Building a Foundation for Optimizing Insurance
Technology like artificial intelligence and machine learning can seem esoteric, but technology works best when it makes difficult tasks easier and produces consistent results that help clients become better risks.
Wald talks to us about Aclaimant’s efforts to bring together safety, risk management and analytics in one connected platform solution.
Probably about four or five years ago, some of the brokers who were trying to differentiate themselves started to add value-added services to try to win and compete for business. They saw their best clients were coming to them and asking for those things, and it was both a push from the brokers and a pull from the clients.
In today’s market, a lot of brokers recognize that the next evolution of their service is going to no longer just be placing insurance and getting good rates, which is important, but also as effectively to be an advisor to the business.
It used to be brokers were people who could help you buy insurance, not the people to help you buy and use insurance. When you think of using insurance, it becomes risk management: both the prevention of using insurance as well as using it (claims and safety) and understanding it (the analytics). All of that is the spectrum of risk management. As we step back, it really feels like brokers have become, effectively, the outsourced risk management subject matter experts.
On the regulation and compliance piece, we see three fundamentally driving forces that are ramping up the need to have people who know what to do and help. The first is the pace of change. Everybody who has lived in the past couple of years has recognized that the pace at which things are changing—new regulations, new risks and exposures, whether that’s severe weather, pandemic or local supply chain—you name it, it feels like the hits just keep on coming. You just need to be able to react. We probably saw two decades worth of change in the past 24 months, and I feel like that pace probably isn’t going anywhere.
The second thing we’re seeing is the skilled labor shortage. The really interesting dynamic we’re seeing is a bunch of people who are experts in the space—20-, 30-, 40-year claim managers, risk managers, compliance officers have been retiring at a rapid pace. It’s our view that the labor pool is not going to keep up with the demand for that, especially because people who are entering the workforce don’t necessarily want to go into risk management. They want to be Instagram influencers or work with a tech company.
The other thing is that there is pressure for everything now to live in a system. Before COVID, it was a lot easier because everyone was co-located; now everybody’s remote. Everything has to be in a connected system or else you are going to lose the visibility that you had. When you add up those three things—rapid pace of change, including regulations, lack of skilled labor and everything needing to live in a system—we feel that’s going to put an additional layer of pressure on the insureds to try to keep up. They were already drowning a little bit, now they are drowning a lot.
They are going to lean to their brokers first. It used to be what policies do I need; now it’s how do I deal with OSHA or how do I deal with the DOT. That’s how the landscape is laying out and why people are leaning into this additional need for understanding of how to deal with safety and compliance and regulation.
We make it simple, easy and centralized. Especially with compliance and with insurance, risk management, a lot of it is not robots and spaceships and artificial intelligence. A lot of it is really doing your homework, eating your vegetables and getting eight hours of sleep. The analogy is that we believe that if everybody just did the right thing all the time you would avoid a significant number of issues. For us, trying to make it easier to help everyone do the right thing and make it simple for everybody to know when the right things have been done and what role they have to play, like coordination and best practice sharing, is really fundamental.
Where we focus is understanding what all the best practices are, what all the required practices are, what all the processes are, automating and simplifying all those things, and putting those things into one system that connects the insurance ecosystem to the policyholder and to the broker, allowing everyone to quickly get access to that and get up to speed—in our mind democratizing risk management best practices across compliance, safety, claims, et cetera. We take what is normally a game of telephone, chase the fax, send an email and make it just smooth, simple and transparent.
Four years ago, we knew that risk management helped people. We didn’t know how much. Now, we are one of the first to actually quantify the value of risk management. We have had enough people in our system long enough to understand a number of key factors—if I do better, what does it look like.
The conservative estimate here is roughly 12 hours of time savings per claim and about 21.7% of total incurred in work comp, and we’re still working on other lines. What that adds up to is that, normally when an insured buys our system across the time savings and the claim savings, they’re going to see roughly a 10x or 20x return on their investment for us, and that’s just the stuff that they can hit.
There is a secondary thing here where you get the hard savings right away and people can point to those and the CFO gets excited because “I can see my claims going down; I can see time savings going up.” But you’re also creating an environment that makes you more competitive in the market and [helps] retain talent, which today is even crazier. If you have a safer environment, people aren’t going to want to leave as often.
Brokers are starting to think about how technology doesn’t just get in their way…but instead about how they can make insurance a core part of their value proposition not only to help their customers but also to help them scale.
We are seeing so many rapidly growing brokers who are starting to find ways to put multibillion-dollar roll-ups together and bring all kinds of outside investment into the space. As we think about how those companies are going to grow and how they’re going to sustain, I feel like Aclaimant is starting to become part of that recipe as brokers think about how can I make sure I’m maintaining my level of service as I’m growing 10x, 100x, over three or four years, how to make sure my back office doesn’t fall apart, my claims team doesn’t want to quit as they go from managing one book to 50 books.
The last piece on the broker point specifically is starting to think about how brokers are using technology. Don’t just think about how to increase distribution but also how to increase service and engagement. That’s the last fun thing to see, because over time that’s how the biggest and best brokers are going to continue to win.