October 16, 2018
October 9, 2018
Posted March 15, 2018
Property and casualty insurers have plenty of reasons for deploying digital identity-based technologies as part of their ongoing transformation efforts.
Five hundred billion reasons, in fact.
According to a new report from Deloitte, P&C insurance premiums in the U.S. could indeed top half a trillion dollars this year. Factor in a $70 billion windfall from new federal tax cuts, and suddenly you’re talking serious money – and some serious challenges as well.
Running the Risks
During the past year, P&C insurers have been buffeted by low investment yields and record payouts of more than $134 billion in the aftermath of natural disasters, such as Hurricanes Harvey, Irma and Marie.
While it’s true that average premium increases of 4 to 5 percent are expected to bolster finances in the short run, weather-related disasters are expected to hit balance sheets hard again this year. Over the long term, the impact of climate change is expected to lead to catastrophic losses in at least 36 U.S. cities.
And that’s just for starters.
Nearly 80 percent of insurers say they must also contend with the ever-increasing demands of a generation of digital consumers weaned on Amazon, Google and Uber. Today, 40 percent of insurance research is conducted via mobile devices, and consumers are 17 percent more likely to purchase an insurer’s policy after completing a mobile quote request rather than one via desktop.
Thanks to these and other consumer behaviors, non-traditional challengers are chipping away at customer loyalty by wielding innovative technologies and entirely new business models. Insuretech newcomer Lemonade, for instance, recently coaxed $120 million from Softbank to help fuel the growth of its mobile platform, which processes policy applications in as little as 90 seconds.
And then there’s the scourge of cybercrime. Industry analysts estimate that fraud now costs the P&C sector $34 billion a year. While it’s true that fraudulent claims have gone up 60 percent during the past four years, underwriting fraud is likely to see the largest increases by year’s end.
The New ‘Ghost’ Protocol
According to industry estimates, incomplete identity info, underestimated mileage, garaging and other forms of customer-driven falsifications account for nearly $25 billion in premium leakage and other annual losses.
What’s even more dangerous is the growing number of ghost brokers exploiting the underwriting process by defrauding innocent consumers out of hundreds or even thousands of dollars for policies that have been set up and then canceled without their knowledge.
Unfortunately, it looks like things might get worse. In coming months, insurers will feel the full effect of recent data breaches, including one where hackers made off with the social security numbers of 143 million Americans.
In an effort to mitigate these risks and nab an outsized share of that $500 billion payday, innovative carriers are turning to cognitive, digital identity solutions that verify the true identities of policy applicants and assess the risk of doing business with them.
According to insurance brands that have deployed them, these solutions detect and block fraudsters the first time they ever hit a site or app. What’s more, these same technologies may prove key to the successful implementation of new business initiatives.
Don’t Just Digitize, Differentiate
Streamlining established businesses operations, such as claims processing, payment processing and regulatory reporting, is just the beginning. The ability to offer competitive rates based on a complete understanding of each applicant’s risk profile is helping insurers diversify and personalize offerings across a wider range of digital channels.
Recognize, Reward and Retain
Today, even 10 seconds of user friction can send 50 percent of consumers searching for alternatives. By being able to instantly recognize returning customers on any device, insurers aim to deliver the ease, speed and convenience customers demand at every point in the customer journey—boosting loyalty and lifetime value.
Ernst & Young predicts that chatbots and intelligent digital assistants are quickly forming the new epicenter of innovation for insurers looking to expand distribution and service models.
Despite growing threats, 76 percent of insurers report that detecting claims fraud is still their primary goal when using anti-fraud technologies. However, only 42 percent of those that use such systems deploy them at the underwriting stage.
Given the stakes, it’ll come as no surprise if those numbers start to change in the months ahead.
To learn more about how digital identity solutions can help insurers achieve secure, sustainable growth, download our new eBook, “Insurance Industry Outlook: Top 5 Digital Identity Trends for 2018.”