Technology has impacted our lives dramatically over the past 35 years. During that time, we’ve seen the birth of the distributed computing, the PC and Mac, networks, the internet, and smart phones. The iPhone I carry with me has more storage and computing power than the mini-computers I sold in the 1980s which cost hundreds of thousands of dollars. We’re not done changing. Companies, such as Amazon, Uber, and Netflix have changed the way we live and shop.
One of the key words many technologists and observers use now is disruption. Amazon disrupted how we buy books and has grown to encompass just about everything. Uber disrupted the taxi and limo industry, iTunes disrupted the music industry, and Netflix killed off Blockbuster.
Many in technology believe the insurance arena is ripe for disruption. It may be. With that in mind, I’d like to look at how technology has and is impacting insurance companies and where it may lead us. Let’s begin with a historical perspective, how it’s evolved and may continue evolving, and then jump out on the end of the limb with some guesses on where it may go.
Technology has automated several areas within the insurance arena for insurance companies, agents, claim adjusters, and consumers. These changes encompass quoting, underwriting and purchasing a policy, document delivery, policy administration, claims management, and much more. Shopping for a home or car insurance policy was based on a retail shopping approach which was not much different from buying a suit.
Insurance quotes were a tedious manual process originally starting with a face to face meeting to gather or phone call to provide information. The agent or an assistant would then refer to quoting and underwriting manuals to determine the rate based on various factors such as vehicle type, use, and driving record for car insurance, and home purchase price for home insurance. A single quote could easily take an hour or more depending on the reference material and underwriting guidelines.
Insurance companies moved to implement proprietary systems which were connected to the home office systems in the mid to late 1990s to quote, write, and service policies thus speeding up the process tremendously for everyone. They also made comparison shopping for consumers easier too.
Geico and Progressive radically changed the selling of insurance when the implemented call centers and 800 numbers. Consumers didn’t need to go an agent’s office, they could simply call and obtain a quote either within a few minutes or the same day. Other companies followed suit and continue to explore how to further automate more processes. Examples include implementation of online quoting and document distribution where ID cards and policy documents can be emailed or accessed online.
Insurance companies are exploring how to automate and better handle the claims process. Systems are now connected to body shops to speed up the administration and payment of car insurance claims and many insurance companies are exploring the use of drones to better handle home insurance claims when natural disasters such as massive hail storms, tornadoes, hurricanes, and brush fires occur.
These changes are incremental though. They automate processes, reduce administration cost for the insurance companies and hopefully make them more responsive to consumers. The key question is, where is it going? What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
