InsurTech Ohio Interview with Alan Demers
Alan Demers is President and Founder of InsurTech Consulting. Alan has built a career and reputation for leadership over 30 years in the insurance industry, and uses his experience in claims and innovation to guide insurtech startups and insurance innovators. Alan was interviewed by Michael Fiedel, a Community Leader at InsurTech Ohio and Partner at PolicyFly, Inc.
Alan, when innovation is all the rage in insurance where does improving claims fall amongst the industry’s priorities?
“I’d like to say that claims has come a long way in the last few years. Overall as an industry most would say there’s been more improvement in the last five years than there has been in the last 25 or 30 years combined, and that’s true! But the reality is insurance claims organizations have historically been among the lower investment priorities. When you consider that claims manages over 70% of premium dollars through claims payments and expenses, I think we should be further along in its evolution than we are.
I understand why that is. Most of the players in the insurance industry have recently completed or are still going through a systems transformation to improve their core operations around distribution and underwriting, and that tends to be pretty expensive and long term. Technology providers like Duck Creek and Guidewire lead these multi-million dollar conversions that require several years to deploy across each business. So there’s a bit of fatigue and exhaustion before claims become a funding focus to modernize further.
However, the current insurtech landscape is vibrant and accelerating. No one’s going to confuse the insurance industry as being a tech industry at the moment but that is changing quickly. The whole idea of insurtech is to help us get to a better place and the near future is extremely optimistic.”
A number of insurtech startups say they’re attacking inefficiencies in the claims process. Are you seeing as much innovation as we’re hearing?
“Interestingly, many of the new digital insurers or disruptors that are spearheading the insurtech push haven’t invested much in their claims handling. In fact, some are still a bit analog and actually farming out claim servicing to third-party administrators (TPA) because of high build costs.
In contrast, there are a number of insurtechs dedicated to modernizing claims functionality. Some have been at it now for several years and are making a big impact already. Everything from modernized fraud detection to image analytics for damage estimating are gaining by leaps and bounds. There’s something for nearly every part of the claims process with an ever-growing and maturing field of insurtech providers eager to engage.”
How do you think customers feel about their carrier’s claims experience?
“While most walk away being overall satisfied, if you ask customers what they dislike most about dealing with a real claim, they’re going to say things like, it was confusing or took too long to resolve. Or, they didn’t know what was going on for large stretches of time, perhaps calls were not returned and having to repeat their story several times are actually the top complaints.
I find customers tend to have fairly low expectations about the claim experience because they’re anticipating it’s going to be a hassle. Customers are already encountering an unexpected and disruptive scenario and just want to get back to normal.
But there are simple opportunities for making strong improvements.”
Those opportunities to improve seem imperative, what are some strong examples?
“First and foremost carriers need to make it easier for people to access their claim once reported. I think it’s a fascinating pursuit to improve the customer experience because customers behave in very interesting ways. They typically pick up the phone to speak to someone about a claim initially, but there are huge opportunities to improve the claims process by helping the customer avoid the need to call and speak to someone as a claim progresses.
You want to be able to anticipate and forecast their needs, guide and push updates out to them, eliminating uncertainty that forces a customer to pick the phone back up. Additionally, you want to give the customer digital access so they can self-serve to easily find specific information. These tools actually invite the customer into the claims workflow and allows them to feel like an informed participant instead of an unaware bystander.”
This sounds a bit like “touch-less claims”, are you a believer or skeptic of going down this road?
“I am a huge believer of touch-less claims and spend most of my time in this area. The vast majority of claims are minor to moderate damage and are prime candidates for touch-less — meaning little to no direct interaction with an adjuster. The goal here is to generate efficiency for the carrier and customer alike much like so many other digital experiences today. Efficiency for customers builds confidence and trust leading to positive outcomes. A claim which begins on a positive path usually concludes on a high note and vice versa.
As this is all new and developing. Carriers are learning what works best when it comes to expressing empathy and where to place human interaction and provide channel options. There is much to consider with respect to the customer journey, adoption rates and how to leverage the respective insurtech solutions to bring touch-less to life then optimize.
I do think the sensors and telematics offer some very compelling features that would allow carriers to act more proactively and change the way claims are initiated in the first place. Today, the average time from loss to claim is five days for a basic auto claim across the industry, so there’s a big gap to address. Detecting a potential loss, assisting with mitigation, providing guidance and claim initiation are next up on the innovation agenda.”
As a consultant, how do you help clients set a strategy for defining their goals around innovation?
“We’re talking about a 100-year industry that only recently is developing a formal research and development mindset around innovation and technology. So it takes practice to build the muscle memory required to sustain.
What insurance companies do have is capital, but they need to work on channelling those funds to the right places and approaching technology in a sustainable way. Will an insurance company accept five years of experimentation to sort out complex problems and accept a certain level of failure that’s required to discover big ideas?
So you need to establish a strategy that defines where you want each individual project to drive the business. Oftentimes, the business vision is missing or faded a bit and habits such as seeing what sticks or grabbing at shiny objects can emerge. You have to be more realistic in your expectations in order to accomplish incremental and positive change and reward the right outcomes.”
What’s your go-to advice for leaders in the insurance industry who are consumed by all of the moving parts required to evolve and innovate?
“I find carriers are trying to be innovative and are fired up about this pursuit. I tell managers and executives it’s about the small innovations that deliver reasonable and sustainable progress that allow for the pursuit of the big breakthrough innovations.
I think the worst thing that can happen to an innovation agenda is analysis paralysis where you spend all of your time analyzing and not doing. My emphasis is to do something and show some progress. And if it doesn’t work, go on to the next thing that aligns with your overall goals and strategy.
Most importantly, it always comes back to the customer. They’re the ones that pay the bills and the pursuit to improve the customer experience is a very exciting journey. I’m a consumer with needs and preferences too and always strive to empathize and that guides my advice to the leaders in insurance that I consult.”