5 Tech Trends Revolutionizing the Insurance Industry
5 Tech Trends Revolutionizing the Insurance Industry
By John Sarich
From property & casualty to healthcare, big technology changes are coming for the insurance industry. With the onset of the Affordable Care Act, a whole new world of required technology has become necessary for health insurers. And while property & casualty is typically reluctant to adopt new technology, the industry is now on the front-line of societal and business change. Both sectors must develop and adopt new technology to meet the ever-changing needs of the insurance marketplace.
Here are five technology trends that are revolutionizing insurance – from healthcare to property & casualty:
Aerial and Digital Imaging: Aerial photographs of houses, business, terrain, roads, and so on are changing the way we handling property & casualty claims. The days of climbing up on a roof to view it and to measure the roof to ascertain cost of replacement or repair are soon to be over. This technology is also useful in underwriting to determine, for example, the precise location and dimensions of all of the buildings on a farm. Obtaining an image of a farm and cropland gives an underwriter the information that they require in assessing the risk, and can prove invaluable at claim time. In addition to looking at roofs and other property, it could also be used to prove that there is in fact a building or a business at a location that is near a flood zone. Another benefit of this technology is that it can provide geocodes for all of the properties that an insurer has in its portfolio which can be a useful tool in assessing property exposure in a geographic area.
Cybersecurity: The need for cybersecurity became apparent with Target’s recent massive security breach. Although healthcare has made security of patient information a top of mind issue, handling millions of individual financial transactions everyday with the onset of the Affordable Care Act will push the limits of the industry’s current financial and accounting processes. Most non-health insurance companies are familiar with cybersecurity issues and have decades of experience in managing the security of customer information on a very large scale. But, health insurance companies simply don’t have that proven experience and will need to acquire it quickly.
Mobility: Customer service via handheld devices will be important and cost effective if the security issue is resolved and the information that can be accessed by the member is accurate. Carriers have the budget and the resources to enable, via customer portals, access to information for self service. Larger advisory firms will also find that their customers will prefer to selfserve when it is feasible. However, the advisory firm will not be able to provide claims or other information that is the purview of the carrier. Customers will expect to be able to call, text or email their advisor to get questions answered in a timely manner.
Compensation Management Software: A common concern for healthcare advisors is how and when they will be paid. The Affordable Care Act puts agent commissions and compensation in the medical loss ratio formula. Depending on the plan, the MLR will either be 80 or 85 percent. If a MLR is set at 85 percent, then all of the allowable administrative expenses of the carrier, including agent commission, is 15 percent. The advisor compensation from a small group with 100 employees is going to go from roughly $6,000 to less than $1,000 per year. Accounting for all of those small commissions that will show up on the monthly account is going to be more than the typical Excel user in the Accounting Department will be able to manage. Software that can reconcile and accurately forecast commission revenue is going to be essential in the wake of PPACA.
John Sarich brings over 25 years of insurance industry experience to VUE Software. As vice president of strategy, he uses his extensive knowledge of insurance operations, information technology (IT) systems, sales and marketing to develop and define operational strategies for the company’s sales and marketing initiatives. Mr. Sarich has senior executive experience in health, life, and property and casualty (P&C) insurance and has served at brokerage firms where he captured substantial revenue gains and made dramatic increases in operational efficiencies.
