Thursday, 24 August 2017

Innovation blog: The win-win approach to insurance innovation

In their drive to improve customer and user engagement, insurers can profit from the insights of perceptive start-ups who understand their pain, says Startupbootcamp managing director Sabine VanderLinden

To optimise retention, experience and satisfaction among customers and employees, insurers are increasingly taking a quick-win approach to process improvement. They’re looking for examples of best practice in other industries that they can copy. How telcos handle billing, for example. Or how retailers are optimising the customer experience.

This is clever. It shortens the development cycle while leveraging successful models from other incumbents. Yet retailers or telcos have no model to help insurers with their two most challenging processes: namely, industry-specific regulatory compliance and claims.

Insurers know this, which is why at the moment they’re keeping new process development in-house in these two crucial areas. But they don’t have to go it alone.

Take Covi Analytics and Rightindem, two start-ups in the first insurtech cohort at Startupbootcamp. Each of these companies is headed by someone with deep experience of the problem they’re trying to solve. And each of them has developed solutions that use technology to make processes smoother and more efficient – and ultimately more profitable.

The claims experience was so depressing that I started my own claims company”

Rightindem’s David Stubbs crashed his car 12 years ago and found the claims process so frustrating that he set up his own claims company. It seems his experience was not unusual. Did you know that around 50% of automotive total loss customers switch insurers after a claim, citing poor customer service?

Right now, total loss claims handling is an awkward phone call-led process, expensive for the insurer to sustain and frustrating for the insured. Documents are shared by post, and the process leads to drawn-out negotiation on settlements, claims leakage and dissatisfied customers. It also finishes with a cheque, leaving the policyholder to deal with replacing the car by themselves.

And David’s knowledge of the market goes still deeper than this. He knows, for example, that 80% of all incoming claims centre calls are wholly unproductive in terms of taking the claim forward. Or, as he puts it, “for every £1 insurers spend, they get 20 pence of value.”

Moving claims from the analogue age to the digital

Rightindem aims to move the whole process online and away from the call centre. Using the Rightindem platform, policyholders can manage their claim 24/7 by logging on to their account. They get clear explanations from the insurer at every stage, and a swift offer of a replacement vehicle. This leverages David’s industry expertise to improve the customer experience while also reducing operating costs for insurers.

Covi Analytics founder and chief executive Waleed Sarwar has worked with tier one insurers as a compliance consultant for over 10 years. He’s also been a policy advisor at the PRA. He knows compliance – and the challenges insurers face over implementation. It cost UK insurers £3bn just to prepare for Solvency II. They’re expected to spend another £1.5bn a year on implementation until at least 2018.

Helping insurers manage their compliance with one single platform

Waleed saw how difficult it was for insurers to understand their regulatory compliance obligations. He also saw that there was no end-to-end system for insurers to interpret and implement the regulations. So he set up Covi Analytics to build one.

Now the company’s platform allows insurers to map regulatory requirements to their ongoing compliance activities, with clear audit trails. It makes the whole process simpler, easier to track and completely transparent. Another example of deep industry knowledge blending with technology to help insurers transform their processes for the better.

Where will you find the best practice of the future?

It’s easy for insurers to assume that tech start-ups can’t help with process innovation because they’re often outsiders to the industry who don’t understand it. But, as these examples show, this is not always the case. So if you’re looking to make your processes more customer-centric and cost-effective, there’s now an excellent chance that the greatest market practices of the future will come from a start-up company that already exists to solve your problem. And that’s not just a quick-win – that’s a win-win.

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