The Agents Council for Technology Strategic Future Issues Work Group identifies technology trends that will impact the independent agency system.  2013 launched the first in a series of hard trends reports on big data, mobile, social media, cyber liability and more. Once the initial analysis is conducted, the group creates roadmaps and must-do implementation strategies to keep independent agents and brokers secure and relevant in an ever-changing digital landscape. The group's overall goal is always to provide strategic guidance, enabling an industry culture of accelerated innovation.

New and emerging technology levels the insurance playing field and creates opportunities for new competition (e.g. insurtech) Smaller players can compete with larger, established companies by offering more efficient business models, improving the customer experience and potentially reducing the cost of entry. While new competition may be a threat, there are clear opportunities for firms able to adapt and design new experiences that are relevant to today's digital consumer.

We are in a new customer-centric era characterized by rapid change and new customer needs, expectations and demands. Technology-driven trends are interconnected and not process silos. Each component is part of an ecosystem that is ushering in a new era and societal reality.

The insurance industry needs to design and deliver a customer experience that is efficient, relevant and memorable.

The very nature of risk – the how, what, where and why of insurance – is being challenged and must be revised if not reinvented. How the traditional market responds to these challenges will determine its future success – and perhaps its very survival.

The Agents Council for Technology Strategic Future Issues Work Group and the Changing Nature of Risk Work Group identified a set of emerging technology trends and produced Risk Advisories on 16 key trends that are changing society and how we do business. Participants created an analysis of the economic impact, industry implications and recommended actions for agents, carriers, and vendors.

Coverage advancements  

Cyber Liability - Protect your agency and clients from cyber risks including data breaches, hacks, ransomware, phishing. A data breach can be expensive and will threaten your business and every client relationship.

To protect your agency, please take advantage of our free ACT Agency Cyber Guide, which breaks down the state and national cyber regulations and provides resources to comply.  For your clients, providing cyber coverage is critical, and covers your E&O as well – Find the customer cyber policies options within Big 'I'Markets and the Big 'I' “Coalition" resource, a tailor-made cyber policy for your agency!    

Operational advancements

• Mass Customization – Big data, digital manufacturing, and even social media are mainstreaming mass customization. Agents can create customized experiences and build loyalty with clients and prospects.
• Work from Home – Freelancers and employees alike benefit from the flexibility and productivity of a work from home culture. Learn about risks, technology, processes and leadership culture need to create a flexible work environment.
• Virtualization and Automation – Automating certain tasks can reduce time, labor and energy needed to do business. Your team can focus on servicing clients and building business.
• Blockchain - Blockchain is one of the digital technologies starting to draw attention in the insurance industry, with consortiums such as B3i charting use cases and structure. 

System Advancements

• Autonomous / Crash-Avoidance Vehicles - Autonomous vehicles will significantly impact our personal interactions with vehicles and radically change both private-passenger auto and commercial vehicle insurance.
• Telematics - Telematics is the long-distance transmission of computerized information.  It is a general term for any device that gathers and transmits data in real time. In the insurance industry, telematic devices can be used to assess risk and pricing.
• Artificial Intelligence/Machine Learning – This will impact our distribution channel by providing a new way to communicate with business partners, prospects and clients.
• Artificial Reality/Augmented Reality/Mixed Reality - This is a quickly evolving trend that is in its infancy but has the potential to revolutionize the way insurance carriers and agents interact with their clients.  

 Consumer advancements

• Smart Homes & Buildings - This technology has the potential of having a significant impact on underwriting, claims, and loss mitigation for property insurance in the near future.
• Drones - As the number of UAVs (Unmanned Aerial Vehicle) and their useful applications increase, the exposures and insurance needs of consumers and businesses will increase.
• The Sharing Economy - Insurance carriers are struggling to create best practices and products in a timely manner; agents are unsure of what questions to ask and are opening themselves up to E&O exposures, and consumers are open to risk as they are unaware of exclusions on their policies. 
• Peer to Peer (P2P) - Peer-to-Peer (or “P2P") entities with a common interest band together to defray their risks financially for many years. The major differentiator in these new efforts is the innovative use of new technologies that improve customer service, product distribution, and delivery to reduce costs.
• Voice Computing - Voice Computing, also known as Conversational Computing and Voice Recognition, is the next major step in user interfaces.
• 3D Printing - 3D Printing will become more commonplace as price points reduce for the technology and as other industries embrace its usage.
• Bitcoin, Crypto and Virtual Currencies - Bitcoin and other crypto or virtual currencies have created alternative payment methods and alternative assets.
• IoT (The Internet of Things) - The combining of technologies to solve problems which will eventually result in a connected world that few have imagined.

The impact these trends have on society is much greater than any individual trend; it is the synergistic impact that is significant. In fact, rarely do these trends stand alone or work independently. Rather, many times the existence of any single trend depends on other key trends.

Smart Home devices rely on the Internet of Things (IoT) and then the synergistic value that comes when sensor technology, AI and voice are added. One can only imagine the possibilities that evolve from combining the sensors that are core to IoT with big data and machine learning.

Collectively, these trends are dramatically changing every aspect of our lives. The focus of this report is that it's not the technology itself that is creating significant impacts, but rather the cultural or societal change it ushers in. Consider this: The Boomer generation looks at an iPad and thinks, “Cool. I can now read magazines on it".  The 'C' (Connected) Generation experiences a magazine as a broken iPad, without features to program and control their home, conduct business, and other preferred areas.

New and emerging technologies are changing customer expectations. Companies such as Apple, Google, and Amazon are setting the standard for customer experience. The insurance industry is facing increasing pressure to adapt, evolve and reinvent itself to keep pace and remain relevant. Failure to do so opens an opportunity for insurtech entrants to offer new experience-designed insurance models.

What is 'Insurtech' (or 'Insuretech')? 

Insurtech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. Insurtech is a portmanteau of “insurance" and “technology" that was inspired by the term fintech. Insuretech companies believe the insurance industry is ripe for innovation and disruption.

Insurtech is exploring avenues that large insurance firms have less incentive to exploit, such as offering ultra-customized policies, social insurance, and using new streams of data from internet-enabled devices to dynamically price premiums according to observed behavior.

• What is 'Insurtech'?
  Insurtech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. Insurtech is a portmanteau of “insurance" and “technology" that was inspired by the term Fintech.
• Insurtech—the threat that inspires
  Incumbents need to keep their eyes out for new entrants that use technology to create a strategic advantage. The size of their share in the next generation of the insurance industry is at stake.
• The Rise of Insurtech 
  Insurers are facing increasing pressure to evolve and reinvent themselves before disruption, caused by emerging technology and insurance startups, hits the bottom line. 
• Insurtech Facts and Figures: A Look in the Rearview Mirror
  Nothing happens overnight in insurtech so let's analyze the last seven years and one quantitative prediction on Lemonade. According to Venture Scanner, the number of insurtech deals has been constantly on the rise in the past seven years and the same goes for the number of investors that have placed their money in insurtech sector deals. Some of the expectations have been missed but the sector is evolving and this is great news for those who love the insurance sector.
• Top Insurtech Predictions for 2018
  Insurtech is often framed as a force of disruption in the insurance industry. But technology doesn't disrupt the industry – it enhances the way carriers and customers interact. In 2018, we predict we will continue to see more carriers and agents embrace technology and partner with insurtech companies, not compete with them.
• 2018 predictions: Insurtech hits its stride
  KPMG insurance and fintech professionals predict 2018 will be the year that insurtech moves from proof of concept to production as minimum viable products are proven and scaled for a wider launch. 
• Top 10 Insurtech Trends for 2018
  We believe these trends should relate to what an insurance carrier would like to accomplish, to what a winning insurance firm of the future would look like. We believe that that such winning insurance firms will have four essential elements.
• Defend Your Turf: 3 Smart Reactions to InsurTech, IA magazine, 2018
  

At 53 years old, Steve sold his +100-year-old agency to start over as a completely digital agent. He strongly feels “it is easier to build a new ship than it is to change the ship that I have."

Steve employs NO staff, and indicates the three things he never wants to pay for again are:

1. An agency management system,
   
2. E&O coverage, and
   
3. Staff salary and benefits.
   

Steve feels carriers have the best-trained service staff already, so why spend time, money and benefits training his own staff on many carrier systems and products? His goal is to determine the single best carrier to write individual niche products including liquor stores, food trucks, microbreweries, etc. He met with the sales and service leadership across numerous carriers to determine the best fit for each niche coverage and quickly knows who to quote when servicing a client. 

Steve is currently working to create a single thread, completely digital agency which can be run from his home office. His focus is on life balance, being able to attend his sons' athletics and events. Steve notes that technology is not the largest challenge – it's branding. And he's engaged several industry branding experts.

This is a work-in-progress and will take a significant amount of time to get right. Steve will share his progress with ACT, and updates will be posted to this and other forums.

Experience Design (XD) is the practice of designing products, processes, services, events, omnichannel journeys, and environments with an emphasis on the quality of the user experience and culturally relevant solutions (Wikipedia).

Experience Design is not customer experience. Rather, it is a methodology to make people's interactions with complex systems like insurance easier and more satisfying.

Note: Learn more about the difference between Experience Design and User Experience, click HERE.

Experience design is more than just putting a new coat of paint on an old building. The entire foundation of the business of insurance (like most other businesses) is dated. Most of the procedures and processes were designed and built more than 50 years ago. Too often, efforts to improve customer experience are nothing more than incremental efforts at updating or improving outdated processes. Future success will depend on our industry's ability to unlearn the old and begin creating innovative, meaningful and on-demand experiences for connected consumers.

“We get stuck in legacy thinking, playbooks and metrics rather than innovate and disrupt to fully capitalize on new digital opportunities." - Brian Solis 

The question remains: Can traditional insurance break free of legacy thinking and processes? Can it reinvent itself and design experiences that delight the new (digital) consumer?

• Wikipedia definition
  Experience design (XD) is the practice of designing products, processes, services, events, omnichannel journeys, and environments with a focus placed on the quality of the user experience and culturally relevant solutions.
• Experience Design: When Innovation Isn't Enough
  The allure of innovation has always been in the chance of finding the next “big thing." However, businesses often find themselves on the treadmill of relentless innovation as markets mature and technology advances.
• Understanding Experience Design in The Digital Age
  Welcome to the world of an experience designer, someone who works with brands to deliver something that can't always be measured by traditional analytics, and can only be measured by how someone genuinely feels when they experience it.
• The Importance of Experience Design and The Future of Brand
  Disruption is a gift either given to you, or by you. Knowing this, we are still making mistakes in creating meaningful experiences to a new generation of connected, impatient and demanding customers. We get stuck in legacy thinking, playbooks and metrics rather than innovate and disrupt to fully capitalize on new digital opportunities. 
• ACT Customer Experience Lifecycle 
  Independent agents are at an advantage—we are a service industry and when we simplify the process through automation and free more time for relationships, our share of the market is poised to grow.  ACT created best practices for the customer experience life-cycle from cultivation to referrals find easy steps to implement in your agency.

Ross Dik – Knight-Dik Insurance (Worchester, Massachusetts) 

Ross is committed to making consistent improvements that attract more customers and create an easy experience. He has committed to seriously considering all productivity and workflow enhancements and learned there is not one big solution, rather many smaller improvements.

The Knight-Dik agency begins with a solid management system that is cloud-based and offers mobile access for agency staff using cell phones or tablets. They can notify and contact insureds using phone, text, and email. The agency ensures it is downloading all available lines with carrier partners by consistently reviewing the IVANS Connections Report. 

The firm also offers two versions of its website – the regular site with a broad presentation of products and services, and a specialty website for workers comp and landscaping. Ross reports steady website traffic.

The agency also has one remote worker and offloads heavy data entry and cert generation through Resource Pro (based overseas).

Ross uses blogs and social platforms like Facebook and Twitter to expand the agency's reach. The firm also employs a robust “Refer a Friend" program with laptop and electronics giveaways. Finally, the agency utilizes a leads capture program with some of their carriers. 

On an even more forward-looking front, Ross is working with Guided Conversations (utilizing Artificial Intelligence) to allow customers to interact fully with machine learning via a robo-advisor. He is experiencing some good results with this as well – up to a 14% completion rate.

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Additional case studies being added.

In the past, much of the advancement in technology was used internally to improve administrative processes and workflows and to improve communication between carriers and agents and brokers. Rarely did the technology offer any significant benefit to the insurance buyer or policyholder. 

Today, much of the technology and many of the changes taking place are customer-centric. The needs of today's consumer are evolving, and the consumer is demanding a radically new insurance experience. For example, the sharing economy is creating the need for new coverages not even contemplated a few years ago. The reality is that the very nature of risk is rapidly changing.

We don't have all the answers. Yet, we know for certain that we cannot avoid or ignore the need to adapt. This is not a carrier responsibility. It is not an agency/broker responsibility. It is an industry-wide responsibility. There are answers and solutions – our collective challenge is to find them, prioritize and implement them together as true partners in the independent agent distribution channel.

ACT will continue to play an active leadership role in the investigation, review, analytic evaluation, education and communication of hard trends and their impact on our industry. We are committed to driving the dialogue forward.

However, ACT understands the scope, importance and significant effort needed to stay ahead of the accelerating pace of change. Success is dependent on a collective effort by all stakeholders – carriers, associations, user groups, agents/brokers and technology providers.

It is no longer acceptable to ignore, dismiss or excuse away the challenges we face from new technology, our digital society, the new consumer, or new competition. Together we need to work to build tomorrow's insurance industry today.

Agents/Brokers

• Use carrier “agent councils" – press them to include this document in discussion and get the input back to us. We request having this topic added as an agenda item for joint discussions and provide access to panels to gain insights. 
• Bring your input to ACT Meetings and our key tech-forward work groups, such as Strategic Future Issues (SFI), and Changing Nature of Risk.
• Get involved with user groups, state associations, and carrier councils and push for dialogue and cooperation on these issues - Make your concerns and needs known.
• Be serious about the opportunities from new technology and lessons from competitors.
• Look for opportunities that the new technology enables.

Carriers

• Set up opportunities for dialogue with agents on these topics.
• Communicate clearly on plans for addressing these topics.
• Transparency – keep your agents in the loop.

Vendors

• Use this report and the risk advisories to identify future system enhancements.

User groups

• Include sessions that address the issues above in conferences.
• Set up panel discussions between vendor, carrier and agent attendees.
• Offer webinars on these topics.

Associations

• Facilitate discussion between all stakeholders on the national, regional, state and local levels.
• Where relevant – work promote and drive regulatory change.

OUR OVERALL GOAL is to cultivate a culture of curiosity.  Keep a wide, strategic focus.

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