How to Create New Opportunities for Traditional Insurance Carriers in 2020

Push Beyond Current Uncertainty and Create New Opportunities

The insurance industry is facing a period of great uncertainty—and great opportunity.

In the following interview on the popular Profiles in Risk podcast, InsureTech reporter Nick Lamparelli and I discuss:

  • The challenges traditional carriers face with the rise of specialist digital providers,
  • The expectations of a new generation of consumers who want buying insurance to be a seamless, click-through experience,
  • Best practices for what traditional carriers can do to leverage the same technology that’s disrupting the industry.

The goal is to empower incumbents to spin up new products and take advantage of exciting new revenue streams in the coming year and beyond.

Key Point #1: What Digital Transformation Means for Carriers

“Digital transformation” was the phrase on everyone’s lips at InsureTech Connect 2019, and it is a topic that comes up daily in conversations with Vlocity team members. But what does it mean for providers, many of whom have already made significant investments in their platform?

As I explained to Nick, digital transformation is more than digitization. Digital transformation redefines how companies interact with customers as well as themselves. For the insurance industry, it is an especially fraught concept, as customers are often dealing with the loss of loved ones, the loss of personal property and other critical, life-changing issues.

In a recent study we conducted with Newsweek and Celent, and sponsored with Deloitte Digital and Salesforce, we asked 300 C-level executives what they thought was the new basis of competition. Their response, across multiple geographies, varied lines of business and functional areas, was the same: The customer experience was most important—more important than product features—and one, as we know, that is driven by simplicity.

By “simple,” we mean: How do we make the quoting process more efficient, ask fewer questions? How do we make the issuance of the policy document easier? How do we make the policy documents simpler and let the customers know that they are covered?

Within the context of our survey, executives reported that customers were less interested in complex ways of customizing their coverages and more interested in fast issuance. In effect, what they want is what they have always wanted: a quick and easy way to get themselves and their loved ones insured, via readily available technology.

This is digital transformation for insurance, in the most bottom-line and customer-facing sense.

Digital Transformation is a multi-disciplinary activity. It’s not just asking your IT team to make a simpler interface or your designer to change a font. What is required is a holistic view of how the product is structured, what the process looks like, how technology fulfills that process, and what the design is on the front-end that drives the experience.

– Jason Silver, VP of Sales, North America, Vlocity

Key Point #2: Taking a Gradual Approach

For established carriers, digital transformation needn’t be a totalistic process. At Vlocity, we tackle new products you are having trouble launching because of legacy systems. This is the low-hanging fruit.

Going from planning to launch in months rather than years gives stakeholders a quick win, shows how digital transformation could work across multiple product areas. It is also the key efficiency of evolving one’s infrastructure beyond on-premise and custom in-house solutions—to embrace the flexibility of the cloud.

When Nick asked about total replacements, I told him the approach is the same: Managing expectations, taking a phased approach, knowing the business priorities as well as the roadmap. For carriers unsure where to begin, the priority should be the most important lines of business, with development taking place in parallel with normal operations.

Also important for 100% conversions: avoiding the lift-and-shift. Digital transformation should not be a one-to-one proposition. Organizations must strive to improve systems, not just migrate them.

Key Point #3: What a Partner Like Vlocity Offers

The Vlocity Insurance Platform is built 100% on Salesforce, allowing issuers to run their business in the cloud, including policy administration, quoting, rating, billing, claims management systems as well as all portals and digital experiences. The platform allows companies to supplement their systems of record or become their systems of record.

On Nick’s question about flexibility, I explained that we understand an organization’s attachment to legacy and incumbent systems. Basically, our approach is: If you have a rating engine that you truly love, we will just integrate that in with Vlocity. If you have a product catalogue, we can talk to it with Vlocity.

The secret sauce here is an agile middle-office, which includes embedded intelligence and various APIs that extend the capabilities of existing systems. A partner should allow carriers to transform at their own pace. They should also strive to create a solution that supports multiple lines of business from a single platform—eliminating inefficiencies and assuring they reach their objectives better, cheaper, faster.

Key Point #4: Ingredients for Success

One of Nick’s most pressing questions was how change actually happens, especially for risk-averse carriers with established business processes. My view: Digital Transformation is a multi-disciplinary activity. It’s not just asking your IT team to make a simpler interface or your designer to change a font. What is required is a holistic view of how the product is structured, what the process looks like, how technology fulfills that process, and what the design is on the front-end that drives the experience.

In the near-term, organizations that want to digitally transform segments of their business need to create a diverse and agile team, representing the full range of capabilities:

  • Business Owner: Seasoned business executive that knows the marketplace, understands customers and has skin in the game.
  • Product Expert: Actuarial and underwriting expert with rates and rule knowledge.
  • UX Designer: Interface expert who brings design thinking to the process, whether you’re creating a chatbot or a simplified website.
  • Information Architect: IT expert that knows which technologies will guarantee the most rapid and reliable results.

In terms of best practices, we have found the most common breakdown in these transformations is a disconnect between the executive and the rest of the team.

Vlocity’s recommendation is small teams, comprised of members of equal organizational rank. Not only does this configuration keep things agile, it assures there is no disconnect between executive goals and team output, whether you are creating a prototype or definitive design. “Failing fast” allows us to deal with issues right away, and brings the agile methodology to the fore.

Also recommended is the right organizational partners to assure everything is running according to schedule. For instance, at Vlocity, we have aligned with Accenture, Deloitte, PwC, as well as specialist players.

Digital transformation is more than digitization. Digital transformation redefines how companies interact with customers as well as themselves. For the insurance industry, it is an especially fraught concept, as customers are often dealing with the loss of loved ones, the loss of personal property and other critical, life-changing issues.

– Jason Silver, VP of Sales, North America, Vlocity

Key Point #5: Critical Themes for 2020

For me, near-term developments will include:

More mobility: The industry moves further away from pads and paper, toward a click-through environment. The goal is to make buying insurance as simple as buying something on Amazon.

Legacy Modernization: As we have discussed, digital transformation will happen piecemeal, as carriers move beyond one-off digital projects to a systematic dedication to updating their entire infrastructure.

User Empowerment: Giving customers greater control over the claims process, by allowing them to upload photos, will be a significant trend. The industry will take a big step toward a straight-through processing environment. Auto, home, renters, life (i.e. sharing death certificates) should be the key product areas.

100% Cloud-based Quote, Rate and Apply: Making it easier for customers to get a quick quote won’t be a promise; it will be a certainty. With Vlocity’s new Agile Quoting in the Cloud, partners enjoy a solution fully integrated with Salesforce and supporting all lines of business, including Property & Casualty, Life and Annuities, and Specialty Lines.

Nick and I also discussed how IoT and drones will transform the industry and what the plethora of data generated by these devices will mean for carriers as well as consumers.

Nick’s brilliant point: Data may be “The New Oil,” but it is meaningless without a refinery. What we should expect is a new generation of business analytics providers to help us make sense of it all. For anyone who needs an example, look no further than Tableau, recently bought by Salesforce and integrated into Salesforce’s Einstein platform.

My conversation with Nick is essential for anyone who is trying to get a handle on the various trends happening in the industry. It is recommended especially for anyone working on their roadmap and budgets for 2020.

Listen to the full podcast here.

Jason Silver

VP of Sales, North America at Vlocity

Jason Silver is vice president of Sales, North America at Vlocity. Silver has spent more than 15 years helping organizations digitally transform to better serve their internal and external customers, and has held various leadership roles at Salesforce, IBM and Marketo. In his role with Vlocity, Silver is responsible for creating and maintaining relationships across industry and across regions that delight customers and positively impact the bottom-line.