Author: Akanksha Baadkar

Demystifying Generative AI in Insurance: A Reflective Analysis

Posted on by Akanksha Baadkar

Generative AI has seized the world’s imagination, promising transformative changes across industries. In a riveting roundtable, Kanopi collaborated with AWS to explore the transformative potential of generative AI and its impact on the insurance sector. AI technology itself has witnessed staggering advancements, so understanding its implications, especially in a pivotal sector like insurance, requires an in-depth dialogue. Let’s break down the multifaceted layers that this discussion unearthed.

The Rise of Generative AI

The last two decades have witnessed an exponential evolution in AI technology. No longer relegated to the confines of tech circles, AI, especially Generative AI, has permeated broader organizational perspectives, right up to the C-suite. The widespread intrigue surrounding this technology, coupled with its practical application, raises important considerations, especially when it comes to issues like security and privacy. As Simon Johnston, Head of AI & ML at AWS, aptly points out,

“I think it’s the hottest topic in town when you speak to customers… The board members are asking the technical personas, what is our position with generative AI? What are we doing?”.

His observation underscores a significant shift in the discourse around AI. Five years ago, discussions about generative AI were predominantly technical. Now, it’s on the radar of top executives and board members. Employees are getting hands-on experience, increasing the necessity for security, privacy, and enterprise-grade implementation.

However, the real shift isn’t just about understanding the “what” of Generative AI; it’s also about the “how.” How do businesses integrate this technology without compromising on security, efficiency, and authenticity? This change in conversation suggests a broader understanding and appreciation of AI’s potential impact on industries, especially insurance.

Democratizing Access to AI

One of the most significant achievements in the evolution of Generative AI is its democratization. No longer confined to the domain of tech wizards, today’s AI models can be used by virtually anyone, regardless of their technical prowess. This democratization has opened doors for tasks that were once considered possible only with human intervention. The widening access means more businesses can integrate AI into their operations, creating avenues for enhanced customer experience and streamlined processes.

Strategic Use Cases in Insurance

While the immediate appeal of generative AI often centres on its ability to automate and simplify, the broader, more profound implications lie in its strategic applications. Kale Temple, Partner – Data and AI from Deloitte emphasized the importance of this by noting,

“What organizations should be thinking about is: how do they use the excitement across their organization about generative AI to drive conversations with business stakeholders about things that matter to them, and how you could actually deliver value to them?”

Imagine an insurance company capable of generating policy documents tailored to individual customers based on historical data and specific profiles. Such strategic use would save time, reduce errors, and offer a personal touch, a crucial factor in the insurance industry. These applications signify not only a technological leap but also a fundamental shift in operational paradigms.

The Challenges: Security, Compliance, and Risk

Every technological evolution brings with it a set of challenges. Generative AI is no different. Kale Temple highlights the importance of understanding the risks raised from generative processes, as he notes, “You need to be making sure that you understand the types of risks that are being raised from generative AI and making sure that you’re putting the processes in place to be able to catch those and mitigate them before they hit customers.” Companies need rigorous protocols in place to ensure the accuracy of AI-generated results.

Echoing these sentiments, Alex Taylor, Global Head of Emerging Technology from QBE Ventures emphasizes the combination of capability and regulatory certainty.

“Anybody can do the magic trick of extracting fields from a document,” says Taylor.

However, proving the accuracy of such extractions, ensuring they’re not an outcome of a model hallucination, and recording the version and outcome become essential in a regulated industry. As Taylor concludes, “The combination of capability and certainty is absolutely fire.”

Workforce Adoption and Evolution

Perhaps the most far-reaching implication of Generative AI is its potential impact on the workforce. Contrary to fears of redundancy, the emergence of AI, as discussed, could empower employees to pivot towards roles demanding uniquely human attributes like creativity, empathy, and interpersonal skills.

Companies need a shift in mindset, one that embraces experimentation, identifies opportunities, and understands that generative AI, rather than being a threat, can be an ally. This AI can free up time for employees to focus on personalized service and forge meaningful customer connections.

Alister Coleman, Managing Partner at Folklore VC, recognizes this “exciting technology” as a catalyst for the rise of generative founders who will target more valuable and complex problems with newer AI versions, despite most adopters approaching it with a basic implementation view.

Peering into the Future

Generative AI isn’t just a buzzword; it’s a transformative force. Nigel Fellowes-Freeman, Founder and CEO of Kanopi, captures its essence when he speaks of the “era-defining shift in technology.” According to Nigel, generative AI is primed to redefine the insurance sector, impacting every facet of the value chain.

Echoing Nigel’s perspective, Alex Taylor adds, “For the first time, everyone’s imagination has now connected the dots… without having to be a software developer or a machine learning expert or a mathematician.” This transformation isn’t merely about streamlining processes; it’s about reimagining them, about seeing the future of insurance through a lens of infinite possibilities and potent capabilities.

Conclusion

The roundtable co-hosted by Kanopi and AWS wasn’t just an event; it was a clarion call to the insurance industry. A call to recognize the potential of generative AI, understand its implications, and strategize its implementation.

Generative AI is more than technology. It’s an ally, an augmentation tool, and most importantly, a transformative force that can redefine industries. As businesses step into this new era, they need to equip themselves with knowledge, strategy, and an unyielding curiosity to explore, experiment, and excel.

 

Watch the on-demand video of the full discussion here

 

About Kanopi

Kanopi is a trailblazing embedded insurance provider focused on helping insurers deliver smart, intuitive insurance. Kanopi’s platform enables insurers to build, manage, distribute and scale new and existing products quickly and easily to meet customers’ changing needs. We believe building a strong digital strategy is the first step to success in a highly competitive insurance landscape.

Take the first step to kickstart your digital transformation journey, download Kanopi’s FREE guide to building a future-focused insurance platform. 

Introducing Kanopi’s AI-powered chat interface: Revolutionising the insurance experience

Posted on by Akanksha Baadkar

In our quest to help insurers deliver exceptional insurance experiences for their customers, Kanopi delved head-first into the world of large language learning models. It’s no secret that navigating policy documents and product disclosure statements can be daunting and time-consuming. That’s why we are proud to announce the launch of our latest feature, an antidote to the most common customer pain points in insurance. Introducing Kanopi’s AI-powered chat interface, built using the innovative open.ai technology.

Simplifying Policy Understanding and Empowering Customers with Cutting-Edge AI Technology

Innovation and experimentation are at the heart of what we do at Kanopi. Being able to scale solutions quickly, is another defining feature of our platform. So we decided to combine the two to create a chatbot that simplifies the insurance customer experience. Here’s why we embarked on this journey,

Enhancing customer experience: The world of insurance can often be complex and difficult to understand, leaving customers feeling overwhelmed and uncertain. Our goal is to help insurers streamline their customer experience across any digital platform by providing an easy and efficient way to access information about their policies.
Empowering customers with knowledge: We believe that informed customers are confident customers. By offering an AI-powered chat interface, we enable insurers to supply quick and contextual responses to customers’ questions, helping them make well-informed decisions about their insurance needs.
Streamlining customer support: Our AI chat interface is designed to complement existing customer support services, allowing insurers and their agent networks to focus on addressing more complex issues. This ensures that the end customer receives the most efficient and effective support possible.

How it benefits customers

  1. Instant access to information: With our AI-powered chat interface, customers can quickly and easily find the answers they need, without having to sift through lengthy policy documents. Simply ask a question, and our chatbot will provide a natural language response, along with a reference to the relevant section in the policy document or product disclosure statement.
  2. Personalized Support: Our chatbot is designed to understand the context and nuances of each customer’s questions, providing accurate and personalized responses. This ensures that our customers receive the most relevant information, tailored specifically to their needs.
  3. 24/7 Availability: Our AI chat interface is available around the clock, offering our customers the flexibility to access information whenever it’s most convenient for them. No more waiting on hold or searching for answers during business hours – help is just a few clicks away.

A closer look at Kanopi’s AI-powered chat interface integration

The AI-powered chat interface integration into Kanopi’s platform has been meticulously designed to ensure seamless functionality and a frictionless customer experience. This overview covers the systems involved, the open.ai models utilized, and the additional functionality provided by the integration.

Systems involved in building Kanopi's Chat GPT Integration

  • Kanopi Insurance Platform: Our comprehensive insurance-as-a-service platform serves as the foundation for the integration, connecting the AI chat interface with policy documents, product disclosure statements, and customer data.
  • OpenAI API: The integration relies on OpenAI’s API to access and utilize the advanced language models necessary for natural language understanding and processing.
  • Customer Relationship Management (CRM) System: Our CRM system is integrated with the AI chat interface, ensuring that customer interactions and inquiries are logged for future reference and to optimize the customer support process.

To power the AI chat interface, we leveraged the following open.ai models:

GPT-4: As the backbone of the chat interface, the GPT-4 model is responsible for understanding customer inquiries, processing the information, and generating natural language responses. This state-of-the-art model is renowned for its capabilities in comprehending context and providing accurate, human-like responses.
Document Summarization: To quickly and efficiently pinpoint relevant information within policy documents and product disclosure statements, we utilized open.ai’s document summarization models. These models enable the chatbot to swiftly identify and extract pertinent information based on customer queries.

Functionality and Customer Experience Improvements: The primary functionality and customer experience improvements we noted were context-aware responses, real-time document referencing and seaming escalation of complex queries to human agents.

In terms of context-aware responses, The integration allows the chat interface to understand the context of each customer’s questions and provide tailored responses. This ensures customers receive the most relevant information and enhances their overall experience. When it comes to real-time document referencing, as the chatbot provides a response, it also cites the specific section of the policy document or product disclosure statement from which the answer was derived. This adds credibility to the chatbot’s responses and allows customers to easily verify the information provided. And lastly, if the chatbot is unable to address a customer’s inquiry or if the customer prefers to speak with a human agent, the integration allows for a smooth transition. Customer interaction history and the details of the unresolved query are passed on to the agent, ensuring continuity and efficiency in the support process.

By integrating the AI-powered chat interface into the Kanopi platform, we have created a cohesive system that streamlines customer support, enriches the customer experience, and empowers our users with easily accessible and personalized information.

Solving customer pain points

Understanding policy documents and product disclosure statements (PDS) is a common challenge for customers in the insurance industry. These documents often contain technical jargon and complex clauses that can be difficult to interpret, leading to confusion and a lack of clarity for customers. This, in turn, can result in customers being unaware of their coverage, benefits, and potential exclusions, which may have significant consequences in the event of a claim.

The integration of our AI-powered chat interface addresses this critical issue by providing customers with accurate, easy-to-understand answers to their questions, ultimately helping them better comprehend their policies and PDS.

Key Features of the Integration in Addressing Customer Pain Points

  1. Simplifying complex information: The AI chat interface, powered by GPT-4, is adept at translating complex, technical language into clear, concise, and understandable answers. This enables customers to grasp the nuances of their policy documents and PDS without having to decipher industry jargon.
  2. Factual responses with document references: The chatbot not only provides factual information but also includes references to the specific sections within the policy document or PDS where the information was sourced. This allows customers to verify the information provided, ensuring that they have accurate and reliable answers to their questions.
  3. Instant access to information: Navigating through lengthy policy documents and PDS can be time-consuming, and finding specific answers may be challenging. The AI chat interface streamlines this process by allowing customers to ask questions and receive immediate responses, saving them time and frustration.
  4. Adaptive learning and personalization: The AI chat interface continuously learns from customer interactions, refining its understanding of the specific needs and inquiries of each user. This enables the chatbot to provide increasingly relevant, personalized responses, further enhancing the customer experience.

Overcoming technical challenges in development 

The development of our AI-powered chat interface integration involved overcoming various technical challenges to ensure seamless functionality and an exceptional user experience. Here are some of the key obstacles our team faced and the innovative solutions we implemented,


Language Model Fine-Tuning: While GPT-4 is a powerful language model, it required fine-tuning to adapt to the specific context of insurance policies and terminology. Our team curated a comprehensive dataset of policy documents, product disclosure statements, and relevant industry-specific vocabulary to train the model, ensuring it would provide accurate and contextually appropriate responses.
Document Navigation and Parsing: Efficiently navigating and extracting relevant information from policy documents and PDS was a significant challenge. We leveraged open.ai’s document summarization models and developed algorithms to effectively parse these documents, enabling the chatbot to identify pertinent sections and provide precise references in its responses.
Maintaining Data Privacy and Security: Ensuring the privacy and security of customer information was of paramount importance. To address this, we implemented end-to-end encryption and strict access controls, safeguarding customer data at all times during the integration process.
Integrating with Existing Systems: Seamlessly integrating the AI chat interface with our existing insurance platform and CRM system was crucial for a cohesive user experience. We developed custom APIs and middleware to facilitate communication between the different systems, ensuring that customer data and interaction history were accurately synced.
Handling Ambiguity and Edge Cases: Insurance inquiries can sometimes be ambiguous or involve complex scenarios. To handle these situations, our team built a robust fallback mechanism that identifies when the chatbot is unable to provide a satisfactory response. In these instances, the chatbot seamlessly escalates the query to a human agent, ensuring that customers receive the support they need.
Continuous Improvement and Adaptability: The insurance landscape is constantly evolving, with new regulations, products, and customer needs emerging regularly. Our team designed the AI chat interface to be adaptable, allowing for ongoing updates and improvements as the industry evolves. This ensures that our customers always receive the most accurate and up-to-date information.

The development of Kanopi’s AI-powered chat interface integration was a complex and challenging process, but our team’s expertise, innovative thinking, and dedication to customer satisfaction allowed us to overcome these obstacles. The result is a cutting-edge solution that significantly enhances the customer experience, simplifies policy understanding, and demonstrates our commitment to innovation in the insurtech industry.

Envisioning the Future of Kanopi with LLMs like GPT-4 

As we look toward the future, Kanopi is committed to leveraging the power of large language models (LLMs) like GPT-4 to continually innovate and provide unparalleled value to both insurance partners and the end customer. Here are some potential iterations and future developments we’ve identified that could further revolutionize the insurtech industry:

  1. Proactive Policy Recommendations: By utilizing LLMs to analyze customer profiles, preferences, and coverage needs, we could proactively offer tailored policy recommendations. This personalized approach would not only enhance customer satisfaction but also optimize the conversion rate and retention of our insurance partners.
  2. Real-Time Claim Assessment and Processing: We could integrate LLMs into the claims process to enable real-time assessment and processing of claims. By analyzing claim details and comparing them against policy terms, AI could provide instant feedback on eligibility and estimated payouts. This would significantly streamline the claims process and improve the customer experience.
  3. Risk Assessment and Fraud Detection: Advanced AI models could be utilized to perform sophisticated risk assessments for new policy applicants, allowing for more accurate pricing and underwriting. Additionally, these models could be employed to identify and flag potentially fraudulent claims, helping our insurance partners mitigate risks and maintain profitability.
  4. Smart Virtual Insurance Advisor: By expanding the capabilities of our AI chat interface, we could create a comprehensive virtual insurance advisor. This advisor would not only answer policy-related questions but also provide guidance on risk management, and loss prevention, delivering added value to our customers.
  5. Enhanced Customer Segmentation and Targeting: LLMs can be used to analyze customer data, identify patterns, and segment customers based on various factors such as demographics, preferences, and insurance needs. This information could be leveraged to create targeted marketing campaigns and personalized offerings, driving customer acquisition and loyalty.
  6. Automated Regulatory Compliance: The insurance industry is subject to a multitude of regulations that continually evolve. We could employ LLMs to monitor changes in regulations and automatically update policy documents and processes accordingly. This would ensure ongoing compliance and reduce the administrative burden on our insurance partners.
  7. Multilingual Support: To cater to a diverse range of customers, we could utilize LLMs to offer our AI-powered chat interface and other services in multiple languages. This would make our platform more accessible and inclusive, attracting a broader customer base and increasing market share.

By continually iterating and expanding our AI-driven solutions, Kanopi is poised to become a leader in the insurtech industry. Leveraging LLMs like GPT-4 will enable us to deliver unparalleled value to insurers and other ecosystem partners, fostering long-lasting relationships and driving sustainable growth in the ever-evolving insurance landscape.

We’re thrilled to share our innovative AI-powered chat interface integration with you and are confident that it will revolutionize your experience with insurance policies and customer support. We encourage you to try it out for yourself and witness firsthand how this cutting-edge technology simplifies policy understanding and enhances the customer experience.

About Kanopi

Kanopi is an award-winning insurtech, featured in the top 50 companies globally, championing embedded insurance and helping insurers every day. We do this by enabling them to overcome the hurdles of legacy infrastructure, integrate with multiple third-party platforms and build seamless user journeys for customers. 

 

 

Embedded insurance 2.0: To affinity and beyond

Posted on by Akanksha Baadkar

In the last few years, embedded insurance has emerged from the wider embedded finance movement to become the industry’s hottest topic. Incumbents have woken up to the opportunity – estimated at $700 billion in gross written premiums by 2030 in Property and Casualty alone – and numerous well-funded insurtech startups have emerged to power the next generation of embedded insurance experiences.

But what really is embedded insurance and how can incumbents get a piece of the pie?

Embedded insurance – the basics

At its core, embedded insurance is the seamless integration of insurance into non-insurance products, platforms or services. When done well, it leverages technology to provide great value, more personalised protection when and where customers need it most. 

It makes life easier for customers, who no longer need to search out the right insurance, for risks they may not even realise they have. It gives insurers new and more cost-effective distribution channels for their products, which can be tailored to a specific customer based on data and insights from partner platforms. It generates new revenue streams for distribution partners and helps them better protect their customers to grow deeper, more valuable long-term relationships.

Today, embedded insurance is considered a key driver of growth in the insurance industry and incumbents, insurtechs and investors are investing heavily to unlock its value. 

Embedded insurance 1.0

Embedded insurance first emerged as an evolution of the traditional affinity model. It allowed insurers to offer policies to customers through a technology-enabled non-insurance partner, such as an e-commerce platform. 

In this first-generation experience, customers are presented with an offer to add on insurance during another transaction during their day-to-day life. This makes insurance more accessible and convenient for customers, as they can purchase coverage while they are already engaged with the platform or product. Some examples include:

 

Examples of early embedded insurance implementations

 

These experiences undoubtedly offer a more convenient way for customers to purchase insurance and work well for simple products. However, the customer experience can sometimes be disjointed, product innovation limited and lack personalisation. Customers often need to actively choose the coverage they want – a problem for the many customers who do not understand their own needs.

These issues can mean relatively low conversion rates, which when coupled with traditional commission share agreements, result in digital distribution partners struggling to hit the revenue targets they set for their embedded insurance offering. Disappointing early results can lead to a reduced focus on insurance and less marketing spend, further exacerbating the problem. 

To counteract these effects, and create a win-win-win for insurers, distribution partners and policyholders, a new approach to embedded insurance is necessary.

Embedded insurance 2.0

In his excellent guide for incumbents, Simon Torrance explains

“Embedded Insurance 2.0 is a new way of collaborating and innovating with third-party brands, of all types and sizes, to help them grow their businesses, create compelling new protection solutions for end customers and, ultimately, close protection gaps. It exploits digital technology and data in new ways to create better underwriting models that improve customer experiences, marketing effectiveness, risk selection, pricing and unit economics.”

This second generation of embedded insurance has improved on its predecessor by leveraging new technologies to deliver more affordable, personalised and relevant protection to customers. It goes beyond simply distributing traditional products via new digital channels to focus on using data and a deep understanding of the customer to co-create innovative new products for newly emerging needs – such as the gig economy. Improved underwriting models based on real-time customer or third-party data can allow for more affordable protection, while reduced product creation and distribution costs ensure they remain profitable for insurers. 

Incumbents have followed the example set by insurtech pioneers, like Cover Genius and Qover, and are now setting up their own embedded insurance businesses to expand on their existing affinity offerings. Chubb Studio and Swiss Re’s IptiQ are the most well-known examples, but many others are following suit. But the technology infrastructure required to build and deliver a successfully embedded insurance proposition is beyond the core capabilities of most insurers’ legacy systems. That’s why at Kanopi, we believe effective partnerships between incumbents, digital platforms and insurtech enablers are the key to unlocking the benefits for all parties – including policyholders. 

But what makes a great embedded insurance experience?

The embedded experience

Customers are not (and shouldn’t need to be) insurance experts, so every insurance experience should aim to help customers get the cover that’s right for them, quickly and easily. At Kanopi, we believe the best embedded insurance offerings do this by providing cover that is smart, simple and contextual.

 

Characteristics of great embedded insurance offerings

Smart
  • The next generation of “smart” insurance policies should offer customers the best protection for their needs, at the best possible price.
  • This can be achieved by leveraging real-time data (at quote and throughout the policy term) and advanced analytics to gain a deeper understanding of customers’ needs and behaviours. This insight can power truly personalised products, fully customised to an individual’s needs.
  • Real-time data can power improved underwriting and risk selection, enabling insurers to offer more intelligent pricing to maximise conversion rates and commercial success. This can extend beyond purchase through to claims too, with more accurate, even instant claim payouts in the event of a covered event.
Simple
  • At the same time as being “smart”, insurance should be “simple”. Policies should be free of insurance jargon and contain helpful, easy-to-understand summaries to help customers know exactly what they are getting and make informed decisions about their coverage. This is especially important in embedded experiences, where insurance is not the primary concern of the customer.
  • Once a policy has been purchased via an embedded experience, insurers and distribution partners should make it easy for customers to update, cancel, renew or claim on their policies. This could happen within the distribution partner’s platform, or within an insurer portal, but should always support customer self-service. No one wants to buy a policy via a slick embedded experience, only to sit on hold for 30 minutes to make a simple policy endorsement.
  • Policies should be designed with simplicity and flexibility in mind, with no cancellation fees or hidden terms.
Contextual
  • The last piece of the puzzle is making sure you deliver the right product, to the right person, at the right time. This is absolutely critical to get right if customers are to trust embedded experiences. For simple products, the insurance offer can even be invisible, with protection built into the partner product or service. For more complex products, where this is not possible, highly personalised experiences should become standard.
  • Insurers and digital distribution partners (and any tech enablers) must work closely together to understand their target customers, build suitable products and either fully embed them into their product or identify the relevant trigger point at which to offer the optional insurance.

Technology enablers

The embedded insurance movement is being driven by changing customer expectations, macroeconomic pressures on insurers’ bottom lines and the proliferation of the platform economy. This next generation of experiences is being enabled by new technologies, from analytics and artificial intelligence, to APIs and cloud infrastructure. 

Kanopi’s full-stack embedded insurance platform enables our clients – including some of the biggest insurers in the world – to build, launch and manage new embedded insurance propositions. By leveraging our technology, insurers can fast track their digital transformation and launch an embedded product in only a matter of weeks. 

The key to incumbents unlocking smart, simple and contextual embedded insurance experiences is based on the ability to: 

Leverage next-generation tech stacks

Insurers’ legacy systems just aren’t designed for today’s ultra-connected, data-driven world. The leading insurtechs have all built their own proprietary insurance platforms and pioneering incumbents have stood up separate business units and technology stacks for their embedded insurance activities. 

Most modern insurance platforms are cloud-native and use a microservice architecture to create flexible and scalable systems. They can be easily integrated into insurer or partner platforms via open APIs, to deliver seamless, customisable experiences for customers. 

Access, store and use data from multiple sources

Compared to the ringfenced core insurance systems of the past, modern platforms leverage APIs to enable extensive use of data. This data can come from multiple sources, such as distribution partner platforms or third-party services, and even be accessed in real-time. 

The best platforms will do all of this while enabling insurers to maintain a single view of their customers. This is particularly important for insurers launching new ventures alongside existing propositions, where customers could end up purchasing policies across multiple systems. This challenge is nothing new, with many incumbents feeling this pain from multiple core systems they currently run on.

Experiment with modular, customisable products

At Kanopi, we’re big believers in the build-measure-learn loop popularised in Eric Ries’s book ‘The Lean Startup’. The speed at which you can get a new product into the hands of real customers, get their feedback, learn and improve, is mission-critical in today’s fast-changing world. Unfortunately, with incumbents often taking 12-18 months to build and launch a new product, this approach historically hasn’t been possible. 

Many modern insurtech platforms have been built with this experimentation-led approach in mind and can configure and launch products in a matter of weeks, even days. They use flexible product models to support modular products that can be easily reused and customised to specific use cases. The best allow non-technical staff at insurers or distribution partners to customise products to their specific audience – Wakam’s self-service portal provides an excellent example to other incumbents. 

Delightful experience

Today’s customers expect intuitive, even delightful, digital experiences from every company they interact with. Modern insurance platforms must deliver this, whether through simple, product-agnostic APIs that allow distribution partners to build their own engaging experiences or through their own intuitive user interfaces. These range from easy-to-embed widgets to fully-fledged policy management portals and are often themable to align with an insurer or distribution partner platform brand.

An intuitive app interface is only one small part of delivering an amazing experience, so platforms must enable seamless omni-channel experiences. Incumbents must consider how third-party platforms fit into their wider technology stacks and target operating models, to ensure they can deliver a seamless experience to their customers across all channels.

This unlocks huge value and can be used to improve risk selection and underwriting, intelligent pricing, and fully personalised customer experiences. These benefits can be seen throughout the full policy lifecycle – from instant quotes based on accurate data, to intelligent policy updates triggered by changes in live customer data, to seamless renewals and claims submissions. 

 

What’s next?

The ultimate ambition for everyone involved in insurance should be to better protect customers and in doing so deliver sustainable business growth. 

In a rapidly changing world, new risks are emerging all the time and the protection gap is widening – fuelled by everything from the digitalisation of the world economy and the emergence of new industries and ways of working, to the increasingly obvious impacts of climate change and global geopolitical crises.

Embedded insurance of course isn’t the answer to all these problems, but it does present an opportunity for insurers and their partners to work together to make a difference. By leveraging the latest technologies to build smart, simple and contextual embedded insurance offers, companies can better protect their customers in an increasingly risky world.

 

About Kanopi

Kanopi is one of the top 50 companies globally, championing embedded insurance and helping insurers every day. We do this by enabling them to overcome the hurdles of legacy infrastructure, integrate with multiple third-party platforms and build seamless user journeys for customers. 

Building a strong digital strategy is the first step to success in a highly competitive insurance landscape. Get started with your digital transformation journey, download Kanopi’s FREE guide to building an insurance platform of the future. 

Guide to transforming your insurance platform

 

Breaking Barriers: How to speed up digital transformation in insurers

Posted on by Akanksha Baadkar

Digital transformation can often seem a faraway dream for insurers. But despite the industry’s reputation as resistant to change, most incumbents long ago embarked on ambitious and costly transformation efforts – and progress has been made.

When governments across the world imposed Covid-19 lockdowns, insurers on the whole reacted quickly to switch to remote operations almost overnight. This would have been impossible only a decade earlier. And as the world went indoors, distribution went digital. 

But for customers who have come to expect instant fulfilment, intuitive self-service and personalised products, many insurance experiences still fall short. In this article, we’ll be unpacking some of the main obstacles insurers face and how they can be overcome. But first, let’s clarify what digital transformation means and why it’s so important for insurers.

What is digital transformation and why is it important? 

Salesforce defines digital transformation as “the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.”

Many established insurers are decades, even centuries old. It is no surprise then that their core technology stacks are often outdated. Built up layer-on-layer over the years to cater for current needs, these systems (and usually there are many!) are not compatible with today’s digital world. The problem extends beyond technology, to people, processes and policy too.

Digital transformation efforts span all these categories and aim to establish the foundations on which the modern insurer can keep up with, and even start driving, technology-enabled innovation.

Today’s customer expects to be able to interact with an insurer on their terms and to have access to real-time information and personalised recommendations. There is increasing competition from new, digital-native players that are entering the market and offering innovative products that better meet customers’ specific needs. This new breed of licensed insurance carriers like Lemonade, Oscar, Next and Zego, leverage digital capabilities to better understand and engage with customers, and to offer more personalised and responsive products and services.

The benefits extend beyond the customer though. Digital transformation enables insurers to reduce costs through automation, improve underwriting and risk selection with advanced analytics, and build completely new businesses leveraging technologies like artificial intelligence, the internet of things, blockchain and open APIs. 

Industry pioneers, like Wakam, show what is possible if incumbents dare to reimagine their business for the digital age. 

So what is stopping insurers from moving quickly into the modern age? 

One of the biggest obstacles insurers face is the lack of digital capabilities and expertise. Deloitte’s global survey found that 43% of insurers feel it’s getting harder to find skilled candidates in a number of functional areas — with technology topping the list. 

Another obstacle is the lack of a group-wide digital strategy. Novarica’s Insurer Digital Strategies report found that “only 40% of insurers have a formal digital strategy”. Many insurers have implemented individual digital projects, but have not yet developed a comprehensive digital strategy that can guide their overall transformation efforts.

Industry regulation is another unavoidable obstacle. Get it wrong and insurers can face huge fines or worse, so compliance with requirements is non-negotiable. Unfortunately, legal, risk and compliance teams established to protect the insurer, can inadvertently slow down transformation efforts. This impact extends to cumbersome processes and unnecessary bureaucracy that can make it difficult to adopt new technologies.

For any company, the process of digital transformation can be complex and time-consuming. For insurers with customers, employees, and technology spread all across the world, the challenge can seem almost insurmountable. 

Navigating the obstacle course of digital transformation 

So, what actions should insurers take to accelerate their digital transformation and maximise their return on investment? Of course, every company will face their own unique challenges, but there are several key areas that almost every insurer will benefit from investing time, money and effort in:

Close the skills gap

To close the skills gap and develop the people and knowledge required to thrive, insurers must first identify the skills needed to leverage digital technologies. This could include skills such as data analysis, software development, and AI.

Once the gaps have been identified, insurers must create a strategy for acquiring these skills. Hiring industry outsiders from leading technology companies can bring fresh perspectives and valuable expertise. Internal talent should not be ignored and ongoing investment in training and development is key to keeping up with the latest developments.

Hiring or developing people is only the first step though. Insurers must allow these newly skilled staff to co-create a culture of innovation, adopt new tools and establish their own ways of working.

To accelerate the above, insurers may choose to partner with insurtechs or consultancies to access the skills and expertise needed to leverage digital technologies quickly. At Kanopi, we work closely with our insurer clients to bring not only our technology but also our insurance innovation expertise to accelerate their digital transformation. 

Reduce bureaucracy and cumbersome processes

The still-far-too-common multi-page, paper-based insurance application form is indicative of the internal bureaucracy and inefficiencies that many insurers face. Processes implemented in the 90s – like having to phone up to change a minor policy detail – are frustratingly still industry standards. 

To accelerate transformation efforts, insurers must identify opportunities across the business where processes and policies can be streamlined.  As Simon Torrance, domain expert and insurtech influencer, once mentioned in a virtual roundtable hosted by Kanopi – “Regulation often moves one step behind innovation. However, for those who are truly motivated, where there’s a will, there’s a way.” Conventions must be challenged and only those that are fit for purpose maintained.

Internal processes can often present a serious challenge to successful insurer-insurtech partnerships. Startups move fast out of necessity, so insurers must attempt to adapt to this way of working. Early engagement with key internal stakeholders can go a long way to making these ventures a success.

Build a culture of innovation

This requires a cultural shift across the entire organisation, with employees empowered to improve previously accepted ways of working that no longer serve the company’s needs. Driving meaningful cultural transformation also requires changes in how companies are structured and run, and how employees are incentivised. Innovation teams must work hand-in-hand with business units to solve core business problems, with executives accepting that not all initiatives will result in a return on investment. Proof of concepts (PoC) can be used to test new innovations before investing to roll them out company-wide.

Take AXA CZ/SK for example, who recently ran a PoC pilot of a deep learning-powered platform for extracting data from incoming unstructured scanned documents. The AI application auto-classified all incoming documents, extracted hand-printed field values, and submitted the data for further analysis with a 96% accuracy rate. When scaled successfully, such an OCR system can save hundreds of hours in productive agents’ time and drive measurable operational savings. 

Collaboration is key, so foster close partnerships between innovation teams and control functions, including stakeholders like legal in cross-functional project teams from the outset. This is particularly important when developing new ventures, where early input can save serious pain later on.

Accelerate innovation with a two-speed approach

The strategic drivers for digital transformation are often multi-faceted, with priorities and impact across different P&L areas and time horizons. Most programmes span multiple years, even decades, so businesses cannot afford to wait until completion to see business results. 

Many insurers are adopting a ‘two-speed’ approach, establishing innovation accelerators uninhibited by their core, which can continue to focus on long-term transformation efforts. These accelerators can take the form of corporate venture capital and startup incubators, to new partnership-led businesses. 

Away from the restrictions of legacy architecture and process, these ‘speed boats’ can unlock short-term business results and learnings, which can be fed back and used to ‘future-proof’ the long-term transformation. Insurers should look at insurtech partnerships to help them quickly establish these new ventures and start experimenting as quickly as possible.

This two-speed approach can help insurers move quickly in the digital age, while also protecting their valuable core business which has been established over the years.

Experiment with new technologies and partners

Advances in technology show no signs of slowing down, so businesses must keep pace. In recent weeks, Open AI’s Chat GPT has stunned the world with many people’s first real experience of the much publicised power of artificial intelligence. 

The convergence of emerging and maturing technologies – including artificial intelligence, augmented and virtual reality, blockchain, cloud, e-commerce, and ‘the metaverse’ – present a huge opportunity. Insurers must experiment with these new technologies and identify those that prove most likely to provide a return, before investing heavily and incorporating them into digital transformation efforts. 

Where speed and innovation are a priority, partnering can speed up time-to-value and help you see how effective new technology capabilities can be. Emerging insurtech platforms may be able to help you get experiments to market in a better, faster way. For example, Kanopi helped our latest client – a top-tier global insurer – launch a new embedded insurance product in under 10  weeks, down from their usual 12-18 months. Learn more about Kanopi’s platform. 

Don’t give up hope!

Hopefully, we’ve established that digital transformation is essential for insurers to remain competitive in the digital age. Incumbents need to adapt or they may slowly be replaced by new digital-native players. 

Insurers must focus their efforts to close the skills gap, reduce bureaucracy and streamline processes, and build a culture of innovation throughout their organisations. Adopting a two-speed approach can unlock progress and pave the way for longer-term transformation through iterative experimentation. Looking beyond organisational walls, new technologies and partnerships with emerging players offer insurers a way to fast-track progress. 

Digital transformation is complex and there are no quick fixes, but by following the strategies outlined in this article, insurers stand the best chance to gain a competitive edge in the digital age.

 

About Kanopi

Kanopi is one of the top 50 companies globally, championing embedded insurance and helping insurers every day. We do this by enabling them to overcome the hurdles of legacy infrastructure, integrate with multiple third-party platforms and build seamless user journeys for customers. 

Building a strong digital strategy is the first step to success in a highly competitive insurance landscape. Get started with your digital transformation journey, download Kanopi’s FREE guide to building an insurance platform of the future. 

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