Insurance agents know better than most that change is inevitable. The rate of technological advancement keeps speeding up exponentially. No one knows this better than Tony Tarquini, European Director of Insurance at Pegasystems.
For 34 years, he has been working with the largest insurance organizations in the world to help them prepare for technology disruption. In short, he was insurtech before there was insurtech.
He recently sat down with Michael Jans and made some important predictions about the future of technology in the insurance field. The message was clear: whether technology hurts or helps, agents need to prepare for the future today!
AI Will Shift Insurance from Risk Mitigation to Risk Prevention
New technology will be so disruptive that the very principles that have guided insurance for centuries are no longer a sure thing. According to Tony, agents will no longer primarily sell Risk Mitigation but instead will play a much larger part in risk management and prevention.
“The mantra of the insurance industry has been “the premiums of the many pay for the claims of the few.” It’s been about Risk Mitigation. That’s a great premise and it’s worked very well for 350 years, but the world’s moving on now.”
New technology is the key to enable agents to make this shift from mitigation to prevention. Artificially intelligent solutions will allow agents to intervene before disaster strikes.
“I think insurers are going to take a much larger role in helping clients to manage and monitor their risk. Using artificial intelligence agents will automatically be able to go back to a client and say, “There’s a risk event happening here. You need to be aware of it. We need to be able to deal with it,” said Tony.
Driverless Cars Will Decrease Personal Lines
Moving to driverless vehicles is the kind of technology shift that will DRAMATICALLY change our way of living. It won’t even be clear until it is actually upon us how many aspects of life will be affected.
“As you get closer and closer to the point where people take their hands off the steering wheel and cars become autonomous, who’s liable? There will no longer be a requirement for a personal lines auto insurance policy. It’s going to be provided by the manufacturer. It’s going to shift to commercial lines, commercial liability policies. Forbes reckoned a 60% reduction in (personal line) premiums as the risk diminishes and collisions stop happening.”
There is already technology giving agents the ability to work with manufacturers to gather information and mitigate risk from the commercial side. Some of the advancements happening right now are changing the game.
“The auto insurers are starting to build intelligent systems into their vehicles which constantly monitor everything. When something goes wrong, they’re doing something about it. In Italy, they have black boxes in cars monitoring what’s going on. They are amassing huge amounts of data, and they’re helping their customers to understand what’s happening on a real-time basis,” said Tony.
The Sharing Economy Will Discourage Ownership
Millennials are less likely to buy cars and houses than past generations were. Concerns about student loan debt keep many millennials from purchasing homes and automobiles. And with the improved coordination capabilities of apps like Uber and Postmates, owning a car, and even knowing how to drive are starting to feel superfluous.
“People are getting used to the idea that they will never own a car. They’re very comfortable with that. They may not even take their driving test. When they need to get somewhere, they just hire a car. And it won’t be “I’m hiring a car that I can drive to somewhere.” It’ll be, “I’m hiring a car to take me somewhere.” We’re already expecting that.”
Without car owners, personal liability claims take another hit. Even those who do purchase a self-driving car won’t be liable for driving it.
“If you really decide that you want to have a car, the manufacturer will provide it and they will be liable if something goes wrong with the software on that journey of getting you somewhere. That will be part of their commercial liability insurance,” said Tony.
Real-time Communication Will Improve Customer Retention
They say it’s five times as valuable to retain a client than find a new one. Retention is something that all insurance agents are constantly struggling to improve. According to Tony, the key to retention is providing “real-time communication” enhanced by an AI assistant to deliver service that gives a customer exactly what they need exactly when they need it. Imagine if every CSR had a program on their computer that—at the moment a client calls your agency—displayed all relevant details about this client, and offered real time guidance on how to proceed; whether they should only focus on the current issue, do greater retention work, or try to cross-sell.
“At that moment when the customer is really upset and trying to get a problem solved, the operators know how to do the right thing. They know this is a customer we really want to keep. because he’s got a lot of policies, he’s been with us for a long time, he very rarely claims, and we very rarely hear from him.”
Using better technology and defined processes to deliver a customer-service experience that delights the client is the surest way to retain that client.
“When real-time communication happens, there is a 38% improvement in the retention of people who were going to leave. Let’s not forget that’s 38% of the ones they want to keep. That means that every operator is as good as your best operator because they all know the same thing. They’re all being advised the same way. They can all empathize with the customer,” said Tony
Attracting Millennials Will Require Adaptation
Millennials are quickly becoming the largest generation in the labor force. Adapting to their insurance needs and preferences is one of the best ways agents can prepare for the future.
“Agencies have to use technology that is going to allow them to deliver to Millennials what they want from an agent. They’ve got to be able to interact with their clients on a regular basis.”
Raised with the Internet, email, and social media, Millennials have a significantly higher expectation when it comes to interfacing with an agent. Tony said they need to consistently communicate with clients on a personal level.
How many of your agents, for example, send out an email to their clients saying, “Happy birthday?” I know insurance companies don’t do it even though they have the contact’s date of birth. They never use it,” said Tony.
Preparing for the Future
Every organization must adapt to new trends and the importance is even greater in the insurance field. If you don’t want to move forward, that’s bad news.
If, however you feel you can adapt with the times, there are huge opportunities ahead. New technology, including Artificial-Intelligence, is available and can take your agency’s capacity to new heights.
Agency Revolution provides the kind of technology agents need to future-proof their agencies. Automated campaigns, AI-curated content, and real-time communications are just a few of the benefits our customers receive. To learn more about AR’s solutions, click here.