Video Series: The State of the Insurance Industry

Blog

August 18, 2020

TABLE OF CONTENTS

Introduction

In this brand new video series from Levvel, our industry experts discuss the disruption happening in the insurance industry, common pain points, and the opportunities for established insurance companies to modernize and level the playing field. We’ll share relevant stories from the field and how we’ve helped national insurers overcome their biggest challenges.

Over the coming weeks, new episodes will be released around the technological issues established insurance companies are facing, as well as the direct impact legacy-system reliance has on business success.

For more insurance modernization videos from our experts, check out Levvel’s Modernizing the Insurance Experience series.

Episode 1: Why Established Insurance Companies Are Being Forced to Modernize

Episode 1 Transcription

Chris Hart: There’s a couple of reasons. So one reason is that the cost of the legacy technology that many of these established companies have is just too great, and the cost comes through in the cost of innovating and providing new products. The costs come through in the operational sense of actually keeping this legacy technology alive and working correctly, and it also is a competitive cost because the more legacy technology you have, the more that creates a barrier that innovative new companies don’t have to overcome when they’re trying to do something competitive in your space.

And so I think as the cost and difficulty of entry is going down for new competitors who are coming into the space and as well established companies, the more time goes by the more they have of this legacy technology, the more of a burden it becomes if it goes unresolved.

So all of those factors I think are contributing to why established insurance companies are looking to make change or feel the pressure to make change.

I think there’s another factor, which is that the availability of these new technologies can really help insurance companies serve their customers in really innovative ways that provide both a better experience for the customer, but also help the actual insurance business itself.

And so you think about some of these more, what may be viewed as extreme use cases, but they’re not extreme use cases, the idea of being able to use drones to capture video from locations where you’re looking at property or you’re looking at a particular area and you want to be able to capture that video and analyze it. That would’ve sounded extreme a few years ago, but now the technology exists for that.

You have to have the capability within your organization to take advantage of those enabling kind of capabilities or technologies to be successful with them now.

One specific example from a client that we were working with was for a very specific kind of insurance policy for high net worth individuals. And for this group of clients, they wanted to be able to provide a really robust, web-based, much more transactional kind of capability to interact with their policies. And because of the unique nature of this type of insurance, this was something that was very difficult for them to just buy something off the shelf.

So they couldn’t really find something just commercially available to solve this problem. At the same time, they had a lot of legacy technology in the insurance core that they were using and so creating a layer of integration and of a digital web presence for them to be able to do this was really critical for them to be successful.

I think it highlights why having digital capabilities within your organization is so important and the fact that you can’t rely on off the shelf technology in every case to solve these problems.

Episode 1, Part II: State of the Insurance Industry Continued

Episode 1, Part II Transcription

David Antoline: There are a few reasons that we’re seeing established insurance companies be forced to modernize in order to stay competitive in the market. One of those reasons is that they’re really being driven by a whole new batch of insurtechs.

Many of those are hyper-focused in certain areas and for the most part, customer experience is held at a premium with those companies. And so it’s driving customer expectations upward, and we’re seeing interesting results in the established market because of that.

Maurice Walker: What customers are looking for are lower costs, as well as ease of use. They’re either looking for easier ways to acquire insurance, all the way down to administration of claims, and even as far as keeping the insurance up to date. So as a result of it, a lot of these traditional companies would have to get to a point where they could meet that need.

The startups are introducing a new way of actually providing insurance. They have very low costs and it’s due to the fact that they have a very streamlined workflow. They don’t have agents, they don’t have call centers. So as a result, they’re able to provide a lower price point, and the way they do that is also by leveraging new technologies like blockchain or internet of things.

David Antoline: One of our customers was faced with the challenge of trying to improve end-user experience, to compete with some of the newer companies that had hit the market. And when they looked at the process for doing that, where they started running into issues was with some inefficiencies in their team structure, inefficiencies from an infrastructure standpoint in how data was processed, and ultimately their ability to quickly churn out end-user features at a rate that would keep pace with expectations at the customer level.

And so, we’re seeing a lot of companies that are struggling with this shift, where they see the writing on the wall, and it becomes pretty clear as to what needs to be done to compete, but the amount of time, and in some cases, the amount of costs that they incur to move this giant ship from left to right in order to make that happen, can be difficult.

Episode 2: Major Pain Points Insurers Need to Solve

Episode 2 Transcription

Chris Hart: One of the major pain points that many insurance companies face is around the operational, and in particular, cybersecurity threats that come from legacy technology. When you think about technology that’s been around for 10, 20 or 30 years, not only is it expensive to maintain, not only is it operationally risky because you increasingly need to find a workforce that’s hard to find to manage that environment, they often also have a lot of cybersecurity risks attached to them.

You think about the risk that gets posed by technology that is literally unpatchable. They have security vulnerabilities that are well known, they have vulnerabilities that have absolutely been used in the wild for attacks in production systems. And they’re sitting latent in your environment without a way to really fix them because you’re running on an older version of an operating system, you’re running on an older application runtime, you’re running on older application frameworks that were used to develop that software for which there is literally no upgrade path. You can never fix that vulnerability without fundamentally changing that technology.

And the risky part about that situation is that every year the situation gets worse, every year that that system is unpatched, every year that new vulnerabilities are found against those systems, every year that more of those systems exist in your environment and the scale of the problem gets larger within your organization, then the problem gets that much harder to solve. There’s a saying about the best time to plant a tree is 20 years ago, the next best time to plant a tree is today, and I think that same kind of analogy applies here.

Absolutely the right time to have fixed problems with platforms that have vulnerabilities is the day that they had the vulnerability, but the next best time is absolutely today. The problem will not get any better by waiting another year. And while that can be challenging when you have other business priorities that you want to go attack, there absolutely is a case to be made for dealing with those challenges now before the problem gets more expensive to solve next year, or worse yet, before you have some kind of an event attached to that vulnerability that is absolutely avoidable if you deal with it now.

David Antoline: There are some pretty serious pain points that most established companies run into in trying to keep pace. And a lot of those just have to do with how they’ve done business to date, how they’ve done IT to date, and some of the requirements, frankly, of moving into this new world. One of those can generally be described as legacy modernization, right? It’s this idea of trying to modernize infrastructure when you’ve built an entire process around a delivery model that is no longer sustainable.

And this is a really difficult thing for companies to go through. In some cases you’re looking at sunk cost fallacy and a desire to hold on to on-prem resources as opposed to going to the cloud, simply because they exist. In other cases it becomes more structural. It can be cultural where design thinking just doesn’t exist within the organization and yet there’s clearly a push to focus on end user experience, to focus on the functions and the features that are being created, and what that means for the end user as opposed to simply a “data project” or simply an infrastructure project.

And this need to cross teams and to cross silos that previously existed, and frankly, the need for cross-functional teams in order to deliver some of these projects can be a really big shift for legacy companies that haven’t thought that way ever or at the very least in a long time. We see it all the time where you may have one group, let’s say it’s the DevOps group, that is purely locked in on a strategy that allows software to move from left to right more quickly.

And this can be really exciting and a lot of progress can be made in a short amount of time with people that are motivated to do this. But the problem sometimes arises, and we’ve had customers run into this, where if the infrastructure team isn’t on board with those sets of changes and all of a sudden you have tool sets and you have software components that aren’t being used by their teams, you can hit roadblocks along the way that really stunt growth in that area.

The same thing goes on the development side. We’ve seen often where development efforts aimed at quickly deploying functionality to end users get held up with infrastructure blockers. They get held up with testing, in some cases it’s not that they get held up at all, but the end problem ends up being that the thought process and the design process that went into creating that functionality wasn’t actually vetted with the end customer.

And so all of the intentions are correct, and even the technical delivery can be right. But if you haven’t actually thought through, if you haven’t engaged with your customers, if you haven’t spent the time to think about what it is that they’re looking for, what it is that they’re expecting, you can still fall flat when it comes to an otherwise successful release.

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New webinar: Insurance Modernization—The Data and Benchmarks in 2020

Join Levvel and Centene Corporation experts for a webinar on insights gained from our 2020 Insurance Executive Report. In this webinar, we will discuss the top challenges of insurance providers today, insights discovered through our research, and ways to benchmark your organization against the industry.

Episode 3: Main Opportunities Insurers Are Seeing Today

Episode 3 Transcription

David Antoline: So some of the main opportunities that insurance companies see today revolve around personalization for their end customers. There is a demand in the market for insurance to be consumed in a very similar way to how a lot of things are consumed today digitally. And that is that I, as a consumer, want to be able to experience your product in a way that maps directly to my lifestyle, that maps directly to my consumption patterns, and I expect you to be able to change your model to map to my wants in that area.

This is something that we’re seeing across industries. It’s happening in banking. It’s certainly happening in retail. And now it’s starting to hit insurance, as well. And this poses challenges for insurance companies, for sure, but it also represents a large area of opportunity. Some of that is on the digital side, in that you can just deliver better experiences to your customers, and that alone has serious value to most companies, but there’s another side of it, and that is the ability to create unique products. And for some of these companies with large stores of decades of data, their ability to use that data in a way that can drive product development in a way that nobody else can, is actually a huge advantage.

And so we’re seeing established insurance companies find ways to leverage decades and decades of customer data to establish trends and use, frankly, a lot of processing power, both human and computer, to figure out ways to create unique products that meet their customers exactly where they are, and frankly, meet these desires that users have, that customers have, to experience insurance in a way that frankly wasn’t possible even a couple of years ago.

Chris Hart: There’s absolutely plays to be made around automating processes, around being able to run the same process more efficiently, because you’re able to do so with technology that’s less expensive. I think one of the other areas, though, for both reduction of costs, for improved efficiency, but also for improving the customer experience, is being able to provide customers with multiple ways to achieve the same objective. So I think as the population becomes younger, the population of people who are using these products have increasingly grown up with tablets and smartphones.

In some cases, customer behaviors are changing. So a customer may want to talk to a broker when they’re first creating a relationship with your insurance company, or they might want to talk to a live person when they’re filing a claim, but there’s other touch points that they expect now to have a digital first experience, and being able to create flexibility in the way that a customer can interact with you is critical. So recognizing the fact that there’s a changing kind of dynamic, depending on the demographic that you’re serving, I think is absolutely important.

David Antoline: So we recently worked with an established insurance company to assist them with the process of creating a personalized experience for their end customers. And there were really a couple of components to that. The first piece was understanding from a research perspective exactly what customer expectation looked like for their market. And the important thing about that process was not understanding the general market, but truly understanding their target audience, their current customers, and where they wanted to go with their product set. And in doing that, they were really able to understand exactly what it was that their customers expected from a delivery standpoint, and that allowed them to kind of go back to the lab and work across boundaries internally to not only come up with the right user experience and not only come up with the right mobile experience, but actually to build a product set and a workflow for their users that really matched what the expectations were in that case.

And so there were really two things that changed for that company almost overnight after launching this. The first was they were able to reduce customer service, and frankly just the sheer amount of effort that it takes to work with their customers, because they were finally delivering these products in a way that made sense. And so there were less questions. Less questions for their agents, as well. And so they really reduced the overhead of managing a rather large customer base.

The second advantage of what they did is that they rolled out a completely new product set, something that hadn’t existed for them before, and so they were really able to expand their base in not only the customers that they were serving, but also the products that they were serving those customers.

Maurice Walker: A customer wants to feel that they matter. A customer wants to feel that that insurance company knows them, and that they know what their needs are and what their desires are. So it becomes more than just a company that is looking for a way to service a need, but it actually would feel more like a partnership between the customer and the insurance company. So personalization, customization is a really big one. A second thing is claims administration, to get to a point to where you can utilize technologies. You can actually get to a point to where the customer can get their claims administered at the time and a fraction of the cost than what they’re doing currently.

Episode 3, Part II: Main Opportunities Insurers Are Seeing Today

Episode 3, Part II Transcription

Chris Hart: There’s also a lot of attention being paid right now to ways to use data in innovative ways, and we see this in a bunch of different verticals. You see it in financial services, you see it in insurance, you see it in all sorts of consumer-facing products. And so, finding ways to capture and leverage data in innovative ways, whether that can be done in a way that is an exchange for better rates, or maybe it’s to provide a more personalized experience, all of those things can play a really important role. But you have to have the foundation in place to be able to take advantage of that, and being able to support a much more data-driven approach to how you price, or how you interact with the customer, is a big opportunity.

David Antoline: For the first time in a while, established companies are seeing retention and acquisition as a real area of opportunity. For a long time, yes, there were always battles between established companies as to who could take a certain percentage of the market, and in a lot of cases that was more of a trading exercise. But with the advent of insurtech companies that are actually scooping up significant portions of the market in certain segments, with the ability for upcomers to grab pieces of the market more quickly, this has now become an opportunity for every company. And that is, how do we focus on retaining the customers that we have, that we want to make sure that we keep, while also advancing into markets or segments that we maybe haven’t operated in, in the past?

This generally is accomplished through two approaches. The first is in building experiences that are very product minded, and this is a big change for an established company to think this way. But in rolling out experiences that truly come from a product-first approach, they’re able to introduce a different side of the company, not only from a technical standpoint but actually from a branding standpoint, and really change the dynamic of how people view their brand in the wild.

The second element is in using data as a tool to actually drive a product set that better match their customer base. We have seen customers actually leapfrog contenders by paying attention to user behavior and market behavior, thinking about how they can use their own data and their own longevity to their advantage. And then, launching similar products that offer unique twists or unique offerings that frankly, nobody else has the ability to launch because they’re the only ones with that background and the only ones with that data.

So, there’s a real opportunity to take advantage of having been around for a while, to take advantage of having a staff of people that really know what they’re talking about, and to turn that into something that actually represents an opportunity as opposed to something that can slow you down in trying to catch up, and ultimately, lap the competition.

See more from our experts:

Authored By

Chris Hart

Founder, Chief Executive Officer

David Antoline

Managing Director, Commercial

Maurice Walker

Director

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Meet our Experts

Chris Hart
Founder, Chief Executive Officer

Chris has more than 15 years of technology leadership experience with a specialized focus on financial technology solutions in the consumer, commercial and wealth management space. He has led software development, infrastructure, and QA organizations at multiple Fortune 100 companies and also helped grow and launch a number of early-stage technology companies. Chris’s technical expertise, startup experience, and global program management background enables our ability to support a wide range of clients at all stages of transformation.

David Antoline
Managing Director, Commercial

Throughout his 15-year international career, David has held senior leadership positions in both startups and top tech organizations alike. Prior to joining Levvel, David's team built what has become the de facto enterprise software platform within the collegiate athletics market. As MD, Commercial, David applies a dedicated customer focus to Levvel's world-class delivery model and product offerings.

Maurice Walker
Director

Maurice Walker is a Director at Levvel. He has advised global corporations on how to maximize business value by capturing and leveraging actionable data to increase revenues, enhance the customer experience, and/or reduce operational experiences and time to market. This is accomplished by engaging various aspects of the business and technology organizations to provide and effective business case, and managed the entire process from solution-building, legal and financial modeling, as well as delivery management. Maurice currently lives in Kennesaw, GA with his wife, Chantel, and is the father of two sons—Marcus and Malcolm.

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