If you take all the hype to its illogical conclusion, we’re right around the corner from people-less insurance companies. With technology advances, particularly with artificial intelligence (AI), we’ll have no need for underwriters or sales people, and claims decision-making will be performed by sophisticated algorithms without the need for human judgement. The savings in coffee expense alone will be enormous –
And we’re moving so rapidly that all the small insurers out there better band together, or even better, look to be acquired by one of the technologically sophisticated giants.
But is the above scenario really the case?
We’re skeptical. Yes, the insurance world has been arcane and slow to catch up to the rest of the world when it comes to tech. There are myriad ways it has failed in being efficient; in looking for simplicity rather than complexity, in truly satisfying the customer and in developing tools to achieve both that are available at a cost that even the smallest companies can afford. However, the world is about to be dominated by the Millennials, and they’re so comfortable with tech that if you’re not in, you’re definitely out.
This march towards technology will, and must continue, but we wonder if we’re losing sight of the role people play in the process.
For example, selling insurance online is great for the company, but is it good for the policyholder? Online software promotes price, but insurance isn’t always all about price. There’s this important issue of coverage and we’re not sure the latest software asks the right questions to match the customer to the right coverages. Coverages aren’t just about the small print, it’s about the fine print, and the best customer service is when the customer understands the fine print. The fine print is the difference between that water damage being covered or that water damage not being covered. It’s the difference between knowing a life circumstance that suggests maybe it’s time to think about an umbrella over your homeowners and auto, or an inland marine cover for some little luxury you just picked up. And when a claim is submitted, the insurance companies have to hope AI can answer, in a satisfactory way, why it wasn’t covered. Inevitably some human is going to have to interpret the decision so the customer understands.
Which is all to say that insurance isn’t like online banking or ordering fast food using an app. There are nuances, and the explaining of those nuances requires an empathy and an understanding that is hard to convey in an app.
While technology should play a role in making the insurance industry more efficient, our belief is that there will always be room for a personal approach to insurance because insurance is only a commodity until there is a claim, and then it’s all personal. Small companies have the advantage. Because they start with the personal, they can invest in a relationship whether that is a client or an agent. They of course need to be as efficient as they can be in the back office using technology, but they will have distinctives that, in our view, will always be attractive. Everything else can, and will change. But that can stay the same.
~ Bill Montei, CEO, founded Megalodon Insurance Systems with a simple yet BIG idea: provide small and mid-sized insurance companies powerful policy & claims management software solutions at a price that is within reach. To talk to Bill directly, please call: (608) 709-2154.