Maintain 'high touch with high tech'

Insurance is built on personal relationships and the industry must maintain high touch, even as it goes high tech, Sparke Helmore Lawyers’ Mark Doepel told the AILA conference.

"We must keep the customer at the forefront" to avoid becoming completely automated with "high tech and low touch, with very little personal involvement in the service".

"In a high-tech world, when we want high touch, we hardly ever get it."

Mr Doepel said honesty and fairness were "the lifeblood of the industry", which meant personal relationships needed to be maintained and nurtured.

He warned "customers are more likely to sue you if they don’t like you". Mr Doepel detailed a frustrating telco experience when he inadvertently overpaid a bill on the internet but could not find a phone number on Telstra’s website to get the transaction reversed. He had forgotten the decimal point, so paid $13,000 instead of $130.00.

He said utmost good faith was fundamental to insurance and only achievable with high-touch behaviour. "Insurance is a commodity, but it’s unique. It’s a product people buy but never want to consume. Consumption is at claim time."

Claims management needed high tech and high touch because of claimants’ increased stress levels. Mr Doepel said research found 75% of claimants after floods in Mackay, Queensland, found the claim process more stressful than the actual flood experience. "The claim process can be incredibly traumatic." Insurers with call centres to talk to insureds fared better in the survey than those that did not.

Mr Doepel said another survey found 43% of doctors who had been through a medical negligence claim that was processed and had a successful outcome found it stressful.

Brand loyalty was "less sticky", which meant it was easier for insureds to swap insurers.

High tech was bringing advantages to the industry. For example, insurers were achieving micro-segmentation of data to better rate and write risks.

In claims, insurers were using drones to speed claims processing. For example, after the December 2015 Great Ocean Road bushfires in Victoria, IAG had used drones to photograph losses in areas where there was no access available, eliminating physical danger for adjusters.

Customers had a high expectation of customer service, which was the industry’s Achilles heel. Insurers had to lead the way and "move in the world of social media".

Digital platforms, like Amazon and AirBnB, were threats to traditional insurance. They could move easily into insurance and were "active as adjunct players". Mr Doepel said online retailer Alibaba had its own insurance company and was selling direct.

Rating model 'drops pricing'

Start-up medical indemnity underwriting agency Tego can compete with mutuals on price because it offers tailored pricing, CEO Eric Lowenstein told the AILA conference.

"We’re not trying to be cheaper, but our point of difference is price," he said. The rating model considered gender (female doctors were lower risk), location (regional and rural doctors were lower risk) and the type of work they did.

Tego rated on actual income, instead of assessing according to income brackets. It did not have membership fees and did not offer risk management advice, telling doctors to seek that from the Australian Medical Association or their specialist colleges.

"It’s not for every doctor, but if they want something different," he said. Tego distributed via brokers, so doctors could get advice and cost and coverage comparisons.

Mr Lowenstein used Tego as an example of innovation in insurance. He said innovation was "challenging the status quo". It could be "something different that adds value, but is not necessarily revolutionary".

Innovation was at the centre of invention, collaboration and entrepreneurship. It involved considering what was desirable for consumers, achievable with technology and viable in the marketplace.

"You need to understand the customer journey and know the pain points and frustrations along the way."The four "lenses" of innovation were:

• Challenging orthodoxies
• Harnessing trends
• Leveraging resources
• Understanding needs.

"Innovation is problem solving – identify the problem, analyse it, plan the development, plan implementation and plan evaluation," he said.

"You can’t read the label if you are sitting inside the jar. A lot of successful Australian businesses have been established by people seeing overseas trends.

"The best way to understand your business is from someone who is not a client. Talk to your non-customers. Why aren’t they your client?" Mr Lowenstein said.