Insurance companies are looking to leverage data more effectively in 2023, according to Arizent research. but that comes with a caveat: They're also acutely aware of security threats and keeping those front of mind as well. In our next Transformation Forum, editor Nathan Golia brings in longtime P&C insurance CIO and insurtech founder and board member Piyush Singh to talk about these trends and how carriers can realize their digitalization goals, while creating a secure and easy-to-use experience for their policyholders and prospects.
Nathan Golia (
Good morning everyone. Welcome into the February transformation forum for digital insurance. Examining 2023 insurance digital priorities. I'm joined by Piyush Singh, I'm going to let you introduce yourself title wise. I don't know exactly what you want, how you want to be referred to, but obviously if you're watching may have known Piyush for being a longtime p and c insurance, CIO and a definite opinionated personality on all these topics. I thought it'd have great to have you in to talk about some insight we got here, digital insurance, so thank you for coming in .
Piyush Singh (
Yeah, thank you Nate. Thank you for having me and it's always been a pleasure to interact with you with your wide insights into all kinds of things related to insurance and also looking at other industries. But anyway, so talking of my title, it's kind of I just want to give an interesting trivia on it. We also have this concept within Friss of actually taking an 'aka' title. So my official title is co-founder and we basically slash that and I'm known as the Hustle guy. Okay. "The Hustle guy." So I guess a bit of trivia, everyone within Friss takes on a avatar, if you'd like to call it that way
Nathan Golia (
For sure. Well, thank you for coming in today to talk about insurance tech priorities. I do not have slides today because our research is actually going live next week but I did take some notes and the top five priorities, this is the big drum roll we surveyed across banking, insurance, mortgage, wealth management at Arizent, and we found the top five, oh, the top five parties for insurers were number one, enhanced security. Number two, data collection and analytics. I should put it this way, enhanced security was by far the highest with 73%. Mm-hmm. Listed it as a top priority. I think they were able to rank top three. Data collection analytics was about 10% less than that, around 63, 60 4% and then the cutoff point for the five was around 50 50 to 55% on customer onboarding, fraud mitigation and process automation. Now, digital insurance, we love writing about data collection analytics. We love talking about customer onboarding and we love talking about process automation, but when we're hearing from our readers that enhanced security is their number one priority for 2023, that does make me think, Hey, what's going on here? And I'm just wondering, what do you think about the fact that security is way at the top of the list here and I'm just, is it a matter of the Insurtech era sort of revealing or introducing any new vulnerabilities?
Piyush Singh (
I think it was something that was bound to happen. I think one is ever since the internet came in, I think the distributed nature of the internet now, if I look at three or four reasons that causes more cyber issues, number one is the distributed nature of the internet. Okay, number one. Number two is really the fact that you can have bad actors operate from jurisdictions that are not within your control at all. So we can have actors work from anywhere in the world that allows them the flexibility to do whatever they want whenever they want with absolute freedom to be able to do it and with no repercussions. That definitely creates a huge challenge that we've seen lately in there. I think. Then the third one is really the increased profitability or e-commerce on selling data and names and PII and all kinds of things on the dark web.
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The fact that e-commerce is easy on dark web is obviously causing of concern, and the last one is really we have a proliferation of SaaS based systems. We have a proliferation of mobile devices, we have a proliferation of iot devices, so not only do you have systems, now you have devices that are proliferating everywhere and all of this is interconnected to the company systems. Earlier on, you had one data center, everything was secure within their, nobody had to worry about anything. Now, given this nature and not just the technology but also the physical aspect of where the cyber criminals can come from has created a huge vulnerability when it comes to the entire cyber crime issue.
Nathan Golia (
I did kind of feel like that was what was going on, and one of the things that is I think a trade off that insurers and everyone involved in insurance is having to make right now is that there's really no putting the toothpaste back on the tube when it comes to that kind of new digital environment. There's an expectation there that we can use these devices, that we can use SaaS, that we can have that we are do not have to maintain a data center internally, and I wonder if it'll be, I'm not saying that insurers didn't care about security before, but I do think it's most things it was like, yeah, we wanted to as an industry really jump ahead on that on all the great stuff and now it's time to, okay, now that we've sort of understanding, understanding the landscape, it's time to double back and secure things and make sure that we're not ending up in a bad place. Like you were saying for example, insurer will by far the most likely to use iot compared to others. Yes. Yeah.
Piyush Singh (
I think the situation also is that if you really are looking for innovation, if you're really looking for leapfrogging where you are to a new world, you don't have a choice but to look at systems that are SaaS based that are going to be housed in different systems different places. They're going to be an AWS they're going to be an Azure, they're going to be in Google Cloud, you don't know where, and the more systems that are out there and the fact that they're always changing then you have the whole configuration aspect of setting up those systems in different environments where whether it's a w s or anything else. So people are exploiting the vulnerability of the fact that systems need to be placed on diverse platforms, which means that you've got connectivity, you've got exposure of your data sitting in different places.
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Then you've got the whole aspect of configuration of those systems in different places and lack of consistency across the board, not having one single standard across all applications in there and then you've got the whole phishing and ransomware and all those kind of things. I think we've had a couple of very, very public cyber crime issues related to large insurance companies. That definitely has also made the situation really worse for the entire community because nobody wants that to happen to them. No board wants to see that. So there's an increased pressure of we don't want to be listed at the company that was down for almost two weeks.
Nathan Golia (
I do want to move on for this, but I just want to clarify for the audience and say, yeah, this was the top priority. So I would love to come in and say that the top priority for insurance was to radically transform and have all sorts of new bells and muscles, but it wasn't the top priority as reported was enhanced security and going the next one down to data collection analytics. One thing I think is interesting about that being a second priority is that, I don't want to say that we thought we were definitely out of the big data era, but I think that when I'm talking about waves of developing digital transformation, there's like, okay, we've got this amount of data, we've learned how to use it, now we're going to apply it to these new ideas. Then we've sort of hit a ceiling there and now we're going to come back and we're going to say what new data have, what new sources do we have? I'm wondering if you think that's something that's going on in insurance that they're reevaluating their big data strategy, which is probably at this point 10 to 12 years old when we were writing about big data for the first time.
Piyush Singh (
Yeah, I think when you started writing big data, it was really an accumulation of whatever they had. Okay, so I think that's step number one. Since then it has evolved to what else do I, am I getting or how else can I get third party data that'll actually enrich my environment in there? Then you've got the whole IOT devices coming in and getting you more data, and I almost liken it to when Google started collecting data on people, I don't think they realized the potential power of everything that they were collecting. Okay. Ways came on much later where they capitalized on Google's data to give you direction. Google themselves never realized that they could use their own data to get you that capability. Think about it this way, I think big data or analytics or insights within insurance industry is coming the same way. I think we've thought of very traditional ways of here's the correlation, here's the causation, but we've not thought of it as what are the other possibilities of all the data that I can get my hands on?
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And I think there's several examples in there is I'll give you a very simple example. People were writing restaurant insurance. Nobody thought, Hey, if I know that they have stairs in the restaurant or if I know that they have a video camera recording in the restaurant, can I rate them differently in there? However, when they started getting the data, suddenly the light bulb went off because a lot of these things within the insurance world I think were anecdotal evidence that claims people had to say losses came in and here's the anecdotal correlation that they had made, but there's no way to go back and get that data and all this tribal knowledge was sitting in people's heads now that they've got the appetite has been wet that I can get more data. I think the need for more insights is moving more upstream to the underwriting side versus only being tribal knowledge at the claims level in there.
Nathan Golia (
Well, I remember the initial pushing the big data was about digitizing all these paper claims reports because someone has a claim, a guy showed up with a clipboard for the first 75 years of an insurance company. Now there's a lot of that's coming in digitally and they're getting it in a way that is a able to be processed. So data people are, I think, yes, I think that is what we're seeing here, which is what did we have was the first wave and now it's like what more can we get and what more insight can we get? Yeah, for sure. So then this little bit of a bunch up with customer onboarding, fraud mitigation and process automation. Now I looked at those and I said, this is one of the situations where I wonder when people see a question, how do they interpret the thing they're doing, right?
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Because when you're as a customer onboarding, do you think of that as an automation play, which a lot of people might because a lot of that, some of that is automated or trying to be more automated. Do you think of it as when we're onboarding customers are number one concern is fraud or do you thinking of the customer onboarding as a group? I just think that's an interesting little group up there. I'm just wondering when you see on onboarding and automation up together, I think are we just going to continue to see more of these opportunities to onboard people with a low amount of friction regardless of <crosstalk>?
Piyush Singh (
Yeah, absolutely right. I think we all have become much more user-centric because insurance companies, were not the most user-centric in that respect. We realize that people don't want to fill in reams and reams of forms to get their insurance because I think everybody realizes that's not the practical way to do it. People answer what they want to do. So you want to make the customer onboarding, which means I need to reduce the complexity in the process and the more complexity that needs to be reduced. The aspect of how do I reduce the element of, I hate to use the word fraud in this case, I think it's just information not provided correctly in this case because people have an element of bias when they want to provide information. We've seen that in auto insurance for the longest time is Hey, I didn't have any accidents.
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And then you run an M V R report and oh, I forgot my son had an accident. I forgot to report that to you now you can call it as fraud, you can call it as I forgot to, I selectively gave you information just like my son tells me selectively his room is clean when only his desk gets clean. I think it's the same way. So really customer onboarding, the process is centric. Customer onboarding needs to be easier, which means the process needs to be made better, which also means that I need to collect as much information as I can with a high degree of veracity. So I don't need to worry about any element of fraud or misleading information being provided by the insured.
Nathan Golia (
And I think that's interesting is that the automation and mitigation comes in as part of the onboarding and it's like yes, they might not see it as an onboarding, as an process change, but that it comes in there for those reasons. Right.
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Moving to the bottom three priorities, which I picked three because there's only one I really want to talk about. The bottom three were APIs, mobile apps and low-code or no code platforms. And I think in the case of APIs well I should say in the case of I think that's more of a, people are still finding out what those entail. That's a transformation project. Things like core systems transformation ranked lowly low, lower as priorities this year, and I think that's because a lot of that work is done and they're working on some other things right now. I mean we'll see another that pushup in the next couple years as the platform's evolved. But mobile apps I thought was interesting because not only did we ask about where mobile apps ranked specifically as a priority, but our survey also asked who thought, what did you think?
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How important do you think a mobile first approach to development is? And insurance came in with the third to last out of the four verticals, third score, and it was even on the draft deck. They showed us the question that they've had. Basically for me, why don't more insurers consider a mobile first approach to customer facing tech a high priority? I think that's misleading. I think insurers are more apt to be platform agnostic and want to be platform agnostic with new technology because of their very high interest in things like i t, which also includes things like connected cars and those kinds of platforms various other things that are transmitting data or collecting data. I think it's like, look, we know the mobile channel is important, but we also want to have an omnichannel approach to our development where any device can be giving us actionable insight that might not be true of an industry like banking. And I'm wondering how you feel about that idea, do you think?
Piyush Singh (
Yeah, so I think if you look at mobile devices, I think part of it is the proliferation has not been very high because our product is complex. Our product is fundamentally written with an inside out approach. It's not written with an outside in approach, which makes mobile products much more easier. Inside out, I mean is because our terminology, our usage of words, our usage of insurance terms makes, which is really what we need to use, makes the process very hard for somebody to be able to do a once a year transaction and we feel learned about it. So they tend to go with the agents and the brokers and other people to be able to get their insurance, which essentially dissuades the insurance company to put mobile as a first mode of deployment in that respect. So we have to make our products simple. I'm not saying that's possible tomorrow or in the next five years. Also it being a once a year transaction for most individuals makes it really hard for them to get a level of knowledge that's proficient enough that they trust their own judgment to be able to do it which is why the agents and the brokers are very valuable in this whole supply chain that they provide that knowledge, they provide the context, they provide the comfort to the insured which is why MobileFirst applications other than selected lines of business or selected coverages has not been that popular.
Nathan Golia (
Well, I think from my own experience, what I would say too is that because of once a year, like you said, the once a year aspect of it, I, I've talked a few times I think on these forms at this point about having to be my first self-service home inspection. When I moved to this house last year and it was a mobile website to upload your pictures, you could take them. So you could take them on your camera, on your phone camera and upload them directly without, I'm going to take them off a camera or and move them to another platform. And that was good, but I was also glad they did not make me download an app that I was going to have to download an app, make sure it works, have it sit on my phone as opposed to be like, no, we'll just put it through the mobile website.
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So it's doesn't mean that insurance. I think that the reason I thought was misleading was just like I think that all that sucker's saying is true. Insurers are looking at their product as a whole experience and they're saying, mm-hmm what is the best way to present this experience? If we just take for granted that people like using their phones and we force 'em to their phones, a lot of the time people are going to want to make a phone call to an agent when they get to a certain part of the application process or they're going to want to be on their computer where they can see the whole application in front of them. I know that's how I feel and I think that it's not a matter of the insurance industry being resistant to using mobile, but I do think it's more about, no, our process is much more omnichannel.
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There's a lot more components to it. We want our customers to feel most more comfortable and not just feel like they only have this app to go through. Whereas I think some of the other more transactional focused verticals like banking and wealth management, it's fine. Their transactions are fairly straightforward. Buy and sell this much, move as much money but not take a picture of your furnace, which is what I had to do, make sure it was all on the screen and upload it and everything. Take a picture of your roof, take a picture of this damage. Yeah, I just thought that was it something that might be the insurance industry might be, we might not have caught up as data collectors to understanding how to ask insurers about their use of mobile.
Piyush Singh (
Yeah, I do want to add one more piece to that as I think there's processes, parts of the process where mobile first application will actually be the best usage for the insurance companies and that relates to claims when an insured is in a claim situation, whether it's a car accident or a home damage, I think if we make everything as mobile first and let the users take the picture and upload it straight from the mobile application, that'll actually be tremendous value to the insured as well as to the insurance company. Because the first part, everybody has their phone with them, everybody's happy to take images and if they can upload it securely and safely, whether it's a video and not have artificial things, you cannot load a file more than 10 mb. We can't put those limits in there. And those are it driven limits in insurance companies, but those are not going to work because if somebody sends me a 25 meg file, but it's got all the richness for a claim to be settled, I should not put that constraint on him. So I think claim side mobile first would be tremendous value,
Nathan Golia (
But we were asking about mobile apps specifically and I think that's, that's where I think ensures to innovate. Mobile web got our kids sort of starter smartphones now that they're getting a little older and they wanted to be able to be in contact with us when they're out of the house. And this weekend I just took my son out of town and for the first time since we got the phone, I actually was trying to load apps onto it and help him get Spotify. So you listen to his favorite podcast and yeah, it's very easy to say, oh, it's put this app up in the app store. People will Dell and install it. But when people have not, everyone's phone is up the top of the line. And I think that's why the mobile web, the insurers innovating and the mobile web is so interesting as opposed to mobile apps because everyone's got a browser and it's so much easier.
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It's you've got someone, not that my son is going to get in a car accident, but his starter phone is also meant for elderly people and stuff like that. There are people who are going to want to interact with insurance companies through it and it was not easy for it wasn't as straightforward to install open and use an app as it has been on my generally late generation iPhone that I've owned my whole life. And there are people who can't upgrade their phones all the time or have to buy used phones because of their own. And that's why I think it's interesting that just insurers or I, I'd rather see insurers being agnostic and trying to focus on the use case and when are people going to use it and what is their condition going to be. Someone in an accident, they don't have their app downloaded or they can't get it updated or something that's going to not, that's even worse than that than anything. So 'em use their browser . Also, I think mobile in the insurance context also encompasses IOT, connected car wearable technology for life insurers that's not just mobile app development on the I store, which I think is how people see it. One thing that I thought was interesting, we did ask all these verticals about working with Insurtech and in terms of proportions of we're very likely to work with them or we're not as likely, there was a little bit bit of uniformity except in the insurance industry where I noticed that most insurers were either very likely or not likely wasn't a lot of middle ground. And I'm wondering if you think that's just a sort of a noisy artifact or if, do you think that there's something about insurance companies, whether it's their size of company has a dictate there that they're able to be able to say yes or no very definitively about their ability to partner with startups and inure tax
Piyush Singh (
A, again, I might have a biased view of this Nate but I'll probably say I think where the divide comes in is where you have a pure technology vendor coming in and trying to sell a solution versus somebody who understands the industry and is then trying to sell a solution to them. Sometimes pure technology folks have come in the insurance industry and said this is the way to do it, this is why you need to do it. But they don't have the context of the insurance market space itself. But they're so convinced about the technology and they have this general feeling that the people within the insurance world don't have a clue, don't understand anything. They really are backwards in that respect. And I think that's what detracts a lot of the insurance consumers in that respect. With the startups in there where you have people with context where you have people with an understanding of the business environment and where they have a sense of appreciation of the challenges that they're facing. Then when they sell the solution, I think you'll find a higher propensity of insurance users listening to them because they like anyone, they want you to know that you can feel the pain and you have a vision. They love your vision, they love your way, you want to take them, but they also need you to understand the nuances within their field versus just saying life should be very simple and you should be able to draw it.
Nathan Golia (
So just to reset here and then going into the last five minutes, there's one last thing I wanted to discuss. We talked about our top priorities enhanced security, data collection, customer onboarding, and our bottom priorities, mobile apps, APIs, and we talked about some of the reasons about that, but there is one overarching thing that I have heard that came up in the survey. It wasn't listed as a technology priority came up in the survey though, cause we did ask about it and also in our reporting we've done so far this year and that is it headcount and that insurers want to hire tech staff, they want to hire digital staff. They are asking you to come to them. If you have seen all state, the Allstate I believe it was the C CEO who said, we are finding all these people laid off from the tech companies and we want to give them jobs.
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I've heard this all over the place no matter what the size of the insurer. When I talked to Plymouth Rock the chief claims leader at Plymouth Rock Assurance or mid-size insurer, they said the same thing. He said, yeah, my number one thing this year is I want to hire data scientists for claims. I want to get these people in the building. We want to hire you. I was so wondering piece, should we just talk about as a person who has hired a lot of insurance tech people, like how do try and sell, what can insurers do with this right now to sell this industry to people who they want to bring in?
Piyush Singh (
I think there's several ways to sell ourselves. I think number one, we are capital rich industry. We want to invest. We are unlike manufacturing where you're worried about pennies on the dollar every time, I think insurance companies, one of the most phenomenal things is they are willing to take a chance to be able to build things that actually will make a material difference in their future. So that's number one thing I think I would like to sell. Number two is we have a tremendous upside or tremendous potential from where we are to can be. I think there's a tremendous amount of potential and I think by bringing in smart technical business savvy people sky is the limit to where we can get I think it's been demonstrated with several insurance companies where the amount of insights that they have, the amount of things that have been converted from tribal knowledge to institutional knowledge, they've been able to make material progress in their growth path.
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Whether you look at headcount and you look at headcount per million dollars generated or you look at any other metric of how many people does it take to process number of claims or number of policies, how many policies need to be touched? I think there is a huge desire to become more efficient than where we are today. So I think those are things that I would definitely use to sell to the new technical people out there. And I'm not saying pure technical, let's be very clear. We are not just looking at pure technical pure data analysts. We are looking at people who are business savvy and have demonstrated capability in utilizing technology for the benefit of wherever we are headed towards.
Nathan Golia (
Yep. I think that I did mention specifically the data scientists and the claims just because it was one of those things where it's like, yeah, write down to these mid-size insurers are saying we want data scientists and they're not only these mid-size insurers competing against big tech companies are against big insurers and there's all these, but the desire is there to bring people in and continue industry, which I thought was really important and interesting. That is maybe the number one tech priority honestly. And I think other thing that, I'm sorry. Yeah, sorry, go
Piyush Singh (
Ahead. I just add one thing is I think it has also meant is the industry is more democratized, which means that even if I'm mid-size or a medium size, I can compete with a goth and I'm going to be able to compete with a Goliath by deploying effective technology and effective platforms for myself. So I'm not limited to say that I cannot compete with the top 10 in any field.
Nathan Golia (
Just want to go one minute over to talk about this other sort of related point quickly that insurers compared to other verticals were the most confident about their ability to use and leverage remote work. And I thought here's here's where having that agent force and working with independent agents all over the place for years, here's where it's really paying off because in insurers know how to work with remote force people that are on in different areas. I just was wondering if how you felt that was one of those unexpected benefits of insurers having such a distributed agent force for years that now when there's more need for remote work, they're able to rope them in.
Piyush Singh (
Yeah, I think that's a great analogy of we have actually worked with the remote workforce of sales all our existence. So we are familiar with utilizing, I think just internally we were just not used to thinking that way. I think the Covid environment definitely has changed the thinking a lot now. How far will insurance companies go in that respect? I think one needs to watch, but I think they're also taking lessons from the technology world where a lot of people are there. I think there are certain core roles that need to be there in a interactive manner to be able to make progress and make decisions in there. And there are several operating roles where I think they want to look for the best talent and to get the best talent everywhere, especially considering insurance companies tend to be sometimes located in not so exciting places. I think the propensity to be able to willing to hire people from anywhere to get the most that they want to get is huge. If I'm in small town in Ohio in it's not going to be that easy for me to be able to attract talent, the best talent from everywhere. But if I can be geared to handle remote work, I can get talent from anywhere and they can be very effective by coming in once a month or once in every two months and have that interaction that they need to have.
Nathan Golia (
For sure. Well, Piyush, thank you so much for joining me this morning and talking about our tech priorities. And thank you to our attendees today and anyone who's watching this on the replay, thank you for checking in. We'll be back in March talking about agents and brokers and their new place in the digital transformation world, but for digital insurance online. Thanks very much.
Piyush Singh (
Thanks Nate. Pleasure to be with you.
Nathan Golia (
Thank you.
