution channels have exploded – requiring new ways of thinking about the agent and policyholder experience.And this group of executives were clear that they will continue to depend on technology to help mitigate against a hardening market, global geopolitical and inflation risks as well as staffing shortages.