The insurance industry has been adopting technology at an inspiring rate: Artificial intelligence, machine learning and blockchain enable simpler and faster quotes, more intelligent claims and a friendlier customer experience. It’s high time we applied this insurtech revolution to the very thing that makes our profession noble: Getting money to our customers when they need it most.

Consider the case of a natural disaster. Technology is helping insurance companies speed up both communication and payments, so that those affected have funds to recover quickly. But getting texts from your insurance company isn’t the only thing that will help you fare better.

The secret ingredient to fast recovery? Turns out it’s social capital – the fundamental relationships among individuals in a community. Yes, it includes your Facebook friends. Fascinating new research shows that, more than anything else, it’s your degree of social connection that makes the difference between bouncing back or barely surviving.

It’s been nine months since Hurricane Harvey submerged Houston, Texas, yet thousands of residents have yet to receive any sort of funding from federal relief programs. A big reason is that federal relief plans are filled with complexity and delays. For example, a recent investigation found that many of the hardest-hit Houston families were completely denied funding because they didn’t buy the flood insurance that’s required in high-risk areas. Many of these families were unaware of this requirement, which makes the problem a classic catch-22, and ripe for the perfect recipe of technology and social capital.

Before we dig deeper, a quick review of the technological ingredients of the solution.

The Upward Spiral of Artificial Intelligence

Artificial intelligence is no longer a buzzword. Together with machine learning, it’s revolutionizing many aspects of life, including insurance. Claims, for example, are exponentially more efficient with AI, by automating the review process, thus reducing the amount of time it takes to receive communications or a payment. Data from AI technology also makes it more efficient to track trends in coverage, allowing a highly-personalized offering and customer experience. In turn, this increases both take-up and loyalty.

The result is an upward spiral that’s good for customers and good for the industry: the more people who use AI-powered coverage, the more data in the system, the smarter and better the AI becomes, the more variety and appeal of coverage offerings, and thus the more customers.

Real-Time Data Makes Real Impact

Turning to data, let’s return to the example of a natural disaster. With real-time data, Insurtech companies can now know:

• Who is responding to communications
• Where their customers are located
• Verification of damage being reported
• What areas are hardest-hit

Data like this creates efficient disbursements, allowing us not just to make good on the promise of paying claims, but meanwhile surprise and delight customers with the speed and ease of doing so.

One example of data-intensive coverage is parametric insurance, which provides quick and simple (usually fixed-amount) payments based on a pre-determined index. Thus far, it’s mainly being applied to natural disasters, with the most credible index being a third-party source. In the case of an earthquake, this could be shaking intensity as reported by the United States Geological Survey. To-date, parametric is a nascent form of insurtech that has enormous potential to speed-up the recovery process for individuals and communities. Limits of coverage for parametric are typically too small to build a new home from the ground up, but big enough to provide a financial cushion and cover expenses many wouldn’t have considered in advance. Examples: Extra weeks of daycare, a “plan B” in the case of power outages or even landscape damage.

How Social Connectedness Builds Community Resilience

Returning to our secret ingredient: Just as the Grinch realized that “maybe Christmas…doesn’t come from a store,” so too resilience doesn’t just come from robust infrastructure, high take-up rates of insurance and federal relief plans. Resilience ultimately stems from our connection to one another.

The leading expert in this work is Daniel Aldrich, a political science professor at Northeastern University, who has discovered the “holy grail” of disaster preparedness. In this study, his team of researchers have found that affected areas with higher levels of interaction and social trust have lower post-disaster mortality rates. In cities and neighborhoods where residents have more ties to the community and shared norms with their neighbors, they’re more likely to provide aid to each other. This support could include anything from giving a neighbor a place to stay, carpooling groups of kids to school or simply checking in to make sure an elderly neighbor is safe. With a high degree of social capital, communities take resilience into their own hands and become masters of their own recovery.

Some governmental agencies are taking cues from this research and integrating social connectedness into their preparedness strategies. Programs like the Australian Red Cross, New Zealand’s Wellington Regional Emergency Management Organization and BoCo Strong in Boulder, Colorado work directly with local residents to help them anticipate not just the immediate needs of the community as a whole, but of each other as individuals.

The Big One: Can We Transform our Fate?

It's almost a certainty that a 6.7 magnitude earthquake -- or greater -- will hit California in the next 30 years. Now consider this double-whammy: Nine in 10 Californians are uninsured for earthquake, yet fully sixty-two percent of Americans have less than $1,000 available in savings. This means millions of individuals do not have the financial means to cope. Traditional models, both for insurance and for emergency preparedness, just aren’t enough.

This is where artificial intelligence, real-time data and social capital can reverse the fate of individuals, families and communities. We’ll all fare better, once we’re better-connected (and not just to our insurance company), when there are a broader variety of options to get protected and when claims payments are lightning-fast.

With technology, insurtech is transforming the economic consequences of disaster, creating the potential for an upward spiral of recovery and laying groundwork for true community resilience.

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