The Uberization of LatAm insurance

Thursday, December 1, 2016

The traditionally conservative insurance industry faces the challenge of implementing technologies to streamline processes and create innovative business models and products. A survey conducted by global consulting firm Accenture indicates that 52% of insurers intend to offer fully digital sales processes within the next three years, while about one in four have it in place today.

Although the digitalization of the insurance industry is making strides in Latin America, some old habits remain, such as cumbersome and costly manual processes. Accenture managing director Diego Zorzoli, insurance lead for Hispanic South America, shares insights on the main digital trends in the insurance industry and the digital transformation of Latin American insurers. 

BNamericas: What do you mean when you talk about the 'Uberization' of insurance?

Zorzoli: By Uberization I mean the digital transformation the insurance industry is currently undergoing. This process entails the incorporation of new technologies as well as operational and business models with the potential of generating levels of disruption the industry is not used to experiencing. 

Take use-based car insurance, for instance, whereby the massification of new technologies is allowing insurance companies to asses risk in real time and select and retain the best drivers. This ultimately turns technology into added value for the customer. The added value is not limited to lower insurance policy prices in the case of safe drivers, as it extends into a series of services that improve the customer's experience and create positive bonds with the insurer. 

From an insurer's perspective, these models translate into fewer casualties in the portfolio and greater persistency, particularly from the more profitable drivers. 

BNamericas: What kind of technologies should Latin American insurers adopt?

Zorzoli: Technology adoption should favor the development of a data model for robust clients and advanced analytical capabilities. These allow insurers to segment efficiently, develop value-driven proposals for each segment, retain valuable customers, reduce fraud, optimize the channel mix, and make decisions based on data in most business functions. 

Moreover, technology used for process automation or robotization is crucial to significantly reduce operative costs and improve service levels. 

We are achieving an average cost reduction of 40% in the business' critical processes, which traditionally have a high manual component that results in high costs and excessive timeframes. 

Accenture tends to advance in both the analytics and automation front with our clients, as the resources that are freed through the robotization process finance a great deal of the investments used for digital transformation initiatives, particularly analytics. 

BNamericas: How is the use of advanced analytics in risk assessments benefiting insurers and customers alike?

Zorzoli: Benefits tend to involve an unprecedented knowledge about the customers, their habits, interests, and expectations, as well as the ability to use said knowledge in decision-making processes across every area in the company. 

The latter translates into a product offering that is more relevant to each client segment and the simplification of contracting processes. 

The use of advanced analytics also helps break the mutualization model that has traditionally existed in the industry, in which good clients and risks subsidize bad ones. This change leads insurers to actuarial models that use multiple data to better determine the risk in each case and adjust the premium accordingly. 

BNamericas: How is the automation of insurance claims streamlining these procedures, and what is needed to make this process more widespread?

Zorzoli: Generally, insurance companies continue using plenty of manual processes that require a large number of people. Process automation, and casualty automation in particular, allows for manual work to be replaced by robots. This leads to significant costs savings (an average of 40-50%) and a reduction of processing times, which in turn stabilizes services and allows for greater control throughout the process. 

The trend towards process robotization is strong in the financial sector in general, and the regional insurance industry is already having important experiences that confirm the adoption of these technologies. It is common for insurance companies to embark on this type of project as a way to achieve savings that can finance other important transformational endeavors, such as implementing advanced analytics programs or channel optimization. 

BNamericas: How will the adoption of technologies such as telemetry in the car insurance market change the regional industry?

Zorzoli: The global insurance industry has adopted the use of telematics as a way to differentiate its car insurance offering, providing new services and radically transforming risk assessment and pricing policies. Several insurance companies have begun offering use-based car insurance services, mainly offering discounts to drivers that entail less risk. 

The trend is expected to continue, reaching 5% of car insurance policies in the next three years. Afterwards growth will be exponential, as it will leverage on the incorporation of telematic devices in next-generation vehicles and the customers' approval of the benefits these technologies offer. 

About the company

Accenture is a global professional services company, providing solutions in strategy, consulting, digital, technology and operations. The firm develops and implements technology solutions to improve clients' productivity and efficiency, and may run parts of their operations on their behalf.