DIGITAL COMMUNICATIONS IN INSURANCE · Figure 1. The Evolution of Digital Communications Options The diagram shows the chronological evolution of communications options on the X-axis

© 2020 Strategy Meets Action All Rights Reserved | www.strategymeetsaction.com

SMA Research Report

DIGITAL COMMUNICATIONS IN INSURANCE:

Managing the Expanding Options

An SMA Research Report

Published Date: July 2020

Author: Mark Breading

SMA Research Report 2© 2020 Strategy Meets Action All Rights Reserved | www.strategymeetsaction.com

Digital Communications in Insurance: Managing the Expanding Options

TABLE OF CONTENTSCommunications in the Digital Era 3

Changing Patterns Due to the Pandemic

Evolution of Digital Communications

Insurers and Digital Communications 5

Insurer Plans

Types of Insurance Interactions

Messaging and Collaboration Platforms

Chatbots

Voice Assistants

Personalized Interactive Video

Augmented/Virtual Reality

Digital Communications Enabling Platforms 13

Categories of Enabling Tech Solutions for Communications

SMA Recommendations for Insurers 15

About Strategy Meets Action 16

Use of Our Reports

About the Author



COMMUNICATIONS IN THE DIGITAL ERAThe methods we use to communicate have dramatically changed in the 21st century. For most of human history, there were only a few basic ways to communicate. Initially, it was just face-to-face discussions or written communiques that were physically delivered to the recipient. In the 1800s came the telegraph, then in the 20th century, the telephone made remote voice discussions prominent, and digital methods like fax and email became widespread in the second half of the century. In the current century, the pace has accelerated due to digital technologies, and there are now many ways to communicate one-to-one, one-to-many, or many-to-many. These new communication options have revolutionized every aspect of business and society, and there have been profound implications for the insurance industry. This research report will describe the many options available and demonstrate why insurers need to rethink digital communications strategies.

Changing Patterns Due to the PandemicWhen the New Year 2020 was celebrated around the world, no one could have predicted what a year of turmoil was to come. Among the many repercussions of the pandemic were the stay-at-home orders and business closures. The need to conduct business across the physical separation of the office and the remote employee mandated the acceleration of digital communications options. As hundreds of millions of people around the world transitioned into the work-from-home mode, the need to use various digital tools for interaction became mandatory. And now, the patterns of communication are forever changed. The vast bulk of the population has had to become familiar with a wide range of tools for communications and interactions (whether they wanted to or not).

Even as workers move back into the office, and people begin to visit business locations again, the lessons learned during the pandemic will reflect a new reality in how we communicate. A significant percentage of workers will keep working at home, at least for some days each week. And individuals that previously only did business face-to-face or via phone will now be more apt to do business online. The insurance industry, a slow adopter of new communications technologies, will need to understand and adapt to the new realities to remain relevant and enable continued business success.



Evolution of Digital CommunicationsAn explosion of communications options has arisen in this century, especially in the last five to ten years. The diagram in Figure 1 illustrates them.

Figure 1. The Evolution of Digital Communications Options

The diagram shows the chronological evolution of communications options on the X-axis and the overall penetration of each on the Y-axis. It is important to note that the positioning is in the context of the world-at-large, not the insurance industry. For example, voice assistants are positioned relatively high on the user penetration scale overall, although insurers leveraging these devices are still relatively few. The more current business-oriented technologies will be assessed the next sections (the boxes on the right side of the diagram). For the key technologies, there is a description of the communications category, the identification of prominent providers, an assessment of the insurance industry’s adoption/usage, and relevant use cases.

Note: Digital payment solutions support a unique type of interaction where money exchange is involved. For an insightful view on the state of digital payments and the opportunities for insurers, see the recent SMA Research report, Digital Payments are Red Hot in Insurance.

US

ER P

ENET

RA

TIO

N

TECH SOPHISTICATION

Messaging & Collaboration

Platforms

Voice Assistants

Personalized Interactive

Video

Chatbots

AR/VR

Social Media/Mobile Apps

SMS

Email

Portals

Instant Msg

Fax

Source: Strategy Meets Action 2020



INSURERS AND DIGITAL COMMUNICATIONS

Insurer PlansFigure 2 shows the percentage of insurers that plan to invest in solutions in each area from 2020 through 2022.

Figure 2. P&C Insurer Plans for New UI Tech

SMA research indicates that chatbots and voice assistants are the two areas that most often appear in insurer plans. Business SMS texting is also planned by over 50% of P&C insurers. These plans are likely to change and even accelerate due to the pandemic.

Chatbots

Voice Assistants

Business Texting

Messaging Platforms

Personalized Interactive Video

Augmented/Virtual Reality

12%

19%

31%

56%

60%

77%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: SMA Research, 2019 Transformational Technologies for P&C, n =57



Types of Insurance InteractionsAs we evaluate each digital communications option, it is useful to keep in mind the common types of interactions that occur in property/casualty insurance. Figure 3 shows examples of both inbound and outbound communications across the value chain.

Historically, many of the interactions were document/form-based – and those modes are still prevalent in the industry today. However, customers increasingly expect insurers to communicate with them digitally, often via mobile, and frequently with a real-time response. Customers – both agents and policyholders – are using a wide variety of apps, devices, and communication channels in their daily interactions with others, and they want insurers to meet them where they are.

Figure 3. Inbound/Outbound Communications in Insurance


Promotions Newsletters

Annual reports

Asset/Investment

MgmtReinsuranceClaims

Billing & Collections

Policy Servicing

UnderwritingDistribution Enterprise Services

Marketing & Product

Development

Estimates

Claim checksSat. surveys

Denial of coverageClaimant communication

ID cardsWelcome kits

Loss runsStatements

Bills Bordereaux reports

Regulatory reportsFinancial statements

Tax reporting

Prospect lettersQuotes

Commission stmts

Dec setsCertificates

Renewal noticesTerminations

StatementsTrans. confirmations

OUTBOUND

INBOUND

Transaction ordersBalance inquiries

Response cardsSurveys

ApplicationsInfo requests

Risk engineering reports

ChecksLetters

Premium payments

Treaty documents Regulatory reportsEmployment requests

Vendor communication

Cust. service inquiriesLicense documents

Agent circulars

FNOL/FROIAppraiser reports

Medical billsPolice reports

Legal documentsClaim inquiries

Cust. service letters



This research report will focus on the communications options that are newer to insurance and more business-oriented, including messaging and collaboration, chatbots, voice, personalized interactive video (PIV), and augmented/virtual reality (AR/VR). The early technologies such as e-mail, fax, basic texting, and instant messaging are not covered here, although business texting and chatbot solutions are covered as more sophisticated options and ones that insurers are leveraging. The whole category of social media apps is not covered here since they tend to be used primarily for personal interactions. Insurers do leverage social media, but the focus is on advertising/ branding, with communications mostly one-way and non-personalized.

Websites and portals demand special attention since they are widely used by insurers to communicate with prospects, producers, and policyholders.

Websites in insurance have evolved like websites for other industries, with modern approaches like responsive design and HTML5 technologies being widely deployed. Companies with a strong direct-to-consumer approach rely heavily on websites to attract new business and service policyholders. InsurTechs especially focus on advanced user designs for their websites and coordinate those with mobile apps.

In the portal arena, there has been a significant movement toward more self-service portals for both agents and policyholders. However, in insurance, portals are disappearing as a separate software/solution category as they become blended into broader digital platforms. For more insights on portals in P&C insurance, see the recent SMA Research report, Digital Platforms: Why Now, What It Is, and How to Move Forward.

“Portals have been a mainstay vehicle for digital communication between agents/brokers and insurers. As self-service capabilities evolve for policyholders, insurers continue to provide digital engagement capabilities like paying bills, printing vehicle ID cards, obtaining a certificate of insurance, and filing a claim. The big trend now is to create a more customer-centric experience for both the agent/broker and policyholder by redesigning portals and leveraging the transformational digital platform solutions.”

Deb Smallwood, Founder & CEO, Strategy Meets Action



The following sections explore the newer, more business-oriented communication categories.

Messaging and Collaboration PlatformsDescription

Messaging and collaboration platforms include a variety of solutions that enable both real-time and asynchronous communications, the sharing of documents, access to knowledge repositories, the location of subject matter experts, and more. The platforms may include live video sessions, screen sharing, co-authoring of documents, virtual whiteboards, and business texting (integrated with mission-critical systems, incorporating devices beyond the smart phone).

Prominent Solution Providers

Insurance Industry Assessment

Before COVID-19, insurers were beginning to use business texting solutions more broadly, especially in areas of vital customer communications such as claims. Most insurers used a variety of messaging and collaboration platforms, some of which were sanctioned and used enterprise-wide, and others in specific departmental areas. The advent of the pandemic and the associated #WFH movement dramatically increased the use of these platforms. In particular, many insurers that had solutions like Teams or Zoom already in place are now using more advanced features, and usage has become widespread across the company.

Use Case #1: QBE and Hi Marley

QBE North American has implemented a solution called TextQBE to improve communications with claimants. The AI-based solution from Hi Marley is integrated with QBE’s core claims system and is designed to enhance communications through timely responses and the option of a virtual assistant for simple questions.

Use Case #2: Liberty Mutual and Slack

Liberty Mutual has hundreds of Slack workspaces to enable improved teamwork and collaboration. The company uses Slack for problem solving, access to subject matter experts, issue reporting, and a wide variety of communication and collaboration needs.

Use Case #3 Say Insurance and eGain

Say Insurance, the digital brand launched by Shelter Insurance, employs collaborative browsing capabilities from eGain. Customer service agents in the contact center are able to help agents co-browse the website with prospects and policyholders to help them navigate during acquisition, onboarding, and servicing.



ChatbotsDescription

Chatbots are automated conversation engines that provide answers to questions posed by prospects, agents, policyholders, and others. Some use simple question/answer matching techniques. Others use more sophisticated, AI-based chatbots that leverage natural language processing, machine learning, and natural language generation technologies to interpret inquiries, determine the best response, and generate the text response. Chatbots may be text-based or voice-based.



Chatbots burst onto the scene in insurance just a few years ago and are now widely deployed. There are hundreds of examples of insurers using chatbots to provide basic product information, find agents, generate quotes, answer policy servicing or billing questions, and support the claims process. Some are deployed in modes that are loosely linked to core systems while others may be tightly integrated. Digital platform providers are increasingly embedding chatbot capabilities into customer-facing portals and mobile apps. Of all the new options for digital communications, chatbots exhibit the highest levels of activities and plans across the industry.

Use Case #1: Lemonade’s Maya and Jim

InsurTech full-stack insurer Lemonade has deployed chatbots from its inception as a central element of their approach. Chatbot Maya helps in the acquisition and onboarding phases, while Jim is an intelligent assistant used during the claims process. These are two of the most widely known and widely publicized chatbots in P&C insurance, chiefly because they are not an “add-on” or experiment but a foundational element of the company.

Use Case #2: Progressive’s Flo

Progressive Insurance has created a chatbot based on its iconic character Flo. What is a bit different about their chatbot is that it not only helps customers with things like quotes and claims, but it also infuses the Flo personality into the conversation.



Voice AssistantsDescription

Voice interaction is already a prominent method of interaction in the digital era and is poised to become a dominant way to communicate in the future. Voice assistants, such as smart speakers and smart-phone assistants, are gaining traction with consumers and businesses alike. Alexa, Siri, Google Home, and others are used by many people every day. Speech recognition, machine learning, and speech generation technologies have matured significantly in the last five years and are now embedded in vehicles, smartphones, smart home devices, and other connected devices. According to Statista, there are already over three billion voice assistants in use globally, and eight billion are projected to be in use by 2023 1, about one for every person on the planet.



The P&C insurance industry usage of voice assistants is still in the experimental stage. Many insurers have set up Alexa skills or tested the use of voice assistants from Google or other sources. Over the next three years, SMA expects the lessons learned to be applied more broadly as more and more customers expect to be able to communicate via voice – whether it is through vehicles, smart devices in the home, wearables, mobile devices, or chatbots.

Use Case #1: GEICO voice assistants

GEICO was an early adopter of voice assistants and now offers policyholders voice access through Amazon Alexa Skills and Google Assistant Actions. Prospects can find information about GEICO products while policyholders can ask billing or policy servicing questions. Future capabilities planned include requesting roadside assistance, locating a parked car, and finding the nearest gas station.

Use Case #2: Nationwide and Amazon Echo

Nationwide made a big splash in 2019 by announcing that they would provide one million Echo Auto devices for policyholders. This enables drivers to use services such as a new driver checklist for safe driving habits, requesting roadside assistance, and a road conditions service to check the weather before driving.

1 Statista, Number of digital voice assistants in use worldwide from 2019 to 2023 (in billions)*, https://www.statista.com/statistics/973815/worldwide-digital-voice-assistant-in-use/



Personalized Interactive VideoDescription

Personalized interactive video (PIV) is a specialized and highly engaging form of digital communication. As the name indicates, it is a video-based communication that has information specific to the recipient and provides the ability to interact at key points. This requires the video production capabilities, which may include animation, integration with core systems to extract relevant data, and options for the customer to redirect the flow, ask for additional information, or execute a transaction. The basic video storyline can be produced for a mass audience, with real-time integrations to systems that provide information unique to the individual.



Selected insurers have used personalized interactive video for the last 5-10 years. The technology itself is proven, and there are mature solution providers in the marketplace. The key to success for P&C insurers is to select the optimum use cases. The payback can be high, but the production of the videos can also be expensive, so solid business cases must be developed. SMA expects more insurers to use this digital communication method over the next few years, but it will still be used only for selected, high value situations.

Use Case #1: CSAA and Idomoo

CSAA creates personalized videos, using Idomoo technologies, for policyholders leading up to renewal time. The videos describe the current policy provisions and premiums, explain the renewal policy, and offer discounts (such as bundled auto/home insurance).

Use Case #2: Mutual of Enumclaw and Sunday Sky

Regional insurer Mutual of Enumclaw uses PIV technology by Sunday Sky to onboard new customers in a way that is unique and very personalized. In addition, they have deployed smart videos during the renewal process to improve retention and have experienced positive ROI.



Augmented/Virtual RealityDescription

Augmented and virtual reality are technologies most often associated with gaming, entertainment, or sporting type applications. Augmented reality layers additional information of images onto the real-world, so that the individual sees the world around him but also sees digital content projected onto or in front of real-world objects. This may be done via a wearable device such as glasses or a helmet, or it may be projected onto a display on or near the object itself. Virtual reality immerses the individual in a virtual, digital, created world using a headset and is increasingly enhanced with clothing that responds to movements and actions in the virtual world.



Augmented and virtual reality technologies have limited use cases in P&C insurance today. While there were some highly publicized examples of Google glass or other augmented reality headsets being used in the claims arena, the usage has not expanded across the industry. Virtual reality has useful training potential in insurance, and some are using it for areas such as claims adjuster training. These technologies will continue to have limited use in specific high-value situations over the next few years. However, there is great potential in the long term for augmented reality for inspections, loss control engineering, and claims adjusting, especially if that technology becomes more pervasive in the world at large.

Use Case #1: Farmers Insurance and Talespin

Farmers has been using Talespin’s AR and VR platforms for claims adjuster training. Much of the training is focused on interpersonal skills, enabling employees to improve conversations with customers. Farmers has also invested in Talespin to enable the company to expand its platform.

Use Case #2: Allstate fire safety app

Allstate added an augmented reality app called Escape Route as a feature of its mobile app in 2018. Escape Route helps families create and plan a virtual escape plan for use if a fire occurs.



DIGITAL COMMUNICATIONS ENABLING PLATFORMS

Categories of Enabling Tech Solutions for CommunicationsIn addition to the communications categories and specific options identified in Figure 1, there are very important enabling technologies. While the solutions and providers discussed relative to those options are often point solutions, the types of tech solutions discussed in this section are each a kind of platform that enables communications and, in many cases, form the infrastructure upon which the specific apps, channels, and technology options rely. There are three types of these enabling technologies that support an omni-channel environment: network communications platforms, digital insurance platforms, and digital content platforms as indicated on Figure 4.

Figure 4. Enabling Platforms for Digital Communications Options

Network Communications Platforms

Digital communication, at its core, is about moving data streams from one location to another and interpreting them so they can be understood by the receiver of the message. The data stream may be audio, video, or text. It may originate from human input (voice, keyboard, etc.) or a machine (computing system, IoT device). The recipient of the data stream may also be a human or a machine. All of these complex communications require sophisticated communications from the Telco providers, Internet Service Providers, and others to provide the infrastructure to enable digital communications and all of the solutions described in this report.


Omni-Channel Communications

Network Communications Platforms

Digital Insurance Platforms

Digital Content

Platforms

Data & Content Objects



Digital Insurance Platforms

Digital platforms for insurance are explored in detail in a recent SMA research report, Digital Platforms: Why Now, What It Is, and How to Move Forward. In that report, the definition of a digital platform is as follows:

Prominent insurance-specific solution providers offering digital platforms include leading core systems providers and InsurTechs.

Digital Content Platforms

Some digital communications are created and sent in an ad hoc manner, and many text messages, emails, and chat discussions would fall into this category. However, many of the outbound communications of insurers are more formal, requiring compliance to regulations, branding guidelines, and internal style guides. In addition, many of the documents, letters, statements, and other communications created by insurers rely on data from the core systems, CRM systems, and other important enterprise apps. Because of this, it is essential to have a common platform for the capture, creation, management, and delivery of digital content. Customer Communications Management systems (CCM) and Enterprise Content Management systems (ECM) address this need. Separate web content management solutions are often required to manage digital content artifacts for web sites. These digital content platforms can also be used to create the content that gets delivered via chatbots, email, messaging platforms, and the other communications channels.

A digital platform for insurance enables real-time digital engagement for all internal and external stakeholders. It encompasses a broad set of unified business and technology capabilities that span a significant portion of the value chain, from sales to service. Its design facilitates the connectivity, interaction, information exchange, and transactions between the various parties in the ecosystem: the agents and brokers, policyholders, employees, partners, and many others.



SMA RECOMMENDATIONS FOR INSURERSThe options for digital communications continue to increase, both inside and outside the enterprise. As new options are added, the old ones tend to remain. The best way for insurers to determine the right mix of communications options for the right use cases is to take a customer-centric approach and consider recommendations in key areas.

Rethink Digital Communications Strategies: Typically, digital communications options have been embedded in specific projects for specific areas of the business. Each area tends to make decisions on what types of communications to make available. Now, it is becoming imperative to take an enterprise view of digital communications as a central component of the overall digital transformation strategy.

Customer Journeys: Gaining a deep understanding of customer journeys and how customers want to be communicated with is a good start. Look at journeys for a broad range of customers, such as agents, policyholders, and key business partners.

Effort/Value Equation: Determine the value delivered by the specific options being considered and how that relates to the effort involved in implementation. Certain options (such as business texting) require low effort and deliver high value. Others, such as personalized interactive video, require high effort, which is only justified for very specific use cases where the value is equally high.

Technology Options: Experiment and use the various communications options internally to gain a better understanding of the capabilities and value of key digital communications options.

Finally, it is imperative that insurers have strong platforms for the networking infrastructure, digital insurance, and digital content management. Digital communications are rapidly evolving, with more options introduced in the last decade than in the totality of human history. However, the key lies in having a deep understanding of what customers and employees expect and demand in terms of digital communications. It would be easy to fall into the “if you build it, they will come” trap. However, implementing modern digital communications options that are valued by key constituents will be a critical element of success for insurers in the digital age.



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About the Author

Mark Breading, Partner, and Chief Research Officer at SMA, is well known for his perspectives on the future of the insurance industry and innovative uses of technology in insurance. His specialty areas include InsurTech, transformational technologies, innovation, and digital strategies. Mark has consistently been ranked as one of the “Top 50 Global Influencers in InsurTech” by InsurTech News.

Mark can be reached at [email protected] or 1.614.562.8310.

Follow Mark at markbreading on LinkedIn and @BreadingSMA on Twitter.

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DIGITAL COMMUNICATIONS IN INSURANCE · Figure 1. The Evolution of Digital Communications Options The diagram shows the chronological evolution of communications options on the X-axis