In this session we will share the results from our recently completed research on the State of Insurance Digital Transformation. This research looks at the key trends driving digital transformation in the insurance industry, with a core focus on how insurtechs are reshaping the industry.
Transcription:
Nathan Golia (Nate): (
I wasn't really slated to do an introduction here, but I really wanted to, I really wanted to, cause I wanted to tell you about this research about being presented. Actually, Jen and I were going to do this. We were together, but we got Jason to help out and give me a break from being on stage. But, one thing that I'm really excited to be doing at digital insurance more of is proprietary research through our great research group at Arizent of which Janet is the head. And, this particular survey we launched last year, we did it again this year on the state of insurance digital transformation. And it really is based on all the feedback I've gotten from all of you in the audience over the years, about what you wanna know, what are the questions we can answer for you? How can we quantify what's going on in insurance in a way that is helpful for you and Janet and her team have really done a lot of work. Really done a lot of great work with a lot of our other survey products as well at Arizent in finding that insurance angle, asking me about the insurance industry and what would be most helpful. And I'm really glad you're gonna get to hear from here more, not just here, but in several of our transformation forums throughout the year, Janet will be with me or someone from Janet's team. The next one is with Carrie, we're gonna be talking about talent. So I just wanted to say, I'm so happy to have you here, Janet, and thank you for all your help in delivering this content for our readers. Anyway, I'm gonna turn it over to them to talk about the state of insurance, digital transformation. Thank you.
Janet King: (
Thanks Nate. Thank you so much. Hi everybody. Welcome. I'm Janet King. I'm the VP of research at Arizent, which is the parent company to digital insurance and the host of this great conference. Joining me today is Jason Verlen. Who's the SVP of product strategy and management at CCC intelligent solutions. So maybe Jason to kick us off, you can just introduce yourself. Tell us a little bit about what you guys do.
Jason Verlen: (
Sure. For those who don't know, who CCC intelligent solutions is, we are basically, a digital platform that is centered between the insurance carriers, the repair shops, the OEMs and other participants in the network. And the purpose of this platform is to essentially link them all in a process that puts the consumer's life back together. After that horrible day, where he just crashed his car. Our presence in the US is we're used by roughly 300 carriers, 27,000 repair shops, the majority of OEMs and a lot of other players that help us complete the process on the network.
Janet King: (
That's great. So today has been great. What a great first day, there's been so many interesting presentations, great conversations. I thought it was wonderful that we started off the day with the keynote, really talking about the know me economy. And I've heard that theme repeated in many of the discussions that we've had today. So that's been really cool. A couple of the other soundbites that I really liked was disruption is not chaos. I think that's an important one to remember go forth without fear. The other one I liked was if customer experience grows, everything grows, and we're gonna talk about customer experience today. So we'll touch on that and then innovation is everybody's business. What a great quote that was, I think, maybe in the MetLife presentation, but I thought that was really awesome. So some things to keep in mind, but we're really excited to be wrapping up the day to be talking about this new insurance that we completed with digital insurance. We're also incredibly aware that it's just the two of us standing between all of you in happy hour. So we'll try to keep this moving along and keep it interesting. So just a little context for purposes of this survey, we did provide our respondents with a definition cuz we really wanted everybody to be starting from the same place and making sure that when they were thinking about digital transformation, they were thinking about it the same way we were. So we refer to it as how an organization uses technology to remake processes, pursue new business models and, or create new business value with that additional caveat that successful digital transformation strategy should deliver ongoing benefits to the business. So that's just kind of a little bit of a level set there for everybody. And then just a little bit more background before Jason and I start talking about what we learned about the research. So this research, as Nate said, is an annual piece of research. We expanded it a bit this year and we conducted it during the first quarter of the year. We had a total of 124 people from across the insurance sector respond. So it was a mix of decision makers from carriers, from insurance brokers and agents as well as insure techs. Our goal was really to more fully explore some of the trends that are driving digital transformation in the industry. And we also wanted to better understand how insure techs or how insurers, how carriers specifically are working with and taking advantage of insure techs to really drive innovation and advance their own digital capabilities. So if you're interested in learning more, we have a lot to cover in 30 minutes. So we're gonna focus on a few of the areas that we thought were most interesting. But you can find the full report on digital insurance. So if you just go to www.dig-in.com, you'll find the whole report there. Awesome. Okay. So let's take a look at our first insight, which is we really wanted to look at how the industry is perceived around their approach to digital transformation. And what we found is that most of the stakeholders, carriers brokers and insure techs alike really think that the industry is taking an incremental approach to digital transformation in the interest of not changing too fast, right. We had 50% or more who identify with that sentiment. And then we had about a third who feel that the industry is delivering or on track to deliver products and services that take advantage of the breadth of technologies that are out there. So the breadth of data and analytics, telemetry, and some of those other digital technologies. So Jason, what I'd love to get your perspective on is what you think maybe is contributing to that incremental pace of a digital transformation for most of these stakeholders in the industry.
Jason Verlen: (
Yeah. Janet, it's a great question. And these numbers really are interesting. And I think what they reflect from my perspective is, it is an issue of what perspective you are looking at the pace of transformation from, if you are looking at it inside out from the perspective of a carrier. I actually think the amount of a transition that is going on transformation is utterly astonishing inside out, if you look. I will give you an example. So for example, CCC provides what we call a photo estimate solution. So the nature of the solution, as you get in an accident, we provide you a link on a text message and instead of the usual calling your carrier and going through it manually and having someone come out and assess the vehicle, you do it all digitally. You document the accident scene on your phone, you take photographs of the damaged vehicle. It get sent to the carrier. They send back an estimate that they developed virtually. And then you continue on the process. You pick a repair shop, et cetera. Four years ago, the adoption of that process, that alternative to the standard process that this industry has used for decades was zero. Okay. And what is it today? 27% of repairable vehicles go through that new process. If you take the DRPs out, it is 45%. Some of our carriers are over 70%, go through a digital process, 150 different carriers to give you an idea of the vastest of the transformation, send their photos to CCC of those damaged vehicles. 95 of them apply AI to those photos. If that isn't the definition of fundamental transformation, I have no idea what is, but let's look at it outside in cuz I think that's where it gets interesting. And that leads to these kind of results. At the same time we've been doing that. What's been going on in the world. Well, the hospitality industry, you now regularly stay in other people's houses. That's a fundamental transformation. That's quite astonishing. You regularly ride in other people's cars. That's a fundamental transformation. The notion of a bank. What exactly is a bank? To me, a bank is my phone. The concept of a physical bank is more or less irrelevant. I go in there once a year to go put some stuff in the safety box. Okay. People now who are reasonably wealthy, now take a rocket ship ride when their heart desires. Okay. You have to wonder in five years, if at Disney, instead of going on a roller coaster, you'll just sign up and you'll go for a ride around the world. These may seem like crazy notions, but look at the pace that the world is remaking itself versus what we've done. And that's why people, I think it is very perceptive of this audience to give that answer because it's all kind of relative and issue of perspective. Isn't it?
Janet King: (
That's a good point. And, I think another thing that might be holding them back a little bit is just overall readiness to make some of those structural changes that need to be made to make this happen. So is this slide shows what you see here is that most carriers and brokers, and this was just asked among that audience do not feel all that well prepared when it comes to the people process and organizational structure of their businesses to advance digital transformation. Right? If you're looking at that dark blue band at the top of each of these columns, it's only about 20 to 25% who think their organization is highly prepared and that lack of confidence also extends to their technology, right, with just about one out of three feeling that they have the technology in place to actually effectively do this. So I think in other words, it shows that there's still a lot of work to be done for a lot of these organizations to get their house in order, if you will, and really advance this conversation.
Jason Verlen: (
Yeah. I would agree. When I think about this notion of preparedness, I mean, look, in a sense, and I think this has been said before, it's not an original thought on my part. We are all technology companies now, whether we want to be or not, I think that that's plainly evident in almost all industries. And look that means you're competing for talent against technology companies. That's a big challenge for the insurance industry. I have a 23 year old who changes jobs. Like I change shirts and guess what? He hasn't had one in insurance yet. Okay. It's a very different world versus my dad. May he rest in peace when he got out of college? I think it was 1960 or whatever and insurance was at the very top of his list of places that he wanted to go work and he had a great career in insurance. And so it is challenging to acquire the technology, the people, et cetera, that you need. Now, there are some different ways to look at it. It's easier if you glob onto technology platforms versus trying to do things on your own. I remember when COVID broke out, forgive the French, all hell was breaking loose. And we had a lot of panicky carriers. I mean, they needed to have a touchless experience similar to one. I was just talking about and we said to them, look, instead of doing all this integration with process, why don't you just use our app? Okay, we'll put your branding on it, use our app, done. And they were up and running in two weeks. So there's ways of countering this problem, but you do have to be creative. The other thing is, I think about roadmap and the right thing at the right time. So it's like sometimes for example, I'll get in a conversation with an analyst and he'll say, well, you said 150 people carriers send you photos, but only 95 do the AI as if that was a problem. That's not a problem. That's the natural progression of people, road mapping things out and not trying to do it all too quickly and have it blow up in their faces. You can't do the AI on photos before you have the photos. So you do the photos where it's the count of people using the photos will always be higher than the people using the AI. Right. That's natural. That's good planning. So I think there's ways of countering it, but this is a challenge. No doubt.
Janet King: (
Thank you. So let's take a look at where carriers and brokers specifically are targeting those digital transformation efforts. And to understand that we asked these survey takers to rank order their highest priorities, where one indicates it's the thing that they are thinking about the most. And five is the lowest of these things that were rated. So customer experience came up at the top of the list, right? If you take that dark blue and sort of green bar, you can see that's kind of leaps and bounds ahead of everybody else in terms of where people are focusing their efforts, then underwriting and product development, and then having distribution and claims, bringing up the rear if you will. So I'm wondering, Jason, what are some of the more forward leaning customer experience initiatives that you're seeing your customers focus on as part of their digital transformation initiatives? I mean, you just talked about the photography and that's a big one, but what else?
Jason Verlen: (
Sure, sure, Janet. I'll play it out a deeper, so number one, we were not surprised at all by that result. We've been after the customer experience and our customers who use this type of solution have been after us to keep monitoring that experience. So roughly to give you an idea, we ask a very simple question. When we go through that photo estimate experience, at the end, would you prefer to use this methodology next time you go through an accident, God forbid, or would you prefer the older, more manual, more analog process? Something like 85% prefer the new process. This is not exactly a revelation. The reason why they do that is it looks like everything else they do in their lives. Why would they want a different process when they get in a car accident? So it makes perfect sense. I think there are three sort of levels though, of a customer experience that we need to go through. So number one, a customer experience is not an app. You really have to go through the steps of connecting the entire networks that the customer can go all the way from the beginning to the end, controlling the process with that app and to build the trust that lets him do that. So for example, put yourself in his position, you get an estimate back on your phone and it says $2,856. Is that right? Or is it a random number generator? What is it exactly that would lead them to believe that? Well, one thing is we provide capability where you could look at a heat map where we show the damage that the AI detected on the vehicle. Okay. So they detected the damage, right? Maybe the $2,800 is right. It's a natural thing. Okay. Now I believe it now, what do I do? Oh, okay. I pick a shop. There's a next step. And we bridge the network to allow a full experience rather than a piecemealed thing. Do you guys piecemeal anything? I don't piecemeal anything. Okay. It has to be the full experience. So that's one thing. The second thing is it's not just a carrier experience and this is the tricky part of it, right? There's a repair shop. It might have started with an OEM. A lot of these accidents now, or at least more of them are detected through connected car and they give their customer an experience to document the accident scene. Well, guess what, how excited is your customer gonna have to be? If you ask him exactly the same questions and to take exactly the same pictures that the OEM just asked him, he's not gonna be terribly excited. So when we provide this type of solution, we give an option at the end of the OEM. Do you want us, do you give us the permission to send this all to the carrier? Okay. So there's no double entry. The other thing is it can start anywhere. Okay. We now provide, let shops put a link on their sites to do a photo process, so it can start at the shop and then they file a claim. Later. Those pictures have to go to the carrier. Conversely, if you guys collect the pictures, they've got to go to the shop. So think about this in terms of everything you do, when you buy food, you expect a continuous experience, right? If you call the restaurant, you expect them to orchestrate the delivery, to orchestrate the payment. You don't call three people and give them the same pieces of information. That's not how it works. So customers would naturally expect you to do exactly the same thing last but not least in the biggie is STP straight through processing. Okay. We, we are at a labor inroad here. The previous panel talked about it. Labor is hard to get, we need to be much more efficient in insurance processes and consumers like things that happen like that. So we have newer stuff that instead of humans and AI working together in some circumstance in just the time that Janet and I have been talking about this question, you could have gotten your estimate back, and it's all AI driven and spreading that from just estimates also to total loss also to paying medical bills, et cetera. This concept of STP is a big next wave in consumer experience.
Janet King: (
That's really interesting. And I think, technology is clearly gonna be the linchpin to much of this, right? And so we asked the stakeholders that we surveyed both the carriers brokers group and the insure techs, what do they see as the technologies that have the most potential to significantly accelerate digital transformation in the insurance industry? And I think it's no surprise that advanced analytics for big data sources came up as number one for carriers and brokers, right? We've been talking about that a lot today, just the power of data and, knowing your customer and being able to act on that data in meaningful ways. We did see a little bit of a bifurcation, a little bit of a difference in opinion, when you ask insure techs, right? So they are more focused on, chat bots and customer interaction technologies and robotics and intelligent tech automation. So those are the two things that they really see as probably being, the biggest accelerators for change in the coming, year or two. What do you think about those picks Jason?
Jason Verlen: (
You know, they are quite interesting actually, and they, while it seems like there's a divergence, I'm not sure that there is the divergence that we think. I think that the divergence actually makes a lot of sense. And here's why, so if you're a carrier and you are in the midst of this transformation, and as I described it is coming like that, I mean, to give you an example, in December of last year, to use the photo estimate again, cuz it's the easiest example. It was 22% of repairable vehicles in January it was 23 in February it was 24 last month I got the main numbers. It's 27. It's going up by point a month. Okay. So it is vast. Now, if you are a carrier in the midst of that transformation, you literally cannot run your business without an advanced analytics platform. It cannot be done. Okay. So because things are changing so quickly, you need to know what the results of the change are and how do you allocate resources, what you need to fix, et cetera. So it is by far number one, and that is clear that the pressure's been on us to provide a lot of advanced analytic capability to look at that end to end result in terms of the length of time it takes to resolve these cases, the cycle time, and also which steps are driving it, what the impediments are makes perfect sense. Now let's reverse it from an insure tech. Most insure techs provide key capabilities at some point in that process, it is literally not possible for them to provide an analytics platform that let you look at the full transformation. They don't have the data. They can apply the analytics and provide excellent analytics for the pieces that they contribute to the process. So they focus where they can deliver the most value, but for the carrier, if they don't have advanced analytics, I don't understand how you would actually do this because what would you do? Just turn on all this transformative stuff and hope for the best? No, nobody in their right mind would do that. Okay. So that is the number one thing. It makes perfect sense. And I think this divergence actually makes sense. People are looking for the things where the value is that they can actually provide.
Janet King: (
And I think if we start to look at how those sentiment aligns with expected investment, you see some interesting patterns there, right? So if you look out over the next 18 months, what we see is that cloud digital payments, chat bots and customer interaction technologies, and then advanced analytics, come up as the top four areas that are expected to capture newer, incremental investment among carriers and brokers. So there's a lot of investment happening and that's kind of the rank order of where it's happening. But given that carriers and brokers see advanced analytics is such a critical piece of the puzzle. Are you surprised that it's not higher on this list? Or do you think it's because maybe they're already making quite a bit of investment there?
Jason Verlen: (
I'm not necessarily shocked by the fact that it isn't higher. I think it's one of those things that goes with the territory. Okay. Carriers put a lot of pressure on us for advanced analytics. They have massive investments in advanced analytics. It is an ongoing thing. Now, where does the data for a lot of that come from, I mean, to give you an idea, once again, of the transformative pace, I remember a conversation about four or five years ago with a major carrier where they were having a big committee meeting to decide if they could go on the cloud. Well, think about all those transformative outside in views that I gave you before, hospitality, transportation, it's all in the cloud. That's a nonsensical conversation. If you want to participate in the transformation of the world, you must be interacting with the cloud. There's no other alternative. Okay. So that's where I think that, every character, some degrees are already interacting with the cloud. They obviously see all these external transformations as do all of you. They need to double down on that. So I'm not surprised that's number one, the payments look that is just a huge time waster with a lot of pieces of paper, et cetera. That makes perfect sense. Okay. Chatbots make sense. In the digital processes like I talked about earlier, there are frequently times where it slows down something goofy happens. It's not anybody's fault. It's the entropy of the world. Okay. You got in a crash in a place where there's too much traffic and you can't take the pictures. Okay. You don't, your phone's not working. Right. You can't, all those things may require a conversation. I just had this experience with a total loss, unfortunately, comprehensive total loss, mice ate the wiring harness on my Mercedes. Okay. I'm not happy about that. Okay, but they killed the car and I worked through the large carrier and it was a game of tag. Okay. So, they would leave me a message. I would give them details. Then, I had to refer them to a shop because the card had some work on it that I wanted to be paid for. Well, then they called a shop. They played phone tech. Well, a chatbot of course solves a lot of that goes away. So does messaging. So these are things that must be there for this more straight through more efficient process to exist. So I think this is actually a very carefully layered listing. And I think, one of the things for carriers, I think that's important is do you want to build point to point interactions with all these things? Or do you want to do some of those, but also latch onto some platforms that already have all these point interactions? So for example, if someone gets into total loss and you gotta clear the lean. Well, for example, we put a lot of investment in our platform to bridge all these interconnections with banks who may hold that paper so we can get those leans cleared much faster, similar with title processing, for shops, with diagnostic tools, linking to Aztec, linking to whoever Opus. So that's important. So pick your spots where you have more advantage versus getting onto a platform that is already building those layers that can link to all these, because if you're doing point to point links, in inure tech with all these things, it's gonna take a long time. Okay. Sometimes it's better to get some of those done and focus your resources where the biggest bang for the buck is.
Janet King: (
So that leads really nicely actually into the last point, which is around the role of insure techs, right? So, how are inure techs gonna factor into this like next wave of digital transformation and how are carriers and brokers really leaning into that and partnering, buying in some cases, technologies to really help them get over that. So we have three key insights here. Jason, and I know we've got about five, six minutes left, so I'll run through them and then you can comment on them all at once. But we first wanted to establish in which areas, folks think insure tech will have the biggest impact in 2022. And it was customer experience overwhelmingly again, 41%, expect customer experience to be the thing that is most impacted by inure techs. And that actually was a perception that was pretty consistent across all the audiences that we surveyed. So carriers and brokers felt that way. And so did insure techs. We also asked what they think the number one insure tech technology trend will be in 2022. And this really mirrors what we saw earlier with the data around, what do you think will be the most disruptive or accelerating technologies, right? But here we had a dead heat, right? Advanced analytics for big data, chatbots and customer interaction technologies, came up as also number one, when we looked at this across the different kind of sectors, we did see that, carriers and insure techs were both focused on advanced analytics, but chat bots actually came up much more for brokers and agents. Then finally, when it comes to how carriers are working with insure techs, we see that 44% are already actively engaged with startup partners and they're operationalizing pilots and almost another 30% are exploring doing so in the coming year. So you have about three out of four carriers who are actively engaging with insure techs. And when you ask insure techs, how are you supporting those customers? They say most often we're providing advanced analytics for big data. We're providing other AI apps, we're providing chat bots. So they're clearly ready and aligned with what those folks need. So, what do you see as some of the key benefits for the insurers, from partnering on the insurer techs side?
Jason Verlen: (
The biggest benefit by far is of course scale. If you remember the initial slide of, Jonathan and the team's findings was this issue of how fast the industry is progressing, which of course is an issue of perspective, but in the middle, well, if you want to progress more, it's not like the technology is not out there to do so, this room is full of insure techs. There are many more than are in this room. And some of the stuff that they've been building is quite frankly amazing in all of these areas, payments, chatbots, et cetera, the issue is kind of how to do it. Okay. So as I said, there's two things. Number one, you have to link to them. Okay. So do you want, do it point, or do you want to link to platforms that already have linked with them? The other is you have to bring it into the workflow. So it makes sense. Okay. So, a quick, quick notion from a different space is maybe repair. Well, you can link to a scan provider, but is it really embedded in the workflow so that the carrier knows the scan of the vehicle was actually done so that they get consistent pricing. So their repair shop can train their people on a consistent way to do the scans that the platform provides and that the OEM knows the vehicles are being scanned correctly. So they're safe for their customers cuz the brand of all of you is at stake. Remember what I said before about this, this notion that there's only one experience there's not three or four, it goes across all these things. So point to point or through a platform and then there's the integration with the insure techs, but then there's the workflow bringing it in so that the benefits are really realized. And the issue is scale. If you want to go faster, there's nothing holding you back from doing that. The technology is there, but how you go about it is very important.
Janet King: (
And how you get access to that technology. Well, thank you so much for your time today. Know we just have a few more minutes. Do you have any final thoughts before we wrap things up?
Jason Verlen: (
Well, just first of all, I think, I want to thank Janet and the Arizent team, this research was kind of the epitome of how to do research. Well, in my opinion, the questions were very crisply asked the results were very easy to understand methodologically very sound. And I think very actionable. You can really look at this and say, okay, maybe we focus here in this way. So great job.
Janet King: (
Thank you.
Jason Verlen: (
I think the second thing is, we've talked a lot about technology, technology change, technology transformation, but if we floated up a little bit, I think the big question is why. And I look at this world today and we're all coming off a horrible two years with this virus. And there was this notion that when we got through these two years, everything would be great. Right. But I think there's an increasing understanding just how challenging the future is looking for insurance. Like we've discussed some of the issues today, getting talent, okay. Costs the complexity of these vehicles for example, is going through the roof and the repair costs are increasing 10% a year. And, I really don't think that's changing. Okay. Labor costs going up general inflation. This is putting a tremendous strain on the system. Where are the efficiencies gonna come from? Because you're not going to be able to just, I think keep charging customers, the customers are right now given this inflation, they are burning through their bank accounts and their credit cards. And when they're done with that, what exactly is gonna happen? Okay. So this kind of bringing all these insure tech into the process, looking at tech, I think this is COVID was almost a practice run for some of the challenges that we're about to face here with this. So I think it is important to look at this with a good amount of haste and sincerity.
Janet King: (
Yeah. I think those are great points. And thank you so much for being here today and for CCC intelligence solutions for sponsoring this it's been great and Jason so kindly pointed out we've lots of research on digital insurance. I think we have an upcoming digital transformation webinar. I think Nate might have mentioned it earlier at the end of the month on the war for talent. So we're doing research on all these topics. We'd love to hear from you feel free to find me or Jason later in the cocktail hour, happy to chat with you. And again, thanks everybody for your time and attention.
Speaker 4: (
Thank you everyone.