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In many ways the COVID-19 crisis has validated technological progress: current technology makes it easy to stay connected, work and transact electronically even as we isolate ourselves physically for our mutual protection. Shelter-in-place mandates have forced insurers not only to undertake initiatives—such as scaling up work-from-home (WFH) capabilities—but to postpone or accelerate work, and to reprioritize their technology investments. The crisis is likely to accelerate insurers’ digital progress overall, and as carriers cope with current economic and technological challenges, certain solution categories are likely to be in greater demand while others will see a lull.

Karlyn Carnahan, Head, The Americas, Property Casualty, Celent (Boston) has been gauging executives’ response to the crisis through snap polls and direct conversations. Generally speaking, she has found that leaders want to strengthen capabilities that proved useful during the crisis. “More than one carrier has told me that this has accelerated senior executive interest in areas such moving applications to the cloud,” she notes. “Today they’re much more interested in acquiring the capability to be a completely virtual insurer.”

To the extent that the COVID-19 crisis tested digital progress, it has been an eye-opener for many insurers, suggests Carnahan. “Many senior executives thought they were prepared for WFH but didn’t realize that they needed people on premise for certain tasks,” she comments. “It wasn’t something that registered at the senior executive level in the business continuity plan.”

‘Essential’ but Non-Strategic 

That revelation has led to another. As Carnahan remarked in comments about Celent’s recent study, COVID-19: Three Scenarios for Insurers, “if you move to the cloud, you don’t need to manage infrastructure; if you outsource billing and payments, you don’t need anybody to print checks, etc.—and there are vendors offering these services,” she says. “We have all of these ‘essential’ employees whose activities are not strategic.”

Insurers recognizing their continued dependence on physically present workers are likely to explore solutions that both increase their resiliency to pandemic and introduce new efficiencies, Carnahan affirms.

Payments vendor One Inc.’s (Folsom, Calif.) CEO Chris Ewing believes that the challenges of COVID-19 are likely to corroborate the digital value proposition of the company’s solutions. “Our payments platform has enabled our customers to maintain contact with their policyholders, offering confidence that business can continue even through the most extreme circumstances,” he comments. “Fast and secure digital payments are what is needed now and in the future especially when a physical payment method is not a viable option for the health and well-being of employees or insureds.”

COVID-19 is also likely to increase the appeal of cloud-based core insurance applications and related applications and ecosystems, according to Denise Garth, SVP, Strategic Marketing at core system/platform vendor Majesco (Morristown, N.J.). In Garth’s view, the advance of digital technologies was already creating cracks in the traditional insurance business model, and the pandemic has only widened them, creating potential reputational, operational and financial risk for the industry.

If the pandemic is driving a “new normal,” it’s less a question of destination than time-of-arrival, as Garth sees it. Cloud-first core systems are delivering a variety of advantages that highlight the operational and strategic value of innovation. In addition to flexibility and scale, Garth says these systems more easily deliver a variety of benefits, including:

• Innovative business processes, such as fluidless underwriting for life insurance, or digital auto or property claims using video or aerial images that meet the customer needs of social distancing;
• Rapid implementation of product changes such as premium rebates or new value added offerings;
• New billing options that meet the unique needs of customer financial challenges; and
• Digital customer platforms that provide an online, real-time customer experience comparable to that of online retailers.

Speed and Innovation as Operational Imperative

“The ease of adapting to rapid market shifts and intensified customer expectations will reinforce and accelerate the reprioritization to cloud-first solutions—giving flexibility, scalability and variable costs needed going forward,” Garth predicts.  “Speed and innovation are no longer a future strategy, they are today’s operational imperative to ensure relevance and future success.”

While COVID-19 is likely to validate the general direction of insurance industry infrastructure and core systems, any company providing a better, faster, and easier way to get things done will stand out, according to Dan Burton, CEO of DroneBase, a global drone operations company based in Santa Monica, Calif. “I believe that this pandemic will help companies decide which partners offer truly innovative solutions and which are nice to have.”

Property inspection technology provides an example of the evolution of an insurance process area that has evolved rapidly in a digital direction and is only likely to accelerate further as a result of the pandemic, according to Burton. Claims technology is especially prone to accelerated technology use because of the urgency of serving policyholders during emergencies, especially large-scale events. Drones in particular have delivered a major improvement in claims response following hurricane landfall or tornado strikes because of their ability to transcend some of the challenges present in disaster areas.

“With COVID-19, DroneBase has implemented contactless inspections so pilots leave their homes with a drone and only spend a minimal time on the property,” Burton relates. “We never need to go indoors or in some cases, even set foot on the premises. Especially in times of crisis, top adjusters should use their time digging into an image set and making an assessment, rather than driving from house to house. Through technology, we’re letting those top adjusters get the most out of their time.”

DroneBase’s appeal is also increased by insurers’ need to reduce employee travel. “Some insurance carriers have built their own in-house drone program, which may require pilots to travel from state to state to handle the claims,” Burton elaborates. I think this pandemic will cause some insurers to reconsider their internal drone program and consider leveraging local pilots. Since DroneBase has a global pilot network in all 50 states and over 70 countries, we have pilots that are already near addresses that need inspections.”

Hybrid Physical and Virtual Inspection Approach

Before there were drones, property inspection was done strictly with “boots on the ground,” and even before COVID-19 the trend has been toward a hybrid approach combining tradition in-person inspection with drones and other technology, according to Tim McKendry, President and CEO of risk assessment service provider JMI Reports (Cleveland). The vendor’s BlueSkyVUE platform unites relevant data sources and provides process automation to support underwriting decisions.

“We still to properties to collect data with the boots-on-the-ground approach, but we have expanded to using a variety of sources and partners to provide a more complete picture of risk to the underwriters so they can make better and faster decisions on the insurability of that risk,” McKendry comments.

With COVID-19, not only are the virtual elements of JMI’s solutions proving valuable, but the crisis is also accelerating the company’s development of new capabilities. “We don’t think that the boots-on-the-ground approach will be replaced, but we see the value in speeding up our development in areas such as self-service. We had scheduled work on client portals, but it has now jumped the queue in terms of priorities, and we’re launching a minimally viable product next month.”

Betterview, a San Francisco-based provider of property data and analytics solutions to insurers, exclusively licensed its drone roof inspection software and services to DroneBase and shifted its business to providing data based on aerial imagery in Aug. 2019.  As a partner to JMI, Betterview still has a place within the inspection ecosystem, but it also provides solutions directly to insurance carriers. “In mid-2019, Betterview virtualized its processes by leaving behind human-operated drones and instead shifting to high-quality imagery from satellite and fixed-wing aircraft to serve our customers’ needs,” wrote David Tobias, co-founder and COO of Betterview in a recent blogpost. “Of course, we didn’t have any premonition of a future pandemic; we chose a more virtual path for the usual reasons: speed, cost-efficiency, accuracy and, as a bonus, the elimination of human error.”

For some carriers who can’t send inspectors, Betterview has become a more attractive alternative, Tobias acknowledged in a recent conversation with IIR. “There will still be instances where you’ll need to send someone to a site, but there’s opportunity for speed and accuracy for virtual data sources and COVID-19 is putting those to the forefront,” he said.  “Before the pandemic, capabilities such as this were a ‘nice-to-have’; now insurers are saying, ‘We need to put this on our roadmap.’”

Insurance Tech Vendors: The Best of Times and the Worst of Times

COVID-19: Three Scenarios for Insurers—Celent Report