Technology to the rescue? How insurtech is helping insurers improve the customer experience and comply with new regulatory requirements

The 2022 ClaimsTech Summit was held in Sydney on 3 March, the same week that large parts of Australia’s east coast experienced catastrophic rainfall, tidal surges and widespread flooding. From the comfort of the Swissotel ballroom, the sound of drumming rain was an audible reminder to delegates of the increasing frequency of extreme weather events in Australia, and the challenges the insurance industry faces to efficiently and sensitively manage the claims arising from those events.

Kennedys was pleased to host the first panel discussion of the day. Insurance partner James Melvin was joined by Sheriff Hamza (Head of Retail Claims at Zurich), Tetiana George (Co-Founder and CEO of Curium), Angelo Azar (Chief Operations Officer at Honey Insurance) and Julijana Sumner (Head of Claims, Australia at AXA XL). The theme of the discussion was “Managing Insurance Regulatory Reforms”, and the panellists explored how insurers are adapting their processes and leveraging technology to comply with the current wave of regulatory reforms - while maintaining and improving the customer experience. Some of the highlights of the discussion are outlined below.

What is insurtech?

The panel began by asking – what does the concept of “insurtech” really mean? Insurtech may seem complex or technical sometimes, but at its core is about implementing processes to provide better experiences and outcomes for customers. Insurtech is about making insurers more efficient in how they serve their customers, by simplifying and streamlining processes.

However, it was suggested, rather than just rolling out technology for technology’s sake, an organisation should first evaluate its processes and then look to how technology can serve that process. Additionally, insurers need to consider the areas in which technology naturally makes sense and can offer immediate efficiency savings – the “low hanging fruit”. In retail insurance, automation of claims is the key to making a profit on low margins. For larger corporate customers, technology can make the claims process more customised and transparent.

Understandably, natural catastrophes were front of mind during the discussion. The panel discussed how insurtech is going to be instrumental in ensuring that insurers have processes in place to enable them to efficiently respond to the tens of thousands of claims that arise in the aftermath of a catastrophe - while at the same time maintaining their service standards for more everyday claims. As the frequency of catastrophes increases, the old model of temporarily hiring more employees to respond to claims from a catastrophe, while deprioritising non-catastrophe claims, is simply not going to be sustainable.

How can insurtech enhance the customer experience?

One of the concerns raised during the discussion was how automation can be seen as simply a way to replace human claims handlers with technology in order to save costs. However, it was conveyed that insurtech cannot come at a cost of de-servicing the customer.

Saving costs is of course important, particularly as the increase in natural catastrophes makes it ever harder for insurers to keep premiums competitive and remain profitable. However, a central message from the panel’s discussion was that insurance is fundamentally a relationship business, and the customer experience needs the human touch.

The panel discussed how insurtech can handle simple tasks like data entry and searching through unstructured data which allows claims employees to be redeployed to more complex claims tasks that require human interaction – such as spending time speaking to the victims of a natural catastrophe to properly understand their circumstances and needs.

Similarly, automating simple claims, such as a claim to replace a damaged laptop, allows an insurer to focus more closely on complex and traumatic claims. Insurtech also provides an opportunity for insurers to have greater ongoing engagement with the customer to make them feel supported – such as using technology to warn customers at renewal time if they appear to be underinsured.

The panel also raised the issue of customer satisfaction and how this often derives from the simple principle of doing what you say you will do, when you say you will do it. This is an area where technologies like the automation of customer communications can have a major impact on customer satisfaction.

Further, it was pointed out that insurtech has benefits for all sizes of insurer. Insurtech has made it possible for small players to enter the insurance market and do things in a way that changes the game for the industry. However, while smaller insurers may be more agile, large insurers have the resources to hire the best developers and invest in developing new technology.

Insurtech and regulatory compliance

The Australian insurance industry has experienced a massive wave of regulatory change in the past two years, largely as a result of the Financial Services Royal Commission. There have been changes to rules regarding misrepresentations during the underwriting process, new product design and distribution obligations, a new deferred sales model regime and anti-hawking rules, the strengthening of ASIC breach reporting obligations, new rules regarding unfair terms in insurance contracts, requirements for claims handling and settling services to be licensed, and new requirements for internal dispute resolution processes.

The panel explored ways insurtech can help insurers respond to and keep up with the fast pace of regulatory change in Australia and proposed the follow points:

  • Complying with the various regulatory requirements require an insurance business to be integrated and connected across underwriting, claims, risk management, legal and audit. Technology is essential in ensuring that all parts of the business are communicating effectively and are working from the same data.
  • Regulatory requirements have the potential to interfere with the customer experience if an insurer’s processes are highly manual. Insurers should automate processes to both meet regulatory requirements and to keep the customer experience smooth.
  • Access to good quality data is critical for insurers to be able to actively participate in the regulatory process. Regulators are increasingly requesting significant amounts of data from insurers on an ad hoc basis, in order to determine whether a perceived problem is in fact an issue in practice. With access to quality data, insurers will be in a position to demonstrate to regulators whether and to what extent a perceived problem actually requires a regulatory solution.

Key Takeaways

The panel’s discussion underlines the importance of insurtech for Australian insurers in the 21st century. It is increasingly clear that technology is no longer a novelty, but something that insurers are going to have to embrace and enhance in order to continue to meet their customers’ expectations and regulatory requirements in a changing world.