From reactive to proactive – can insurance transform? Part 2

Last post ended with thoughts on how insurers can succeed in transforming their approach from reactive to proactive, and create stronger connections with consumers, who are compelling insurance players to reshape the way they package and sell their products.

Today, this isn’t a technological challenge – all the technologies needed for the transformation are available and mature. The innovation around AI and machine learning, in addition to the proliferation of data and ability to connect to external data sources, offer the opportunity for change and a new type of insurance experience.

This change can best be achieved through implementation of an insurance platform that integrates advanced machine learning models and can support actuarial practices and big data analytics. Such platforms can process millions of events in real time, from flight schedules and luggage tracking to weather forecasts, price fluctuations and delivery schedules. Furthermore, machine learning enables the use of historical data, as well as facilitates a competitive approach to product offerings, pricing, customer communications and claims handling.

A smart insurance platform provides insurers with the ability to automatically and accurately assess endless possible risk scenarios. Applying appropriate mathematical models, it’s possible to predict the probability of customer experience disruption – in terms of frequency and severity – at the highest level of granularity, in order to determine adequate underwriting rules. Additionally, triggers based on real-time data, such as if a flight is late, whether there’s sufficient snow for skiing or if luggage has gone missing, enable automatically triggering a policy and generating immediate payment of compensation.

This is a game changer in the insurance experience, and especially essential for millennial consumers who expect nothing less than proactive, personalised and fully automated insurance products. In fact, consumers who perceive their insurers to be proactive indicated a 15.7% increase in positive experience. Furthermore, 40% of the millennial generation and 45.7% of tech-savvy customers indicated willingness to share their data for the benefit of receiving personalised services.

The benefits of such services are clear:

  1. Proactive predictions of consumers’ individual needs in various areas.
  2. Real-time monitoring of risks and staying one step ahead of consumers to ensure a seamless customer journey.
  3. Worry-free and hassle-free experience through automated claim and compensation processes.
  4. Vast reduction in operational cost required by manual claims processes, enabling insurers to offer services at lower rates making them more attractive to consumers.

Adopting a proactive, millennial-ready insurance approach is becoming inevitable. The ability to predict and respond quickly to shifting consumer attitudes, market opportunities and risks is essential for gaining customers, alongside keeping them happy and ensuring long-term business sustainability.

About the Author
Eyal Gluska’s entire career has been focused on creating innovative services and business models that generate new business opportunities for leading organizations around the world. As co-CEO of Setoo, he wants to disrupt the insurance industry with AI and state-of-the-art machine learning technologies, automating human-intensive operations to transform the way insurance products are created and delivered.


From reactive to proactive – can insurance transform? Part 1

According to the World Insurance Report, “business-as-usual within the insurance industry is coming to an end”, and as consumer demands and market dynamics continue to evolve at great speed, the ability to a adopt a proactive approach will become even more vital for insurance players.

How has this situation evolved? Basically, it’s because traditional insurance is reactive – an event occurs, and the insured party makes a claim – and this approach does not meet the experience expectations of consumers today.

The claims process is long and tiring and it consistently leaves consumers resentful and angry due to the massive amount of bureaucracy involved; the disputes concerning actual compensation; and the time it takes to actually receive compensation. Often, consumers give up the fight, conceding to the insurers.

Today’s digital and customer-centric era demands a change, and to attract and retain customers the insurance industry has to adapt accordingly. Some insurers are already moving from a traditional reactive insurance experience to a predictive and proactive one; a new type of insurance offering based on parametric capabilities, AI, machine learning, big data, analytics, etc.

This enables defining the probability of something happening and automatically compensating the consumer if it happens, thereby eliminating the exhausting claims process. Even if the types of insurance products remain traditional, the customer experience and claims process need to transform and become up-to-date and millennial-ready.

Consider flight delay insurance. In the reactive approach, if a flight is delayed, consumers need to inform the insurer of the delay after landing, and then have to start the long claim process of providing documents to prove they were on the flight, that the flight was late, etc. On the other hand, imagine the same product in a proactive approach: the insurer knows the plane was delayed (even before the consumer), and thus can provide immediate compensation and further assistance, which prevents consumer frustration and creates a sense of trust and loyalty.

Sounds like a pipedream? It’s not. Some insurers are already transforming from reactive to proactive, embracing a new approach, changing the role of insurance and fundamentally strengthening the relationship between insurers and consumers.

How are they achieving this? See part 2 of this blog next week.

About the Author
Eyal Gluska’s entire career has been focused on creating innovative services and business models that generate new business opportunities for leading organizations around the world. As co-CEO of Setoo, he wants to disrupt the insurance industry with AI and state-of-the-art machine learning technologies, automating human-intensive operations to transform the way insurance products are created and delivered.


Can e-businesses sell insurance like any other consumer product?

Technological innovation, data proliferation and the ability to tap into external databases are compelling insurance companies to readdress how they sell their products. A great example is parametric insurance, which is assuming a larger role in the insurance industry.

Could this be an opportunity for e-businesses to increase ancillary revenue from parametric-based insurance products, providing a better customer journey and keeping ahead of competition? Perhaps. However, there are two main problems.

First, even though insurance products are being offered within e-business customer journeys, they are created and controlled by third parties and not by the e-business itself. Second, they lack consumer appeal, but since they are associated with the e-business, they are negatively affecting the customer journey and experience, as well as causing churn.

At Setoo we believe that insurance has to be turned into an online consumer product just like any other product, which e-businesses know how to market and sell. Insurance products have to be created by the people who best understand the consumer and consequently, e-businesses –like OTAs (online travel agents), ticket sellers and e-commerce companies, should be defining these products.

Is this possible?
Many will argue that it’s unrealistic, claiming that while e-businesses know to sell consumer goods, they lack the knowledge and capacity to handle insurance-related processes and regulations. But using today’s range of innovative technologies – from big data, AI and machine learning to IoT, telematics, digital insurance and cloud – insurance processes can be handled in the background automatically, leaving
e-businesses to easily create already-regulated insurance products.

By gaining ownership of insurance products without having to know anything about insurance regulations, e-businesses can independently build and deliver insurance products that meet the needs and demands of their customers. Consumers can enjoy value added services with an extraordinary experience, while e-businesses benefit from:

  • Increased revenue from ancillary services, since consumers will want to buy these new types of insurance and protection products.
  • Enhanced brand loyalty, as consumers will recognize the e-business’s support when something bad happens in their customer journey.
  • Competitive advantage through the delivery of an outstanding customer journey experience.

About the Author
Eyal Gluska’s entire career has been focused on creating innovative services and business models that generate new business opportunities for leading organizations around the world. As co-CEO of Setoo, he wants to disrupt the insurance industry with AI and state-of-the-art machine learning technologies, automating human-intensive operations to transform the way insurance products are created and delivered.