No going back

No going back

The virus lockdown has forced the insurance industry to discard its go-slow tech approach

By Bernice Han

It’s finally happening. Technology is being embraced at unprecedented speed in an industry that has, fairly or unfairly, earned a reputation for its slow and cautious approach to the digital revolution.

Before the pandemic arrived nothing, it seemed, could nudge the industry into going faster in adopting new technologically-based ways of doing things.

Massive amounts of money may have been poured in recent years into mobile apps, drone research, artificial intelligence, bots, cloud solutions and insurtechs, but application-wise the industry is still perceived as behind the banks and other financial services providers.

The new technologies that insurance has invested in are either still in various stages of pilot development, or if used commercially they are usually being implemented on a limited scale.

But the pandemic has changed all that, pushing the industry out of its comfort zone. The sudden shift overnight to all things virtual and remote may well be irreversible, according to KPMG.

“Coming out of the crisis, the sector could look fundamentally different: much more agile, secure, connected and digitally enabled,” the consultancy says. “Perhaps, indeed, COVID-19 was the digital wake-up call the industry needed. Now the opportunity is there for those who can to gain value from it for their organisation.

“Just as COVID-19 has forced insurers to adopt remote and digital ways of working, so it is undoubtedly set to drive a wider acceleration of technology adoption across the industry. This is a trend, of course, that has already been with us for some years, but the current situation will significantly expedite it.”

As the industry starts turning its thoughts to what the post-pandemic landscape might look like, KPMG predicts there will be an increased focus on using technologies to improve pricing, underwriting, claims handling, policyholder interaction and fraud management.

Scott Guse, KPMG’s Brisbane-based Partner for Audit, Assurance and Risk Consulting, expects the industry to raise its focus on chatbots. With local and offshore call centres affected to varying degrees by the pandemic, customers have had to refer their enquiries to online chatbots, but the results haven’t been all that satisfactory.

“At the moment, the chatbots are not as sophisticated as they need to be,” Mr Guse told Insurance News. “When they are too generic, they actually annoy the customers when their problems can’t be solved.

“Insurance companies have realised they need to enhance the ability of those chatbots to be more sophisticated. They have recognised that in this COVID-19 environment they need to focus on ‘killing the cause for the call’.

We’ve had front-row seats in observing what can actually be achieved when the traditional way of managing claims has been torpedoed.

“That’s a terminology being bandied around. If companies can keep a customer online and solve their problems online, it’s a lot more timely [and] cost-effective and will mean better customer service.”

Third-party suppliers of IT software and hardware to the industry say they have seen a sharp rise in sales and enquiries.

Insurance clients, who in the past have either been reluctant to try out new technologies or preferred to rely on internal resources for their IT needs, have had a change of mind since the pandemic.

Daniel Lukich, Asia Pacific Business Development Director with 360Globalnet, a UK-based claims specialist with significant business in Australia, says the pandemic has “pushed aside the traditional roadblocks” to digital transformation within the industry.

In the past, he says, efforts to advance claims processes through digitisation have often been stymied for a variety of reasons such as internal bureaucracy or simply a case of IT departments wanting to retain control over development.

“Often in normal times, the very people responsible for claims delivery find it difficult to implement wholesale changes easily within their organisations,” Mr Lukich told Insurance News.

That isn’t the case anymore. The scale and urgency of the pandemic crisis necessitated the need for decisions to be made quickly.

“We’ve had front-row seats in observing what can actually be achieved when the traditional way of managing claims has been torpedoed,” Mr Lukich says.

“Within many insurers, the business managers accountable for claim delivery under the current challenge have certainly taken the driver’s seat in identifying, adopting and implementing changes to maintain a continuation of servicing customers (after COVID-19).

“In our experience, both here in Australia and other regions, we have been able to move from initial discussions through to proposal, contract and implementation within a matter of weeks if not days.

“This is unprecedented for this industry and a great achievement for the individuals concerned. From our perspective, however, it’s unfortunate that it took an event like COVID-19 to force many to shift.”

Claims management company Sedgwick agrees that COVID-19 has accelerated the use of digital solutions – specifically remote loss adjusting or assessing via apps.

“We have the ability to be virtually in the building, in the room and viewing the damage,” Chief Executive Diego Ascani told Insurance News.

“We can use video, photographs and geomapping. We can join in multiple parties.”

Mr Ascani says the technology has been available for some time, but traditional methods had previously remained dominant.

“Necessity is the mother of all invention. While we have had this technology for a while, traditional loss adjusting seems to have continued as it always has.

“There was a need to attend the site and make physical contact with the insured and physically inspect the property. That was our traditional methodology and I’d say 80% of all inspections and all claims were managed that way.

“But along comes COVID-19 and within two or three weeks it is completely the reverse, where 80% of assessments are now done by digital technology.”

Mr Ascani believes the switch will remain once the pandemic and its attendant restrictions ease.

“We’ve been doing a lot of thinking and planning for what happens post-pandemic – what is fundamentally going to change for insurance and claims management.

“We’ve agreed that this is almost for ever.

“We will continue to have the capability to attend sites. It could be that there is a vulnerable customer, or a suggestion of fraud, or a complex damaged property.

“But where we are heading is the majority of claims being far more streamlined.

“I think COVID-19 has accelerated digital and remote loss adjusting within two months, when the natural evolution would have seen it taking much longer.”

Insurance platform vendor JAVLN says it has seen a significant uptake in new clients, while enquiries have increased about 200% after Australia and New Zealand went into lockdown in March.

Chief Executive Dale Smith says the lockdown period has reinforced to the insurance industry that it needs to be quick and mobile, and the only way to achieve that is through increased use of technology.

“The industry in Australia and New Zealand has been very under-serviced from a technology perspective for a long time,” he told Insurance News. “That meant that when this terrible [pandemic] happened, for businesses that perhaps haven’t been as technology-focused as they should be it’s front of mind now.

“To operate in the new world, they need mobility, they need the information that they have in their businesses at their fingertips and they need to be able to log in from anywhere on any devices at any time and get access to information.”

He says the JAVLN cloud-based processing platform, which offers 24/7 full policy and claims lifecycle management, has enabled clients to continue running smoothly despite the strict lockdown rules. “That proves how relevant our technology is to the situation.”

He believes the industry’s newly developed focus on technology is here to stay. Insurance is under pressure, with the virus-induced recession adding a bigger strain on margins and profitability.

“Our region is no different to the rest of the world, there is huge pressure on SMEs and businesses,” Mr Smith said. “The argument is that the insured pool will get smaller and that will then put pressure on insurers and the value chain.

“In order for them to maintain profitability, they will have to invest in technology and business efficiency.”