Phil Neuffer,
Senior Editor,
Monitor

When Brendan Cronin first began working in the insurance industry in the late 1990s, most business was still being conducted over the phone and on paper. While the internet age had begun, it was still in its infancy and for a regulated industry like insurance, huge technological leaps were not part of the equation.

By 2002, however, with the passage of the Sarbanes-Oxley Act, a wave of investments flooded the insurance sector to help providers (and financial service firms more generally) deal with new financial reporting and disclosure requirements and controls, spurring increased engagement with new technologies and laying the foundation for innovations decades down the line.

Insurance Innovation

During the last two decades, the insurance industry has been transformed by external factors, certainly, but it has also innovated within itself. According to Cronin, who is the

divisional assistant vice president for digital products for the Specialty Equipment Division of Great American Insurance Group, much of that innovation has focused on two main areas: claims and underwriting, with many of the new developments coming from the provider side to better assist customers and make it easier for insurance agents to be more efficient and productive.

While solutions like machine learning and the internet of things (IoT) are high level concepts that can be applied to many industries, in insurance, much of the technological innovation taking place centers on automation, whether it be in terms of applying for insurance or moving data from one source to another. This desire for automation has been driven by the consumer experience, according to Cronin.

“If you’re able to reduce a 30-question application to 12 and make that data-driven, data-enriched, or branching logic, so you only ask some questions in some certain situations, that’s where the experience can be improved considerably,” Cronin says, noting that automation is being called for throughout the process. “You don’t want to go through an efficient way of applying and then all of a sudden be kicked out into a phone call or writing a check or some other part of the process that is very manual and uses a lot of outdated technology.”

As more traditional insurance firms are tackling these new customer expectations, companies have sprung up to help, creating a cottage industry known as “insurtech.” Almost a subset of the larger financial technology or fintech revolution, insurtech firms work with insurance brokers, providers and consumers to improve the entire experience of selling and buying insurance. However, despite garnering “a lot of buzz” as well as investment, insurtech is not a panacea for the challenges inherit in the insurance business.

“There’s so much to be done. It’s a complicated ecosystem. There are a lot of different parties,” Cronin says. “And sometimes it’s complicated because it’s inefficient; sometimes it’s complicated because it’s complicated and there’s really no way to reduce that.”

Due to these complications, the insurance world still needs agents to deliver value beyond what automated processes and improved technology can do on their own. Cronin believes that providing the “human touch” is more about adding value rather than being a requirement because an automated process isn’t completed or working correctly.

“I do think that there’s a difference between becoming frustrated with the process and wanting to bail out to talk to somebody and understanding and seeing an efficient interface and user experience and still wanting to have an additional conversation,” Cronin says.

Embedded Solutions

Within Great American’s Specialty Equipment Division, Cronin has seen firsthand and helped implement some of the other major innovations sweeping through the modern insurance industry. Embedded insurance, for example, is becoming an increasingly common solution offered to customers, as it is often a part of the process of buying plane tickets, mobile devices and even concert tickets. While Great American Insurance Group has been offering a similar product to its equipment financing clients for years, how it is able to deliver such a solution has changed dramatically and for the better.

“What’s different now is we’re using APIs and embedded technology to deliver placement and tracking and other things that are needed for insurance in the most automated way into the leasing lifecycle at different points,” Cronin says, noting that integrating newer technology improves on a process that previously relied on file exchanges from the backend of leasing companies.

With embedded insurance, Cronin and the team at Great American Insurance Group have learned that there is no one-size-fits-all solution, tailoring such offerings based on the individual needs of each lessor and its clients.

“The trick there is for the product to reflect what the equipment finance company has in mind for their user experience,” Cronin says. “You can have an opt-in type of a program, which we call positive acceptance, or something which is placed on the backend.”

As embedded insurance and the insurtech sector continue to emerge and become more widely accepted, there are potential lessons to be learned by the equipment finance industry, particularly as embedded finance becomes an increasingly sought after solution by customers who are regularly confronted with such offerings in the consumer finance world.

“I think there could be some looking over the fence at what’s going on with insurtech and there may be some tricks of the trade that apply to both embedded finance and embedded insurance,” Cronin says. “Tactically and in terms of step changes, I think everybody’s focused on that client experience, getting through these complicated financial products with as few clicks as possible, using data to supplement that, and then thinking about the whole experience end-to-end.”

Cronin says that Great American Insurance Group’s Specialty Equipment Division is also starting to look at implementing more usage-based insurance offerings built on IoT technology, which will obviously have a major impact on its own business as well as those of equipment lessors.

“If a piece of equipment has certain IoT technology, like GPS and location, it can potentially influence a different type of underwriting approach because there’s an opportunity to know where the equipment is and potentially recover it in some scenarios,” Cronin says.

Ripple Effects

Each time Great American’s Specialty Equipment Division implements a new digital solution, it embraces the opportunity to learn and improve, not just how it delivers products but how it develops and rolls out new ones. Cronin says the development of each new digital product must begin by thinking about client needs.

“You can’t get so granular and focused that you forget the broad customer journey experience in terms of how they’re going to interact over time,” Cronin says. “So, the investments are sometimes very targeted, but you have to keep that big picture in mind as you develop your strategy.”

Although the customer experience is critically important, Cronin says it is also still necessary to think about how new products and processes will impact internal teams and operations.

“We’ve seen our digital products get traction and they’ve had a ripple effect on our operations and how we support the business,” Cronin says. “[Your people are] going to do business differently than they did in the past supporting previous products.”

When evaluating how a new product or service will impact all stakeholders, company leaders shouldn’t always nix an idea entirely because it might have drawbacks. Instead, Cronin recommends accepting that you may need to fail in order to learn.

“You have to be willing to experiment,” Cronin says. “You can’t transform the business overnight, so you have to let the ripple effect play out a little bit.”

ABOUT THE AUTHOR: Phil Neuffer is senior editor of Monitor. Rita E. Garwood, editor in chief, interviewed Brendan Cronin for this article.