Big Data and Insurance Create A Promising New Relationship

Guest Editorial
By Jason T. Andrew

The insurance and employee benefits industry of today is often operating as it did 20 years ago. The tools commonly used by insurance professionals have remained unchanged; paper, pen, fax and email dominate the everyday activities and tasks of the long quote-to-enrollment process. But at long last, our industry is undergoing a huge shift.

The insurance industry does not love risk. Typically, it has been slow to respond to technology innovations. It is also one of the most complex and intricate industries to understand and navigate. With little public data readily available, old legacy systems operating as the standard, and manual processes at every turn, there is little transparency or shared processes. This make it difficult to get things done. But the insurance industry lives and dies by its use of data, so there is a great need to open up and streamline the process of obtaining it. Slowly more and more data is beginning to be made available and industry players are starting to use data in new and exciting ways. There are many ways that data will help to improve key decision making, product creation, selection and renewals.

Part of the ‘long overdue shift’ has been the fact that the insurance industry is starting to embrace technology as a way to better process and disseminate data. Between 2013 and 2017, more than 1,200 insurtech companies in 14 categories across 61 countries received over $18 billion in funding, driven by automation, machine learning, and using data sources to make better decisions around everything from pricing and better customer service to selling more products. That is a lot of dough, and there are more and more startups wanting a piece of the action.

In addition, startup accelerators (typically, investors who create programs to help early-stage startups get off the ground) have blossomed all over the globe. Because of the excitement–and money– around insurtech, we are seeing a myriad of new and interesting potential companies, partnerships and collaborative efforts that have the potential to produce a tectonic shift in the way insurance gets done.

Insurech Wish List for 2019

In an ideal world, the industry will get to a point where some of the following things begin to transpire at scale:

  • Employee benefit insurance prices are structured in a way that account for behavior, and reward health and good habits with favorable pricing
  • Wellness incentives are baked into most employee benefit products
  • Pricing for procedures is readily available with an amazing and interactive user experience that is both user friendly and enjoyable to navigate
  • When searching for a doctor, networks are up-to-date, easy to connect with and simple to confirm (if they are contracted with an insurance plan)
  • Insurance companies have APIs (application program interface; basically a set of technical tools that allow two software programs to ‘talk’ with each other and exchange information) and technology companies are able to share data and systems to help improve outdated processes
  • As a result of the work that Accord, NAIC, LIMRA, carriers and others who have been working on this for years, we get a set of data standards in our industry

While the thoughts above have been dreams of insurtech leaders for years, with the slow pace at which the industry is evolving, it is unlikely these issues will be remedied in 2019 (even though the problems above are not technical problems, but rather issues that can be easily remedied with technology available today.) Plus, for the above to happen, there will need to be collaboration between carriers, government, associations, startups, investors and big players in the industry.

What Can Actually Happen in the Near Future
There are a number of exciting things that are taking place. For now, at least partially due to the emphasis on and investments in insurtech startups, there is substantial collaboration between insurance carriers and new entrants, making this one of the most exciting times to be in the insurance industry. Data and how we use it will start to play a bigger role in every aspect and interaction with insurance. It will take some time, but we are not far off.

APIs: connecting the world
Using and getting familiar with APIs can make a world of difference in almost any process. Since our industry is inundated with manual processes, getting familiar with and using APIs can take costly and manual workflows and automate them.
To get more familiar with a consumer API platform, check out Zapier. Using Zapier with many platforms you already use (Gsuite, Salesforce, Marketo, Dropbox, etc…) you could, for example, automate some of the following:

  • Set auto notifications about renewals to go to your service department
  • Have those notifications run a quote, generate a proposal and send it to the service department for review
  • Auto schedule an appointment with a prospect or customer and gather the required information needed to prepare in advance
  • Write an article and have it automatically posted to all your social media sites, sent to all your prospect and customers and tracked in your favorite marketing solution

These are just a few examples. But being that it is said that 40 manual processes account for about 25 percent of an insurer’s (think about your brokerage firm) cost of doing business, how much could you save and/or how much more efficient could you be if you began automating? For our industry, the more API connectivity we get between systems, the more time and money we will save.

AI & Machine Learning
There are a plethora of cool applications and opportunities that can help accelerate the realization of my wish list above. Let’s take a parallel industry: tax preparation. Just two years ago, H&R Block partnered with IBM’s Watson to see if they could begin to help augment the CPA and tax preparer experience with machine learning and data.

The New York Times writes: “Watson proved to be a quick learner. Its core skill is its ability to digest and classify vast amounts of text, using what is known as natural language processing. So, among other things, it was fed the 74,000 pages of the federal tax code and thousands of tax-related questions culled from H&R Block’s data, accumulated over six decades of preparing tax returns.”

How cool is that? Can you imagine if we were able to feed Watson all the rules around employee benefits, all the plans, rates, six decades of renewal proposals and years of claims experience and let Watson learn what we have in our heads? Having access to all that data to help think through the best options for an employer and their employees would be a huge boon for the insurance industry.
As we advance ever closer to a new decade, the insurance industry is poised to be the latest to embrace new and exciting ways to increase productivity through technology. It is invigorating to see new life breathed into the industry through insurtech innovations and startups. As more and more carriers and brokers begin to use APIs, we will see turnaround times shrinking and efficiency skyrocketing.

Jason T. Andrew is CEO and co-founder of Limelight Health. Recognizing the early trend for insurtech innovation in late 2013, Jason co-founded Limelight Health to deliver better data integration and sales efficiency for insurance carriers, PEOs, brokers and others in the employee benefits sales ecosystem. As CEO, Jason has led Limelight through three rounds of funding, helped the company close contracts with some of the largest and most well known companies in the U.S and grown the team to over 50 employees. Limelight’s award-winning technology, called QuotePad™ aims to transform the way health insurance and employee benefits are quoted, sold and renewed. In its first three years, Limelight has been recognized with numerous industry awards:

· Awarded “Most promising HealthTech Company of 2015” – Silicon Valley HealthTech Conference
· 1st place “2015 Startup Showcase” at Insurance Disrupted in Palo Alto
Named top “Agents of Change” for health insurance technology startups Jan 2017
· Chosen of 1,000 companies to be part of Plug and Play’s InsureTech batch March 2017
· Awarded 1st place in MunichRE’s annual innovation summit June 2017

Jason is a serial entrepreneur and has advised numerous Silicon Valley startups as well as volunteering in the industry and community.