Issue
30
ISSN 2515-3803
Connecting Insurers, Brokers, Lawyers & Claims Professionals
Ready Approaching autonomy David Williams, AXA
The value of vehicle data
Richard Barlow, wejo
or not... The future in reach Tesla
Working with
Selling Cyber Keith Tracey, Aon Sponsored by
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MODERN Insurance
Editorial Contributors Andrew Gibbons ACII Chair, Industry Claims Initiative on behalf of BIBA
Nik Ellis Managing Director Laird Assessors
Brett Dixon President Association of Personal Injury Lawyers (APIL)
Pablo Liñares Director of Consulting and Innovating Services GT Motive
Dan Chesney Commercial Director S&G Response
Richard Beaven Executive Director Swinton Group
Donna Scully Managing Director Carpenters
Rodrigo DeCossio UK Insurance Lead MarkLogic
James Roberts Business Development Director, Insurance Europcar UK Group
Rupert Armitage Managing Director Auto Windscreens Shaun Smith Sales Executive EMEA iovation
Jason Tripp Operations Director Coplus
Shirley Woolham COO Minster Law
Jonathan Hewett Chief Marketing Officer Octo Telematics Keith Tracey Managing Director, Professional Services Aon Risk Solutions
Simon Stanfield Chair Motor Accident Solicitors Society (MASS)
Martin Milliner GI Claims Director LV=
Sophie Timms Head of UK Corporate Responsibility Zurich
Dr Matthew Connell Director, Policy and Public Affairs Chartered Insurance Institute (CII)
Stephen Hines President Forum of Insurance Lawyers (FOIL)
Michael Lewis CEO Claim Technology Ltd
Stephen Marshall ACII Managing Director Insure Apps
Natalie Larnder Policy Adviser, Civil Justice Association of British Insurers (ABI)
Trevor Lloyd-Jones Senior Marketing Manager, Insurance LexisNexis Risk Solutions
WELCOME utomation is both a growing buzzword and legitimate business tool in many industries currently. Broadly, it’s being utilised behind the scenes, speeding up and optimising processes to improve the businesses’ bottoms lines and, ultimately, their customer journeys, even though it’s often the case that customers won’t see this automation in action. However, one area of automation that is very visible in the public eye and the mainstream media is the evolution of driverless vehicles.
A
Autonomous vehicles have been on the radar of the insurance industry for some time now, and the Automated and Electric Vehicles Bill that will allow insurers to continue preparations for their advent is making its way through parliament. But, much like driving itself, sometimes it’s more about the journey than the destination, and so this issue of Modern Insurance will examine the evolution that the motor vehicle is going to undergo on the road to total autonomy. Our all-star interviewees and editorial contributors will delve into the details of how ADAS technology is bridging the gap between driven and driverless cars and how the insurance industry can take advantage of these incremental changes. The obtainable data from cars is only becoming larger and more valuable as vehicle technologies develop, and this is providing some of the biggest opportunities for insurers to differentiate their offerings. I’ve heard it being said for some time that data is the new oil (and this is especially the case in the automotive industry since vehicle tech is also providing eco-friendly alternatives to fossil fuels!) Therefore, it’s going to be the businesses that are able to take full advantage of the data available that will thrive in the new world of motor insurance heralded by autonomous vehicles. Not dissimilar to the need for public acceptance of vehicle autonomy in order for it to succeed, driving change in companies requires a business-wide buy in, and this is only possible with a defined culture and clear values. These are factors that have been central to the growth of S&G Response over the past year, and the company directors explain their ethos in this issue’s supplement, which looks at how to build a sustainable business in this competitive market. It’s an important consideration given the way insurance is going to transform over the coming years, and it won’t be long before we start seeing the companies that bring a proactive, positive attitude to change start to pull ahead.
Issue 30 ISSN 2515-3803 Editor Brendan Gurrie
Brendan Gurrie, Editor, Modern Insurance Magazine.
Editorial Assistant Poppy Green
Project Manager & Events Sales Rachael Pearson
Modern Insurance Magazine is published by Charlton Grant Ltd ©2018
01765 600909 | @ModernBrendan | brendan@charltongrant.co.uk
All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.
Issue 30
Modern Insurance 3
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Issue 30 | ISSN 2515-3803
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Issue 30
MODERN Insurance
NEWS 07 Connected & Autonomous Vehicles: The future of mobility and the implications for insurance
David Williams, Technical Director, AXA Insurance and Chair of the Autonomous Driving Insurance Group, examines the current levels of autonomous vehicle technology in the UK and how its continued evolution will impact the insurance industry.
27 Advancing autonomy
43 Sector Soapbox
27 The opportunities in the world of new mobility
James Roberts, Europcar UK Group
29 Data sharing is caring
31 Brand risk for professional firms
31 Safer roads and speedier resolutions
Rapidly developing technology, data sharing and attracting new talent are currently challenges in the body repair industry that are also great opportunities, as David Cresswell, Auto Body Professionals Club, explained to Modern Insurance.
19 Richard Barlow
Modern Insurance spoke to Richard Barlow about how wejo is changing the automotive landscape with their connected car exchange platform. Richard also discussed the value and importance of vehicle data and how this will influence insurance in the future.
EdiTorial Board 23 Dawn of the data scientist
Trevor Lloyd-Jones, LexisNexis Risk Solutions
Shaun Smith, iovation
25 Break down barriers to take down fraud
Donna Scully, Carpenters
Issue 30
Shirley Woolham, Minster Law
Martin Milliner, LV=
Jason Tripp, Coplus
35 Forget AI, it’s the technology in the car that we should be keeping our eye on!
Steve Thompson, Industry Insights, evaluates the use of smart technology within motor claims and vehicle repair and the impact it is having on the sector.
50 A seamless supply chain
Optimising the insurance supply chain to improve efficiency, costs and the customer journey.
54 Investing in your people
Rupert Armitage, Auto Windscreens
35 A resilient future
Della Garmory, BGL Group, discusses the importance of investing in opportunities that enable your employees the ability to learn and develop professionally; she also shares the aims of the new BGL Academy and what it can offer its candidates.
Sophie Timms, Zurich
37 Brokers can bridge the gap
55 Just a thought from Eddie Longworth
Richard Beaven, Swinton Group
Time for lawyers to step up
37 Delivering a personal service in a digitalised world
57 Case Study: Eclipse
Jonathan Hewett, Octo Telematics
Eclipse Compact transforms efficiency at Anything Legal
39 A shift in mindset
Michael Lewis, Claim Technology Ltd
57 Case Study: EDAM
BDElite sees value in EDAM Group’s service-led approach
FEATURES
Pablo Liñares, GT Motive
25 Ghost broking and how it is evolving
49 Smart technology is set to transform motor claims
33 Insurtech expectations
23 Motor insurers need to adapt as technology evolves
Keith Tracey, Aon Risk Solutions
33 Change on the horizon of the RTA landscape
Telsa Model S owner, Paulo Benfeito, tells Modern Insurance about his experience with Telsa and what we can expect from these cars of the future.
Stephen Marshall ACII, Insure Apps
14 David Cresswell
Dan Chesney, S&G Response
10 Keith Tracey As cyber risk continues to evolve, Keith Tracey, Aon RIsk Solutions, told Modern Insurance how the insurance industry is adapting to meet these changes.
Modern Insurance’s panel of resident associations outlines the burning issues facing the claims sector.
46 Vehicles of the future – a customer perspective
29 Claim in a pocket
INTERVIEWS
Nik Ellis, Laird Assessors
40 Industry Innovators Interview: Rodrigo DeCossio
Modern Insurance spoke to Rodrigo DeCossio, UK Insurance Lead of MarkLogic, about how they aim to use data to make their mark on the industry and how technology is helping them to shape their plan of action.
10 MINUTES WITH 58 10 minutes with…
Jo Evans, Unite Professionals Ltd.
Modern Insurance 5
NEWS
David Williams TALKS NEWS Connected & Autonomous Vehicles: The future of mobility and the implications for insurance David Williams, Technical Director, AXA Insurance and Chair of the Autonomous Driving Insurance Group, examines the current levels of autonomous vehicle technology in the UK and how its continued evolution will impact the insurance industry. t the end of January, the Automated & Electric Vehicle Bill got its third reading in the House of Commons and now moves on to the Lords. It’s not considered contentious and therefore you would expect that within a very short period of time the framework to allow Driverless Cars, or Connected & Autonomous Vehicles (CAVs) as we should more properly call them, will be on the statute books.
A
This is a massive point in the UK’s attempts to be at the forefront of CAV development and also clearly sets out the insurance position, hopefully for other countries to consider and emulate, but certainly signalling to the insurance industry that it is time to take these things seriously. Fortunately, this won’t come as a surprise to most insurers. The ABI has set up its ‘Autonomous Driving Insurance Group’ of which I am proud to be the Chair, and a few of us have taken the plunge by getting directly involved in physical developments through Government funded projects and consortia.
Where are we now? So, the lawmakers have got their act together, but where are the manufacturers? How close are we to fully autonomous vehicles on our roads? To give you some idea, I must first talk about the ‘SAE Levels of Autonomy’, which, whilst not perfect, are the best thing we have to describe capability. Level zero is exactly that – no autonomy or even driver assistance. They then progress up to the two levels that the Government (and insurers) consider autonomous, and these are levels 4 and 5. At these levels, the key thing is that if the vehicle finds something it doesn’t like, it doesn’t try and immediately hand over control to an unsuspecting driver. Levels 4 and 5 will, at worst, be able to safely come to a stop in ‘safe harbour’. Below them however, all levels are really just Driver Assistance, and the key thing there is that the driver remains responsible; if your Tesla crashes because you couldn’t take control quickly enough, it is you that will be presented with the bill for the damage. Currently the most advanced vehicle on general sale would be a Tesla, which I would describe as being around level 2 and a half! Yes, it can do some amazing things, but the driver has to be ready to take control at any time if required. Level 3 vehicles will be appearing on our roads during 2018. These give the impression of being fully autonomous, but can’t operate in a wide set of circumstances, and if they see something they don’t like, they ask the driver to immediately assume control, and the driver is responsible for any accidents, even in ‘autonomous’ mode. Some manufacturers have decided to wait and go straight to level 4, Issue 30
Level 3 vehicles will present some interesting liability debates, but the Government has been clear with us in stating that the new rules will only apply to levels 4 and 5
Modern Insurance 7
NEWS
We think we will have to wait until 2025 for truly autonomous level 5 vehicles that can operate pretty much anywhere without driver intervention, but that is only seven years from now which is clearly a safer option. Level 3 vehicles will present some interesting liability debates, but the Government has been clear with us in stating that the new rules will only apply to levels 4 and 5.
What’s next? You always overestimate what will happen in the next two years, but underestimate what will happen in the next ten, I am told, but our current prediction is that level 4 vehicles, able to operate autonomously on motorways, dual carriage ways etc., will be with us at a reasonable scale in 2021. We think we will have to wait until 2025 for truly autonomous level 5 vehicles that can operate pretty much anywhere without driver intervention, but that is only seven years from now. We will of course see some specific implementation of the technology in dedicated areas (40 ‘Pods’ running around Milton Keynes later this year for instance), but the big change for us insurers will be when level 4 and 5 vehicles begin making up an increasing amount of the car parc. At that point it seems sensible to talk a bit more about liability aspects, as clearly that feeds claims we all have to deal with, and that impacts on premiums charged. The current Road Traffic Act works very well and includes funding for uninsured drivers so that even the most severely injured victims can rely on funding being in place that will make sure they get appropriate compensation. Car technology has been improving at an incredible rate; currently we only see Advanced Driver Assistance Systems (ADAS) but these are the precursors of truly Autonomous Vehicles. Whilst these vehicles will be much safer than manually driven vehicles, there is a substantial change in responsibility for an accident. If someone sitting in what might previously have been described as the driver’s seat has no ability to control the vehicle because it is fully autonomous, how can they be held responsible for any accident? Further, if they are injured in an accident, surely they become a ‘victim’ and might need compensation, but where would this come protected in the event of an accident?
8 Modern Insurance
Complicated claims The Automated & Electric Vehicles Bill mentioned above makes it a requirement that all autonomous vehicles are protected by an insurance policy that complies with the terms of the Road Traffic Act, the same regime that applies to existing manual vehicles. The Government then makes insurers responsible, imposing effectively a strict liability on insurers for all claims caused by the Autonomous Vehicle. This is great news, as the public doesn’t need to worry about whether the manufacturer or someone else is to blame, the insurance policy will respond, and compensation will be paid. If it can be shown that the manufacturer has been negligent in some way then they may have to make a payment to the insurer, but this all happens after the event and should not slow down the settlement of the original claim. This is important as these things will not be straightforward; there could be many causes of an accident, and other parties beyond the manufacturer and the insurer may get involved, for instance software programmers, people who have modified vehicles, infrastructure providers or other vehicles that may have transmitted information to the vehicle involved in the accident. So it’s a complicated area, but one made simple for the general public by a focused piece of legislation. All this is helping to get driverless cars on the road in the UK and reducing road accidents whilst giving confidence that when things go wrong, compensation will be available. The impact on insurance premiums and products will be tremendous, and at the same time more people will abandon vehicle ownership and move to ‘sharing’ solutions and mobility providers. It will add to disruption of the market, but that is probably another article by itself! David Williams is Technical Director at AXA Insurance.
Issue 30
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INTERVIEW
Keith Tracey As cyber risk continues to evolve, Keith Tracey, Aon Risk Solutions, told Modern Insurance how the insurance industry is adapting to meet these changes.
Q A
How have attitudes towards cyber protection changed within the insurance industry over recent years?
Cyber insurance has been a major growth vehicle for insurers. As threats have evolved, so have underwriting appetites, wordings and the scope of services that accompany the core insurance product. Insurers must of course continuously monitor threats to ensure that their underwriting assessments and policy wording are current and relevant. The suite of post-breach services that accompany insurance cover have been a key area of focus. Risk reduction and mitigation support has become a differentiator for insurers, and in this area there has been a flight to quality. Breach response services are a vital component of the insurers’ offerings and indeed for many buyers constitute the major motivation for purchase. Access to immediate and managed breach responders is a vital part of the risk management of cyber threats. Insurance supplies this without the need to construct individual retainer arrangements. Insurers will seek to add value to the purchase through the underwriting process. This will involve feedback and advice arising from the underwriting assessment that will serve to reduce risk and to allow organisations to benchmark themselves against similar organisations. One key focus has been the relevance of policy wordings. As incidents emerge with new characteristics, insurers must ensure that their polices are responsive to the financial losses that can result.
10 Modern Insurance
Issue 30
INTERVIEW
It is in the insurance industry’s interests to promote growth to create increased diversification of risk and avoid any negative selection that might be occurring
Q A
In your experience, what are the most important influences on choice of cyber insurance provider for clients?
In common with all insurance classes, markets have successfully created lead positions through their expertise, breadth of cover and the capacity they can offer. Pricing continues to be competitive for most but not all sectors. There may be future pressures since cyber pricing is sensitive both to general market conditions and to the level of cyber insurance claims. The quality of supporting services and risk management support are areas for any potential buyer to examine. Also worthy of note are claims services and the ability to access expert support swiftly in the event of an incident. Wordings are not standard and some have been unnecessarily restrictive. Competition is acting to improve the overall quality of policy wordings. There is a trend for insurers to add value through the application process. The ability for insurers to distinguish between the relative qualities of risks in the same sector has been somewhat limited. New forms of applications are emerging that could provide better assessments as well as adding value for the applicants. This might involve feedback on existing security, the risks facing the business and risk reduction. Insurers may also turn to big data analytics to improve their competitiveness and feed valuable insights to their insureds on a continuous basis.
Q
Do the needs of professional services clients differ greatly from other kinds of clients in regards to cyber insurance?
A
The exposures are different for a professional service firm. The nature of the firm, its practice mix and the client data held, will of course determine the exact risks and consequences. Professional advisors have been identified as targets because of the nature of the confidential data that they hold and their access to their clients’ intellectual property. The importance of confidentially and client trust means that the direct consequences of a breach may be less significant for the firm than the subsequent damage to reputation. Most polices do not protect reputation directly as such but reputation risk is managed through the immediate access to breach responders addressing technology, forensics and legal service needs. Accompanying public relations advice addresses the communication aspects of the incident. Thus reputation effects are mitigated through having a comprehensive and efficient response in place.
Q
How effective is education and awareness around cyber in preventing risk, and what is the role of the insurance industry in providing this to clients?
A
Keeping current on the threat landscape is very important in order to shape the management response. Both insurers and insurance brokers can offer helpful information and briefings in that respect. Employee errors and insider risks are often cited as sources of incidents. This could involve disaffected employees or more commonly, human errors or the failure to follow processes. Indeed many surveys identify employee error or a straightforward failure to follow procedures as being a factor in the vast majority of breaches: vulnerability to phishing being of course a very frequent and topical phenomenon. GDPR is increasing the profile of privacy and data security across all organisations.
Q
Are enough businesses aware of the benefits of cyber insurance, and how can the industry raise awareness of products among clients who might not see the need for them?
A
The take up of cyber cover is surprisingly low. In today’s economy, it would seem that cyber insurance should be a part of any insurance portfolio purchase. There is of course quite significant growth predicted in the short to medium term, stimulated by an expected continuing increase in the number of incidents and more stringent regulation, within the EU and indeed globally.
Issue 30
Modern Insurance 11
INTERVIEW Perhaps the biggest obstacle to purchase has been the ability of buyers to understand the scope and relevance of the cover. The polices contain modules of cover being a mix of liability and first party covers. An additional complication is, to what extent are incidents already insured in other covers? For example, professional service firms may feel that sufficient liability protection is provided by the professional indemnity policy and the other cyber insurance modules offer limited value, except of course for the breach resposnse services, which could be accessed independently of insurance. Mobile working and technology tend to reduce the relevance of business interruption cover, but nonetheless this could still be significant exposure, as recent apparent ransomware attacks have proven to be quite destructive to the provision of ongoing services. It is in the insurance industry’s interests to promote growth to create increased diversification of risk and avoid any negative selection that might be occurring.
Q
How could cyber products be integrated with other insurance products in order to provide clients with added value services?
A
There is an argument that some cover exists in other polices. I would urge caution here. An overlay of risk exposures onto the existing insurance programme is desirable. The relationship between crime cover, PI and cyber exposures is an important exercise for professional firms. Avoiding overlaps is a worthwhile ambition. An adviser with broad knowledge of the relevant sector and technical insurance knowledge can perform the required “gap” analysis. Indeed this should be part of the cyber insurance purchase process.
Q
What reputational impact can a cyber breach have on a company, and do insurance providers have a role to play in helping their clients recover from this aspect?
A
Any risk scenario presents a potential reputation event. A breach can clearly have an effect on future client purchasing decisions. The scale of that effect may be determined by a few factors, in addition to what damage arises as a result of the breach and how the overall response is managed. These include how much reputational credit did the organisation have prior to the event, how well and swiftly did it respond to the event and what direct effects did the breach have on the delivery and availability of services? Professional service firms have proven to be quite resilient, perhaps due to their sophisticated client base. Where public perception is a determinant, the results could be more volatile. In the new world of social media and instant news, one cannot contain the issues, facts are negotiable and of course the sanctity of data is now big news. Insurance is not a substitute for the sound risk management practice of having a crisis management team in place schooled in responding to potential scenarios with a communication strategy. Recovery comes in stages, but the insurance support can contribute significantly to the beginning phases.
Q
As cyber insurance is still a relatively new product, in what ways might it still need refining or improving to provide the best value and protection for clients?
Buyers will look for the product to mature as threats change and evolve. A topical issue would be responsiveness to “ransomware” attacks such as NotPetya and WannaCry. For those currently with insurance policies, how comprehensive would your cover have been? Is the business interruption cover responsive to your financial structure and the nature and scale of loss that you might have experienced? Navigation of the different wordings and variations in key definitions between insurers can be baffling. Perhaps simpler and more standard forms will emerge that give consistent, clear and unambiguous cover.
Q A
As cyber risk continues to evolve, do you predict demand for personal cyber insurance in the future?
There is already a vibrant market for personal cyber protection in the USA, and the market there is growing. Corporate benefit packages often contain an option to purchase personal cyber protection. Different core covers and coverage grants exist for personal policies. Demand is apparently building outside of the US. High net worth individuals have increasingly become targets for ransomware, and the demand for appropriately crafted insurance protection will match that growth.
Q
How do you foresee cyber risk for businesses evolving in the future, and how will Aon’s cyber products be developed in line with this to meet client need?
A
Outside of privacy and data protection issues, the threat levels and consequences of sophisticated attacks on critical industry and infrastructure are currently in the news. Insurance programmes for more sectors will therefore have to include adequate risk analysis for the cyber threat and have responsive insurance protection in place. Clarity of cover is a legitimate and important objective. This encompasses the avoidance of overlaps with other insurances. One less discussed priority would be making sure that cover for business interruption is fit for purpose. One of the objectives that we recently identified was giving more clarity for clients as to what they can expect in the event of a claim situation; role of the parties, important contacts and their respective roles included. Risks encompassed by cyber insurance will grow in significance in the digital economy. The challenge for insurers and advisers will be to give relevant and current insights on how to manage and transfer those risks efficiently.
Keith Tracey is Managing Director, Professional Services at Aon Risk Solutions.
Risks encompassed by cyber insurance will grow in significance in the digital economy
A
Some of the emerging concerns in the cyber risk environment include: risks in the supply chain, the risks of damage without an actual breach occurring if a system is unexpectedly unavailable, infrastructure interruptions and property damage exposures.
12 Modern Insurance
Issue 30
INTERVIEW
David Cresswell Rapidly developing technology, data sharing and attracting new talent are currently challenges in the body repair industry that are also great opportunities, as David Cresswell, Auto Body Professionals Club, explained to Modern Insurance.
Q
How have the needs of members changed over the past few years, and what would you say are the main drivers of this change?
A
I would say the biggest change in the last few years has been the general big improvement in the relationship between insurers and repairers. At the same time, we have seen most of the repairer groups growing in size, coupled with the emergence of companies offering national coverage such as Fix Auto, Nationwide, Vizion and National-ARG. We have seen the relationship move from adversarial to collaborative as both parties (insurers and repairers) recognise that they need each other!
Q
What would you identify as the biggest current challenges for the body repair industry, and do similar challenges exist in the wider insurance industry? 14 Modern Insurance
A
Probably the biggest challenge for repairers at the moment is keeping up with the rapidly developing rate of car technology, and in particular the safety systems in today’s modern vehicles. We now have Autonomous Emergency Braking (AEB) fitted as standard to the majority of new vehicles together with an increasing number of ADAS (Advanced Driver Assistance Systems), such as lane departure warning and adaptive cruise control, migrating from luxury to mainstream vehicles. After repair, the cameras, radars and sensors need to be recalibrated in order to operate correctly. However, the systems are all different. Some require dynamic calibration involving plugging a diagnostic tool into the vehicle’s On Board Diagnostics (OBD) to initiate calibration while the car is moving. Others require static alignment requiring a target board and more specialist equipment, and some systems require both. Therefore, there is a whole wide variety of methods to carry out ADAS realignment after the repair has been completed, and
Issue 30
INTERVIEW
suggests that this is leading to more people using price comparison websites when their insurance premiums are due for renewal, so those are some big pressures on our industries.
Q A
How is the body repair industry preparing for the advent of autonomous vehicles?
To answer that question, firstly we need to define what we mean by autonomous vehicles, because the Society of Automotive Engineers (SAE) has five different levels of autonomy going up to level 5, which is the fully autonomous car. This has no means for a person to drive it, so has no steering wheel and no pedals, and in my view is many years further away than the mass media is trying to portray – at least 20 years away in the UK. The semi-autonomous vehicle where people can be hands-off for designated parts of the driving such as on motorways, however, is not that far off. Many would say we have got it with the Audi A8 coming out later this year, but first of all legislation has to catch up to allow that. I have just seen a very interesting paper from AXA Insurance and law firm Burges Salmon on how we handle that interim phase, where the car is autonomous for much of the journey until it gets confused and says “back to you Mr Driver to take over”, and there’s that three seconds or more of the driver working out what’s happening and having to react. It is a whole area that is going to need legislation and a very serious look at by the vehicle manufacturers and the insurance industry.
Q
How will collaboration with insurer and supply chain partners ensure each industry can take advantage of this disruption?
A repairers have to absolutely know the specific repair method and resetting procedure to reinstate the vehicle to its pre-accident condition.
I think we will see more selective work allocation from insurers and accident management companies because not every bodyshop is going to be able to repair every car as the technology becomes more complicated. Therefore, it may be that an Acme car has to go to an Acme approved repairer because they are the only ones that are going to have the correct equipment, training and tooling to carry out the collision repair and ADAS alignment post-repair. I think one may certainly see a growth in the number and strength of vehicle manufacturer approval jobs due to the level of technology.
Insurers also have to take into account the cost of ADAS alignment both for vehicle repair and windscreen replacement.
Q A
What are the biggest influences on cost pressures?
For repairers, the biggest influence is the considerable shortage of skilled vehicle fitters, panel beaters, painters and MET technicians in our industry. This has inevitably led to considerable pressure on wages, which has not necessarily been reflected in the charge out labour rate to work providers. There is also competition for these skilled workers from outside our industry and bodyshops often simply can’t compete with salaries on offer elsewhere. From the vehicle manufacturers we have seen substantial increases in the cost of the parts element of a repair. Some of this has come from exchange rate issues but also from the increasing level of safety technology in cars, which uses expensive sensors, if they are damaged in an accident. The insurance industry has also been hit by competition from aggregator websites and the latest ruling from the FCA (Financial Conduct Authority) that came into effect last year with regard to renewals. The insurance company now has to show what last year’s insurance premium was, what the renewal premium will cost and also has to recommend that a lower price may be available by shopping around. The latest research from Consumer Intelligence
Issue 30
I think many insurers could be much better at sharing their CSI data between themselves and their repairers, who would love to see how well they are doing compared to others
Modern Insurance 15
INTERVIEW
Overall, we have to encourage young people, let them see what a fantastic industry it is, with a great future, and we just need to attract more people to join it
Q
How might training in the body repair industry need to evolve in the coming years to prepare the workforce for the continued rise of ADAS and autonomous technology?
A
There will be inevitably a huge cost to the industry both in terms of the equipment and training required to first of all identify what ADAS equipment is fitted to a vehicle, then how to align it and in what circumstances it requires alignment. We know, for example, that some manufacturers require their vehicle to have a 4-wheel alignment before you can recalibrate the ADAS items on it. We also know that some of the radar equipment can be affected by anything put over it, so the sensors that are fitted behind a bumper can be compromised by the thickness of paint, the type of paint and even the colour of the paint.
Q A
What steps are being taken to encourage new talent into the repair industry?
We have a considerable skills shortage in the body repair industry and we need to get more young people involved in our industry. First of all, we need to raise awareness about our sector. At the moment, I suspect that young people who are good with their hands and want to be involved with cars are being put down the road as a mechanic rather than considering body repair because we are a bit of a forgotten industry. We have had a number of bodyshops who have held apprentice open evenings and got involved with local schools to showcase what a modern bodyshop looks like, which is clean and high tech and miles removed from what is depicted on television in Eastenders and the like. At ABP we are holding the first ever Body Repair Industry Apprentice Awards (BRIAA) on 26 June where bodyshops, technical colleges and vehicle manufacturers can present their award to their best apprentices. The event is going to be free for the awarding companies and the apprentices to attend, and most importantly for Mum and Dad to attend, because the parents play such a vital part of ensuring that the young person gets up on time, gets into work and sticks with the apprentice programme. Overall, we have to encourage young people, let them see what a fantastic industry it is, with a great future, and we just need to attract more people to join it.
Q A
What role could the insurance industry play in developing the supply chain workforce?
I’d love to see the insurance industry getting more involved in bringing young people into our sector. It would be great to see Acme Insurance sponsoring some apprentices within their approved repairers because they would get the benefit of it and it would be such a great thing to see. Two insurers have their own repair centre networks, Solus owned by Aviva and the DLG Auto Services Group owned by Direct Line. They obviously have apprentices within those networks, but it would be great to see that expanding into their approved network.
Q A
How is data currently being used within the body repair industry to improve the customer experience?
The use of data to improve the customer experience is still in its infancy in our industry, but it is certainly there and used to measuring things like SLAs and key-to-key times.
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As a society, next day delivery is not seen as exceptional and similarly people want their cars repaired quicker and don’t expect it to take five days to replace a bumper. Insurers are very keen to know how quickly the car has been repaired – the key-to-key time, together with the average repair costs and CSI. Sometimes I do feel that repairers have to concentrate too much on meeting the insurers SLAs, rather than listening to and acting on what the driver actually wants!
Q A
How could increased data sharing between supply chain partners further this?
This is a massive area, which definitely could be improved on. I think many insurers could be much better at sharing their CSI data between themselves and their repairers, who would love to see how well they are doing compared to others. If they have a 1% complaint ratio, is that high or low? If the average is 3% it is very good, but if the average is 0.3% it is not very good, so there needs to be much more sharing of that data. The same applies if using Net Promoter Scoring (NPS) as the measure. It would be lovely to see an industry standard measurement for customer satisfaction so that we can then compare one insurer with another, one network with another, one bodyshop with another etc.
Q
What are the ABP Club’s plans over the next year to continue to support its members across the entire insurance supply chain?
A
The fundamental point about the Auto Body Professionals Club is that it is a club for the entire industry and has been since we formed fourteen years ago. We have 2,500 members, half of whom are bodyshops and the rest comprises all of the top motor insurance companies, vehicle manufacturers, paint companies, paint distributors and accident management companies. We don’t support one section of the business of our membership over any other; we are there to provide a platform for members to engage with each other. Our events are open to all of our members. We have on May 10th the seventh version of the British Bodyshop Awards (BBA), which is a fantastic event and the largest bodyshop awards event in the world. This year over 850 guests will see 18 insurance companies, accident management companies, training providers and vehicle manufacturers present their awards to the best repairers in their network, with 32 bodyshops receiving awards. In November, we have a more informal gathering of around 550 at our Annual Convention and Night of Knights where we present the ABP Repairers Choice Awards. This is where the repairers have voted for their favourite insurer, paint company, accident management company, software provider etc., giving the repairers a real chance to tell their suppliers what they think of them. David Cresswell is Chairman of the Auto Body Professionals Club.
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As the automotive industry works towards its driverless revolution, connected cars will be the necessary precursor to driverless cars
Richard Barlow Modern Insurance spoke to Richard Barlow about how wejo is changing the automotive landscape with their connected car exchange platform. Richard also discussed the value and importance of vehicle data and how this will influence insurance in the future.
Q A
What role does wejo play in the automotive sector?
wejo is the world’s only omni-channel, multi-marketplace, connected car exchange. We are at the cutting edge of the automotive industry and are set to revolutionise the car market thanks to the connected car data that our proprietary exchange platform is able to analyse and curate. Currently we track 3.5 million cars in over 190 countries, with 10 million cars projected to be on our exchange by the end of 2018. We enable cars to communicate with each other and trade back with OEMs. The exchange offers a comprehensive insight into driving behaviours and the technology to respond effectively to the needs of fleets, drivers, insurance companies and other industries. As the automotive industry works towards its driverless revolution, connected cars will be the necessary precursor to driverless cars, starting with enriching the in-car experience for the driver and enhancing safety standards.
Q A
What are the next steps in the evolution of the connected car on the lead up to total autonomy?
However, car owners are unlikely to willingly share their data without a clear economic incentive, and this is something wejo works closely with leaders in the automotive industry to deliver. Good examples of what will stimulate driver buy-in include the convenience of having your car inform you of the nearest parking space, personalised in-car driver preferences and re-routing based on real-time mapping information
Q A
How are developing vehicle technologies going to influence the RTA landscape in the next twelve months?
We are working with a number of OEMs in the US and Europe and finding quicker ways to respond to RTAs. Selected partners of wejo work with OEMs so that in the event of an incident, the vehicle transits a real-time notification of a collision event (e.g. an airbag deploy) along with the exact latitude/ longitude of the vehicle location. This enables the emergency services to be deployed to the location much more quickly than in traditional events – literally life-saving minutes.
Autonomy at the moment is a car that has anti-avoidance or lane detection, and that is known as level 2 autonomy. The next steps will see the connected car becoming fully autonomous.
There are already developing vehicle technologies that are supporting the RTA landscape positively, for example, SOS buttons in cars. There are other instances where improving the autonomy of the car can improve the ability of the car to brake if there is a collision ahead or to stay within a lane. All of these things are existing ADAS capabilities that will help to reduce RTAs.
The general consensus of our analysts is that they think the connected car will grow to 250 million by 2025. We want to become the company that those 250 million connected cars can communicate with. wejo offers vehicle-to-vehicle communication, and making cars work with each other and share certain data can help them become more autonomous.
We also provide a voice service. In the US, 17 million cars already had that functionality, but only a fraction of those cars actually enabled it. We’re now enabling real-time web functionality, which can improve response rates and reduce fatalities in the event of an RTA by speeding up the car’s recognition that it is involved in a crash, rather than waiting for the driver.
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Modern Insurance 19
Q A
What are the applications of the data gathered by wejo in order to improve the overall insurance experience?
We are working with a number of insurers in the US and Europe, and we are helping them with not only the claim element in the event of an RTA but also throughout the overall lifecycle of a policy. For example, with one OEM, who we work with in fourteen countries, we are helping to build a usage based insurance product. Historically, UBI has been through black boxes, a product that is predominately given to young drivers that may be of a high risk. wejo’s data will be instrumental in modernising the insurance industry, enabling the introduction of new products such as pay as you go insurance. wejo seeks to support insurers throughout their policyholder lifecycle, helping drive a more meaningful engagement and dialogue through the use of data and supporting the insurer to deliver more personalised solutions for their customers and operational efficiency. This is particularly true at point of incident, where through the wejo accident assistance services we are able to share FNOL data with insurers within minutes of an incident occurring. Postincident we can support insurers with crash reconstruction, claims investigation and fraud identification through the generated car data. We see this service as crucial in supporting the driver post incident and in facilitating, with lost incidents, a more timely resolution of claim for the drivers.
Q A
How can insurers further utilise technologies that customers already possess in order to better utilise vehicle data?
We’ve found technology like eCall has been used for a number of years and that most new vehicles in production have the capability to share data with the insurer, should the permission exist. It’s not an implementation of new technology
20 Modern Insurance
that needs to happen, but it’s technology that already exists in the car being utilised effectively that will create progress. wejo recognises that insurers in most cases neither have the desire or capability to integrate with each individual manufacturer; it is our experience that OEMs wouldn’t seek to support multiple integrations regardless. wejo’s data exchange removes the issue of integrating, enabling insurers to access customer data through our single exchange platform, ADEPT. We understand the importance of being able to add value now for insurers, and as such the majority of our integrations are bespoke, allowing insurers to ingest information directly into their existing systems. In addition to the data feed, we offer voice support, and through our contact centre team we build relationships with insurers over the phone, mirroring the practises that they have today for claims notification and support.
Q
How will consumers’ relationships with their vehicles change in the future, and how should vehicle and mobility solutions providers respond to this?
A
There is a general understanding that the car is utilised for less than 20% of a person’s time in a day. OEMs have predicted that the usage won’t go up, even though the relationship between drivers and their vehicles is evolving. We envisage a variety of likely scenarios, all of which rely on connected car data. Insurance is likely to become more transient and driven by a desire from customers for flexibility, something that data is likely to support, with drivers no longer responsible for reporting own mileage or driving style, for example, and therefore enabling a more flexible insurance model. Car sharing may increase, and insurers might have to deal with a car that doesn’t have one driver over the year but 300 drivers, and they will need to provide insurance that lasts for one hour or one day rather than one year.
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Q
How are customer and driver expectations forcing change in the automotive industry, and what form do these changes take?
A We are at a much more advanced and developed stage than any other data provider, and we want people to recognise wejo and know that their data is secure
Q
What is the value of vehicle data and what role does it play in today’s market?
OEMs are constantly striving to have the most effective and driver-friendly cars on the market, and they realise that technology and the role connected car data plays in this space is critical. The pace of change and technological advances with smart phones is making for a restless consumer environment whereby drivers expect a high level of automation and ADAS type advances as standard, even on the most basic models. Specifically in the first instance, parking, mapping and other geolocation applications are having to be developed by the automotive industry and its supply chain to meet this demand.
Q A
What are wejo’s goals for this year and beyond?
2018 has already been a busy year for wejo. In January, we announced the completion of a successful £5m fundraising round, and this follows £20m raised over the previous two years. We are only four years old, and we are continually adding to our board, like Tim Lee who joined us as our Chairman. Tim was previously the Executive Vice President, Global Manufacturing for General Motors and Chairman of General Motors China. Our goal is to maintain our strong position in the market. We are at a much more advanced and developed stage than any other data provider, and we want people to recognise wejo and know that their data is secure. In the future there will be less car ownership and there will be more car utilisation, and with that comes a lot of playing around with data; that is what we are helping the OEMs do on a global basis. wejo recognises the importance of the insurance industry as consumers of connected car data, and we welcome continued collaboration with insurers around the creation of these data products that will support their businesses now and in the changing future. Richard Barlow is Chief Executive Officer of wejo.
A
The latest report from McKinsey stated that: “The expected growth of the value pool from car data and shared mobility could add up to more than $1.5 trillion by 2030, and the foreseeable proliferation of new features and services will turn “car data” into a key theme on the agenda of the auto industry.” If all cars are driven by smart mobility by 2030 there are going to be all new cases, and that drives value; whether it is helping build maps for autonomous driving, making cars aware of free parking spaces, or getting a courier to drop off a parcel, there is huge value in having car data. Car mobility data is of high interest and will attract capital for its monetisation, which will fund the mass development of the connected, then autonomous, vehicle.
Q
How can technology and connectivity be used to improve vehicle eco-efficiency?
A
There is a range of applications that connectivity will be able to enhance and improve for cars and their drivers, including eco-efficiency and reducing the environmental impact from vehicles. There is a company making a prediction that by 2020, the emissions of new cars has got to drop by 95 grams. Car companies are now working with people with an element of eco-innovation, and if we can share technology that is helping to drive emission levels down then that can help the car company. To help drive down emissions we’ve introduced start-stop technology in the car; one of the datasets that we build lets us know a car’s average time spent at a traffic light, so then start-stop can be more intelligent about the engine being engaged or not. All of these small instrumental benefits can help to reduce emissions.
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EDITORIAL BOARD
Dawn of the data scientist In the face of technology advancements and automation, how can the talent of the future be developed and trained to suit the skills this will demand? ata science is a scarce skill that is in high demand. It is moving from being project-based to something that is pervasive across all insurance processes. Increasingly it is becoming centred not only on narrow, statistical analysis skills, but on business knowledge, marketing and communication skills too; in fact, everything that sits around the data processing for insurance.
D
A good description would be the rise of the ‘citizen data scientist’, those armies of people who don’t necessarily understand the mathematical algorithms, but who will be able to up-skill enough to direct the machines and ask the right questions. For insurance, digitisation is going to mean automation; doing more of the mundane processing tasks and a shifting of skills across a whole range of disciplines. This data-driven approach completely changes the rules of the game. From our viewpoint at LexisNexis Risk Solutions, we help our clients with provision of agile solutions and with access to our high-performing analytics team. But we see digital transformation as being as much about culture change as it is about process and training. Skimming most of the industry publications, you would think the data scientist is almost like some mythical creature with unlimited powers to solve any analytic problem. Now there is a realisation that insurance providers need to look around and figure out more deeply what they want data scientists to do, the ways they want them to question the data, and how they want to apply the results. Big data and using insights from analytics is no longer something that resides only in narrow objectives set by the CIO or data scientists. It’s all about ‘infused analytics’ becoming the standard: analytics that are embedded as a natural part of the solution. As with any major technological change, there’s a tendency to believe machines will remove the element of human skill, when in fact the opposite is the case. Solving the training issue is going to require a huge effort coming from government, as well as universities, insurance companies and the data intermediaries.
Motor insurers need to adapt as technology evolves he two basic elements of motor insurance, the customer and the motor vehicle, are rapidly changing, and motor insurers can greatly benefit from these changes. Furthermore, insurers will be forced to adapt and respond to these changes if they want to stay relevant in this continuously changing market.
T
On the side of the vehicle, the connected and autonomous car will steadily increase their impact in how the insurance market assesses the risk and prices insurance. UBI (usage based insurance) is already common practice and is a growing model. Different ADAS devices, which are already in place, are playing a relevant role in reported accidents (-41% between 2000 and 2010) and in claims frequency (-35% 2000-2013) according to the ABI. More and more the car is going to become a mobility service platform, and insurance needs to adapt and become one of those services. Vehicle manufacturers are at the forefront of this, and with the ever increasing development of technology, vehicle manufacturers working in partnership with insurance companies will drive the strategic view for the insurance market in coming years. On the side of the customer, the claims industry has a large opportunity through existing technologies; self-service claims is becoming a trend that still needs to realise its full potential, allowing benefits and convenience for the customer. The consumer is used to a claims experience that has not changed that much in fifteen years, and it’s an open field for disruptive players. Hyperconnected customers will choose those insurers that can unleash the potential of their data and connectivity. The new normal customer experience is Amazon-like, customer obsessed and customer centric companies, which in the insurance industry would mean that you can buy insurance adapted to your specific needs; the insurance company already knows this means convenience, self-service and hassle free restitution to normal life. Pablo Liñares, Director of Consulting and Innovation Services, GT Motive.
At LexisNexis Risk Solutions we expend a lot of time and effort on hiring analytics experts and data scientists, although these job titles don’t really tell the whole story in terms of the explosion of data, the new sources of data and the importance of the analytics opportunities for insurers. Trevor Lloyd-Jones, Senior Marketing Manager, Insurance, Lexis Nexis Risk Solutions.
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Modern Insurance 23
EDITORIAL BOARD
Ghost broking and how it is evolving host brokers sell fake or defrauded insurance policies to individuals for what appears to be very cheap premiums. Unfortunately, these policies are not worth the electronic mail they’re written on.
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This can work in two ways: either the policy is incepted using falsified or stolen identity data and sold onto unwitting customers, or fake policy documents are produced to impersonate a legitimate insurer. We’re going to focus on how the former is evolving and how you can combat it. In our last editorial, we wrote about the rise in reported True Identity Theft, Account Takeover and reported 3rd Party Application Fraud by our insurance clients; all fraud instances that are prevalent in ghost broking operations. The threat from ghost brokers is not a new one, but the techniques they use to avoid detection are constantly evolving. Fraudsters know they are being watched; we see this when investigating the origin of questionable policies. Fraudsters have started to create smaller amounts of falsified accounts per combination of deception. They will actively change not only an identity, but also the device in use to avoid detection. They are able to change the device profile (is it a laptop? tablet? mobile phone?), the location (are they based in the UK or further afield?), the MAC address, local language, operating system and screen resolution, and this is just scratching the surface. Fraudsters have hundreds of variables to play with to enable their behaviour, so how is the insurance industry keeping up? Firstly, there are offerings on the market that can aid you to recognise these signs and help to combat fraud. Secondly, insurers can collaborate by sharing fraud insights with other insurers, or even other industries, to get a better picture of evolving threats. This is a powerful tool that allows insurers to connect the dots on ghost brokering rings before running afoul of them. Because, after all, insurance is not the only defrauded industry, and these sophisticated fraud techniques are being used and perfected elsewhere. Recognition and collaboration are the biggest weapons in fighting fraud, because businesses cannot solve such large issues in isolation. With these tools you can evolve your fraud prevention and help ensure that your policies are worth the electronic mail they’re written on. Shaun Smith, Sales Executive EMEA, iovation.
Issue 30
Break down barriers to take down fraud How will the methods of fraudsters in insurance evolve in 2018, and how should the insurance industry prepare for this? istory has taught us that fraudsters, and their enablers, such as CMCs and a small minority of lawyers who seek to find a shortcut to financial success, are nothing if not nimble. Close one loophole and they shall seek to exploit another. Restrict or shut down entirely one market and they already have their eye on the next. Change the regulatory model, and they will recalibrate their business model to become legislatively compliant, at least to the letter, if not in the spirit of the intended reform.
H
Although we may, and knowing the sector, undoubtedly will, continue to argue about the scale of fraud in certain markets, we – all sections of the sector, regulators and government - need to be equally adaptable and thoughtful in how we respond. The regulators appear to have been relatively swift in seeking to clamp down upon holiday sickness abuse, but the next target areas are just around the corner. At the risk of sounding like a stuck record, this also means not making poor decisions to seemingly tackle one problem, whilst opening the door to a whole set of new ones. The proposed whiplash reforms will do precisely this and open the floodgates to further abuse from CMCs. Fraud, in all its guises, needs to be tackled from every angle. The SRA needs to get tougher, the ICO needs further powers and cold calls need to be banned. The insurance industry, and the rest of the claims sector, does have a variety of proven tools at its disposal to combat fraud. Closer collaboration, sharing data and intelligence and providing a unified front to change cultural perceptions that fraud is a victimless crime will all contribute greatly. For our part, that is why Carpenters worked hard to satisfy all the criteria and checks to become an IFB affiliate member. It is essential that the sector breaks down traditional barriers and works together. In large part, that involves seeking a broad agreement about what the sector should look like in the future. Regrettably, such agreement continues to be elusive. Donna Scully, Director, Carpenters.
Modern Insurance 25
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EDITORIAL BOARD
Advancing autonomy How are developing vehicle technologies going to influence the RTA landscape in the next year? hilst lawyers and insurers have been arguing and lobbying the government over who, how, why, what (and how much) about RTA claims, both manufacturers and tech companies have been placing massive efforts into ensuring cars don’t crash in the first place.
W
There have been some incredible breakthroughs in accessible technology and anyone who has driven a vehicle built in the last couple of years will have noticed active safety features. Now common place is autonomous braking, where the vehicle recognises an imminent impact and warns the driver and ultimately takes control of the brakes to avoid or minimise a collision. This autonomous braking will be a prerequisite for a five star Euro NCAP rating this year. Passive systems such as lane change warnings, blind spot alerts, smart high beams, parking assistance and various other driver alerts are being added to models each month. Most of these systems are paving the way to move from what are typically classed as level 1 or 2 autonomy, which require plenty of driver control, to the next steps where the vehicle monitors the environment. Starting at level 3, conditional automation, where the car is doing the driving but with continual input/awareness from the driver; level 4, where the vehicle systems are fully in control but the driver may resume control, to the ultimate full autonomy where no driver is required whatsoever. Interestingly, it is tech firms such as Waymo, Nvidia, Apple and Samsung that are leading the way here. So the technology is almost upon us, and I’m proud to say that the UK is at the forefront of what is one of the biggest advances in transport since we decided to dump horses. We are currently testing driverless vehicles, although current law requires a human in the driver’s seat to take control if required. In 2019 we are likely to be allowed to test fully driverless cars in an attempt to leap us ahead of our rivals in the US and Singapore. So will this technology stop crashes? Well, last year Volkswagen stated that their vehicles fitted with autonomous braking were involved in around 40% less accidents, and this is only level 1. Data from Swiss accidents concluded that drivers were responsible for 90% of accidents, so remove the human and we see a dramatic impact on the amount of crashes. I am therefore in no doubt that driverless cars and emerging technology will significantly reduce accidents, if we can work out the legalities and legislations surrounding such a massive upheaval. Nik Ellis, Managing Director, Laird Assessors.
Issue 30
The opportunities in the world of new mobility New business models are emerging incredibly quickly, for example Airbnb and Uber. What new risks and challenges are these models bringing to the insurance industry? any column inches are currently being expended on the subject of new mobility – from autonomous vehicles to ride hailing. And whilst there’s no doubt that there is much debate in the insurance world about how to mitigate for the risks of autonomous vehicles, the positive benefits of emerging technologies, for social mobility and inclusion in particular, should not be underestimated.
M
The big challenge for the insurance sector is how to embrace and support new mobility solutions, alongside the current model for motoring. Recent research1 suggests that there is a continuing trend away from ownership to ‘usership’, particularly when it comes to new cars. It seems that a growing number of motorists are looking for a monthly payment solution, rather than making a long term financial commitment to purchase. And whilst affordability is undoubtedly part of the story, it also seems that motorists want flexibility. Flexibility of choice when it comes to fuel type, including being able to tap into new more eco-friendly solutions such as hybrids and electric, as well as flexibility in relation to the type of vehicle they need. But what does this all mean for insurers, and how can the supply chain support insurers as motorists’ behaviours change? I believe a key factor in the changing picture of UK motoring is the impact of smart technology. Certainly the insurance industry has not been backwards in adopting new technology to improve the customer experience, such as apps to monitor and influence driving behaviour. The application of technology is also enhancing the claims experience, reducing the friction for the policyholder. But that doesn’t just have to focus on the first notification and arrangement of repairs. Customer mobility is also fundamental. Get the customer mobile as quickly as possible, enable them to continue their life regardless of the fact that their vehicle has been put out of commission as a result of an accident and they could well feel that bit more loyal to the insurer. And I believe the emergence of ‘mobility as a service’ solutions can play a key role to help insurers address this imperative. It’s another step to meeting new mobility demands – and it’s another way that insurers can differentiate themselves. James Roberts, Business Development Director, Insurance, Europcar UK Group. 1https://www.contracthireandleasing.com/car-leasing-news/usership-v-ownership-new-
car-ownership-in-reverse-as-leasing-overtakes-hire-purchase/
Modern Insurance 27
Innovation in Information Get the essential insights you need to more accurately price and underwrite risk from LexisNexis Risk Solutions.
Combining cutting-edge technology, unique data and advanced analytics, LexisNexis Risk Solutions provides products and services that address evolving client needs, while upholding the highest standards of security and privacy.
For more information, call 0800 130 3002 or visit lexisnexis.com/risk/uk/insurance LexisNexis and the Knowledge Burst logo are registered trademarks of RELX Inc. Other products and services may be trademarks or registered trademarks of their respective companies. Copyright Š 2017 LexisNexis.
EDITORIAL BOARD
Data sharing is caring
Claim in a pocket
What is the importance of integration between the various technologies now available to insurance businesses, and how can this be achieved?
How can insurers further utilise technologies that customers already possess in order to better assess, prevent and respond to risk?
here has never been an easier time for all partners in a supply chain to work together and integrate multiple data streams and platforms into a single seamless aggregated transaction. When secure data is communicated transparently and shared amongst all stakeholders, the real value of service delivery to the customer is realised.
T
Integrating systems and utilising technology to remove the nonemotive elements of necessary interactions enable significant efficiencies to be delivered throughout the supply chain. Driven by the clean exchange of data by removing frictional working processes and costs, these savings can then be shared throughout the chain; a benefit which is welcomed by all stakeholders. As well as the enormous benefits to efficiency savings on all operational departments, sharing live data between all partners ensures that customers are kept up to date with proactive communications throughout the claims process, reducing the need further for customer inbound communications. Keeping the customer informed, setting clear expectations at the outset, sharing relevant and timely communications throughout and then delivering on time; these are the very simple steps to a solid foundation for the best customer experience. A secondary non-customer specific benefit of true integration between all parties is the real time MI reporting capabilities and performance management. Visibility of the performance of the whole supply chain in real time can drive improved service levels, a faster and more convenient claims experience and overall enhanced customer journey for each policy holder. In a recent live example, we worked with a customer to deliver all of these technological benefits; the first part of the process was to understand their specific requirements at a stakeholder level and define the desired and clear outcomes from the innovation. From there, we enlisted the subject matter experts within the business to scope out the project and design bespoke workflows and processes, which would deliver a highly beneficial and integrated solution. Data transparency and integration delivers marketleading NPS scores, improved efficiencies throughout the delivery of all services and MI, not only helping to measure performance but to identify key future trends for further service innovation.
W
hat technology do you carry on you at nearly all times? I’ll give you a clue: if you have a teenager it’s likely that they don’t even look up from it when they speak to you…
The “smartphone” has changed the way we interact with the world around us. People use their phone to manage their banking, emails, internet browsing, shopping, travel tickets, home heating and social interaction etc. What does this mean for the average person and their mobile phone? It means that in their possession they hold technology that twenty years ago would seem more Star Trek than reality. But what’s the benefit to insurers? Put simply, people carry this technology around everywhere with them, and it’s easy to see how it can be used for insurance purposes. From purchase to risk management to claims. 4G internet connection and easy access to WiFi, alongside better screens and browsing ability, means that people can search and shop for their insurance whilst on the go. Better access to buying products via smartphone could be key in some areas. The phone knows where you are; “just before you plunge down that black run, would you like some extra cover?” Things keep developing, and in 2018 new chips are to be found in smartphones that will be able to track your GPS to within 30cm of your actual position. Can we be so precise and up-to-date on detailed local situations that you can warn people and reduce risk? In a claims situation, we know who you are and where you are, let’s help recover you and your vehicle. Add in the ability for smartphones to take photographs, which a decade ago would have required an SLR camera, nearly everyone carries a tool that can tell insurers where a claim happened and build a picture of it in stunning detail. How best to utilise this technology then? “Insurance is old fashioned” - turn this stereotype on its head. Don’t just be receptive to new ideas, create them – the big question in technology is often not ‘if’ but ‘when’. Today’s generation talk about chatting to someone when they Snapchat each other. They aren’t interested in insurers building portals for them to key into, that’s insurer thinking, they will expect the insurer to enter into their world.
Dan Chesney, Commercial Director, S&G Response. STEPHEN MARSHALL ACII, Managing Director, Insure Apps.
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Modern Insurance 29
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Brand risk for professional firms
Safer roads and speedier resolutions
eputation is a key component of professional service firm success. The components of a strong brand include reliability and consistent delivery of high quality service, good leadership and high esteem in the client community. This confers considerable benefits to the organisation that is able to differentiate itself. Reputation risks are one component in today’s world where technology, disruption and new business models constitute potential risk areas.
How are developing vehicle technologies going to influence the RTA landscape in the next year?
Professional firms have proven to be resilient to bad news arising in areas such as litigation. Clients tend to take informed and sophisticated views on the issues and have personal relationships and experiences to draw on that generate loyalty and trust. Clients will likely therefore forgive negative publicity arising from bad decisions or genuine mistakes, but violations of ethics or questions around leadership or culture could be different.
While we await the apocalypse, technology-led disruption is already changing the insurance value chain, including RTA. It is reckoned that there are roughly 750,000 accidents each year. On average, an individual has an accident in their vehicle once every seven years.
R
Outside of the reputation area, potential sources of brand damage are the many potential threats if the business is undermined by innovation or competitive moves that the firm fails to react to. This is of course very topical and the strategies to cope are topics of lively discussion. Some of these threats might be considered brand erosion while others could be catastrophic. Further threats could emerge from expansion into new areas; new business models, alliances, mergers and acquisitions. Monitoring for any warning signals is advisable. Sophisticated methods exist that are used by media originations who track sentiment about the firm in relevant communities. Self-assessment and intuition can thus be balanced with quantitative analysis and independent inputs. Brand risk fits into a risk management framework and conventional risk awareness models would identify many threats. This would have to be sufficiently broad to include strategic risks and tools such as horizon scanning and scenario planning, which are very valuable. Perhaps the most important risk management tool is to have a crisis management team in place. Dealing with reputation events is notoriously difficult and is complicated by cognitive bias and the need to deal with urgent questions under conditions of stress. Of course, ignoring bad news or covering it up have perhaps the worst consequences. Finally, brand damaging events have a cycle and attention should be paid to recovery strategies as the cycle plays itself out. Keith Tracey, Managing Director, Professional Services, Aon Risk Solutions.
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plethora of start-ups and insurtech businesses, big and small, want to eat traditional insurers’ lunch. Even Amazon has started recruiting insurance professionals to cause widespread disruption to European markets. Insurers are paranoid about one of the big tech companies unleashing blitzkrieg on the sector.
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Most of the developing technologies either speed up the claims process, from FNOL onwards, or eliminate accidents altogether. In the latter, vehicle to vehicle communication (V2V), which allows cars to communicate with each other over a dedicated WiFi band and share information about vehicle speed, direction of travel, traffic flow, and road and weather conditions, may reduce car accidents in the USA by 80% each year. The next step will be vehicle to infrastructure communication (V2I), where vehicles are connected to smart highways and traffic lights. This will significantly reduce congestion and commuting times, further improving vehicle safety. These technologies are the foundation for fully-automated vehicles that make driving safer and easier. In time, manufacturers will introduce partial autonomy and, eventually, cars that drive themselves. We don’t have accident-free roads just yet, but technology is already influencing post-RTA. Onboard cameras and telematics make liability resolution easier than ever before. Telematics is already being used in criminal prosecutions to provide evidence of driving behaviour pre-accident. Technology also provides rapid assessment of the extent of damage and the cost of repair. Mediation technology, using similar workflow management systems to other conflict resolution tools, will feed all the information into a hopper, where a series of protocols between insurers and CMCs will ensure a swift resolution to the claim without the need to litigate. And, if mediation doesn’t succeed and the claim is litigated, technology developed by Minster Law will help clients through the journey online. During 2018, post-accident will see the most immediate changes, delivering improvements to client satisfaction and a significant reduction in claims cost, which will surely be welcomed by drivers paying through the nose for car insurance. Shirley Woolham, COO, Minster Law.
Modern Insurance 31
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EDITORIAL BOARD
Change on the horizon of the RTA landscape How are developing vehicle technologies going to influence the RTA landscape in the next year?
I
t’s inevitable that developing vehicle technologies will influence the road traffic accident (RTA) landscape in 2018. However, it’s not just going to impact 2018 – the influence is going to be long lasting.
The Automated and Electric Vehicles Bill has gone through the Commons and is scheduled to be debated in the House of Lords before it then goes to the Committee stage, possibly getting Royal Assent around or shortly after Easter. The way I see it, this legislation is the time tunnel to the future for RTA, and with it will come the need for modernised insurance. Regardless of what happens with the Bill though, there are some obvious areas of the RTA landscape that will be impacted by technology. For instance, MOT tests/testing centres will need upgrading to support new and legacy technologies and repairers will need up-skilling and to be provided with the right equipment to repair complex vehicles and recalibrate them. Significant investment will also be required to facilitate infrastructure changes, such as creating smart motorways and redesigning roads.
Insurtech expectations What trends in insurtech and start-ups do you foresee in the next year? ast year was another headline grabbing year for insurtech. It seemed that the investment value climbed with each new story. In fact, £1.6bn was raised in funding over 2017, which was a 36% increase on the previous year.
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However, so far, we’ve not seen the forecasted major shift toward insurtech in customer buying behaviour materialise, and I expect we will see a new wave of start-ups throughout 2018 competing for that prize. Realising the benefits of the investment in technology takes time, but this year we are going to see more and more customers testing their insurtech cover at the point of claim; and the proof will be in the proverbial pudding. In my previous column, I talked about the critical importance of good back office partnerships for insurtechs to enable them to deliver on their customers’ high expectations. I think this is the defining factor for insurtech in 2018.
However, it’s not all about monetary investment. A lot of effort will also need to put into educating people so they feel comfortable and able to use the technologies that emerge. A good example of this is the lack of education that currently exists around advanced driver assistance systems (ADAS) and the lack of confidence in solutions such as parking assist, guidance systems and driverless vehicles.
Much of the focus for insurtech is on point of sale customer experience and personalisation, where there is so much scope for doing things differently. In order to make this a reality however, that experience needs to run right through the customer proposition. When the customer needs to claim on their insurance, the experience must be in-sync with the brand and personalisation they bought into. If not, they will vote with their feet, and in this social media enabled world, tell everybody about it.
Specific groups of people are also likely to be impacted more so than others. Take for example young drivers. Surely the advent of safer cars brings back on the table a way to support the appalling waste of life in terms of the numbers of killed and seriously injured young people on our roads?
This is why there is great value in claims partnerships for insurtech. A forward thinking, agile start-up needs claims management that is equally forward thinking and agile, otherwise the claims process will fail the customer’s expectations.
And with all these developments, it’s highly likely that insurance premiums will fall. Which begs the question, what will it mean for our industry? Will it result in more consolidation, further commoditisation and new players? There are obviously many unanswered questions, which hopefully will be addressed by the Automated and Electric Vehicles Bill. Regardless of what happens though, one thing is for sure – there’s going to be a lot of change to the RTA landscape, and we need to ensure we’re prepared for it. MARTIN MILLINER, GI Claims Director, LV=.
For example, if a customer chooses a new insurer whose specialised proposition gives great cover as a self-employed courier, then when making a claim they expect to have those specific needs recognised; their mobility requirements, the importance of key-to-key repair time and so on. To sum up, there is still a lot of potential disruption to be caused by insurtech, but there is a long way to go before technology led solutions become the norm. This is also the case for partners working with insurtech who need to align their services with the proposition in order to help to realise the benefits for customers. Jason Tripp, Operations Director, Coplus.
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EDITORIAL BOARD
A resilient Forget AI, future it’s the How can insurers and businesses work together to better technology in understand and mitigate the risks of natural disasters and improve the car that we should how they are mitigated over time? obody can have failed to be moved by the pictures beamed be keeping our eye on! ith the use of big data and AI, many customers are unaware of the incredible tech working in the background to make the whole process of buying insurance and making a claim easier. But the obsession with making everything five seconds faster has taken the industry’s attention away from the real game changer – innovation in the cars themselves. Driverless cars may still be the future, but much of this technology, integrated into the functionality of their car, is here now as the first level 3 autonomous vehicle launched in December 2017.
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A customer can go to a franchised dealer and purchase a car with a variety of different safety systems in place to make driving easier and safer. The problem is often that the customer drives away with no idea what systems are there or how they work. Volvo has famously pledged that no one will die or be seriously injured in one of its vehicles by 2020. This clearly presents a great advantage to insurers if the technology is in perfect working order and the customer is using it. But where we fall short is following the vehicle manufacturer’s instructions to understand the functionality of the car and maintaining these safety features. What I have personally found, with the ever-increasing adoption of Advanced Driver Assistance Systems (ADAS) in even basic vehicle models, is that the key for everyone to benefit lies in further education. This is true for insurers, supply partners and especially the customer. Vehicle manufacturers are making technology in cars more mainstream and sophisticated to make the car safer, so this should therefore act as a fantastic source of information for the insurance industry. In theory, the more smart technology in the vehicle there is, the lower the risk. City braking for instance could prevent numerous road incidents, however, this is reliant on the customer knowing that the technology is there and understanding at least a proportion of the science behind it. It is precise and must be treated with great care, but without clear regulation or compliance how can we ensure that we’re all doing our absolute best to maintain these features and ensure customer safety? Auto Windscreens have invested in its partnerships with vehicle manufacturers so that we understand the implication of replacing a windscreen fitted with ADAS. My personal opinion is that insurers would benefit from working more closely with the vehicle manufacturers to understand the innovations coming into every vehicle so that they can present a more accurate risk profile. Only then can we create a standard and secure way of utilising the innovation that is already there, keeping the safety of the customer at the heart of what we do.
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around the world of the devastation caused in the recent hurricane season. One Caribbean Island, Barbuda, suffered almost 90% devastation with profound consequences for the lives and livelihoods of its residents. And the outlook continues to look gloomy. Recent research from the World Economic Forum, sponsored by Zurich, shows that environmental risks continue to dominate, with extreme weather events ranked number one in the 2018 Global Risks report.
Environmental risks come in a variety of shapes and sizes, including extreme weather, biodiversity loss, ecosystem collapse, major natural and man-made natural disasters and failure of climatechange mitigation and adaptation. Managing risk is at the core of what insurers do, and the industry is at the forefront in taking a long-term approach. As well as looking at and tackling their own impact on the environment, insurers have a key role to play by helping customers tackle their approach to environmental risks. Insurers can make a difference, providing specific products, services and risk management advice, for example, increasing flood resilience, improving building design and offering bespoke insurance for renewable projects in the short term. They can also support longer-term efforts by global energy firms and governments on the tougher nuts to crack, such as the risks of transitioning to a lower carbon economy. As big institutional investors, building environmental factors into asset management decisions is a big movement, which insurers like Zurich have joined. The industry is also at the forefront of collaboration through efforts such as ClimateWise, building a collaborative approach to tackling existing and future climate risk throughout the globe. Much of the effort to date has been voluntary, but as Governments coalesce around the need for action through efforts such as the Paris Agreement of 2016, there will be increased pressure on companies to demonstrate measurable activity to their stakeholders. For example, the financial sector is edging ever closer to the reporting proposed by the Financial Stability Board’s Task Force for Climaterelated Financial Disclosures. There is no question that environmental risks are now seriously threatening the foundation of most of our communities. Unfortunately, we currently observe a “too-little-too-late” response by governments and organisations to key trends such as climate change. It’s not yet too late to shape a more resilient future, but we need to act with a stronger sense of collective urgency to avoid potential disasters and system collapse. Sophie Timms, Head of UK Corporate Responsibility, Zurich.
Rupert Armitage, Managing Director, Auto Windscreens.
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Modern Insurance 35
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EDITORIAL BOARD
Brokers can bridge the gap How will the methods of fraudsters in insurance evolve in the next year, and how should the insurance industry prepare for this? nsurance fraud is a perennial challenge for the industry and its financial impact is growing. The crime costs insurers more than £2 billion a year in the UK alone, according to the Insurance Fraud Task Force1.
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While the perception may be that this is a trivial or victimless crime, the impact on revenues, and the knock-on effect on insurers’ ability to offer affordable premiums to customers, is huge. As a result, tackling fraud at the root is a strategic imperative for the entire industry. And while the sector does work tirelessly to meet this challenge, successfully detecting 125,000 cases of fraud in 20162 according to the ABI, the problem still persists. We believe there are big shifts coming down the line in 2018, and not only from fraudsters whose methods are constantly evolving. What I’m most keen to see this year is brokers fully embracing their role within the fraud detection process itself. As the bridge between policyholder and insurer, brokers are perfectly positioned to do their part in protecting both parties from fraudsters. A key part of this will be a movement among brokers to make fraud detection capabilities become a far more important part of their sales pitch. One way to do this is to work with third party technology firms to keep at the cutting edge of software development. Our partner’s Synectics Solutions’ fraud prevention and detection system, SIRA, offers a suite of analysis and workflow management capabilities to protect businesses from fraud and financial crime. This enables us to identify risks at the point-of-quote and post-sale. Every month, three percent of insurance applicants are attempting to commit fraud. A system like SIRA means we can root out the problem and protect both our insurer panel from paying out on these policies and our customers from hiked premiums. Our commitment to deliver expert support and guidance underpins our brand positioning of removing nagging doubts when it comes to insurance – and this applies to our panel as well as our customers. Those brokers who can most effectively identify fraudulent applications and claims as an ‘added value’ offer to underwriters on the panel will find themselves with a real point of difference, and all the commercial advantages that implies when it comes to protecting relationships with their panel. Richard Beaven, Executive Director, Swinton Group.
Delivering a personal service in a digitalised world How has increased adoption of apps and digital technology led consumers to demand products that are tailored to them as individuals and how can insurers meet these requirements? onsumers expect to be spoken to individually. Social media has given everyone a voice, both to express their opinions and to develop a unique, online personality. Through our phones and desktops we’re constantly being marketed based on our online behaviour. Adverts and marketing campaigns are tailored to individuals and services are aimed at providing a user experience tailored to each customer’s personality. This demand for personalisation cuts across all businesses and industries - insurance is no different.
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Traditionally, car insurance premiums have been calculated based on general questionnaires, which seek to pigeon hole customers into broad categories of risk. Premium adjustments would therefore be calculated based on broad brush factors such as age, location and even gender. Datasets were limited, resulting in developing customer groups rather than treating each driver as an individual. This type of customer experience is old world. Consumers want to ‘pay their own bill’, rather than being lumped in with a group that just shares a number of similar characteristics. Enter telematics and big data analytics. Telematics devices enable usage-based insurance (UBI). Through simply installing a device in a vehicle, or downloading an app with a corresponding smart tag to be placed in the car, customers can provide a range of granular data to their insurance companies. Telematics sensors collect vast amounts of data, including speed, braking and cornering and build a picture of each driver’s unique ‘driver DNA’. It’s then left to the big data algorithms to sort this information to provide actionable insights to insurers and allow them to tailor premiums to each customer, rather than to a group of motorists. This provides a personalised experience, meaning that each customer can be rewarded individually for their good driving behaviour, building loyalty between insurer and client. The trend for digitalisation is continuing and gaining momentum. With it comes an ever-growing desire for personalised, tailor-made products and services. The insurance industry cannot afford to lag behind on this and must embrace big data, machine learning and the data economy to provide services and policies that are unique to each client. Every client has different needs; insurers with the right data at their fingertips can respond to each one, personally. Jonathan Hewett, Chief Marketing Officer, Octo Telematics.
1
https://www.gov.uk/government/uploads/system/uploads/attachment_data/ file/494105/PU1817_Insurance_Fraud_Taskforce.pdf 2 https://www.abi.org.uk/news/news-articles/2017/07/the-cons-not-on--insurers-thwart2400-fraudulent-insurance-claims-valued-at-25-million-every-week/
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Modern Insurance 37
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EDITORIAL BOARD
A shift in mindset How can law firms diversify their service offerings to adapt to the challenges present in the claims sector? he Civil Liabilities Bill 2018/19 will see the small claims limits rise from £1k to £5k for RTA related PI claims, and from 1k to 2k for non-RTA related PI claims. Solicitors will no longer be able to claim costs from the at-fault insurer for less than these amounts, which will impact more than 85% of PI claims.
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The most likely option for law firms dealing with claims will be to enter into a Damage Based Agreement (DBA). This allows firms to claim a maximum of 25%, including VAT, on clients’ claims for general and past special damages. On a claim of 1.5k, this works out to be a net fee of £312.50, which on average works out to barely two hours of a newly qualified solicitor’s time. The best in class time you could expect to settle a claim in is five hours, creating an unviable situation for firms. I believe a shift in mindset is needed. Rather than law firms seeing themselves as managing the claim from end to end, they should instead look to offset some of this burden onto technology that automates the process. A self-service solution limits the workload of the law firm, while increasing efficiency. For the customer who wants the process to be hassle-free, they can choose the DBA model without overburdening the firm.
Issue 30
This type of technology also opens the door for new service models. For customers who are happy to take more of a hands-on approach in making their claim, self-service technology can make this a possibility, while solicitors remain supportive and advisory in the background. This provides more of an unbundled offering, another way of making the move from managing a claim end-to-end. The law firm can have complete control over the services they advise on, pricing them by how much time they think each individual task is going to take, effectively going back to an hourly rate model. One such example could be a version of the familiar Post Office ‘check and send’ service, ensuring a claim contains no errors before submission, or later, advising a client on the value of their claim before disclosing their evidence. By using technology which automates the process, law firms can begin to think in terms of different service models which allow them to run claims profitably, as well as potentially capturing a higher volume of claims altogether. Michael Lewis, CEO, Claim Technology Ltd.
Modern Insurance 39
FEATURES
Industry Innovators Interview: Rodrigo DeCossio, MarkLogic Modern Insurance spoke to Rodrigo DeCossio, UK Insurance Lead of MarkLogic, about how they aim to use data to make their mark on the industry and how technology is helping them to shape their plan of action.
Q A Q A
How would you describe MarkLogic in three words?
Disruptive. Agile. Enterprise-class.
What makes MarkLogic different from traditional insurance businesses?
We are a database company that creates technology that supports insurance companies and other verticals. Insurers have a lot of information and data scattered all over the place; it is under people’s desks, locked in contracts, in data warehouses and legacy systems – it is all over the place. What we continually hear is that insurers want to have a complete view of that value chain, automate a component and accelerate how they deal with claims and have a complete 360 view of their customers across multiple lines, but the problem is that their data is all over the place so bringing that together is a major problem. So we solve that problem by integrating the data, adding context and enriching the data in order to drive insights from that and we do that in a way that is governed and secured. There is a lot of personal data that is held in these different data silos, you want to make sure that that information is properly governed and secured and that no unauthorised people can get access to it or lose it. That is a very unique solution compared to other technology vendors out there.
Q A
What would you identify as the gap in the market that MarkLogic aims to fill?
To solve the complex problems insurers are faced with today they will most probably have to use data from different parts of the business. This data is in silos, in contracts, in legacy systems, under people’s desks, etc. This data integration and enrichment challenge is complex, and to do it quickly insurers would need to have a large IT engineering body to solve it. They would have to integrate multiple technologies and on top of that add governance, security and enterprise availability. It would take a long time to engineer and build that. MarkLogic technology solves this problem out of the box. So instead of taking you 18-24 months to solve a business problem, it takes you weeks. And in today’s world of ever changing business requirements being agile and delivering quickly is a must have. The time to market requirement is a very niche problem that we are solving. We solve problems in weeks not in months or years like normal IT teams – this goes back to how do I define MarkLogic – and that is agile.
Q A
What were the main challenges in standing out and establishing yourself in a competitive market?
We have been around for sixteen years, we are still a private entity and when you think about the enterprise-class features,
There is now a need to really drive efficiency and move costs out of the value chain. There is sti ll the legacy of the cultural aspect and that is really slowing that down 40 Modern Insurance
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FEATURES
Q A
How are new consumer buying habits forcing change in the insurance industry?
As a customer I want to be able to see my entire relationship with the insurer. I am expecting to see efficiencies and I want to get all the benefits from an increased relationship with my insurer. If you don’t have those capabilities, then the customer is going to go to somewhere else.
Q A
How is technology influencing MarkLogic’s service offering, and how will this be developed in the future?
We are a technology company. Technology is such a fastmoving industry - it is always driving forward. What drives Marklogic’s road map is its customers’ requirements. Enterprises want a better understanding of the data they have. We take that data and then we can link and enrich it to give it context. Delivering value quickly is pushing us to tweak our technology.
Whoever is going to rock the industry is going to be someone that has a good understanding of technology and is savvy and aware
security, governance and the ability of not losing data, it takes a long time to harness that capability. The fact that we have been around for so long with those capabilities allows us to come into new markets and establish ourselves very quickly in that space because we have something that has been proven for the last fifteen years. We started doing business in publishing; this was the first industry to be disrupted by digital, fifteen years ago. Insurance is one of the last industries that is getting digitised yet publishing and insurance are similar as they have similar problems – insurance is 80% document based while publishing is 100% document based. All of the experience we have solving these problems over the years has allowed us to come into the insurance sector and help our customers solve complex business problems and get excited about what they can do with the data.
Q A
How is the wider industry responding to challenges in your area of the market, and how are you tackling these?
I think it depends on which part of the market you look at. General insurance is ahead of the curve in using data to drive their business. They are ahead of the journey because their margins are tighter than in Specialty and they have been using data to be more efficient. In Specialty there is now a recognition and a need for the use of more data as they understand that the more complex the risk, the more data you need to underwrite it. There is now a need to really drive efficiency and move costs out of the value chain. There is still the legacy of the cultural aspect and that is really slowing that down – leaders are trying to do something in the industry in a certain way and are not always open to using new technology and their way of thinking is what you cannot afford to do because your competitor is already doing it. The industry is getting there but there needs to be a bit more of a shake-up – expect results in weeks not in months or years. Issue 30
Q A
What’s unique about the culture of MarkLogic?
We are a relatively young company, and we are driven to deliver successful customer outcomes using MarkLogic. We are focused on making sure a customer’s problem is solved. Think about insurance; there is a focus to drive value into our insurance clients and get the most out of their data. We have over a thousand enterprise customers now and the relationships we have with some of them has spanned fifteen years. We put everything behind our customers to make sure that their business problem is solved. From my experience, this company has an attitude that I have not seen anywhere before. The product does what it says on the tin. It makes sure that its customers are happy, and it is a company with a healthy and happy culture that people are committed to making successful.
Q A
Where do you see MarkLogic this time next year?
From a UK insurance perspective, I see ourselves having grown our share and acquired a good more insurance clients in the UK. I see us as having a recognised name in the industry and the UK, we have been going after the UK insurance market for twelve months – this time next year people will know that MarkLogic will help them solve their data problems and put them on a journey to the future. AI is the new thing out there; this is great, but what you need is to solve your data problem first. You first need to have nice clean, secured and governed data and then AI will work for you and give you a good outcome. I want to be able to see those insurance companies have a better footing in terms of AI.
Q A
What advice would you give to anyone else looking to disrupt the insurance industry?
Whoever is going to rock the industry is going to be someone that has a good understanding of technology and is savvy and aware. Make sure you are using all of your data and components of it properly and harnessing it correctly. Today, there is a realisation that this needs to be done, but there is not a sense of urgency. A new entrant into the market should be able to capitalise on that. You could move very quickly and use technology to your advantage – there is a great opportunity there to disrupt the industry. Rodrigo DeCossio is UK Insurance Lead at MarkLogic.
Modern Insurance 41
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FEATURES
Sector Soapbox Modern Insurance’s panel of resident associations outlines the burning issues
The right approach to automation echnology can make a huge difference in the way we deliver services to consumers, and the companies that will make the most of it will be the ones that shed the preconceived ideas and unconscious biases that come with today’s ways of working.
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Any labour market will reward skills that are in short supply. In financial services, the skills that have been in shortest supply have been the ones that involve methodically analysing large amounts of data. The rewards that go to people with these skills are not just financial, they also gain status and influence within organisations. Someone once told me that the people who have the most influence in board meetings at oil companies are the ones who know how to dig massive holes, and in financial services, the people who have that kind of influence are the ones who can run the numbers. In contrast, people whose main attributes are that they are friendly, good-natured and good at getting on with others, are in much greater supply. This is important in relation to the decisions firms make about technology, because it can skew decisions about what should and shouldn’t be automated.
It might be tempting for firms to think that low status roles are the kind of ‘low skilled’ roles that are ripe for automation, for example, by replacing customer-facing staff with chatbots. However, tasks that come easily to the human brain, like dealing with the fluid and ambiguous rules of language, are tough for even the most sophisticated forms of artificial intelligence. Equally, tasks that are difficult for people, such as analysing large banks of data, are the kind of problems that machine learning can solve before breakfast. So perhaps we should think of machine learning as increasing supply in parts of the sector where it has been constrained in the past, like risk analysis, rather than trying to get a machine to do a job that comes more naturally to most people. Around 25 years ago I worked with an organisation that turned its organisation chart upside down - showing customer-facing roles at the top, and other jobs as supporting roles. Machine learning might make more firms dust down those old charts. Dr Matthew Connell, Director, Policy and Public Affairs, Chartered Insurance Institute (CII).
Correcting the ‘compensation culture’ very once in a while, the phrase ‘compensation culture’ appears in a news story, often in an article about the cost of car insurance premiums. At APIL, we work hard to douse its use as much as possible.
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The expression is used by those seeking to criticise people who make claims for compensation. It also implies that a significant number of claims for compensation are frivolous or even fraudulent. It is never accompanied by an accurate portrayal of the harm endured by an individual because someone else was negligent and did not take proper care. The levels of fraud in road traffic claims is another damaging perception. I say it is damaging, or at least potentially, because this exaggerated impression of a so-called ‘problem’ has successfully wormed its way into Parliament. In an attempt to defend the proposed increase in the small claims limit at a justice select committee evidence session in January, Lord Keen said that the Government was trying to deal with a “particular problem related to whiplash injuries, or soft tissue, neck or back injury” adding “…and many of these are fraudulent.” When asked by the committee for a figure, he said he did not have one. The truth is, proven fraud is found in a mere 0.25 per cent of all motor-related claims. Personal injury fraud is just a fraction of that
Issue 30
0.25 per cent, and fraudulent whiplash claims just a fraction of that. This is the Association of British Insurers’ (ABI) own data. Yet fraud is a regular excuse for sky-high motor insurance premiums. The Ministry of Justice appears to remain intent on tackling perceptions about whiplash claims through the introduction of a tariff system and an increase in the small claims limit. This course of action exceeds the Government’s stated aim to tackle the “claims culture”. It is unfair to people who are genuinely injured through no fault of their own. The biggest driver of these perceptions is cold callers, encouraging people to make claims. It is time that the Government’s efforts were put into dealing with this real cultural problem, rather than allowing genuine injured people to be caught up in over-zealous, misguided reforms. Brett Dixon, President of Association of Personal Injury Lawyers (APIL).
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FEATURES
The future of MedCo anuary saw MedCo’s first Annual Conference, during which time was spent discussing the impact of the anticipated civil justice reforms on MedCo and those operating within it.
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To re-cap, the main reforms will introduce a tariff for low value whiplash claims, involving symptoms of up to 24 months, as well as an increase to the Small Claims Track limit for RTA claims to £5,000. A new IT Portal will be built for claimants to use for cases under a value of £5,000. This portal will need to be easy for litigants in person to navigate, without the need for a lawyer or CMC. The new portal will have to interact with many other existing systems, including MedCo, so that claimants don’t have to go to multiple websites with multiple log-ins. At their recent conference, a MedCo spokesperson outlined preliminary work to establish the potential ability for MedCo to speak directly to individual experts’ calendars. This could mean that once a claimant had set expert preferences and dates of availability, an appropriate expert and appointment date could be selected without the need for anyone to pick up a phone.
This leads to the question of whether the current ‘offer’ set by the Ministry of Justice for the purpose of producing a random selection of experts or MROs will be appropriate after the reforms, and who it is that will select the expert or MRO. This is something that the MoJ and their reform Steering Group will have to grapple with shortly. The next piece of the instruction puzzle will be disclosing the report and calculating the tariff, if appropriate. This could call for some sort of standardised report. There are many different software reading systems on the market that could be adapted for use by MedCo and/or the new portal system, so that the relevant information could be pulled straight from the report and into the portal and/or a tariff system. Nothing is built or decided on yet, but the key for the new portal and for MedCo will be to create a straightforward seamless system, which is automated as far as is possible, and easy to use. This is a great opportunity to iron out some more of the wrinkles created when MedCo was put together so swiftly at the start of its journey, and to create a much better streamlined system for claimants. Natalie Larnder, Policy Adviser, Civil Justice, Association of British Insurers (ABI).
GDPR and the Data Protection Bill go hand in hand ou and your organisation may or may not like the idea of the UK not being in the EU. But, as from 30th March 2019, that will be a reality – the UK will then become a ‘third country’ for the purposes of the law of the European Union (absent any Brexit deal providing to the contrary). And, as we were reminded by the European Commission in their ‘Notice to Stakeholders’ (issued on 9th January), that includes the General Data Protection Regulation. It may be reasonable to expect that, after the end of March 2019, the UK will benefit from an ‘adequacy decision’ by the European Commission, which would allow a free flow of data from the EU to the UK. That, however, is by no means a fait accompli.
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decision, it is down to each organisation to ensure that ‘adequate safeguards’ are put in place for the protection of personal data transferred outside the EU. If that safeguarding is not in place, then data transfers may take place through the derogations mechanism, which allows transfers in specific circumstances. All organisations that value their compliance with data protection legislation will have ensured that, by midnight on 24th May 2018 at the latest, their operations are GDPR-compliant. They may have done that using internal resources, or by securing help externally. I doubt very much that the industry, which has grown up and around GDPR in the last 18 months or so, will all of a sudden die a death on 25th May 2018.
As we all know, the instrument that will bring the GDPR into legislative effect in the UK is the Data Protection Bill. Passing from the Lords to the House of Commons on 18th January 2018, in its current iteration, it comprises of 263 pages including 18 Schedules – a behemoth piece of legislation by any measure.
As well as creating opportunity in that way for data protection specialists, GDPR/the Data Protection Bill are already making the ability to demonstrate compliance with Data Protection Legislation a key differentiator for claims organisations, including law firms.
The absence of an ‘adequacy decision’ should not necessarily create significant headaches. Where there has been no adequacy
Stephen Hines, President of the Forum of Insurance Lawyers (FOIL) and Barrister at Citygate Chambers Limited.
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Issue 30
FEATURES
Claims is a personal thing ooking back to the FCA thematic review on household claims, first announced on 9th April 2014, reveals a fundamental shift in the attitudes of insurers in terms of how they provide a quality service to their customers.
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According to ABI statistics, our industry paid £160m per day in 2016, of which £33.3m was to motorists in relation to vehicle damage and personal injury, with £7.4m to homeowners. However, the nature of claims received by insurers may be changing. In late 2016, the Hotpoint tumble dryer issue emerged, which led to an increased number of domestic fire claims, the industry claims initiative chaired by the British Insurance Brokers Association (BIBA) discussed on numerous occasions how, collectively, we could ensure that customer concerns and policy wordings responded appropriately, given the changing nature of advice provided by the manufacturer. The continuing trend of flooding in domestic properties meant that the industry sought to improve their response to surges of weather related claims. Insurers now deploy staff to affected locations to ensure that their customer service is in the heart of their own community. The use of local stores as bases and the
deployment of trained counsellors to deal with the mental trauma of loss are all innovative and much needed sources of support when it is most needed. Such solutions have emanated from insurers and brokers wanting to deal with the real problems of their customers fairly and with compassion, which is also evidenced by the joint ABI and BIBA code for dealing with vulnerable customers. Household claims departments are mindful of the changing landscape of risks that will be insured in the future, such as a loss suffered by John Terry, whose house was burgled when thieves became aware that he was not at home following a post on social media. Cyber losses will likely be more prevalent as the use of technology increases. Electronic door keys could mean a house is vulnerable to robbery through hacking the locking system. In summary, the industry is continuing to work to improve service and has made massive strides since the criticism received from the first FCA thematic review, and it will continue to do so. Andrew Gibbons ACII, Managing Director, Mason Owen Financial Services Ltd, Chair, Industry Claims Initiative on behalf of BIBA.
‘It’s still not too late to stop and think again’ n many respects, the debate around the Government’s proposals on whiplash has moved on considerably since the plan to effectively outlaw whiplash as an injury was first revealed in November 2015. The original proposal to effectively ban the right to damages may have been dropped, but a combination of the proposed ridiculously low fixed tariffs and an unjustified 500% increase in the small claims limit will severely limit the right to damages anyway.
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Despite all the correspondence, conferences, roundtables and meetings, Ministers’ views remain stubbornly wedded to concepts that should by now have been consigned to the rubbish bin. They claim that “most” low value RTA are fraudulent, when just about everyone acknowledges that it’s probably less than 3%. They say that the number of reported serious accidents have declined, so why haven’t the number of claims; studiously ignoring Department for Transport estimates that some 480,000 RTA casualties go unreported each year. The logic that accidents are more likely to be at a low impact and less serious because of slower traffic and improved car safety continues to elude them.
the more common sense number of claims that are actually settled at the end of the process. That this number has shown a significant decrease over recent years just doesn’t fit the Government’s narrative. And then, there is the fallacy that RTA claims are simple cases, little different from making any other insurance claim – apart from fraud checks, liability assessment, assessment of damage, disputes over causation, evidence gathering and a host of other stages and legal concepts. Whilst RTA claims are clearly not amongst the most complex of legal cases, they will still appear bewildering and complex to LIPs, no matter how user-friendly the new LIP Portal may eventually turn out to be. The reality is that after more than two years, the evidence base is still disputed, unreliable and is in some areas entirely speculative. Regulation should be proportionate and based on clear and reliable evidence, rather than a reliance upon assumptions of the consequences and a “wait and see” approach. It’s still not too late to stop and think again. Simon Stanfield, Chair of the Motor Accident Solicitors Society (MASS).
The significantly higher number of Claims Notification Forms submitted makes for a better headline number rather than using Issue 30
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FEATURES
Vehicles of the future
– a customer perspective
Telsa Model S owner, Paulo Benfeito, tells Modern Insurance about his experience with Telsa and what we can expect from these cars of the future. I never thought I would be able to drive my dream car every single day to run my business. own a company that sells and delivers corporate branded cupcakes all over the UK and Europe and was looking to update my delivery vehicle. I looked into getting a van and calculated the costs involved; given the extensive mileage that I do on a daily basis, range, comfort and space were important factors. All of this led me to explore the feasibility of an EV and therefore I purchased my pre-owned Model S last year.
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A breath of fresh air
Insurance
The whole buying experience was brilliant. When I looked at booking a test drive, the sales advisor was very informative and helpful. I told them I wanted a cheaper car to match my budget and they found me a car that matched both my budget and criteria. You never forget the first time you drive a Tesla. The experience was amazing. As a sales person, customer experience is of utmost importance to me and my purchase experience with Tesla was a breath of fresh air. I was able to take it home a week later.
The experience of obtaining insurance was the easiest I’ve had so far. Direct Line were very helpful in providing me with all the information I required before I made an informed decision. They didn’t bombard me with a million questions, the insurance policy form was very straightforward, and it was tailored for an EV/Tesla owner. In fact they were very knowledgeable when it came to Tesla and the insurance product that was best for me. They also offer 5% discount to Tesla drivers who have the Autopilot option, and I received a further discount because I insured both my Tesla cars, which was an added bonus for me! I would give Direct Line 10/10 for ease of buying and value for money.
Saving a fortune From a financial perspective, Model S makes the most sense when compared to other vehicles I was looking into. I purchased my car through my business and given the extensive incentives in EV ownership and other benefits available, I have saved a fortune. I don’t pay road tax, there are no fuel costs involved, I don’t have to pay congestion charge and there are significant tax savings when used as a company car. I calculated that I saved approximately £3500 in contrast to the minivan I used to drive. I am so lucky because I get to deliver cupcakes to my customers in my dream car and the Tesla has been by far the most reliable vehicle I have ever owned. 46 Modern Insurance
Charging? No worries! Driving an electric car in no way restricts the thousands of miles that I have to drive. Charging my car is a breeze. I simply plug it in overnight and leave home with a full charge and I use charging facilities to top up where I need to on long distance journeys. My Model S is not only a great company car, but also a great allrounder. I have taken a couple of longer trips using my Model S; I have driven to Sicily and Lisbon using both Tesla Superchargers and Destination chargers along the way. Charging is not something I think about anymore.
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FEATURES
All new Tesla vehicles come fitted with the hardware needed to futureproof them for full self-driving when the time comes
What’s the story behind Tesla? Tesla has a big mission – ‘to accelerate the world’s transition to sustainable energy’. The company was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to compromise to drive electric; that electric vehicles could be better, quicker and more fun to drive than internal combustion engine cars. Today, Tesla builds not only all-electric vehicles but scalable clean energy generation and storage products.
Software and space Apart from the corporate benefits associated with my dream car, there are many other features that I just love. My Model S is so advanced; it continually receives software updates to get better over time that puts other manufacturers to shame. It is amazing how someone like me with an older car gets the same updates as someone who has recently received a car. The entertainment alone is so advanced. I love the new interface, especially Spotify.
Autopilot My favourite feature of the car is Autopilot; that has on many occasions alerted me of possible danger and on a couple of occasions it has outright prevented me from getting into a crash. I have personally driven nearly 200k miles in my Model S, to which 90% is on autopilot, I feel significantly less tired and more alert when driving the Tesla.
Space The space in Model S is also outstanding; there is more than enough storage for me to take family trips abroad. Customers are usually astonished when I open the frunk and take out 300 cupcakes, and in case you were wondering, I can fit 3000 cupcakes in my Model S – boot and frunk. They are normally shocked when I turn up with a Tesla and are even more confused when I tell them that this car is cheaper to run than my old Mercedes Van. Model S is my dream car and I get to drive it every single day and all over the country without feeling guilty. Now my friends want to buy one too.
Issue 30
Their first car, the Roadster, was a two seater sports car, launched in 2008. From there, Tesla designed the world’s first ever premium all-electric saloon from the ground up, Model S. Combining 5* safety, performance and efficiency, Model S has the longest range of any electric vehicle as well as over-the-air software updates that make it better over time, and at the top of the range, Model S P100D is the world’s fastest accelerating production car. In 2015, Tesla expanded its product line with Model X, opening up electric motoring to SUV drivers. Although not yet available in the UK, Tesla also makes Model 3, a low-priced, high-volume electric vehicle. Also in the pipeline, Tesla has unveiled a truck, Tesla Semi, and a new version of Roadster. To create an entire sustainable energy ecosystem, Tesla also manufactures a set of energy solutions. Currently available in the UK is Powerwall, the residential battery and Powerpack, for commercial solutions, both enable homeowners, businesses and utilities to manage energy storage and consumption. The company also produce Solar Roof Tiles, which recently started being fitted to homes in the US. Tesla’s vehicles are produced at its factory in Fremont, California. Supporting Tesla’s automotive and energy products is Gigafactory 1 in Nevada, a facility designed to significantly reduce battery cell costs and, by 2018, produce more lithium-ion batteries annually than were produced worldwide in 2013.
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My favourite feature of the car is Autopilot; that has on many occasions alerted me of possible danger and on a couple of occasions it has outright prevented me from getting into a crash
About Tesla’s Autopilot System All new Tesla vehicles come fitted with the hardware needed to futureproof them for full self-driving when the time comes. This hardware is also used to provide the safety features that come as standard and the convenience features in Tesla’s Autopilot option. Eight surround cameras provide 360 degree visibility around the car at up to 250 meters of range. Twelve updated ultrasonic sensors complement this vision, allowing for detection of both hard and soft objects at nearly twice the distance of the prior system. A forward-facing radar with enhanced processing provides additional data about the world on a redundant wavelength that is able to see through heavy rain, fog, dust and even the car ahead. Vehicles equipped with this hardware will continue to become more capable as new safety and convenience features are rolled out over time through over-the-air updates.
In its current form, Autopilot is an advanced driver assistance system (ADAS) that is classified as Level 2. It is designed as a hands-on experience to give drivers more confidence behind the wheel, increase their safety on the road and make motorway driving more enjoyable by reducing the driver’s workload. Data shows that, when used properly, drivers supported by Autopilot are safer than those operating without assistance. In fact, over a year ago, the first iteration of Autopilot was found by the U.S. government to reduce crash rates by as much as 40%. Eventually, full autonomy will enable a Tesla to be substantially safer than a human driver. Today, Model S and Model X owners enjoy features like Autosteer, Auto Lane Change, Autopark and Summon, and Tesla is
48 Modern Insurance
continuously innovating to keep customers at the forefront of technology. • Autosteer and Traffic-Aware Cruise Control – Autosteer assists the driver on the road by steering within a motorway lane. It relies on Traffic-Aware Cruise Control to maintain the car’s speed in relation to surrounding traffic. • Auto Lane Change – By engaging the turn signal when Autosteer is engaged, drivers can be assisted in transitioning to an adjacent lane on the right or left side of the car, when it is safe to do so. • Autopark – When driving at low speeds on city streets, a “P” will appear on the Instrument Panel when a Tesla detects a parking spot. The Autopark guide will appear on the
touchscreen along with the rear camera display, and, once activated, Autopark will begin to manoeuvre the vehicle into the parking space by controlling vehicle speed and steering. • Summon – With Summon, you can move Model S in and out of a parking space from outside the vehicle using the mobile app or the key. As Autopilot technology continues to be developed, more advanced functionality will be made available to Tesla owners over time, nearing full self-driving capabilities; however, until truly driverless cars are validated and approved by regulators, the driver is responsible for and must remain in control of their car at all times.
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FEATURES
Smart technology is set to transform motor claims Steve Thompson, Industry Insights, evaluates the use of smart technology within motor claims and vehicle repair and the impact it is having on the sector.
Smart technology and artificial intelligence can play a significant part in removing processes, increasing efficiencies and ultimately removing costs, rather than simply reducing the cost of repairing vehicles
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hen considering the strides already made with smart technology, the adaptation to motor vehicles is relatively simple, hence Google and Intel’s sudden interest in motor vehicles...
Smart technology advances are dramatic, and this is impacting motor claims and vehicle repair like never before. As I look back through my time growing up in a family motor business, I have never witnessed such technological change. If the motor repair industry is honest, by and large we have survived as an industry without really needing to be at the forefront of emerging technology. But the technological tsunami is hitting our shores right now. We’ve almost become used to telematics, which seemed like magic only a few years ago. ADAS, autonomy, cloud technology - the list goes on, and they all directly impact car repair, motor claims and consequently Insurers. In my opinion, the most advanced smart technology is artificial intelligence. This technology is impacting FNOL, claims handling, vehicle repair, estimatics and how we will go about many things in the future. This needs to be embraced by all stakeholders, as I have no doubt that correctly harnessed it will increase efficiencies of insurers and many suppliers within the motor claims supply chain. Given the marginal nature of vehicle repair and motor insurance, the timing is, in my view, fortuitous. There is no doubt that technology will increase repair costs and is already doing so, which is something many insurers are now starting to recognise. Equally, with the advent of smart technology, the frequency of accidents will reduce; we see this today with the likes of ADAS, LIDAR and parking sensors. Technology advances and the increased costs associated with it need to be viewed by insurers as an aggregate position, given that claims frequency will reduce. All these advancements also come at a high cost to repairers, with significant investment required in tooling, ADAS Issue 30
calibration equipment and technical training for insurers to continue having their policyholders’ vehicles repaired safely. The industry is already marginal; insurers’ underwriting models need to change. How much of the technology advancement is reflected in the underwriting decisions? These costs cannot be ignored, as this will be to the detriment of vehicle safety and quality. During my work with Industry Insights, I witness challenges faced by insurance company claims departments who have a difficult job in delivering a mandate to achieve savings in an almost impossible scenario, without this being to the detriment of vehicle repair standards and customer service. There will come a point where the supply chain can no longer support this, and some would argue that this is the case today. I believe that smart technology and artificial intelligence can play a significant part in removing processes, increasing efficiencies and ultimately removing costs, rather than simply reducing the cost of repairing vehicles. Perhaps the greatest challenge of all facing the repair sector of motor claims, and one that I feel very passionate about, is the availability of skilled technicians and the aging demographic of vehicle repairers, which is exacerbated by very few young people joining the trade. This will have profound effects on an insurer’s future ability to fulfil motor claims by the repairing of policyholder vehicles. The Auto Raise Charity exists with a sole objective of attracting young people into vehicle repair as apprentices, and many motor claims suppliers are supporting this financially. I feel very optimistic that where this article started, with smart technology, will create a very positive ending to our challenges. Hopefully, the greater the technology demands on car repair, the more successful we will be in attracting young, tech-savvy people to repair cars. Steve Thompson is Director of Industry Insights.
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David Shepherd, Regional Managing Director Audatex UKSA
Q
What technologies are having the biggest impact on insurance supply chains, and how do stakeholders need to respond to take advantage and not be left behind?
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The introduction of Artificial Intelligence (AI) by companies in the insurance supply chain provides them with the ability to directly interact with the customer through multiple touchpoints on their journey, from purchase to claim and settlement. Furthermore, the development of portals, such as subrogation platforms that enable interaction between multiple parties in the supply chain and across the insurance market, are having a profound impact on the speed and manner of how claims are dealt with. Additionally, the advancements in cloud-based technologies across an insurer’s supply chain, whilst not a new development, has enhanced connections and allowed for many processes to be integrated and fully automated. For insurers to embrace these technologies and not be left behind, Audatex believes they will need a three-pronged approach: 1. Insurers will need to carefully select their partner for the future. They must analyse their size, scale, ability to quickly and seamlessly implement with the insurer and willingness to collaborate with other partners in the supply chain, ultimately for the benefit of the insurer’s customer. 2. Insurers will have to rapidly accelerate internal programs to either acquire or attract talent, primarily from other industries, as well as looking at their existing workforce to identify and develop existing talent pools. 3. Insurers will also need a plan that enables them to quickly identify and respond to changes across their supply chain partners, ensuring their transformation teams have the skills and bandwidth to tap into these opportunities, as and when they arise.
Q A
Where are there common areas of friction across a supply chain and how should these be addressed?
Similar to most businesses, insurance companies have a fragmented supply chain; the difference between supplier profiles is often significant. If you take a typical motor claims journey, it’s common to see a large number of different suppliers interacting at various points throughout the claim’s lifecycle, frequently through manual and paper-based touchpoints; these suppliers are often the face of the insurer. The employees that operate the systems for these suppliers often have differing, sometimes conflicting, levels of focus on the needs of the insurer’s end-customers; they are often working to the end-goals of the supplier, losing sight of the all-important customer. Audatex believes these issues could be addressed through three steps: 1. Ensuring that people and systems collaborate seamlessly, by choosing suppliers that are similarly aligned on goals and objectives. 2. Introduce intelligent automation to reduce the number of manual processes, freeing up staff to concentrate on adding value where it really counts. 3. Strive for real-time visibility across the claims process so decisions can be taken in the ‘now’, enhancing customer experience.
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Issue 30
FEATURES
Darren Clark, Commercial Director Advantage UK
Q
What would you identify as the biggest challenge and opportunity for insurer supply chains?
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The biggest challenge for insurer supply chains (specific to automotive parts), is acquiring accurate and transparent transactional data. Historically, parts is the one area of the supply chain that has little or no visibility. Delays in cycle time and low NPS scores are often blamed on parts availability. Using technology (that’s been available for many years), gives us an opportunity to create complete transparency and an audit trail to validate the availability of parts and the type and quality of parts being used in the repair. In addition, we are able to measure performance on the parts supply chain and create continuous improvements by sharing specific KPIs. We have been using this model in North America and the UK for many years and the value creation has been significant.
Q
What technologies are having the biggest impact on insurance supply chains, and how do stakeholders need to respond to take advantage and not be left behind?
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Online automotive parts trading platforms have been available for many years in North America and Europe. Most insurers are moving towards these available technologies to ensure better control and visibility on this key area of the repair process. It is also an opportunity to leverage buying power and create better performance in the parts supply chain. Through our own insurer engagements we have achieved significant reductions in both cycle times and average cost of repair and ultimately improved customer satisfaction scores (NPS). The other objective is to create work flow efficiencies by integrating estimating platforms and bodyshop management systems within the parts trading platform. This has been accomplished with the main systems in the UK and the next step is to have integration throughout the complete supply chain. Reducing every step of manual intervention improves accuracy and efficiency. The other component that is increasingly important, is working with stakeholders that are GDPR compliant and achieving the highest international standard for information security management system (ISO 27001). AI, big data and machine learning is also starting to play a role in the parts supply chain, which will create even greater value creation. We are well positioned to support any insurer who is thinking, or already engaged, in using technology to support the automotive parts supply chain.
Reducing every step of manual intervention improves accuracy and efficiency Issue 30
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Keith Webber UK Business Manager IMO
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What are some of the biggest challenges facing insurance supply chain professionals, and how are they responding to these?
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With ever increasing customer expectations, margins continue to be squeezed. Finding ways to impress and reward loyal customers, whilst remaining cost effective, continues to be the “silver bullet”. Using Connect Solutions helps deliver without the need to speak to gate keeper after gate keeper, rarely making it to the actual decision maker. I believe Connect Solutions quickly accomplishes this by linking together the right businesses with the right people. At IMO Car Wash, we take immense pride in being the go to aftercare solution. We have worked hard to ensure we fully satisfy the requirements of our customers to deliver an affordable, reliable and trusted service. Throughout our 260 UK locations, our washes are used by over 11 million customers a year in the UK alone. Cost effective customer rewards need to resonate and spending time finding products that can show a level of personal approach and practicality are always greatly received. Covering the whole of the UK and appealing to all car driving demographics is a fundamental requirement, no one has time to set up regional rewards with a multitude of suppliers. We also understand that having a tried and tested national campaign will deliver your required message, again saving valuable time. Our IMO offering has received incredibly positive feedback from our current partners, specifically in areas of engagement and appreciation.
We all invest in a dedicated business and customer support team, who are easily contactable on a variety of platforms. When facing these challenges, our customers are rightly expecting us to take the lead, we understand the need to listen, and we are all fully aware that a quick resolution is paramount to reputation. Where we have in place systems that “fix it now”, we can have confidence that we can ensure ongoing trust in the brand, and if handled correctly, impress the customer. A relevant example would be the remarkable success we are having with partners who use IMO’s ability to offer full valeting as one of the solutions. Insurance supply chain professional face a multitude of challenges, cost effective and trusted customer engagement solutions shouldn’t be one of them.
Spending time finding products that can show a level of personal approach and practicality are always greatly received 52 Modern Insurance
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FEATURES
Investing in your people Della Garmory, BGL Group, discusses the importance of investing in opportunities that enable your employees the ability to learn and develop professionally; she also shares the aims of the new BGL Academy and what it can offer its candidates
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Q
A
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How is BGL Group focused on developing its core digital and marketing capabilities through the professional development of its people? We place great emphasis on developing and maintaining these skillsets. Through the BGL Academy we support apprenticeship qualifications in areas such as software development, digital marketing and digital and technology solutions. We also run specialised tech and marketing graduate programmes with professional qualifications to degree level and beyond. Our focus on developing digital and marketing skills runs throughout the company: we run marketing masterclasses with external speakers and hold regular tech Innovation Days to unlock digital potential. We also actively encourage people to try new areas of the business to maintain and extend their digital and marketing skillset. Over the past year around one in ten employees have taken on a new role internally. Professional development is a key priority right across the Group. We offer a wealth of training resources to all employees through our MiDevelopment portal, which is available through any device, anywhere, and contains a library of e-books and e-learning as well as a calendar of pre-bookable workshops. Over the past year, colleagues have carried out an average of eighteen e-learning modules each and we’ve delivered over 3,000 workshop places – more than one for every employee.
Q A
What does the newly launched BGL Academy offer its candidates and how will these benefit BGL Group overall?
The Academy offers candidates the opportunity to learn and pursue professional qualifications while earning a competitive salary. They also benefit from an extensive support network: everyone joining the programme will be matched with an experienced mentor in their business area who will support them during their first six months. Learning from experts in their field while gaining hands-on experience will give our Academy members a great start to their career. In turn, BGL benefits by gaining a broad range of candidates from diverse backgrounds, from school leavers to experienced employees changing career, who will provide fresh insights into new and emerging technology and data trends. It also supports our business to develop the core skills we need to grow our business across all of our sites.
The better way to manage leads and onboard new clients 54 Modern Insurance
How can the BGL Academy develop and train the talent of the future in order to suit the skills now demanded by firms?
Data, digital and technology skills are key to our business and also in short supply. Our successful graduate programme has been in place for over five years, and the addition of apprenticeships to the BGL Academy will complement this. It will give us the ability to access the core skills that we need from a diverse demographic, inclusive of those where university may not be practical or preferable. The BGL Academy provides professional development from a variety of educational starting points and uses a mix of onthe-job training and more formal learning opportunities. Each Academy post has role-specific training and development, including study for the relevant qualifications; all apprentices who join spend 20% of their time on their professional development.
Q
How is BGL Group looking to evolve in order to meet the needs of a modern workforce?
A
We’re already taking huge strides in championing flexible working and aim to be a progressive workplace; our technology allows employees to work just as effectively from home as from the office. We use online collaboration tools to make sharing easier. We’re also encouraging people to use video conferencing as an alternative to face-to-face meetings. We promote the use of hotdesks, particularly at our London tech hub in Shoreditch, where having a base for the day can be a real help for those who’ve got meetings in London. In a fast-moving technological environment, we also place great emphasis on supporting our people in keeping their digital skills up to date, particularly those in tech and digital roles. We make a point of putting on regular innovation days, masterclasses and meet ups to encourage people to share their skills and learnings. We’re a creative business and we never stand still. We try new things, think differently and disrupt the markets in which we operate, so we’re constantly evolving the way we work, which benefits both our own people and, ultimately, our customers. Della Garmory, HR Director, Insurance Distribution and Outsourcing, BGL Group.
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Issue 30
Just a thought
Just a thought
from Eddie Longworth Time for lawyers to step up. s the government seeks to implement long anticipated changes in the whiplash and broader PI claims environment, there will inevitably be two categories of response from the legal community.
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There will be those who, a little like the diehard supporters of fox hunting, will seek ever more inventive ways of getting around the new regulations. Desperate to maintain the indefensible regime of PI claims factories, questionable marketing methods, and pandering both to their own greed and those of dubious claimants, their entrepreneurial ingenuity will be tested to the limit.
Let us be in no doubt that the days of easy money will disappear, and if that proves to be a disappointment to some, then so be it
Fortunately, there will also be a second group of lawyers who recognise, even if a little belatedly, that the game has changed and not just in the sense of new regulations being applied. No one in their right mind can honestly believe that the position of the UK as the whiplash injury capital of Europe is remotely sustainable or justifiable. This second group of lawyers will therefore, I hope, seek to remodel themselves into those trusted advisers and legal experts to whom the public can turn in genuine cases of need and who will supply a superior quality of service.
Remodel the business Instead of a ‘pile them high and sell them cheap’ cavalier approach to the provision of legal advice for genuine injury claims, we can expect a much more selective and considered approach to case triaging and management. This latter group will maybe earn less than the ‘good old days’ from the world of PI, but, in turn, this will mean that their entrepreneurial instincts will turn towards the future and not be wasted in ultimately doomed attempts to maintain the status quo. Mergers, acquisitions, brand development and service diversification seem likely consequences and that is all to the good. Even if difficult and unpalatable in the short term, if it leads to a restored sense of pride and, dare I say it, morality in this area of the legal profession, then society and the lawyers themselves will surely benefit in the long run. Of course, we must not only look to the lawyers to change. Insurers who have been quick to condemn the PI industry and the compensation culture have been equally quick to take advantage of huge commissions to secure additional income streams. Justified on the basis that ‘my competitors are doing it so I need to join in’, I hope that the new regulations and much less rewarding financial regime will also serve to sweep away such specious arguments. Insurers too must look to the future and not seek to sustain the past.
Claimants have nothing to fear So, in the three legged stool of lawyers, insurers and claimants, we are left with the final group to consider – those individuals who might have benefitted from a lax and overly generous regime
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of financial compensation for minor and (some would say) nonexistent whiplash injuries. This group will lose the most if all goes according to plan. Celebrations in the pub, a last minute holiday, or purchase of a new washing machine will no longer be financed by insurer compensation payments. Let us not paint this group as somehow being ‘victims’ of a heartless government or insurer cartel. Minor injuries are just that – minor. As my mother would often say to me – get over it! Genuine claimants for real injuries will, it seems to me, be better served by a new legal system and responsible insurer treatment, but let us be in no doubt that the days of easy money will disappear, and if that proves to be a disappointment to some, then so be it. The world of PI is changing for good and for the better. Get used to it! Eddie Longworth is Director at JEL Consulting.
Modern Insurance 55
AUTOMOTIVE INSURERS Custom trade parts solutions that improve business results. WE BRING THE TOOLS AND TRADE PARTS SUPPLIERS TOGETHER. Advantage offers automotive insurers custom Trade Parts procurement technology that leverages a best-in-class national supply chain of Parts Suppliers. Additionally, we provide a comprehensive suite of performance dashboards that assist in gaining greater cost control and transparency of Supplier performance. OUR ADVANTAGE: M ANAGED NATIONAL OEM / OES TRADE PARTS SUPPLY CHAIN Advantage has over 2,500 Trade Parts Suppliers as Clients. We can help build out a best-in-class national supply chain for Automotive Insurers so they can improve business results. PROCUREMENT AND PAYMENT SYSTEMS Advantage are experts in developing and managing custom Trade Parts procurement and payment platforms to the Automotive Parts industry. PARTS PERFORMANCE KPI DASHBOARDS We provide complete transparency of the entire Parts programme and process down to the individual Trade Parts Supplier and Repair Shop in your network with the Advantage Automotive Insurer performance dashboards. NATIONAL OEM PARTS LOCATOR SERVICE Take advantage of our national network of Automotive Parts Suppliers to find that part your Supplier doesn’t have. Reduce repair cycle-time and improve customer experience.
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CASE STUDIES
Eclipse Compact transforms efficiency at Anything Legal nything Legal, a legal services support business, is implementing the new Compact solution from Eclipse Legal Systems, the sole Law Society Endorsed legal software provider.
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Anything Legal provides the legal profession with a comprehensive range of streamlined and cost-effective services, from medico-legal reports and expert witnesses, through to litigation funding and interpreters. Established to increase profitability for those in the legal sector, Anything Legal serves to reduce administration time in securing third party services, and as such has developed an exceptional reputation for delivery. Darren Gower
Prior to implementing Compact, the incumbent software solution at Anything Legal was outdated and unsupported. Due to the continuous growth in new clients, the firm decided to implement Eclipse’s Compact system, an easy-to-use case management suite aimed specifically at boutique businesses. Rolling out a medico-legal module, Anything Legal will utilise Compact’s built-in workflow to carry out a number of routine steps
at the click of a mouse, enabling the firm to benefit from elements of high level automation throughout the entire medical reporting process, and save hours of manual administrative duties. Further, Compact will transform the firm’s overall efficiency, and as a result increase turnover, by managing all cases with speed, reliability and accuracy, and allowing the team at Anything Legal to concentrate solely on providing the highest quality client service. Ben Gardner, Director of Anything Legal, comments: “We’d been researching the market for some time and hadn’t found a system that could effectively manage our caseload volume without requiring bespoke work or excessive costs. Compact suits our needs perfectly, offering a simple-to-use case management system and market-leading toolsets to effectively streamline case progression and enhance client service – and without prohibitive setup costs!” For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal.co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk
BDElite sees value in EDAM Group’s service-led approach DAM Group, the UK’s largest privately-owned provider of credit hire and associated services, is currently at the end of the first year of its threeyear plan, and is on course to achieve its target to double the size of the business. A key factor in achieving that growth is the company’s focus on delivering an exceptional customer journey, evidenced by its NPS of 74.
E
One of EDAM Group’s key customers is BDElite, a trusted supplier to the broker market and specialist in providing innovative Total Claims Management services, essential aftercare support and a diverse range of add-on insurance products. The companies have been working together for nearly three years, with EDAM Group appointed following a successful trial. For the team at BDElite, EDAM has surpassed their expectations both in terms of the level of service provided, as well as the consistency following a claim. Julie McKeown, Managing Director at BDElite said: “EDAM Group is one of our key suppliers for providing credit hire and repair services to our clients. For which, those clients expect a high-quality of service from us. EDAM Group’s tailored solution enables us to maintain that level, consistently.”
Issue 30
At the start of the partnership, it was the compatibility of the companies’ respective approaches that made EDAM an attractive proposition. “They have the same drive, commitment and company ethos,” continued Julie. “The flexibility of the team was essential during the onboarding process, and has been key to the success of the partnership since.” The tailored solutions implemented by both BDElite and EDAM Group have enabled a streamlined process and created a smoother customer journey. “The main difference with EDAM Group and similar suppliers is the ‘can-do’ attitude that carries through at every point. The service is consistent across the company, meaning we can rely on things to get done, and know we’re being listened to. You’re dealing with honest people when working with EDAM Group, and you can hear they are passionate in what they do which makes them a joy to deal with,” concluded Julie. As a key supplier to BDElite, EDAM Group has played a huge part in helping improve BDElite’s customer satisfaction to an outstanding 99%; a level that is required in this specialist market. For more information about EDAM Group services, please contact Nigel Evans, Group Sales Director, nigel.evans@edamgroup.co.uk
Modern Insurance 57
10 MINUTES WITH
Jo Evans Q A
Joint referrals can be a very proactive and collaborative way to work, providing there is quick authorisation of recommendations made
Has the industry changed drastically since you started working in it?
Unite Professionals Ltd entered the case management marketplace in 2010. It has observed and responded to the commercial landscape changes over this period of time and continues to do so. The interface at which case management works has seen its own dramatic changes, including; increase in the small claims limit, changes brought about by the MOJ in 2014, the recent discount rate change, revision of the 2015 Rehab code and development of the Serious Injury Guide. Case management delivery has needed to remain informed and responsive to the changing requirements of the stakeholders over this period and work closely with all parties to ensure that the role in providing witness of fact commentary and relevant recommendations is delivered in a format that can be quickly dealt with and approved by the funding parties. The changing face of the NHS and social care has also presented challenges for the case manager to navigate, and as GDPR approaches, these challenges are likely to be exacerbated for case management companies.
Q
What has been the key positive or negative changes in your area of the market?
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There has been positive change via earlier agreement between litigating parties to progress collaborative working via statutory pathways of health and social care. Emergence of the trauma centres and rehabilitation prescription championed by Derek Wade et al. are positive developments in the medical management of people following significant trauma or illness with sound clinical evidence of the optimum treatment pathway. Joint referrals can be a very proactive and collaborative way to work, providing there is quick authorisation of recommendations made and case management is delivered by an individual or company who are independent of the litigation agenda. There has been an increase in the numbers of case managers offering services, and whilst this provides a healthy choice in the marketplace, it also presents the need for a registering body to ensure the quality and competencies of providers. Currently, CMSUK are working hard with BABICM and VRA in progressing options for a registration process to reassure a high standard of practice. It is vital that the case manager demonstrates a commercial awareness/ respect for the unique position they occupy outside of the litigation. CMSUK has grown as an organisation over the years and offers regular training events for new case managers.
Q A
Who inspires you and why?
I am always inspired by the NHS frontline staff who save lives through providing access to specialist healthcare where it is needed. Their dedication, despite huge resource challenges, is humbling. The development of the trauma centres has been critical in ensuring clients have the opportunity to access specialist interdisciplinary teams and give the optimum opportunity for the client to survive and recover.
Q
Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?
A
I was privileged enough to spend a number of years working alongside Professor Bipin Bhakta, Professor of Rehab Medicine at Leeds University, who sadly passed away in 2014. He was a visionary in his approach to rehabilitation, passionate about interdisciplinary and collaborative working and, despite his huge academic achievements and commitment, he was selfless in encouraging developing clinicians to be bold and instinctive when exploring effective rehabilitation approaches.
Q
If you were not in your current position, what would you be doing?
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I would have liked to have worked within a social enterprise, supporting people who find themselves physically, psychologically or socially excluded to accesnetworking, collaboration and technology to support one other and rebuild their lives to realise their personal goals. Jo Evans is Managing Director of Unite Professionals Ltd Case Management and sits on the board of CMSUK.
58 Modern Insurance
Issue 30
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