How Ecosystems Are Changing Insurance CX  May 25th 2023

How Ecosystems Are Changing Insurance CX

[Ed. note: Very well informed insider insights and a peek at the future of the auto claims ecosystem from CCC Intelligent Solutions' invitation only annual 'CCC NXT Conference". Thanks to Indranil Bandyopadhyy at Forrester for the article.]

I just had the pleasure of attending the CCC NXT Conference, which took place against the stunning backdrop of Tucson’s Sonora Desert. What struck me the most about the conference was the collaborative atmosphere. CCC, its customers, solution partners, collision repairers, car manufacturers, component suppliers, and industry analysts gathered to discuss the art of providing a great customer experience (CX), mainly when dealing with motor vehicle claims. In front of my eyes, I could see a perfect illustration of ecosystem management at work and the value that it offers.

“Ecosystem” is a trendy concept, appearing in contexts such as platform-based business models, customer experience ecosystem mapping, B2B marketing’s ecosystem management, and ecosystems as a cornerstone of vendor selection processes. The advantages of ecosystems include leveraging network effects, enabling unified value creations, expanded customer reach, and co-innovating at scale. But to benefit, businesses have to get ecosystem management right. And this very much applies to insurance, particularly the claims process.

Vehicle claims are often complicated, involve several parties, and take a long time to resolve. Each participant in the claims process, including carriers, loss assessors, vehicle repairers, diagnostics technicians, and so on, has distinct needs and requirements. An emerging technology ecosystem, consisting of various linked and interdependent technologies, is developing to meet those needs.

For example, emerging technologies such as artificial intelligence and, more specifically, computer vision technologies can meet the needs of carriers (assessing the circumstances of the accident and the extent of the damage) and vehicle repairers (diagnostics to repair the damaged car). There was plenty of evidence of such solutions during the conference, which might make the dream of zero-touch automobile promises a reality.

Indranil Bandyopadhyay, Principal Analyst, Forrester

How APIs took embedded insurance global

Embedded" insurance products aren't necessarily new. But this technology has allowed their proliferation like never before.

As customers expect more digital, seamless interactions, the insurance purchasing process continues to become more embedded. Although, traditionally, embedded insurance has existed in industries like travel for decades, the increased use of APIs has offered insurers the opportunity to embed products in other purchase workflows and services.

Kyle Beatty, managing director of American Family Ventures, said at an InsurTech NY event in March:

"The opportunity is to have some exclusive access to a specific channel. You can get a specific platform partnership that gives you a high degree of workflow and it's at a moment in the decision process with a high conversion potential or at least such a large flow that even a low conversion yields strong growth that can help catalyze strong growth."

Technology Was Supposed to Transform Insurance Pricing. It Hasn’t.

Nearly a decade ago, a generation of startups promised to transform the insurance business with new types of data and algorithms to more accurately assess risk and price policies. So far, that hasn’t happened.

Three high-profile insurtechs that have since gone public—Lemonade, Root Insurance and Hippo—have each lost tens of millions of dollars in their most recent quarters and watched their share prices plummet over the last few years.

At first, the insurance pricing process—heavily reliant on algorithms and mathematical modeling—seemed ripe for upending, thanks to advances in the sheer amount and variety of data digitally-native companies could suddenly collect on customers.

But the Silicon Valley axiom to move-fast-and-break-things hasn’t been enough to transform an industry built on centuries of observed human behavior, massive marketing budgets and a savvy grasp of the regulatory environment.

P&C Insurers Up Their Digital Games to Attract Rising Tide of Shoppers, but Miss on Account Servicing, J.D. Power Finds

Historic rate increases in the property and casualty (P&C) insurance industry have pushed a record-high1 volume of shoppers into the marketplace to seek new quotes and switch carriers. According to the J.D. Power 2023 U.S. Insurance Digital Experience Study,SM released today, insurers have been doing a good job addressing those shoppers’ needs via the digital channel. When it comes to servicing existing customers on digital, however, overall satisfaction declines this year.

“Increasingly, the usability and accessibility of a carrier’s digital solutions plays a big role in both attracting new customers and retaining existing ones.”

“The industry is seeing historical levels of customer churn right now, which puts a spotlight on the critical role insurer digital channels play in not just attracting new customers, but also onboarding them, and in retaining existing customers,” said Stephen Crewdson, senior director, insurance business intelligence at J.D. Power. “When it comes to shopping, insurers are starting to get the formula right, but they are still lagging far behind the best-in-class offerings in other industries like banking and airlines when it comes to servicing existing customers. That needs to become a focal point if insurers really want to build lifetime customer value.”

The U.S. Insurance Digital Experience Study evaluates the digital consumer experiences of both P&C insurance shoppers seeking quotes and existing customers conducting typical policy-servicing activities. It examines the functional aspects of desktop, mobile web and mobile apps based on four factors: ease of navigation; speed; visual appeal; and information/content. The study was conducted in collaboration with Corporate Insight, the leading provider of competitive intelligence and user experience research to the financial services and healthcare industries.

“The last thing most insurance customers want to do is have to call their carrier for help with basic account servicing questions and actions,” said Michael Ellison, president of Corporate Insight. “Increasingly, the usability and accessibility of a carrier’s digital solutions plays a big role in both attracting new customers and retaining existing ones.”

Capgemini: How autonomous, EVs are shaping auto insurance

Capgemini, in partnership with Qorus, published the World Report Series 2023 Property and Casualty Insurance: From Insuring Assets to Protecting Mobility, which discusses the future of the traditional auto insurance industry and upcoming era of mobility insurance. As consumers begin to adopt new mobility solutions, such as autonomous, connected, electric and shared (ACES) vehicles, the report indicates that insurance companies will have to adapt business models and transition from conventional auto insurance products to mobility protection offerings.

According to the report, mobility insurance is expected to double to a $1.38 trillion market in 2030. Modes of transportation like micro-mobility, which is transportation such as bikes or motorbikes, using multiple modes of transportation and use of shared vehicles is projected to increase from 29% to 58% in 2025, according to Capgemini experts.

"The mobility industry is on the brink of a significant transformation. To successfully transition to this new era of mobility, insurers need to leverage their risk management expertise and partner with specialists like InsurTechs and BigTechs in the ecosystem for protection across a consumer's entire travel journey. Organizations that test high-potential mobility value propositions, and scale mobility solutions through connected insurance platforms will position themselves for sustained relevance and growth," said Kiran Boosam, Global Insurance Industry Leader of Capgemini, in the report.

Surfside collapse: The historic settlement and the legislative response |

Within one year of the infamous Surfside collapse, insurers agreed to pay more than $1 billion to settle bodily injury and property damage losses. Florida thereafter enacted a tidal wave of insurance regulations, supposedly to avoid due process concerns in any future catastrophe. The state’s legislative response presents an interesting case study on government efforts to curb the impact of bad faith laws as a result of lessons learned from this tragedy.

The losses and settlement

On June 24, 2021, Champlain Towers South in Surfside, Florida collapsed, killing 98 individuals and leading to the total destruction of the condominium, including 136 individual homes. A class action ensued. On June 24, 2022, it was announced that the action settled for $1.2 billion.

The fund consisted of $120 million from the sale of the beach-front land on which Champlain once stood. About $1.1billion was provided by settlements with insurers for the benefit of their insureds/alleged tortfeasors, some of which were named defendants in the class action but most of which were not. In fact, the largest sum, approximately $517 million, was paid on behalf of Securitas Security Services, Champlain’s security firm, which was not a party to the action.

The Startling Cost of Technical Debt in Insurance

Concerns over cost are a common culprit when it comes to choosing business as usual over making changes or improvements to outdated technology and processes. Thinking the cost of implementing modern solutions will be far greater than the cost of maintaining their current, legacy technology can put insurance organizations into technical debt and negatively impact their opportunity for growth.

What is technical debt? Technical debt refers to the time, money, and resources an organization should be spending on software development compared to the cost of keeping its legacy solutions running. Put simply, technical debt accrues when an organization prioritizes “business as usual” over innovation.

Businesses often end up in technical debt for the same reasons people with medical needs put off getting help – to put off doing something they don’t want to do. Like an individual who deals with tooth pain for months to avoid going to the dentist, organizations get into technical debt to avoid the research required, the time spent, and the money needed to update their outdated technology.

However, similar to putting off a visit to the doctor or dentist, going into technical debt is only a short-term solution to a problem. While the consequences are more immediate for the individual dealing with a toothache, who will likely only last a few weeks avoiding the dentist until the pain becomes too unbearable, it can take longer for a business’s technical debt to catch up.

Holly Monroe, writer and editor

Who leads the way in claims modernization?

One way to characterize how technology is impacting insurance claims is to track claims handling today versus the way claims were managed five or 10 years ago.

“A smart claim,” Sean Burgess, Lemonade’s chief claims officer, said during a recent claims-technology themed webcast, “is one that knows its own status.”

That status check would include acknowledging the complexity of the claim, the regulatory and legal issues at play, and the “customer sentiment.” All of this can largely be handled by automation now compared to in the past, when an adjuster was required to manage every aspect of that claim.

Indeed, automation continues to change the way claims are handled. But such technologies may not currently be as impactful in insurance as they are in other business sectors, especially when it comes to advanced machine-learning tools.

“From an AI standpoint, we’re just getting our hands around how to use it,” said Derek Zahn, chief claims officer for PURE Insurance. However, “I do think [P&C insurance has] come a long way, at least over the last five years, in terms of a willingness to try out new things.”

These are just two perspectives on the impact that automation, AI and other technologies have had on claims. Both of these insurance leaders agreed that there’s still a great deal of unchartered territory when it comes to fully maximizing the benefits of technology to modernize and humanize the claims process.