Motor insurer digital maturity, touchless auto claims and customer satisfaction, Mike Daly

Touchless auto claims have frequently been in the news this year as AI powered platforms analysing millions of vehicle images are piloted and deployed at scale by major insurers. In parallel, advanced driving assistance systems (ADAS) data is surfaced and dished up for analysis so insurers can better write risk and process claims. Digital transformation is on the move so, what a time for Altus to release the 2021 DigitalBar- a digital maturity league ratings for UK auto insurers.

“We have new winners! AXA are now leading the pack in the Car Insurance rankings, with both Aviva brands (Aviva, QuoteMeHappy) not far behind. The 2020 leader (1st Central) maintain their high position at number 4, with another AXA brand (Swiftcover) completing the top 5” There are other insurers moving up the table like Tesco Underwriting which transformed its claims technology in 2020.

Now, two caveats before we review the digital transformation taking place at these insurers.

First-“Claims in the Digital Age”

Transformation and innovation must achieve measurable goals across three key areas described by McKinsey in

Customer Satisfaction
Effectiveness
Efficiency

The lowest ranking insurer in the digital maturity table is NFU Mutual BUT- its customer satisfaction ratings are top ranking. So- digital transformation is not the goal itself but improving outcomes for insurers, brokers, repair network partners and policy holders is. Behind every insurer a dedicated team of claims handlers and supply chain teams are a critical success factor and when they are augmented with the best technology make a winning combination.

SecondPolicyholders pull back from digital claims in post-pandemic insurance world

- Reuters report an interesting trend quoted by Ian Thompson (Group Chief Claims Officer at Zurich) suggesting that policyholders are starting to pull back from digital channels as the COVID-19 pandemic eases and reverting to in-person ways to file insurance claims. See

LexisNexis in its 2021 Future of Claim Study states:

So digital maturity is one means to deliver outstanding products and service to customers. Still- insurers must know why they need to transform, validate all projects with rigorous business planning, strategies, resourcing, and cross-company commitment.

If these are outstanding, digital transformation can be the platform to deliver industry leading metrics for the customer and the company.

The overall picture is of motor insurers achieving high digital transformation in Quote & Buy and Mid-Term Adjustments whilst still much to do for claims eFNOL and even the essential matter of keeping customers and partners informed with automated and ad hoc online messaging.

Altus goes not much greater detail by measuring each insurer across 19 digital capabilities seen below in top ranking AXA.

Just to keep matters in perspective Altus also evaluates pet insurers and the top of the pack in this sector is Bought by Many with an 84% rating.

Hang on you might say, Bought by Many had no legacy core systems inherited over many years M&A activity, pet claims are simpler, and it is not fair to compare the two. However, we already see auto equivalents of this pet insurer who have the industry expertise, start with modern agile and low-code technology platforms, high funding, and fierce ambition to apply the same high digital transformation to auto insurance as Bought by Many has done to the pet insurance sector.

Adiona announced its plans to launch in the UK in February 2022

and has a similar high digital maturity utilising a mix of Duck Creek SaaS No-Code platform, Trak8 Telematics, AI and Data Science expertise from World Programming and the auto insurance products that customers want. Other full-stack insurtechs are already addressing specific auto insurance segments- famously Lemonade with its planned acquisition of Metromile. Np time to stand on ones laurels!

Take Admiral which is ranked joint #17 with DLG- both scoring 46% only just over half that of AXA.

Look at the full table and you can see for yourselves where the gaps (red and amber) are. It behoves all motor insurers to take the same path, beat AXA and Aviva the table leaders and keep Adiona and other full-stack insurtech challengers at bay.

Of course, there is more to overall competitive standing than the 19 digital measures of maturity described. It starts with having the right products. Customers are increasingly attracted to products that reward driving behaviour and can be adjusted as mileage covered changes.

“Telematics programs, including UBI (usage-Based Insurance), PAYD (Pay-As-You-Drive) and PHYD (Pay-How-You-Drive) proliferated and became a “table stakes” for auto insurers – despite anaemic adoption rates averaging between 5%-7%, new intermediaries emerged to enable and support carrier programs. These included not only TSPs (Telematics Service Providers) such as Octo, IMS, True Motion, Cambridge Mobile, Vitality Drive and The Floow. In addition, TDEs (Telematics Data Exchanges) were introduced by large insurance industry information providers such as Verisk, Lexis Nexis Risk Solutions, CCC Intelligent Solutions and Arity, an Allstate company which offers driver behavior insights for tens of millions of drivers. These exchanges are essentially permission-based platforms connecting car, drivers and auto insurers which share embedded and mobile vehicle Telematics data in normalized format for use by auto insurers to provide usage-based insurance (UBI) programs and Telematics-enabled claims capabilities.”

Steven Applebaum and Alan Demers in Telematics 2.0-Enabled Insurance Economy: Virtually Unrecognizable

Customers buy on price and UK insurers apply price walking to attract new customers on aggregators’ sites, where 80% of policies are sold, but from February 2022 this practice is banned by the FCA so the brutal price cutting must be replaced by product differentiation and value for money.

The whole question of repair networks is a critical area when it comes to vehicle repair. The best triage, orchestration and communication platform in the world is only as good as the business relationship between insurers, body shops, garages, and repair networks. Many of these will not open their appointment making systems to insurers putting a barrier to automated appointment making by customers. Some insurers like DLG and Ageas have a closer relationship with authorised repairers but even then, connecting the various systems and platforms is an issue.

Technology can be best leveraged when the leadership, culture, organisation, structure of insurers and the supply chain are aligned. It all comes back to vision, strategy, and ability to execute.

When these are shared with technology partners the capacity for effective digital transformation is high.

Take the combination of data and AI applied to the automation of claim validation, total loss v repair decisions, automated repair estimation software.

LexisNexis Vehicle Build has been adopted by Admiral so that it can analyse the ADAS data on new build vehicles to enhance underwriting, product development and claims. There is a link between ADAS features in the vehicle and claims frequency and severity.

A day after Mitchell and Tractable announced Tractable’s photo estimating artificial intelligence Mitchell Intelligent Estimating, the two software companies revealed their first customer: the Hartford. Mitchell also partners with Claims Genius to marry AI with AI.

was available to auto insurers through

CC Intelligent Solutions offers a wide range of similar technology solutions and was chosen by Sedgwick to deliver AI powered claims capabilities.

If an insurer cannot achieve the digital maturity over the 19 features measured by Altus will they succeed in the complex areas described above?

Or will the auto OEMs win the technology wars as they seek to embed insurance at the point of sale or lease as Tesla is determined to do? Or the switch to commercial insurance as Shared Mobility services grow? These include ride sharing (e.g. - Uber, Lyft) car sharing (e.g. - Enterprise CarShare, Zipcar, Car2go, GIG, Turo, Getaround) and rely heavily upon Telematics and is projected to continue to grow as vehicle ownership declines and socio-economic factors continue to change the mobility landscape.

Which technology partners should insurers turn to outcompete other carriers, fight against disruptive full-tack insurtechs and partner with auto OEMS rather than fight the ambitions to monetise the data streams from the vehicle technology stacks of connected vehicles?

AXA the leader in the Altus DigitalBar transformed on the platform of the core insurance platform Guidewire which is the “gorilla in the market” across the whole value chain. On the other hand, the cost and time of licensing, deploying and maintaining these leviathan core systems of record are a barrier to innovation.

DLG another Guidewire customer has invested heavily in newer, agile digital platforms as “digital wrapper” around its Guidewire core.

Allianz likewise has its inhouse core systems and investments in licensing digital wrapper platforms integrated with its core systems.

Tesco Underwriting decided to build rather than buy using low-code technology and partners and its in-house knowledge and expertise in auto insurance.

The lesson is that there is no one path to success and no one combination of technology partners to achieve digital maturity and market leadership. In my article last week “Home Claims, Industry Challenges and the role of Technology” industry leaders listed three key success factors for partnership.

Trust
Respect
Like

It is one thing to pilot a very tight project such as implementing eFNOL and Self-Serve FNOL to revitalise a claims system that does not offer this benefit. But quite another to transform every auto peril across the whole company when you have a core system that is upgraded every three or so years and multiple technology stacks sucking the energy, time, and budgets out of central IT. Risk is far higher in the latter and reward more difficult.

Every point solution deployed adds complexity, the potential for data degradation at every crossing point of data extraction, ingestion and sharing. Even with a 95% accuracy at each intersection the final accuracy integrating five different point solutions is in the 77% range!

So, partnerships where a single data model is proven, and integration capabilities proven is a must in ant technology partner choice. Many “talk the talk” but fewer “walk the walk”.

I have mentioned many potential technology partners in the article and summarise these below not as a definitive set but an initial short-list to add to your own research. I have had to chose technology partners and systems integrators to plan, implement and deploy enterprise transformation and these decisions are critical to short-term outcomes and long-term success.

Major core insurance platforms

Guidewire, Duck Creek, Majesco, ICE, Pega, Innovation Group and so on. Good on breadth of functionality but sometimes lacking in specifics e.g., claim management. And traditionally involving Capex and high annual licensing costs though that is changing.

Quote & Buy, MTA & Renewal Platforms

like Go-Insur, HUGHUB, iptiQ that enable an insurer to allow a customer to interactively manage all their policies from one dashboard

Digital Claims Platforms

Synergy Cloud, RightIndem, Snapsheet, ClaimsGenius, Salesforce Industries, Five Sigma, 360Globalnet, Claims Technology etc

Auto Ecosystems Providers incl. telematics data exchanges:

Verisk, Lexis Nexis Risk Solutions, Mitchell International, CCC Intelligent Solutions and Arity

Point Solutions:

Weathernet, Tractable, Audatex/Solera, Shift, Friss Sprout.ai, Solera and many others

Telematics Service Providers:

Octo, IMS, True Motion, Cambridge Mobile, Vitality Drive and The Floow

Shared Mobility Systems: Uber, Lyft, Enterprise CarShare, Zipcar, Car2go, GIG, Turo, Getaround

Combined claims services and technology providers