In Focus: How insurtechs can bolster insurer service without compromising face-to-face interaction

According to George Hanks, principal at Oxbow Partners, insurtechs have gone from claiming they will turn the industry on its head to instead promoting themselves as a partner to incumbents.

This is no surprise, with parametric models, embedded distribution and artificial intelligence (AI) technologies having become trends that are here to stay in the insurance industry.

And despite a drop in investment since a peak in 2021, the insurtech universe continues to grow in both size and complexity.

So, could these firms partner with insurers to bolster their service to customers? After all, new regulations mean a service driven market centred around fair value is more important than ever.

For example, the FCA’s personal lines pricing rules, which came into force last year (1 January 2022), mean insurers can no longer differentiate on the price charged to homeowners and motorists based on whether they are new customers or renewing their policies.

The regulator’s Consumer Duty regulation is also on the horizon and sets out a slew of updated regulations that firms must follow from the end of this month (31 July 2023).

Essentially, Consumer Duty requires insurance firms to review their products and services against a new standard of fairness, with companies working hard to measure, analyse and benchmark their performance across a number of different metrics.

“Certainly, the big topic of conversation is actually insurer service, in responding to this dynamic – and at times difficult – market,” Peach Pi chief executive Russell White told Insurance Times.

’Push the limit’

While all insurers are working hard to bolster their service levels further, figures show there is a lot more the industry needs to do in order to achieve this.

For example, between April 2022 and March 2023, the Financial Ombudsman Service found 39,730 complaints were made about insurance – the second highest figure across the main financial product areas.

“People want their issue addressed as quickly and efficiently as possible,” Matthew Maxwell Scott, executive director at the Association of Consumer Support Organisations (ACSO), said.

“It’s not just a question of what they might get out of it at the end, it’s that they want to be dealt with efficiently and they want to make sure that their matter can be resolved quickly.”

This is where insurtechs could come into play. 

For example, insurtech Lemonade revealed it managed to pay out a claim in the UK without any paperwork in just two seconds with the help of its AI chatbot earlier this year (16 June 2023).

It is also the first Insurtech UK member to be granted a carrier licence by the Prudential Regulatory Authority (PRA).

New firms wishing to become an insurer, bank, credit union or managing agent of a Lloyd’s syndicate must apply to the PRA for a carrier licence.

“Insurtechs push the limit of what is possible in service and customers are starting to expect it,” Roi Amir, chief executive of Insurtech 50 firm Sprout.ai, said.

“Customers today are not willing to wait weeks and months for claims to be settled, they expect high level of service from insurance and you cannot provide this high level of service if you don’t have the right tools and automation in place.”

Technology use

When asked how insurtechs can enhance insurer service, Sat Sanghera, chief executive of contact centre services and solutions specialist IP Integration, said there were software applications they could layer over existing technologies to help insurers do “smarter stuff” with consumers.

He highlighted that the firm worked with Ageas and has been able to help it ”automate a lot of simple processes”.

“[When a customer says] ‘I need an update on my policy’ or ‘I’d like to add some new things to my policy’ – we’ve automated that process. In doing so, we’ve made the journey a lot quicker for consumers. So that’s the basic premise of automation and AI and what it can do at the front end.”

He added that insurtechs were crucial in helping integrate new technologies with older ones, for example during the M&A process.

“If you look at a lot of traditional insurance companies, certainly the larger brands, a lot of them have grown through acquisition,” he said.

“What it means is they’ve got disparate and legacy technology all over the place and it’s very difficult for a lot of those insurance companies to magic up millions of pounds to go and migrate those technologies without any strategy.

“Now, the beauty of where the technology world is moving to now is there’s no need to rip out all of that existing technology anymore.”

Adrian Coupland, head of sales at insurtech Earnix, added that the firm had created a modelling pricing data system that allows insurers to test and deploy prices quickly in a bid to prevent delays and provider better service for customers.

He said Earnix had “AI running right through every part of our solution”.

“So, we’re looking at machine learning and AI in terms of the offers that are made to customers and making sure that the insurers are fully informed and able to provide relevant offerings and services to customers,” he added.

“There are no longer any excuses why the insurance industry cannot be stepping up and providing good pricing, good customer experience and good service.

“Legacy technology has been a reason for a number of years on why insurers have said it’s difficult to get that done.

“Now, there are different ways of solving those problems.”

Face-to-face value

While it is clear that insurtechs can bolster insurer service, especially through the use of AI, face-to-face contact is still key in the insurance industry.

For example, the London and International Insurance Brokers’ Association found that the willingness of underwriters to trade from the Lloyd’s Underwriting Room had become a “point of contention for young brokers”.

In its research, which was published earlier this year (13 June 2023), it revealed that out of more than 50 brokers across four workshops, some 97% said they wanted their working life to comprise of at least 50% face-to-face trading with underwriters.

White said: “We have a broker advisory forum as Peach Pi, where we’ve got a real mix of brilliant different brokers and stakeholders who work with us – not commercially – but to simply help advise us and share information together as to what’s going on in the market.

“From a meeting we had earlier this year, insurer service was coming through as a consistent theme from brokers.

“[This includes] the ability to actually have sensible conversations for insurers to deliver on their promise, to be able to get hold of people to have a conversation about a particular risk.

“And, in particular, customer needs was coming through as a real frustration.”

Coupland stressed that there was still a place in the market for face-to-face interaction and service “without any doubt”, but felt the way customers were consuming products was changing.

“They might want to buy completely autonomous without human intervention,” he said.

“But then if they get into a claim, they might want guidance around that.

“We’re not at a place where consumers are completely happy to be serviced from a non-human perspective.

“But, what we’re seeing is a lot of emerging technologies, which are providing a very good model of supporting consumers in how they want to be supported.”