The Future of the Insurance Industry: Exploring Innovation Through the Eyes of College Students

More than 400 insurance professionals convened in Des Moines, Iowa, at the Global Insurance Symposium for three days of pitches, dialogues, and insights centered on the theme, “Thriving in a Changing World.”

During GIS, teams of students from Drake University, University of Nebraska, and St. Joseph’s University showcased their insurance talents in the second annual Case Study Competition. Open to students in more than 100 Gamma Iota Sigma chapters across the U.S., the three teams earned cash prizes and the opportunity to present at GIS, where attendees voted for the winners.University of Nebraska-Lincoln students Connor Boudreau, Sam Gilbert, and Nick Lauver delivered “The Insurance Industry’s Future: Exploring Innovation Through the Eyes of College Students” on stage at GIS. We invited them to share their presentation with you. Enjoy!

When thinking of innovation today, insurance wouldn’t be the first industry to come to mind for most. Whether it’s paper mailers or archaic legacy systems, it’s clear that there is a lot of room for improvement. While some insurers still depend on manual processes that can create inefficiencies and customer dissatisfaction, other industries have been revolutionized by advancements in artificial intelligence and cloud computing. After witnessing other services become more experiential and accessible, it begs the question, “What does innovation look like for insurance?”

We’ve noticed innovation in customer experience enables more effective customer targeting, lower customer acquisition costs, and shortened underwriting times. Additionally, we’ve noticed that insurance is going places where it’s needed, not just where it’s been. In what follows, we’ll highlight startups capitalizing on new market opportunities or niches and demonstrate how insurance could learn from the customer-focused strategies of other industries. 

Digitization in the insurance industry

As students who are part of Generation Z, often considered the generation of digital natives, we’ll start by covering digitization. While most companies are digitally modernizing, we’ll highlight how industry players are digitally transforming to improve their competitiveness in the market.

According to a PwC survey, 56 percent of insurance companies believed in 2017 that up to 20 percent of their revenues were at risk to insurtechs. Today, insurtechs are driving the insurance industry forward with transformative digital technologies, revolutionizing the customer experience. This technology helps customers easily identify the right mix of products and purchase them at the right time through the right channel. The industry should follow the lead of Amazon, whose ability to provide relevant information, detailed comparisons, and tailored products is forcing players in many industries to level up their game.

Our team interviewed the CEO of Pattern Life, who realized the traditional distribution channel for physician disability insurance was antiquated and slow. The company aggregates information about policies from different insurers, ultimately giving the physician more confidence in their choice and distributing insurance at a lower cost than ever before.

We recently spent some time with the Chief Risk Officer of Beazley, a specialist insurer in the Lloyd’s of London Market. He described a long-overdue, multibillion-dollar transformation effort at Lloyd’s that was driven by a competitive necessity to digitize. Listening to his anecdotes about paper records and clunky underwriting technology reinforced our belief that the insurance industry has a long way to go.

Insurance won’t need just entrepreneurial or insurtech talent; it’ll need more technologically adept talent across all levels as digitization touches more and more aspects of the industry. According to a 2020 McKinsey report, not only will digitization lead some jobs and tasks to be entirely automated, but vital insurance functions will also fundamentally change in scope and skills. Although automation is the obvious application for new technology, we’re confident that companies will stay at the top of their market by creating data pipelines and ecosystems.

Leveraging data in insurance

Reimagining the insurance ecosystem starts with leveraging data to improve customer experiences. Building a data-assisted pipeline can bring efficiency and accessibility to policyholders.

Using data for predictive analytics has improved decision-making in various industries, including insurance-adjacent ones like healthcare. For example, healthcare providers have used predictive modeling to create early warning scorings for adverse events, even reducing occurrences of emergencies like cardiac arrest by as much as 86 percent. 

Similarly, insurers can use historical data to help make more accurate decisions, streamline underwriting, and measure future claims trends. Machine learning models can help insurers discover relationships and new questions to explore that they might’ve missed otherwise. For example, insurers like Lemonade use AI-powered algorithms to assess claims for validity quickly. The algorithm can accurately check for discrepancies or potential fraud based on policyholders’ information. While the AI doesn’t make the final decision of rejecting claims or canceling policies, it can quickly support whether a claim should be paid or not. Lemonade has handled claims in as little as three seconds with this technology. 

In addition to predictive analytics, the use of telematics has improved remote data collection for a variety of use cases. It can help improve products by reducing ambiguity through continuous, remote data collection. Trucking companies have used telematics to improve safety among their fleets by measuring truck speeds and driver fatigue. They can manage spending through tracked fuel costs. 

In the case of insurance, U.K. startup Floodflash is a pioneer in this approach, using an internet-enabled smart sensor to trigger payouts when flooding levels surpass a certain height. Customers can set the amount of rain required for a payout (and the amount of coverage they desire), allowing them to have a more customizable, simplified solution for risk. Improving data pipelines can drastically improve and redefine customer experience through increased efficiency and decision-making. Taking this a step further, rather than analyzing or predicting behavior, can we incentivize it? This is where the concept of gamification comes into play.

Gamification

Gamification has been wildly successful in several industries, such as Fitbit’s virtual health competitions and educational game platforms like Kahoot. Kahoot is a website and app where classrooms can participate in live quizzes to review for exams while competing against their peers. Both of these companies motivate people to improve themselves.

The idea is to extend this principle to insurance and motivate policyholders to improve their lives through a competitive, game-like interface. Gamification benefits policyholders by increasing their engagement with their insurance policy. By encouraging policyholders to live healthier lives, insurers can lower claims. For instance, a dental insurer could turn brushing your teeth into a competition, making a once-mundane ritual fun for the policyholder and reducing preventable claims from poor oral hygiene. This strategy could improve the company’s loss ratio, allowing for a cheaper premium: a win-win for insurers and policyholders.

Several insurtechs have developed game platforms in hopes of applying successful gamification initiatives from other industries in insurance. One is YuLife, an English startup whose app engages employees within their group insurance plan through wellness challenges and health insights. At last year’s Insurtech on the Silicon Prairie Conference, we had the pleasure of meeting with its founder, Sammy, and hearing about the company’s success. Companies using YuLife saw an average 181 percent return on their investment in providing employees with the app, with 80 percent of employees being highly engaged. Using a platform akin to a video game motivates employees to take charge of their well-being, which is mutually beneficial for employees and insurers. 

How will your company innovate for the future?

As our generation enters the workforce and becomes more involved in the industry, we’ll bring a fresh perspective and a desire to create a better customer experience. We’re very optimistic that the insurance industry will embrace the technology of insurtech startups and create a more customer-centric experience. Insurtech startups have already made significant strides in revolutionizing the industry. Gone are the days of slow and outdated processes, endless paperwork, and impersonal customer experiences.

As we enter the industry, we hope to develop an industry that’s technologically advanced, customer-centric, and inclusive to all.

Contact AgentSync and learn how your company can innovate for the future.