The insurance industry of yesterday can be summed up in one sentence – Hindsight is 20/20.
Traditional insurance carriers focus on making homeowners whole … after an event. It’s a reactive business model that impedes resilience in today’s ever-changing marketplace.
The onslaught of IoT in 2016 saw the rise in home automation and the advent of advanced technological mitigation. Automated leak sensors began to inform homeowners of potential leaks in their homes through an app on their phones. Cameras placed around the property alerted homeowners relaxing on a beach 500 miles away of a package placed on their doorstep. From a desk in the office, homeowners turned up the heat of the programmable thermostat, so they would walk into a comfortable environment once home.
While insurance carriers began giving discounts for such smart home devices, which can mitigate water damage, theft, and other claims, next-gen insurance carriers, agencies, and insurTechs challenge these long-held paradigms with a focus on prevention, leveraging predictive analytics and marrying data with preventative insights directly to policyholders. Rather than waiting for a home claim to occur, future-ready organizations prevent homeowners insurance claims from happening in the first place, and it’s only a matter of time before the entire industry follows suit.
Proactive > Reactive
Many insurance carriers use phrases such as #ThinkSafe or #MakeSafeHappen, but how many actually encourage their policyholders to do just that? Nearly nine out of ten carriers focus on improving the home insurance buying process and nearly 70% are investing in changing the buying process. Yet one of the biggest concerns for most carriers is increasing customer expectations, and many of the top 50 carriers fear they’ll lose customers and fail to win new ones.
The way to boost customer retention and entice potential new policyholders is by delivering best-in-class service that goes beyond the traditional reactive policies of yesterday. Today’s AI-driven capabilities allow insurance companies to adopt a granular – and innovative – approach to claims prevention and customer engagement.
A Lexis-Nexis’ study found that self-service apps for customer-led inspections and photos impact the way almost all carriers (93%) do business. Self-service apps will continue to disrupt carriers’ organizational models with the key to exceeding customer expectations and welcoming new policyholders being: engagement with customers before a home claim happens.
Rather than requesting the homeowner take pictures of their $10,900 water damage claim (this is the average cost of a water damage claim, which happens to one in 50 insured homes per year, or 2%), carriers can use predictive analytics to identify which homeowners are more likely to have a water claim and offer steps to reduce their risk. Geo-centric notifications can also encourage homeowners to check their pipes during periods of extreme cold temperatures and apply preventative measures to avoid an issue. When it comes to fire claims, which cost on average $78,838 each, carriers can remind homeowners to clean their dryer vent annually and install smoke alarms. Even the number of burglaries can be reduced by taking precautions such as installing outdoor lighting, motion sensors and appropriate perimeter landscaping.
Why continue to emphasize the past when your company can save your policyholder from future perils and your company from future claims?
Shifting focus to preventative practices with the help of digital enhancements will amplify your brand with policyholders and prospects through enhanced personalization. By increasing positive engagements that encourage risk-averse behaviors, you’ll lower your exposure to home claims and reduce losses while also meeting customers’ rising expectations.
As structure fires caused over $12 billion in property damage in 2019 alone, it’s only a matter of time before the insurance industry evolves beyond its current reactive policies and aligns its business to take advantage of preventative technologies, data insights and predictive analytics to boost bottom-line growth.
Will your organization evolve, or will it be left behind?