In a recent Executive Brief, insurance market analyst Novarica explores the future of personal lines insurance. According to the report (and common sense), carriers should wisely invest in technology. Highly digitized processes, advanced analytic capabilities and an effective distribution strategy are key elements to stay successful in the fast-changing market.
Leverage predictive analytics at underwriting
When it comes to improvements in underwriting, two short-term enhancements stand out:
- Leveraging predictive analytics. Predictive profiles can greatly enhance the value of a carriers’ portfolio. By applying predictive analytics at the gate when people are requesting a policy, carriers can differentiate how they are going to deal with people based on their profile. This can help in moving toward a 100% straight-through underwriting process.
- Leveraging third-party services and platforms. These services can bolster underwriting by augmenting the internal data available. There may be products available on an “as-a-service” basis, including the use of scored telematics data. Examples of these include services to check bank account details (SurePay), utilize unstructured data (omni:us), retrieve stolen objects (Brightmaven) check sanction lists in real-time (Compliance Screening) or perform online network analysis (Web-IQ).
Strengthening fraud detection at claims
The total cost of P&C insurance fraud is more than $80 billion per year in the US alone, according to the Coalition Against Insurance Fraud. In order to strengthen fraud detection there are two quick wins:
- Implementing technology that automatically flags claims that are potentially fraudulent. Fighting fraud can be a time-consuming and error-prone process, especially when done manually. Automated fraud detection is a prerequisite for digital transformation. Carriers start working with real-time, automated fraud detection software to lower their loss ratio, support a consistent investigations process and benefit from higher investigator efficiency by lowering the number of false positives and decreasing cycle time.
- Leveraging AI to improve customer experience. AI opens up exciting possibilities to enhance the claims handling process and increase fraud detection. Emerging technologies such as network analysis, text mining, anomaly detection, image analytics and pattern identification help carriers in processing and flagging claims fast and accurately. These enable the carrier to implement a touchless claim experience for the 98% of customers who are legitimate, raising overall customer satisfaction. At the same time, those claims that need further attention are forwarded for special investigations.
When working on improvements in underwriting and claims, having a good strategy matters. Successful companies will think longer term and focus back on the essence of insurance: covering risks for the customer. Customer expectations change. The question is not when a carrier needs to adapt, but how to effectively do so. FRISS has a proven track record of helping underwriting departments cope with automated risk assessment and claims departments with touchless claims. Let’s work together to keep up with the customer.
The full Novarica report can be viewed or purchased here.