It's 2018 and many P&C insurers are focused on determining which trends to jump on — which will serve them best — in the new year and beyond.
Here, I've compiled three that my colleagues and I believe P&C insurers should start investigating in right away: a mobile-first strategy, chatbots and the on-demand economy.
Mobile-first strategy
Practically everyone has a supercomputer (aka smartphone) in their pocket these days. Indeed, thanks to its ease of use — characterized by geolocation, swiping and bar code readers to prefill data rather than by typing it in — society relies so heavily on the mobile device, using it for both personal and business affairs. In fact, global mobile use trumps desktop use — 50% vs. 45.6% — with tablet use coming in at just over 4%, according to StatCounter's 2017 data.
More specifically, a mobile-first strategy speaks to society's demand for anytime, anywhere service. Insurers must be ready for the mobile customer, and take care of them on their device of choice.
Chatbots
Let's start with a simple definition of a chatbot. It's not a person behind the scenes; rather, it's software capable of humanlike interactions. Chatbots are comprised of three components: a user interface (messaging, text or speech), artificial intelligence (AI; pre-formed questions and answers), and system integration (creates a guided, big-picture approach).
Like mobile first, chatbots support the demand for rapid, convenient and 24/7 service for the consumer. According to an Oracle survey conducted last December, 80% of brands are already using or intend to implement a chatbot by 2020. For the P&C insurer, chatbots automate some aspect of customer service so that human capital is redistributed and used more effectively. For example, agents field the same three questions over and over — "What do I owe?" and "Am I covered?" and "Can you make this simple change?"
With the chatbot's pre-formed questions and answers covering these types of calls, agents are free to focus on incoming calls that require more complex answers.
Chatbots are comprised of three components: a user interface, artificial intelligence, and system integration. (Photo: iStock)
On-demand economy
The on-demand economy is thriving: BIA/Kelsey estimates that on-demand spending in the United States will reach $54 billion by the end of this year. Increasingly more industries are being enveloped by the on-demand economy: for example, movie rental (Netflix), transportation (Uber, Lyft) and hospitality (Airbnb).
P&C insurers are just beginning to understand how to serve and participate in the on-demand economy. Cuuva is an example of a company that does it well: It offers pay-for-the-drive insurance, which dramatically reduces insurance costs, as the driver isn't paying a dime when his car isn't being driven. And Trov is adapting its on-demand insurance for Waymo's self-driving taxis, so that passengers are protected with automatic coverage during their trips (without paying extra or activating a policy on their own).
Other insurers offer something similar for on-demand lodging. Insurance (for the host) turns on the moment the guest walks in the door, and stops the moment he walks out. The insured only pays for the time the insurance is activated.
A point to remember: Innovation for all
At first glance, it seems that innovative trends like these respond directly to the millennial demand for slick, inexpensive user experiences. They are, after all, the first generation of digital natives: Mobile is their platform of choice; they prefer fast, self-guided online service; and they have less disposable income.
However, it's important to note here that, while the "millennial influence" may drive innovation, use of innovative technology isn't limited to millennials. That is to say that all generations want fast service and a seamless user experience, anywhere and at any time, and for a competitive price. For P&C insurers, this means that technology use should not be segmented by age; rather, it should be segmented by the behavior and requirements of each generation group.
It may go without saying that finding success in these three trend areas begins with a modern core system foundation that can support new technologies. Without one, P&C insurers will find that they will need to repeat the same processes as they start to update all their siloed systems, and won't be able to service their customers in a unified way. Their data will be out of sync and the insurer will simply not be able to operate in a digitally optimal way.
Suffice to say that the trends mentioned here open the doors wide to opportunity. It's up to insurers to adopt an infrastructure that enables them to maximize their potential.
Laura Drabik is vice president of Business Innovation for Foster City, California-based Guidewire Software, Inc. To reach this author, send email to ldrabik@guidewire.com.
The opinions expressed here are the writer's own.
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