Insurance Buzzwords: Q1 2017 Wrap-Up

Every year industry buzzwords infiltrate the speech of industry insiders across all business sectors – insurance is no exception.  While there is often a distaste for buzzwords amongst industry pundits, it is nevertheless important to familiarize yourself with them so when conversations do come up, you can at least talk the talk.  This is aptly called Q1 2017 as there undoubtedly be more buzzwords to sprout up during this year.  Some buzzwords are a passing fad that will get lost in time and space after the year has passed; however, a few will actually evolve into more than a catchy phase and become a transformational element of the industry.  Only time can tell.  Either way, getting a clue to what everyone else is saying is important for anyone, regardless of industry tenure.  So I can mark the history books, here is my list of for Q1 2017.

 

Gamification

Gamification has been a growing trend for years in industries such as education and research.  If you are not familiar, you should take a quick crash course.  Businesses have been turning existing websites, apps, and other materials into game-like experiences where employee or customers can participate in a more engaging manner.  The insurance sector is no outsider to this growing trend.  Its application spans all stakeholder segments from insurers to agents to customers.    For consumers, especially millennials, gamification presents an opportunity to be rewarded for participation.  Insurers are able to obtain deeper insights into habits and propensity of buyers to insure specific aspects of their livelihood.  Insurers have also toyed with gamification as a way to train employees.  Allstate has been an early adopter and had about 56,000 employees participate in an online course which incorporated a superhero and villain.   Expectations are that gamification has more applications on the life & health side which focus on getting policyholders engaged with personal wellness, but the potential for P&C largely remains untapped.

 

 

Touchless Claims

As the insurance industry begins to embrace all things InsurTech, a major focus has been on claims handling.  The new standard in the industry is touchless claims.  This is a notch above the virtual claims handling/processing which has been synonymous with personal auto carriers apps used to snap photos and submit claims.  No need to send appraisers out into the field.  Touchless claim handling is similar but does not require any claims staff to process any part of the claims – from intake all the way to resolution.  Technology systems can evaluate and pay the claim without any human involvement.   Touchless claims can reduce the number of touches by staff by 50%-100%, while cycle times have been known to improve from 4-6 days to only 1 day.  A recent example has been highlighted by industry newcomer, Lemonade.  They recently announced they were able to process a claim in 3 seconds and with no paperwork (which they also claim is the world-record).  Lemonade use artificial intelligence technology to assess the claim, review for any potential fraud, and issue payment directly to the policyholder.  Expect to see uses in small claims, typically those defined as ‘fast-track’ continue to rise among carriers.   Several examples where touchless claims can have the biggest impact would be simple property losses, first party auto comprehensive losses, or low value medical only workers’ compensation claims.

 

Nuclear Verdicts

This is term has been strictly limited to label the severe trial verdicts in trucking accidents handled down by judges and juries for – in most cases –catastrophic losses.  These verdicts have been a growing trend but now have a name.  Settlements have ranged in the tens of millions of dollars for truckers whose negligence left claimants either with critical, life-altering disabilities or were killed in the accident.  These settlements values are increasing while, thankfully enough, the number of fatalities actually are decreasing.  Per the Department of Transportation, the number of fatalities per 100 million miles driven has decreased by about half since 2000.   Even so, major carriers such as AIG and Zurich have ceased writing business while premiums have skyrocketed, by some accounts 15-30%.  These verdicts will also impact self-insured retention levels trucking companies may be asked to retain if they want to bind coverage.  Hopefully, integrating autonomous vehicles and trucks in the equation will improve safety, and the industry may undergo a reversal of trends over the next few year making this term obsolete.

 

About Brian Reardon MBA,ARM,AIS

Brian Reardon, AVP of Worker's Compensation Claims at Maiden Holdings in Bermuda and NYC. He has over 14 years of P&C experience working on all sides of the industry including carrier, reinsurer, TPA, broker and employer. He holds multiple industry designations and a MBA in Insurance and Risk Management from St. John's University. He's a Board Member at AmComp (American Society of Workers Comp Professionals) and a Fellow at the Claims & Litigation Management Alliance.

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