A New Way of Approaching the Insurer/Insured Relationship
May 25, 2022
We’ve all heard that the insurance business is being transformed by cutting-edge technology and analytics. There’s no shortage of new ways to differentiate insureds, quantify loss drivers and refine pricing strategies. But despite this progress there remain several problems: the returns from analytics are likely to diminish, analytics do little to actually improve the risk-related behaviors of the insured, and the insurer’s existing offerings may be uncompetitive or unresponsive to the customer’s top needs.
Perhaps it’s time for a new paradigm. Let’s explore what that might involve.
Your standard offering may be missing the mark
Your standard analytics may not be addressing each of your client's most critical needs. Some may have interest or opportunity to re-stack their provider network, some may be seeking improved medical cost management outcomes, others better return to work durations. And, it can’t be assumed that the customer is aware of any and all missed opportunities.
It was a big job assembling all the data and analytics for that standard reporting package, and customization may seem out of the question as an offering. If that’s the case, this is a symptom of aging or obsolete technologies that may be preventing you from truly meeting customer needs….and from matching what the marketplace is increasingly offering.
Your brokers may be replacing you
In their quest to add value and demonstrate transparent differentiation, agents and brokers are turning to third-party analytics in order to provide new insights to their insureds. While their offerings are ultimately beneficial in terms of helping insureds address what matters most, a side effect is that the buyer may perceive the true value coming from the broker and not the insurer. This raises the risk of the insurer being commoditized and replaced solely on price.
Your insureds need actionable analysis
Beware of the possibility that all those wonderful charts and deep analytics that you present to your insured during the typical service meeting or stewardship report become nothing more than defensive information to be filed away. Unless you are providing actionable insight to people who have the resources and resolve to implement meaningful changes, your report may become an annual check-the-box exercise.
What if you provided the insured with a practical way to change its risk behaviors? What if you could establish a direct link between your technology offerings and improved customer outcomes?
For many insureds, the game has profoundly changed
A paradox exists among many insurance buyers. While the pandemic and the supply chain crisis became existential threats for many businesses, the resulting disruption and short-term cost pressures may have shoved “traditional” risk management practices to the background, if indeed continued at all.
The consequence is that past behaviors and controls may no longer exist, or will become a shell of their former state. Insurers won’t have much influence over the risk management budgets of their policyholders, but they can change how they interact with their insureds.
Where it’s at: the empowered line operator
People back at headquarters have only limited control over operational risk behaviors. The greater opportunity arises from empowering people in the field to manage risk in a non-intrusive way that enhances, rather than distracting from their current daily workflows.
Several things are necessary to make this happen:
- mobile-enabled technology that thrives on devices the operator would be using anyhow
- a short learning curve that doesn’t require lengthy training
- cost characteristics that don’t pose a financial barrier to widespread adoption (cost per user access)
- intuitive self-service capabilities
- most importantly content that is relevant to the operator’s needs and circumstances
How does your current capability measure up?
What about the smaller insured?
Not every buyer has an in-house Risk Management Information System guru. Meanwhile it seems certain that bundled program offerings will only increase in prominence, and the pace of change in the business world will be unrelenting if not unprecedented.
These factors speak to new challenges and new opportunities. The threat is to be left behind; the opportunity is to realize new efficiencies, new revenue streams and better customer behaviors by embedding risk technologies within the insurance program offering. The benefits of active risk management tools can thereby flow down to insureds that until now were too small to partake.
Technology: a new perspective
The new world of risk management technology is nothing less than a new way for insurers to earn and retain business while influencing the risk behaviors of their insureds like never before. An effective deployment of risk technology does more than make real the potential for improved loss ratios: it is a new way to illustrate true competitive differentiation, and a powerful account retention tool.
As the pace of change in risk management technologies becomes ever-greater, it is increasingly necessary and appropriate for insurers to partner with outside providers in order to exploit the full potential of these dynamic new products.