Author: Twentyfour

The insurance industry is constantly evolving, and creating new products to meet customers’ changing needs is critical to staying competitive. Solving the product development challenges that arise alongside implementing these products, requires a careful consideration of various factors.

Every insurer has been there — long processes, incompatible data, and challenging integration. Even when the product is finally onboarded, it doesn’t function as advertised, and it seems no one on the support team will answer your call. Not only are other projects getting held up, but long delays and poor service means you’ve just cost yourself a customer. Does it really have to be this way?

In this blog, we’ll take a closer look at some of the critical challenges involved in creating new insurance products and how to resolve them to implement solutions effectively.

Identifying Customer Needs

Identifying customers’ needs is one of the biggest challenges in creating new insurance products. This involves extensive research to deeply understand customer preferences, pain points, and emerging trends. Insurers must invest time and resources into market research, surveys, and focus groups to gather insights into customer demands.

The challenge here is that customers’ needs can be diverse, depending on their age, income, location, and other factors. Insurance companies must strike a delicate balance between meeting the needs of different customer segments and ensuring that their new products are financially viable.

Regulatory Compliance

Another major challenge in creating new insurance products is navigating the complex regulatory landscape. Insurance is a heavily regulated industry, and insurers must comply with various guidelines set by state and federal regulators.

Ensuring new products comply with all applicable regulations can take time and effort. Failure to comply with regulations can result in significant fines, legal disputes, and reputational damage.

Designing the Right Product Features

Creating new insurance products involves designing features that meet customer needs while balancing financial considerations. Insurers must consider factors such as the level of coverage offered, the pricing of premiums, and the deductibles and co-payments.

Curating the right product features requires careful consideration of an amalgamation of customer needs, market trends, and risk management strategies. It can be difficult to ensure customers are provided with adequate coverage while still being able to afford the product.

Distribution Challenges

Another challenge in creating new insurance products is effectively distributing them to customers. Insurers need to consider the most effective channels for reaching their consumers, such as online platforms, agents, or brokers.

The challenge here is that different customer segments may prefer other distribution channels. Insurers need to tailor their distribution strategies according to their consumers. Insurers also must ensure that their agents and brokers are adequately trained to sell and service the new products.

Overcoming Challenges

Having an onboarding process that is fast, efficient, and well-supported is crucial, but it can be challenging. A successful onboarding process can be achieved by thorough planning, a focus on the process, and a dedication to customer service.

Pre-Planning

A crucial step to a smooth onboarding process is curating a dedicated team consisting of an account manager, product owner, technical lead, and process coordinator to oversee implementation. Each team member plays an essential role in ensuring a successful onboarding experience. The account manager builds relationships with the insurer and understands their business needs. Product owners are involved from the start, outlining the benefits and workings of the product and how it meets the insurer’s needs. The technical lead is responsible for delivering and installing the technology.

Preplanning should begin before the kick-off meeting. The team must define the deliverables, develop an implementation plan, and ensure it meets the insurer’s efficiency and speed criteria while avoiding system interruptions. Everything should work within the insurer’s guidelines and meet their deadlines.

Communication and Action

The next step is to initiate the implementation process. The team leader should contact relevant parties to confirm and establish a plan, and an implementation schedule should be created that considers any specific requirements.

The focus of meetings should shift towards actually implementing the product or service. The team should be dedicated to delivering a quality customer experience and supporting the insurer throughout the process.

Support

It is vital to have ongoing support during the onboarding and beyond. A single point of contact to address issues or questions, even if this person may change throughout the process, is crucial to ensuring streamlined customer service. Support should come from operations, IT, product development, and training.

Conclusion

Creating and implementing new insurance products requires careful consideration of customer needs, regulatory compliance, product design, and distribution. Insurers must invest resources into market research and distribution strategies to ensure their new products meet customer needs while remaining financially viable.

A platform that co-exists with existing infrastructure and integrates legacy systems will allow for a seamless digital transformation and onboarding process. Time-consuming and costly system migrations can be a thing of the past with an innovative solution that optimises your value chain. Insurers need a customer-centric and comprehensive platform and cutting-edge technology to empower their teams. Overcoming implementation challenges in such a way will allow insurance companies to stay competitive and meet the evolving needs of their customers.

The insurance industry is undergoing a rapid transformation due to technological advancements and changing consumer expectations. While these changes have the potential to unlock new opportunities, they must overcome the corresponding integration challenges . One of the biggest challenges facing insurance companies today is integrating their systems and processes with the larger digital ecosystems that are emerging in the industry.

Integration has become a critical factor in ensuring the smooth functioning of businesses. Integration enables seamless communication between various systems and stakeholders. It ensures that data is transferred accurately and efficiently, which is critical for underwriting, claims processing, and policy administration. It also allows insurers to offer a better customer experience by enabling customers to access their policies and claims information through multiple channels, including web portals, mobile apps, and social media platforms.

As these ecosystems continue to evolve, insurance companies must navigate a complex landscape of data sharing, platform interoperability, and customer engagement to stay competitive and deliver value to their customers. In this context, tackling the challenges of integration is more important than ever, and will play a critical role in shaping the future of the insurance industry.

In this blog, we will discuss the integration challenges facing the insurance industry and explore strategies for overcoming them.

Integration Challenges in the Insurance Industry

One of the biggest integration challenges facing the insurance industry is the sheer complexity of insurance products. Insurance products often involve a variety of variables such as premiums, deductibles, and coverage limits. As a result, integrating these products with legacy systems can take time and effort.

Insurance systems often involve multiple layers of technology, including front-end interfaces, middleware, and back-end databases. The complexity of these systems also makes it difficult to identify the root cause of integration issues, leading to delays in problem resolution.

Another challenge is the lack of standardisation across different platforms in the insurance industry. Insurers often use different processes, procedures, and a range of legacy systems. While legacy systems aren’t always the problem, some aren’t compatible with newer methods, like Agile, an innovative underwriting program used by many insurers. This makes it difficult to integrate their digital ecosystems with those of other insurers leading to delays, inefficiencies, and errors, which can be costly and time-consuming to correct.

What’s more, the insurance industry is heavily regulated, with different jurisdictions imposing varying regulations. Jurisdiction plays a crucial role in integration in the insurance industry, particularly for companies that operate across multiple countries. When operating in multiple jurisdictions, insurance companies must comply with a range of local regulations and laws that can affect data sharing, cross-border transactions, and customer privacy. Some jurisdictions have restrictions on the sharing of data across borders, particularly personal data. Others require insurance companies to report certain data to local authorities in each jurisdiction where they operate. Insurance companies operating in multiple countries may also face language and cultural barriers that can impact integration efforts.

Data quality can also raise challenges in integration. Insurers rely on accurate and timely data to make informed decisions across the entire insurance value chain, from underwriting and risk assessment to claims management and customer engagement. Such decisions impact the fraud detection strategies, customer segmentation, product development, and pricing and profitability that are all central to an insurer’s management processes. Still, data quality issues, such as missing data, inconsistent data, and duplicate data, can undermine the effectiveness of their systems and processes.

The need for real-time integration puts pressure on the insurance industry. This pressure is driven by changing customer expectations as consumers today are accustomed to the convenience and speed of services provided by companies like Amazon, expecting the same level of service from their insurance providers. The rise of Insurtechs also drives this change, as customers demand a seamless, end-to-end experience that allows them to access insurance products and services as easily as they navigate other digital ecosystems.Bottom of Form

Insurers need to be able to process data instantaneously to provide a better customer experience and reduce processing times. However, real-time integration requires robust technology infrastructure and systems that can handle large volumes of data.

Finally, the insurance industry is grappling with a shortage of skilled employees with expertise in both technology and insurance. Integration requires specialised skills like system analysis, data modeling, and software development. However, many insurers lack the necessary resources to support their integration initiatives, and it can be difficult to find employees who can effectively integrate new technologies with legacy systems. This leads to delays and increased costs for insurers.

Despite these challenges, there are several strategies that insurers can employ to overcome integration challenges and leverage new technologies to improve their operations.

Standardisation

The lack of standardisation in the insurance industry is a significant challenge, but it is not insurmountable. Insurers can work together to develop common standards and processes that will make it easier to integrate their systems. For example, they could establish standard data formats and protocols that will enable different methods to communicate with each other seamlessly or use existing technologies, like JSON. JSON (JavaScript Object Notation) is a lightweight data interchange format that has gained popularity in recent years due to its simplicity, flexibility, and compatibility with a wide range of programming languages and platforms. JSON provides a common data format that can be easily parsed and understood by different systems and applications. You don’t have to reinvent the wheel to implement a successful digital transformation.

Cloud-based Solutions

Cloud-based solutions can help insurers overcome integration challenges by providing a flexible and scalable platform for their operations. Cloud-based solutions can be easily integrated with existing legacy systems, making it easier to leverage new technologies without disrupting existing operations. Additionally, cloud-based solutions can help insurers reduce costs by eliminating the need for expensive hardware and software.

Automation

Automation can help insurers streamline operations and reduce errors, leading to cost savings and increased efficiency. By automating repetitive tasks, insurers can free up employees to focus on more strategic. Insurers can also use artificial insurance for fraud detection by analysing patterns and anomalies in data and identifying potentially fraudulent behaviour. In the same way, AI can be used to improve pricing by implementing predictive models to determine the risk of insuring a particular individual or entity. Various factors can be taken into consideration like demographics, health history, and other relevant information.

Collaboration

Collaboration can be an effective strategy for insurers looking to overcome integration challenges. By working with other insurers and technology providers, insurers can leverage their collective expertise to develop solutions that benefit the industry as a whole. For instance, insurers can collaborate on developing common data standards or creating shared platforms for policy administration—BiPRO is a prime example of this. The German data exchange standard, developed by GDV, aims to standardise communication processes between insurance companies and their partners to streamline operations, reduce costs, and improve customer experience.

Training and Development

As previously mentioned, the insurance industry needs more skilled workers with expertise in both technology and insurance. To overcome this challenge, insurers can invest in employee training and development programs. By providing employees with the skills to integrate new technologies with legacy systems effectively, insurers can ensure they are well-positioned to take advantage of new opportunities. Customisation abilities can also help insurers find and nurture the right employees with user interfaces that simplify complex processes. Automated workflows and decision-making algorithms make it easier for new employees to navigate company systems.

Conclusion

The insurance industry is undergoing significant changes, and integration challenges are an inevitable part of this process. The complexity of insurance systems, the large number of legacy systems in use, and the lack of standardisation across different platforms can lead to delays, errors, and some insurers being left behind by competitors.

By taking a proactive approach and employing strategies such as cloud-based solutions, automation, collaboration, and training and development, insurers can overcome these challenges and unlock the full potential of new technologies. Ultimately, those insurers that can effectively integrate new technologies with their legacy systems will be well-positioned to thrive in the rapidly-evolving insurance landscape.

The insurance industry has always been complex. With rapidly evolving customer expectations and a landscape ripe for digital disruption, insurance companies today face increasing pressure to innovate and deliver exceptional customer experiences. This has its challenges, but IBA offers a solution: IBSuite.

IBSuite is an IBA platform that enables businesses to automate their workflows and streamline their operations. IBSuite offers a comprehensive suite of tools and services, including workflow automation, document management, and process orchestration, to help organisations improve their operational efficiency, reduce costs, and increase productivity. IBA is transforming the insurance industry, designed around scalability, continuous availability (24/7), and effortless accessibility. But you might still be wondering if IBSuite is right for your business.

In this blog, we will discuss the advantages of IBSuite and why insurance companies should choose IBA to optimise their digital insurance operations.

1. Streamlined Processes

One of the key benefits of IBSuite is its ability to streamline organisational processes. IBSuite’s platform can automate repetitive tasks such as data entry, policy creation, and claims handling to eliminate manual errors and inconsistencies, resulting in higher accuracy rates and lower instances of fraud.

IBSuite performs tasks with precision and accuracy, ensuring that policies are created, and claims are handled correctly every time. IBSuite helps businesses achieve greater efficiency and effectiveness. The platform’s automation capabilities are essential for organisations that want to stay competitive in today’s fast-paced business environment.

2. Improved Customer Experience

IBSuite is designed to help insurance companies improve their customer experiences, from initial quote requests to policy administration and claims handling. The platform’s advanced automation capabilities allow insurers to provide personalised and efficient services that cater to each customer’s unique needs.

IBSuite also provides faster claims processing, which is crucial for customer satisfaction. With automated claims handling tools, insurers can quickly process claims and communicate with customers in real time, providing a hassle-free claims experience. Better communication also helps build trust and transparency, improving customer satisfaction.

3. Increased Productivity

With automation capabilities that eliminate repetitive and time-consuming tasks, staff time can be freed up, allowing employees to focus on complex tasks and strategic initiatives. This allows insurers to maximise their human resources and improve overall productivity.

IBSuite’s platform also provides valuable insights into productivity metrics, enabling insurers to continually monitor and optimise their workflows. With access to this information, insurers can identify areas where automation can be utilised and implement changes that improve efficiency.

4. Lower Costs

IBSuite is designed to help insurers reduce costs and increase profitability. One of the most significant ways is through automation, which saves insurers time and money through reduced errors. Still, IBSuite can also lower costs through improved data management.

With real-time access to critical data, insurers can make informed decisions about pricing, policy design, and risk management, leading to cost savings and enhanced profitability.

5. Real-time Data Insights

IBSuite’s real-time data insights have a host of benefits beyond reduced costs. They help insurers quickly identify and respond to issues, reducing the potential for customer dissatisfaction. For example, insurers can use IBSuite’s data insights to identify underperforming policies or areas of high claims activity and take steps to improve them. They can also monitor customer behaviour to identify trends, such as an increase in claims or a change in policy preferences, and adjust their strategies accordingly.

IBSuite’s data insights can help insurers track key performance metrics, such as policy renewal rates, claims processing times, and customer satisfaction. This information can be used to set goals and measure progress over time.

6. Customisation

IBSuite is highly customisable, providing insurance companies the flexibility they need to evolve. With IBSuite, insurers can easily configure their systems to support specific requirements, allowing them to optimise operations and improve performance.

Customisation enables insurance companies to deliver more personalised services to their customers. Insurers can configure their systems to capture customer data and preferences, providing a better understanding of their customers and their needs.

7. Enhanced Security

IBSuite is designed with security at its core, offering robust security features to protect sensitive data. The platform is built with advanced technologies to ensure the confidentiality, integrity, and availability of company data.

All data transmitted between the platform and its users is encrypted using intelligent algorithms. Access controls are built into the platform. IBSuite also includes robust audit trails, which enable insurance companies to track user activity and monitor access to sensitive data. This allows businesses to identify potential security breaches and quickly take action to mitigate risks.

8. Scalability

IBSuite’s platform is designed to be highly scalable, providing insurance companies with the flexibility they need to grow. The platform can easily accommodate new policies, customers, and users, enabling insurers to expand their operations without worrying about system limitations. This also means insurers can respond quickly to market changes and seize new business opportunities as they arise.

IBSuite is built using industry-standard technologies known for their scalability, such as cloud computing and microservices architecture. This means the platform can handle large volumes of data and traffic without performance issues. Insurance companies can leverage the benefits of cloud computing to scale up or down without worrying about infrastructure management or upfront capital expenditure.

9. Rapid Deployment

IBSuite can be rapidly deployed, which is particularly useful for insurers responding quickly to market changes, regulatory requirements, or emerging customer demands. By leveraging IBSuite’s platform, insurance companies can quickly adapt to stay ahead of the competition.

IBSuite’s rapid deployment also means that insurance companies can start seeing a return on investments in shorter timeframes. Insurers can start automating their processes, reducing manual interventions, and improving operational efficiency to increase savings in record time. With IBSuite, insurers can get a head start on their digital transformation journey and achieve their goals faster.

10. Integration

IBSuite offers a range of integration capabilities, allowing insurers to connect their systems and applications seamlessly and streamline operations further. With IBSuite, insurers can integrate with core systems, as well as third-party applications like electronic payment gateways, policy rating engines, and data analytics tools. This ensures that businesses have access to the latest technologies and data, helping them to make better decisions and improve customer experience.

IBSuite also supports application programming interfaces (APIs), enabling insurers to integrate with other platforms and access a wide range of services, including fraud detection, identity verification, and social media analytics. By leveraging APIs, insurance companies can also build their own applications and services, which can help to differentiate them from competitors.

Conclusion

IBSuite offers insurers significant advantages, from streamlining processes to improving customer experience, reducing costs, and increasing productivity. Insurance companies can optimise their digital insurance operations and drive growth with IBSuite’s automation capabilities, real-time data insights, and customisation options. IBSuite is the modern platform insurers need to start their digital transformation and gain a competitive edge in a rapidly evolving industry.

The insurance sector has a vast global market value that far surpasses the gross GDP of many nations, making it one of the largest industries in the world. The insurance industry plays a crucial role in the global economy, providing individuals and businesses a sense of security and stability against risk. However, insurers today face numerous challenges which are impacting their growth, profitability, sustainability, customer satisfaction, and relevance. These have much to do with a changing technological landscape and shifting customer expectations. This article examines the top 5 challenges facing the insurance industry today and how insurers can overcome them.

1) Digital Disruption

The insurance industry is being disrupted by rapid technological advancements reshaping traditional business models and transforming customer expectations. The benefits of this digital revolution to the insurance industry are limitless, but insurance companies are also under pressure to provide their customers with a seamless and convenient digital experience. Many need help to keep pace with these technological changes.

The rise of digital technologies such as AI, big data, blockchain, and machine learning has led to the development of innovative insurance products and services. However, insurers that are slow to adapt to these technologies are being left behind.

The insurance industry’s biggest challenge is to harness the power of technology to improve the customer experience and create new revenue streams. Insurance companies must invest in digital transformation to streamline operations, enhance data analytics capabilities, and leverage real-time customer insights to provide personalised products and services.

2) Regulatory Compliance

Insurance companies must conform to a complex and ever-changing regulatory landscape which can be challenging to navigate. The regulations are often implemented at national and state levels, making compliance a resource-intensive process.

Insurers must ensure that their policies and practices align with such regulations. If not they risk being fined or losing their license to operate. Such rules include privacy laws, consumer protection laws, and insurance industry regulations.

As the regulatory environment becomes more complex, insurance companies need to invest in compliance tools and expertise to manage regulatory risks effectively. Non-compliance can also result in hefty fines, legal disputes, and reputational damage.

3) Climate Change

Climate risk can strain local economies. This unfortunately, lead to market failures that have consequences for insurers and consumers alike. Swiss Re, the world’s leading reinsurer, has forecasted that property damages from natural disasters due to climate change may rise by over 60% by 2040. This could lead to a projected annual increase of 5.3% in homeowner policy premiums.

The effects of climate change are becoming increasingly apparent. Extended periods of drought, wildfires, and severe weather patterns like heavy rainfall, hurricanes, tornadoes, and floods are becoming more common in many parts of the world. These natural disasters can cause significant damage to homes, businesses, vehicles, and crops, leading to a surge in the frequency and severity of insurance claims.

The impact of climate change is not limited to property and casualty insurance either. It can also adversely affect the health of consumers, with poor air quality affecting anyone in reach of a wildfire zone. Irrespective of the causes of climate change, insurers have to take preventative measures due to the possibility of incurring unprecedented losses.

Some insurers have ceased providing specific forms of insurance coverage in particular areas of the world, while others have restricted the scope of their coverage options. Consequently, insurance premiums have increased, creating difficulties for consumers who may be unable to afford them. This has resulted in some consumers purchasing policies with inadequate coverage, while others have chosen to go without insurance altogether.

4) Changing Customer Needs

Changing customer needs, driven by demographic shifts, social trends, and economic factors, is one of the most significant challenges facing the insurance sector today. According to Consumer Intelligence, top-performing companies in any industry average 93 to 95 percent customer retention, but this figure sits at just 84 percent in the insurance industry. Customers expect more from their insurance than ever before, and some companies are struggling to keep up.

Consumers want personalised products and services with greater transparency and accessibility, fast and efficient claims processing, and a seamless digital experience. They also demand more flexibility and convenience in their interactions with insurance companies.

Insurance companies must adapt their products and services to be more customer-centric to meet these changing customer needs. They need to leverage customer data to gain insights into customer preferences and behaviours and use this information to tailor their offerings. They must also invest in digital channels to provide customers with a seamless and convenient experience across all touchpoints.

5) Cybersecurity Threats

The insurance industry is a natural target for cybercriminals due to all the sensitive information insurers hold about their customers. Insurers are required to protect this data from breaches and cyber attacks. However, the increasing sophistication of cyber threats means that insurers must constantly update their cybersecurity measures to stay ahead of the game.

Cybercriminals can often exploit vulnerabilities in insurance systems to steal sensitive data, money, or intellectual property. Cybersecurity breaches can result in significant financial losses, reputational damage, and customer mistrust.

Still, it’s not only outdated systems that face the risk of interception. In fact, industry employees are among the most susceptible to malware attacks and phishing attempts since they receive many files, links, and emails daily in exchanges with customers.

Insurance companies must invest in robust data protection measures to mitigate cybersecurity risks, including employee training, access controls, and network security. They must also implement incident response plans and conduct regular vulnerability assessments to identify and remediate security weaknesses.

Conclusion

In conclusion, the insurance industry faces various challenges that require innovative solutions. Insurance companies should invest in digital transformation, compliance tools, cybersecurity measures, talent management programs, and customer-centric strategies to overcome these challenges. By doing so, they can adapt to the changing landscape and emerge as leaders in the new era of insurance.

In The Metaverse – part 1: Should insurers care? I explained what the metaverse is, how Web 3.0 turns it possible and the hype around what Meta and Microsoft have defined as “the virtual world that will usher in the next phase of the internet”³. We read industry experts argue that NOW is the moment to reflect and act to play an active part and benefit from the metaverse economy that Citi estimates⁴ to be worth $8 trillion to $13 trillion by 2030.

In this 2^nd part, we shall consider how the metaverse is impacting insurance, suggest an approach to engage with this phygital world and show how some of our industry practitioners are going forward.

The way the metaverse will impact insurance is seen potentially in 2 ways by PWC⁵. Firstly, it creates and amplifies new and emerging digital asset classes, and insurers will need to assess those risks and provide coverage. Secondly, the metaverse becomes a new economy, and ecosystem, for insurers to transact in, and for insurers to communicate with customers on. While the metaverse currently seems to mimic many of the ways we interact in real life, it will invariably create new forms of virtual communication and information exchange that businesses will need to adapt to.

Thinking of the areas of the insurance business that will be affected by the metaverse, Publicis Sapient¹¹ mentions:

• Admin and product development will need to dedicate efforts to create and develop new covers for digital assets which consumers increasingly care for and want to be protected.
• Following the examples of brands such as Nike, DBS and Time Studios¹², creative insurers may also benefit from the metaverse in the distribution and marketing
• The uniqueness, trust and traceability brought by blockchain technology and a universe in which one may move instantly from one place to the other will facilitate an effective underwriting process, reduce fraud in claims and render payments in cryptocurrencies possible.

Publicis Sapient goes on to point to 3 important factors that need to be carefully considered when engaging in the metaverse. The people that will lead the company on its metaverse journey need a high level of data literacy as well as sufficient knowledge and understanding of emerging technologies. As referred to above, many processes, such as underwriting claims and payments, will need to adapt. Finally, technology-wise, the cost of the equipment necessary to access the metaverse is high. Hence the latter may reduce over time, blockchain does not require the use of a headset to engage with.

Looking at concrete initiatives & Insurance players that are already engaging the Metaverse
Animoca Brands, a global leader in gamification and blockchain, invested $10 Mn in GOQii to launch Health Metaverse⁷ – The smart tech-enabled healthcare platform of GOQii brings together the entire preventive healthcare ecosystem to its users, amongst which fitness tracker, app, coaching, health store, insurance, and many others. By doing so, Aminoca Brands looks to contribute to building the open metaverse.

Insurance brokerage firm IMA Financial Group announced the launch of IMA Web3Labs⁸, the metaverse’s first insurance and risk management research and development facility, to be located in Decentraland, a virtual world based on blockchain technology. Web3Labs sets new industry expectations for exploring, testing and bringing to market risk and insurance strategies specific to the metaverse.

Qualcomm has set up a $ 100 million fund to invest in virtual and augmented reality technologies to help metaverse jump start⁹. They will also establish a funding program for software developers creating virtual and augmented reality content in areas such as gaming, health and wellness, media, entertainment, education, and business content.

Sigortambir, the recent winner of the 2022 TDI InsurTech Innovation Awards for the EMEA region¹⁰, set up what they describe as the first insurance centre on the Metaverse. They invested in the Metaverse in anticipation of demand for insurance products in the virtual world, which will include insuring land, vehicles, avatars, clothes, and crypto-wallets. Among the innovations Sigortabir has harnessed, its virtual office is built on a decentralised platform, OVRLand, and users can visit the office, speak to advisors, and get their insurance policies via WhatsApp or email.

Decentralized Finance (DeFi) initiatives and application based on blockchain technologies are multiplying. Nimble presents itself as a Licensed Decentralized Insurance Marketplace, where one “pays for insurance, not insurance companies”. In this insurance platform built on the Algorand blockchain, Nimble stresses that underwriters, actuaries, claims assessors, appraisers, insureds, capital providers, and more work in a decentralized environment. Each is paid for his work, is rewarded for his participation; and together, as part of the larger Nimble community, they are building a stronger and more secure future.

We are just at the dawn of the Web 3.0 era and of the metaverse. Many challenges remain and the insurance industry has only scratched the surface of potential applications. Nevertheless, as the metaverse gathers interest and more people and companies reflect on the opportunities it unveils, new use cases appear which in turn grow the prospects and its potential. Not being possible to predict with great certainty what the metaverse will be like in 5 to 10 years and to what extent it will impact our day-to-day life, having looked deeper into the topic one understands something is happening.

Now is the time to engage and start experimenting with the metaverse. Insurers who do so will gain a strategic and tactical advantage over their competitors in discovering how to create value and benefit from it, in the digital and physical world. The longer an insurer waits to begin the experimentation, the more likely he will fall behind the competition as it targets the insurance buyers of the future, who find the metaverse exciting and inviting.

Sources:

¹ in: Web 3.0 Vs. Metaverse: A Detailed Comparison

² in: How to access Metaverse? Everything you need to know

³ in: TDI Connect Monthly Topic (September): Metaverse – Week 1

⁴ In: Metaverse and Money, Decrypting the Future

⁵ In The impact of the metaverse on the insurance industry

⁶ In: TDI Point of View: Insurance Blockchain & Web3

⁷ In: Animoca Brands, a global leader in gamification and blockchain, invested a $10 mn in GOQii to launch Health Metaverse

⁸ In: IMA launches metaverse’s insurance research & development facility

⁹ In: TECHQualcomm bets on Metaverse with a new $ 100 million investment fund

¹⁰ In: Award Applications

¹¹ In: Unique Ways Insurers Can Embrace Web3 and the Metaverse

¹² In: TIME Studios Presents ‘March Through Time’ in Fortnite to Celebrate the Anniversary of The March on Washington for Jobs and Freedom

We were at the 2022 edition of Web Summit in Lisbon recently and were struck by how much the event was geared toward virtual themes such as Web 3.0, Blockchain, NFT and the metaverse. In this global event that gathers the founders and CEOs of technology companies, fast-growing startups, policymakers, and heads of state to ask a simple question: Where to next? 70.000+ attendees were exposed to a plethora of information to make sense of the uttermost tech novelties and trends to shape our society for the years to come.

One of these main trends is the metaverse, which is becoming less of a concept and more of a reality each day. A reality companies are reflecting on and increasingly engaging with.

If like me you have heard of the metaverse but associate many question marks with it, read on.

In this blog, I will pass on some of the elements I collected from industry leaders. For bite-size readings, I will divide my comments into 2 texts. In this first part, I will strive to shed light on what the metaverse is, where it originates and, what’s in it for you, me, the corporate world and insurance in particular. In the second part, I will share how it is anticipated the metaverse will impact our industry and some suggested strategies to engage in this new reality. I will also illustrate some concrete steps taken by insurance players.

Metaverse technology is made possible by Web 3.0 and blockchain technology. While Web 1.0 was the age of data and search engines, Web 2.0 was the era of sharing made possible by the mobile internet and social networks, Web 3.0 is about space and ownership.

Also known as the Decentralized Web, Web 3.0 (or Web 3) is made possible by combining blockchain technology, artificial intelligence, Augmented Reality and Virtual Reality¹.

In simple words², Metaverse is an augmented reality platform that allows users to create interactive experiences that merge the digital world with the physical world. It is a concept or idea of cyberspace made real; a virtual 3D world that is immersive, interactive, and collaborative, and that is shaped by the technology to access it.

It is all based on the concept of transporting our physical-world experiences into mixed reality, virtual reality, and eventually augmented reality. The ultimate focus is to develop decentralized, fully interoperable, and immersive digital communities and environments.

See this short video explains it well: What is the Metaverse? – BBC News

But why all of this hype all of a sudden? What is the metaverse and who is concerned with the metaverse?

On October 28, 2021, Mark Zuckerberg, the CEO and founder of Facebook announced the rebranding of his group as Meta, in an attempt to, what is considered by some, as to own the metaverse. This public announcement has attracted attention to an area where activity and investment are picking up rapidly, an area that Meta and Microsoft are defining as “the virtual world that will usher in the next phase of the internet”³.

The metaverse is not just about 3D games with virtual and augmented reality. It materialises the convergence of the digital world with the real world. Real people are shopping, buying, selling and socializing daily in the metaverse, and Citi estimates⁴ that the metaverse economy will be $8 trillion to $13 trillion by 2030.

While the interest of individuals for entertainment and social purposes is more obvious, the use cases for corporations are multiplying too, from Marketing to onboarding and training of employees, just to mention a few.

Insurance Industry experts agree to say the metaverse will have a huge impact on our sector too, as a virtual world where users share experiences, interact in real-time and buy, sell and own assets.

PWC classifies the metaverse as a ‘new economic sphere’, which it defines as “a booming virtual economy where blockchain-based transactions involving virtual assets… occur more frequently and at higher volumes than ever before… digital data representing virtual land, buildings and other property will be considered a regular part of an individual’s economic assets, which will lead to the need for such assets to be insured”⁵.

Simon Phipps, a co-founder of The Digital Insurer, argues that NOW is the time for insurance board rooms to reflect and act because, it will most likely be three to seven years for blockchain and Web 3 (of which Metaverse is part) to start making a real impact on our industry, which is outside most CEO/executive teams’ three year incentivisation periods, so boards need to drive the strategic debate⁶.

Another reason Simon Phipps points out is that, with the advent of ecosystems and platform economies, insurers will increasingly be working with non-traditional partners (utility providers and social platforms, f.e.) which expect and demand 21st Century technology capabilities, including blockchain and Web 3.

In part 2, of our blog, we will therefore explore how the metaverse will impact insurance, share a possible approach to engage with this new phygital world, and illustrate some bold initiatives already taken by some industry players.

Sources:

¹ in: Web 3.0 Vs. Metaverse: A Detailed Comparison

² in: How to access Metaverse? Everything you need to know

³ in: TDI Connect Monthly Topic (September): Metaverse – Week 1

⁴ In: Metaverse and Money, Decrypting the Future

⁵ In The impact of the metaverse on the insurance industry

⁶ In: TDI Point of View: Insurance Blockchain & Web3

Core system modernization has picked up in the last few years for technical and economic reasons. Increased digital transformation has led insurers to create numerous apps and integrations which surface legacy constraints such as Data consistency, stability, performance, and speed to delivery. Improvement on the front end alone is not enough to implement new technologies and cater to consumers’ expectations. Achieving the full benefits of digitalization requires real-time data access as well as agile feature development in core systems. To enable this vision, most insurers must substantially overhaul their core systems and, in conjunction, transform their overall business model. Mobile first user experience, switching covers on/off, IoT connectivity, and embedding solution in 3rd party channels and ecosystems will be configured more easily and rapidly in a modern core.

McKinsey assesses and explains the value of core system modernization in 3 areas[i] – see graph below:

Increased gross written premiums and reduced churn. Flexible, digitized product systems enable insurers to revamp their product innovation process, often resulting in a faster time to market for rate changes and new products. Likewise, digitally enabled integration capabilities can facilitate a more satisfying front-end user experience and increased support for agency and broker sales processes—a key driver of sales.

Increased operations productivity. The productivity benefits stretch beyond IT. Indeed, the disruption of introducing a new core system often motivates insurers to overhaul their operations setups and adapt workflow mechanisms, thereby improving work organization.

Reduced IT cost. Once implemented, modern IT systems can substantially reduce the cost of IT core systems by, for instance, running on commodity hardware versus the mainframe systems used today by many insurers. This last benefit will be maximized once the redundant older system is completely decommissioned.

The increased flexibility and real-time data exchange capability made possible by the implementation of a modernized core system may then be further leveraged in all processes of the insurance value chain with AI, ML, and RPA.

The potential value at stake explains why core system transformation is today a top priority of the insurance industry and should remain so for the next two to five years[ii].

The crucial question to consider when embarking on a core system modernization, a multi-year initiative, is what should I do with the core? Consolidate, rewrite, or wrap/extend an existing system or replace a system with best-of-breed COTS (commercial off-the-shelf) vendor solutions. The decision is generally based on priorities, risk appetite, investment budget, people/skill availability, vendor solution fit to its needs, time to market, IT estate, and organizational preparedness towards change. But insurers must build trade-off metrics and carefully pick the best transformation option that aligns with strategic priorities, plans, and risk appetite while not allowing organizational constraints to derail the project.

Each path to IT modernization has different pros and cons. In addition to choosing between the fundamental options described above, the timing and extent of existing policies of migration need to be considered. While many insurers develop a platform for both their existing and new business, some carriers opt to start with a greenfield implementation specifically for the new business that would provide an option to migrate the existing business later.

The latter also named The Land and Expand Approach by IBA, is becoming the most consensual amongst its insurance clients. As shown in the drawing below, this low-cost and low-risk approach consists in adding a new modern core system to launch a new digital offer that the older core could not handle.

A cloud-based solution, IBA’s IBSuite may be configured, implemented, and run alongside your existing core in as less as 5 months – see the drawing below. To allow for a quick time to market, the number of products and services configured in a first implementation is reduced as are the interfaces needed. By doing so, and with very little strain on his financial, technical, or human resources, an insurer may present a product or service to a consumer via any channel of his, of a partner, or via any marketplace or 3rd party ecosystem.

Once the first implementation of the new core is done and running smoothly, the organization may plan and roll out the new core-selected products, services, and applications that will most benefit from the capabilities of a modern system. Amongst these are top-notch functionalities related to Distribution, rating, product configuration, billing, policy admin, claims, and data insights – see the illustration below.

This hybrid design can gradually bring about valuable modernized core functions without compromising day-to-day activities. In the future, when the insurer wishes to switch out individual system components for more modern ones that will keep him on the leading edge, this approach will make it easy.

A hybrid, multi-core Innovation Platform was chosen by Klinc, a subsidiary of Zurich. This client of IBA wished to roll out a mobile-first digital experience to insure phones and other devices with advanced functionalities such as switching covers on and off usage-based and repair and replace. Their older system not permitting, Klinc opted for a greenfield project with IBA which allowed them to roll out their product to a great number of partners throughout Europe in 5 months, through a multicore strategy.

Modernizing insurance core systems is imperative to achieve the full benefits of digital transformation and, eventually, sustain an insurer’s activity. Given the digital advances in insurance—especially in personal lines—transforming the core is the next frontier. How it is done, and the choice of a new core will bind those involved. An approach that is gaining consensus and that is less disruptive is the multicore strategy. Adopting a new core alongside a legacy system permits an insurer to reap the benefits of new technology for selected applications and projects. It is a low-cost approach that limits the risk to the business and allows a gradual, as-needed basis, modernization of the technological stack of the company.

[i] In: https://www.mckinsey.com/industries/financial-services/our-insights/it-modernization-in-insurance-three-paths-to-transformation
[ii] In: https://www.mindtree.com/insights/resources/core-systems-transformation-7-modernization-best-practices

Our expectations are driven by the GAFAMs

Technology has entered our lives and is shaping our expectations. In an ever more connected world, the rise of the big tech platform has accustomed us to seamless interactions and responsive operations. Tech giants such as Facebook, Linkedin, Instagram, Google, and Amazon are dictating the way forward. Users now expect and seek the same instant and convenient interactions from all other service providers. Due to entry barriers and traditionally lower touch points, the financial service industry did not react at once. A growing gap between customers’ aspirations and the services offered by traditional insurers has favoured the appearance of new players; technological enablers and neo-insurers. While the neo-insurers concretized a direct threat to their client base, the technological enablers offered innovative technology to better satisfy customers, improve their experience, and better defend themselves from neo-insurers.

In an industry where a big part of interactions between customers and insurance companies were traditionally face-to-face, the remoteness imposed by Covid turned even more dire the need for insurers to provide a new customer experience that is as satisfying or more than before.

What makes a good customer/user experience

The overall experience a user or client has relative to a product or service results from a series of factors.

Don Norman, considered the inventor of the term “User Experience” when he worked for Apple in 1993, believed that products that provide a great user experience (e.g., the iPhone) are designed with the product’s consumption or use in mind and the entire process of acquiring, owning and even troubleshooting it[i].

The International Organization for Standardization (ISO) defines user experience as: “A person’s perceptions and responses that result from the use or anticipated use of a product, system or service.” [ii]

KPMG conducted further research to identify the underlying characteristics of a world-class experience and concluded they amounted to 6. The Six Pillars of customer experience excellence are universal qualities that they found to be present in every outstanding customer relationship[iii].

According to KPMG, these Six Pillars of Experience have consistently been the essential characteristics of world-class experiences. The presence of these six factors is essential if commercially beneficial behaviors are to ensue because of customer experience. Whether it is an increased share of wallet, loyalty, or advocacy, KPMG supports that these six factors are the prerequisites for commercial success. Companies need to be good at them to succeed.

The Six Pillars of Customer Experience Excellence, by KPMG

Keeping these Six pillars in mind when thinking about process improvement in any part of the insurance value chain is essential. Aiming for excellence on each of them will help increase customer satisfaction metrics such as Net Promotor Score (NPS) or Customer Satisfaction (CSAT) score.

Customer experience driving operational change

Technological innovation and improvement drive customer expectations, which in turn nurtures R&D that leads to new technological breakthroughs which insurers need to introduce in their processes and interactions with customers to continue pleasing them and merit their loyalty.

New technologies that incorporate AI and machine learning are appearing to help insurers better respond to customers’ expectations and deliver a convenient and timely service.

Insurers need IT systems that are apt to integrate these new technologies and enable them to deliver the enhanced expected customer experience and further grow their business. Time to market being a decisive factor, quick and effortless integration of technological modules in the cloud through APIs is an option that insurers have come to appreciate. Being usage-based such cloud solutions – such as the IBSuite of IBA – are also cost-effective and scalable to adapt to small, medium, or large volumes.

Nevertheless, an optimum customer experience will not be achieved if the user experience of the employee managing the tool procured by the customer is not optimum too. The interfaces of the software are therefore designed to be simple, and self-explanatory to facilitate everyone’s work.

Today one may conclude that the insurance industry was slow to hear and respond to changing customers’ expectations. Nevertheless, pressured by new entrants and the fear of losing customers attracted by innovative offers and services made possible by new technologies, insurer have stepped up their game and are accelerating digital transformation. How insurers transform and ultimately access and integrate new digital tools is varied. The path is clear though; achieving corporate goals passes by optimizing the customer experience.

[i] In: https://www.interaction-design.org/literature/topics/ux-design

[ii]In ISO 9241-210, Ergonomics of human-system interaction—Part 210: Human-centered design for interactive systems

[iii] In https://home.kpmg/xx/en/home/insights/2021/09/the-six-pillars-new.html