Let’s Revisit thoughts of 2020… Insurance Predictions noted B.C.- that's long ago, you know, Before Covid

(originally published May, 2020)

It's past mid-COVID-19 (wild that an outbreak is now a measure of time) and the Insurance Elephant is revisiting Matteo Carbone’s challenge of early Covid-19 shutdowns-

How have your 2020 InsurTech/insurance predictions held?

Matteo Carbone threw down the gauntlet in May, 2020 with his recounting of health insurance guidance or discussions over the past several years, and included some actual today versus 2013 results. I purposefully was not that bold in specific future actions but did continue my discussion of early 2019 and early 2020 of insurance tendencies that would continue.

In retrospect of my good friend Matteo's request then, here are my 'what will continues' and how those looked mid 2020/mid COVID and now updated for 2021:

1.      Customer knowledge about insurance in general will remain low. Not because they don’t want to know, but because they don’t need to (from their perspective.)

• 2020- All that is needed to be said here- business interruption cover. Knowledge was low, but need to know- very high. That won’t happen again (new demands for cover, new approaches)
• 2021- seems I was over confident that the market and customers would take bold steps to build effective BI coverage, or at least keep the pot simmering. Not much discussion here other than litigation for past claims. Denial and deflection reigns supreme because that’s what we do. 

2.      How insurance is purchased will -in the majority- remain the same. Sure, digital sales will increase, who it’s purchased from may change (agency changes), but since customer retention remains at a high rate a significant sea change is not to be. It’s a pain to change how you deal with a product that many would rather not have.

• 2020- Yep.
• 2021- Still a yep.

3.      The public’s motivation to have insurance will remain low – customers still have trouble understanding its worth and accepting its cost.

• 2020- See item 1.
• 2021- sorry- still see item 1.

4.      Insurance innovation (InsurTech) will continue to capture the bulk of discussion within the industry and will remain generally unrecognized by the buying public.

• 2020- InsurTech players’ survival is now the bulk of the discussion. The shining stars that rise from the ashes of COVID-19 will be the next discussion.
• 2021- Four camps- IPO for a limited few, demise for many, decisions to collaborate or acquire for some, hopes for 2021 for others. A lack of collocated conferences has dampened discussions compared to the prior several years.

5.      Insurance will remain a ‘sold by price’, represented as commodity product. Just can’t seem to get past that.

• 2020- For commercial products, see item 1. For motor/auto- the tide may be changing to selling by effective use of vehicles (not UBI or on-demand, but some pricing recognition changes prompted by reductions in use, rebates by carriers, and new expectations by customers.
• 2021- Price remains the differentiator, and in combination with reduction of cover (just try to get BI cover for pandemics) solidifies 2021 as a hardening market year. P&C (auto/motor) gets change impetus by less auto use, subscription plans, sharing, and collaboration between auto mfg and carriers (those with data combine with those who can use data).

6.      Net promoter score will remain the primary measure of insurance company service success. Measuring the outlook of a minority of customers (those who experience claims) will remain the means to benchmark claim organizations’ effectiveness.

• 2020- Net Promoter what? Empathy and pricing effects are the new KPIs. Loyalty is suspended during the post-COVID period
• 2021- NPS remains an orphan child, relegated to left overs in the press.

7.      Large carriers will continue to measure staff efficiency and effectiveness through file reviews and reinspection/damage evaluation, aggregating review data but not leveraging those data well in meaningful training efforts.

• 2020- Quantitative reviews are also under suspension- frequency and severity management have suffered a blow under COVID era claim inspection changes. Virtual and alternative methods of inspection have roiled the QA waters.
• 2021- Carriers cut to the chase here- 2020 was an expense year, RIFS, growth of virtual methods that have not yet found full vetting by users. QA is a new world in virtual; ML might rise up here.

8.      Agents will still sweat loss ratios at year’s end.

• 2020- Agents are like everyone else in the industry- sweating daily operations. Loss ratios will exist but mostly as a verification of being in business with a book of clients.
• 2021- Agents focusing on identity and evolution. Loss ratios (agency type) are in the back seat.

9.      Unstructured data will still be received in large volume by carriers, and managing it in terms of access, utility, and predictive worth will be a working goal for the year. Again.

• The health insurance world might escape some of this problem with telehealth, but the volume and complexity of health claims for the year will keep unstructured data on the marquee of insurance coming attractions.
• 2021- the volume of data continues to explode, unstructured data remain a lesser proportion but still an issue. New users recognize the need for clean data, talk of distributed ledgers suggest success only if data are clean. Plenty of work to do.

10.  The carriers who have established reputations for excellent service will continue to satisfy their customers. Carriers who have not will continue to not really know why.

• 2020- This will hinge on how well a respective carrier has engaged staff in adapting to change and unique ways of serving customers.
• 2021- inertia will apply for this year- those who have, will, those who haven’t will see that applying virtual methods will not cure CX ills. Need for innovation from customer backwards still applies.

New for 2021-

·       Underserved markets are building a groundswell of advocates and market entries- watch LatAm, Africa (particularly Central and South), India (regions and lines of insurance)

·       Parametric and other alternative approaches to risk management (including alternative risk financing- ILS, ILW, capital markets) will continue to gain traction

·       Captive use will grow

·       Service ecosystems will become more focused and sophisticated in established markets

·       Carriers and brokers will look to cross geographic market borders to build business.

·       Who owns customer and use data will grow in contentiousness.

·       IoT use and insurance applications will continue to look for a ‘guiding star’ that will lead the concept to more mainstream use and acceptance.

·       Exits of intellectual capital within the industry will remain a vexing and expensive problem. Talent acquisition expertise will grow in importance and as a competitive advantage.

·       How the industry serves SMEs will have to change; 2020 was too disappointing for that economic sector and they will expect more than cookie cutter packages.

Innovation must come from a recognition that its purpose is to facilitate what is still primarily analog- customer service. As for the coverage gaps that have been identified in stark magnitude- the industry needs to start work on solutions now. Pandemics will occur again. A prediction in 2020 that was not met- programs like the proposed Ten C's Project did not gain in application. Although what happened for COVID-19 cannot be afforded again its enormity seems too much to tackle at this time.

The Insurance Elephant predicts with high reliability that customer service will remain a key aspect of insurance for 2020, along with it's close partner, empathy. It’s low lying fruit for the Beast- along with having affordable products service and empathy are keys to insurance success.