What does the future hold? Certainly it will be electronic, but what are the experts' views of what the industry will look like in 10 years’ time? Expect to see more networking, ‘do it all’ centres online, and fraudsters finally beaten
It Is 2020 and technology has seen insurance enter a brave new world. Virtual communities collide with reality as consumers routinely use online avatars to buy and renew policies. Holograms ensure that those who are pressed for time can solve the problem of being in two places at once; they also help them to meet stringent rules on carbon footprint allowances. Meanwhile, staying up till the early hours to prepare for CII exams is a thing of the past: industry newbies simply buy microchip implants that feed the mind with updates on emerging theories and trends.
Okay, such changes may be more wishful thinking than distinct probabilities, but there is little doubt that technology is advancing at a dizzying rate. Predicting the future is, as ever, an uncertain business. While it may be some time before brokers can fire up the jetpack for a quick visit to their local underwriter, undoubtedly the sector will see some dramatic transformations. Insurance Times asks industry stalwarts and technology experts to gaze into a crystal ball and give us their predictions.
1. An electronic revolution
While many disagree over the eventual direction of the sector, they all agree on one thing – the future is electronic. The transfer of commercial insurance onto electronic platforms has been leisurely so far, but the pace is set to accelerate. Acturis chief executive Theo Duchen expects dramatical progress within the next two years. “I can see a point where 50% of brokers’ commercial lines are going to be electronic. If they don’t have the right technology, they are going to be in a competitively disadvantaged position. I see that happening within the next 18 months.”
But industry heads are keen to stress that this does not spell the end of the broker. Towergate’s deputy group chief executive, Amanda Blanc, says: “Commercial will still be broked; you will still need somebody in the middle. The expectation from a customer will be that they will not have to wait two or three weeks for a quote. They’ll get their quotes; they will be able to access their own policy and their own quotes online at the same time as being able to speak to somebody.”
2. Pay-and-go online servicing portals
Being kept on hold while contacting call centres and laborious form-filling will be distant memories for many customers by 2020. Accessing online portals and self-servicing on personal lines and SME business will become the norm. SSP director Kevin Child explains: “It will be along the lines of online banking. There will be the ability to set up direct debits, make individual payments and actually action things, rather than just quote and buy. We are going to see a full-scale emergence of ‘do everything for yourself’ online, so you won’t need call centres. A lot of brokers are going that way already because they are trying desperately not to recruit lots of staff.”
3. Increased expertise
While electronic trading will mean a reduced head count in back offices and a smaller overall workforce, this will increase the specialist knowledge of insurance professionals who will have more time to devote to unusual and complex risks. Aviva’s director of regional brokers, Gareth Hemming, says: “I would imagine the calculation of risk data and initial risk price can be done through systems, but that means that both the broker and the underwriter can spend more time on conversations about unusual features and things that can be done with the risk to make it better or different.” This belief is echoed by Duchen: “The people needed by insurers and brokers will change. They will become more skilled because they will be dealing with exceptions – the more difficult and complex issues – so there will be a small but much more highly skilled staff.”
4. Web-based communities are the only ones that matter …
The tentacle-like reach of Facebook is set to continue apace as founder Mark Zuckerberg continues in his mission to register every person on the planet. PowerPlace chief executive Matthew Reed explains that the widespread and reassuring appeal of online communities will become increasingly important to insurance. “Aleksandr Orlov of Compare the Meerkat has close to 750,000 friends on Facebook – that is a personal lines aggregator to which three quarters of a million people have chosen to give their details. That is staggering. It is the comfort provided by the community element, the comfort you get from other people making the same decision, knowing that if you do make a mistake that nearly 750,000 people have already done the same thing. That is really very powerful.”
According to Blanc, recognising and utilising the power and influence of networking sites will become a no-brainer for brokers. She says: “Facebook now has over 400 million users and LinkedIn has 70 million entries, so for us to pretend that e-commerce is not going to impact on the broking world would be like putting our heads in the sand and pretending that nothing is going to happen.”
5. … but face to face is still in vogue
Business transacted through cyberspace is set to become the norm, but this will conversely lead to widespread craving for the reassurance of face-to-face contact and verbal explanation when buying certain products. AXA’s head of personal lines intermediary, Mike Keating, says: “I don’t at any point see a scenario where the entire UK population doesn’t want or need to speak to somebody. In fact, we are already seeing signs of apathy about the internet and the comparison sites.”
Child argues that call centres will evolve rather than disappear. The provision of personalised face-to-face voice calls over the internet, instant messaging and even video conferencing is set to take over the traditional call centre as a means of liaising with customers and clients.
6. The industry goes upwardly mobile
Smart phones and more sophisticated applications are set to have as big an effect on broking as the internet. Insurance applications will become more commonplace and easier to use. Hemming says: “You can certainly see the development of new apps; we even see it now in travel insurance with the rise of ‘text now to buy travel insurance’. You can imagine there might be some commercial products like that in the future.”
On top of this, messaging technologies will help brokers to quote and handle insurance away from the office, leading to more flexible working hours. Allianz head of SME and affinity markets, Dave Martin, points out that increasingly sophisticated camera applications will record and help assess damage in the wake of an accident, linking it directly to data warehouses such as the Motor Insurance Database – and speeding up the claims process.
7. Better relationships
Technological advances are likely to mean that insurers, brokers, clients will get along much better. Poor systems connectivity, particularly between insurers and brokers, has long been a sore point for industry players fed up with time-consuming and unnecessary duplication of information. Lark Insurance’s chief executive, Stephen Lark, says: “I think there has to be definite improvement between system connectivity between insurers and brokers. There are attempts made to improve it but there is still a lot of keying and double keying.”
By 2020, it is expected that new and more sophisticated platforms will cut out this waste, facilitating better communication and fewer errors between parties. In addition, policyholders will be able to access instant information about their policy. Groupama’s commercial lines director, Malcolm Smith, says that a claimant will have the option of keeping tabs on the progress of their claim, ensuring they are happier and better informed. He says:?“Claims tracking and claims reporting online will become common in five years.”
8. More sophisticated fraud technologies
Efforts to detect and trace fraudsters will become increasingly sophisticated as better data streams provide instant access to credit history and automatic links to conviction records. Advances in voice risk analysis will help claims handlers pinpoint variations in voice patterns or micro tremors that indicate deception.
Business development director at voice risk analysis experts DigiLog, Kior Koskas, explains: “Future developments in integration and database management will greatly improve the speed at which claims can be processed and the ease with which they can be identified as high risk. As a result, insurers will benefit from faster, more efficient fraud detection, as well as seeing a reduction in the cost of processing claims and substantial savings by paying out to fewer fraudsters.”
9. Second life becomes a passport to the top
Spending hours in fantasy worlds such as World of Warcraft, where fans use avatars to fight rivals, join factions and oust evil kings, will no longer be seen as the preserve of the teenage geek. Instead, they will be a must for any aspiring industry go-getter. Expect to see at least one major consolidator announce that reaching level 60 will replace GCSEs as its minimum qualification for entry into the business … IT