Technology

TECH EVOLUTION: LESSONS LEARNED

Wisdom gained over time can help agency professionals ride the next insurtech wave

By Elaine Nance

When I started as a licensing specialist in 2003, it was still largely a paper-based process. We had the technology to accept clients’ demographic information electronically, but many people were reluctant to share confidential information online—despite rigorous security protocols. We created fillable versions of the different state application forms and linked them to our database. At that time, many in the business were still typing applications.

Even though we tapped technology early on, we still needed to print the lion’s share of the completed forms, because only a handful of states accepted online applications. We had a team member whose full-time job was to sort completed forms into bulk shipments to the various regulators sowe could save money on courier charges.

How things have changed!

While a few specialty licenses still involve paper forms, the majority of applications and renewals process electronically. Did increasing uniformity in state regulations make this faster, more accurate electronic landscape possible? Or did the adoption of technology drive the move to uniformity?

In my mind, it’s a bit of a “Which came first: the chicken or the egg?” question. Improved technology and increased uniformity created a synergy that benefitted everyone. Today, insurance professionals not only accept but expect the ability to view and modify their compliance information at any time, from anywhere in the world.

To remain competitive, insurance professionals need to truly understand the technologies shaping our industry. Jumping onto the bandwagon of an over-hyped technology can be just as devastating as lagging behind the adoption curve.

Certainly, the evolution has not been completely straightforward. For example, early efforts to improve uniformity in surplus lines compliance under the Nonadmitted and Reinsurance Reform Act (NRRA) floundered. Today, shared tools like OPTins (an electronic premium tax filing tool) and SLIP (Surplus Lines Information Portal) are making inroads. Still, surplus lines procedures remain—let’s say—distinctly individual to the various states.

As we ready for the next wave of insurtech, what lessons can we learn from our journey? How can we apply this wisdom to ease the adoption of new technologies? And what are the potential drawbacks?

Better, faster, stronger

Back in the day, it wasn’t uncommon to wait from two to 12 weeks for an insurance department to respond to an application. We had to keep different sizes and colors of paper in stock to meet specific state requirements.

Now, all accept online applications for major lines, limited lines, and surplus lines using a standard interface based on the NAIC Uniform Application. Even adjuster licensing has become more uniform! And while there are still circumstances that can slow the review of a license application, the majority of applications—for the major lines of authority, at least—tend to be approved in 24 to 48 hours.

Back then, we also had to attach proof of resident licensing to non-resident applications. These were either license copies or Letters of Certification. Now state regulators, insurance companies and even consumers check license status against the NIPR (National Insurance Producer Registry) database or department of insurance websites. It’s so much faster and more accurate!

The downside of this information sharing is, well, regulators are sharing information. When a regulatory issue arises, it’s essential to address it immediately with ALL states simultaneously. Regulators will find out about it, and you want to be the one who brings it to their attention. Also, potential employers and clients can easily access information about a producer’s history, so protecting your regulatory reputation is critical.

Lesson for the next wave: Automation profoundly impacts users’ expectations. Once clients get used to near-instant responses, even a short delay becomes intolerable. Think about it: How often do you stand tapping your foot impatiently waiting for the microwave to ding?

Ensuring consistent access to information requires an ongoing investment in technology infrastructure and cybersecurity measures. It also means recruiting skilled personnel to maintain them.

Running with the big dogs

When Arleen and Ted Taveras founded Insurance Licensing Services of America, Inc., their primary goal was to develop and implement technologies to help insurance agencies of all sizes access the licensing and compliance services that then were available only to the largest agencies. Technology was and is the great equalizer. It allows licensing services to be delivered by a handful of highly trained experts that before would have required whole departments at major carriers.

Today, internet access, podcasting, blogs, and mobile apps mean that tech-savvy independent agencies can compete with the captives of nationally recognized brands on an even playing field.

Of course, it also means that your new competitor can come from anywhere.

Entrepreneurs crossing over from tech fields continue to challenge incumbent agencies and carriers alike. They bring fresh eyes to the issues that insurance customers face. Often, they prove to be more agile than existing industry players in pivoting to meet changes in consumer needs and expectations.

Additionally, investments by national carriers in technology solutions make the direct sales channel more and more appealing to consumers. This trend fuels speculation among some that the age of the independent agent is over. Some even question whether technology will make insurance as we know it obsolete.

Technology also is making real-time communication between policyholders, insurance producers, and carriers not only desirable but essential. Customers don’t see agents and carriers as separate entities, so they don’t want to provide the same information twice! Consequently, agencies and carriers are starting to get serious about upgrading their systems and are building out functionality that allows them to share information more easily.

Lesson for the next wave: While technology tends to change how we do our jobs rather than what we do, sea-change moments are coming closer together. To remain competitive, insurance professionals need to truly understand the technologies shaping our industry. Jumping onto the bandwagon of an over-hyped technology can be just as devastating as lagging behind the adoption curve.

An excellent solution is adopting a greenfield approach to innovation—or starting from scratch. Additionally, professionals at every stage of the insurance process must be willing to implement new solutions to remain relevant.

The (im)personal touch

It’s a reasonable concern that greater uniformity may be mistaken for sameness. If everyone is doing the same things the same way, how does anyone set themselves apart from their competition?

We often talk about insurance as being a relationship-based business. Increasingly, however, the idea of a local insurance agent meeting with a client over a cup of coffee to discuss changing coverage needs seems old-fashioned. Younger clients, in particular, actually seem averse to this kind of communication. At the same time, data collection from social media and IoT devices and analytics of historical data promise to let us know more about each other than ever before.

Here’s a question to contemplate: Is knowing about someone the same as knowing them? In our rush to implement sales funnels, targeted marketing, do-it-yourself quoting and claim adjusting, are we losing something more valuable than a bump in the bottom line?

At the 2019 Insurance Nerds Day, educator and commentator Bill Wilson described insurance professionals as “second responders.” This concept, that we are there for those we serve as soon as possible after a loss—whether a fender-bender or a multi-state CAT event—to help them put the pieces of their lives back together again, is a powerful one.

Lesson for the next wave: We are human beings helping human beings. It’s going to be a while before a chatbot can replace that! Automation offers to take over routine tasks: for example, providing proof of insurance, answering standard questions, cross-checking policy language, etc. That frees up people to work with clients.

We can identify their emerging insurance needs and ensure they truly understand their coverages. We can also help them negotiate the often-confusing insurance process in a way that creates real satisfaction and gives them peace of mind.

When all you have is a hammer

In the end, it’s important for us to remember that technology—no matter how sophisticated—is simply a tool. Obviously, great tools offer many benefits, but we are the tool users. It’s very easy to let technology shape our products and processes.

As we speculate, for instance, about whether AI or any other technology will replace us, maybe the better question to ask is, “If a machine can replace me, what am I not doing right?”

The author

Elaine Nance is a marketing specialist for Insurance Licensing Services of America, Inc. During her sixteen-year association with the firm, she has helped agents and agencies nationwide manage their licensing and compliance, and carrier contracting and appointment needs. She writes extensively on trends in the insurance industry, including technology and cybersecurity, and leadership and development.