Other articles in this series:

  1. Reduce Your Costs by Modernizing Your Distribution
  2. Modernize Your Insurance Distribution to Reduce Your Risk
  3. Modernize Your Distribution by Augmenting Your Connectivity
  4. Build, Measure, Learn — Modernize Your Distribution to Win

As we established last week, modernizing the individual insurance distribution network reduces costs and improves profitability. This provides a lot of value to insurance companies, but no insurance carrier worth their NYSE ticker symbol ignores the importance of risk to their company’s long-term success.  

In an analysis of the life insurance industry from 1985 to 2000, McKinsey found that the wide performance gap between top companies and those at the bottom was primarily driven by excellence in managing poolable risk. They urge individual insurance companies to continue to build core risk management capabilities. 

While this can be done in-house, it often requires dedicating significant and ongoing resources for building embedded analytics platforms.

« Many companies have found that it’s easier, faster, and cheaper to partner with a SaaS provider such as Breathe Life.  »

But how do these partnerships reduce risk?

Moving applications and policy approvals to the digital world reduces man-made errors. Checks can be built into the software to let the agent know that they’ve skipped a line or entered something inaccurate. This helps underwriters do their jobs better. 

Beyond this benefit, however, is demonstrated by smartphone telematics provider TrueMotion.

TrueMotion builds technology that captures data from a user’s smartphone. Using this data, auto insurance providers can evaluate a driver’s behaviour.  This helps them set better prices for their policies and determine whom to insure and what risk exists. 

Data is a vital element of the subscription, and by quickly identifying risky drivers and removing them from their insurance pool, insurance carriers reduce their risk. Rideshare apps can also employ TrueMotion’s data to monitor their driver’s safety performance. 

Customers can file claims through TrueMotion’s app, which lowers cycle times. Data that the app has collected also verifies and supports any claim or helps protect against fraud. TrueMotion has built powerful AI and machine learning algorithms that make sense of all the data collected. By partnering with TrueMotion auto insurance carriers can significantly cut their risk. 

The same is true for life insurance providers who partner with Breathe Life.

« Not only do we help reduce man-made errors but our anonymized multi-carrier data helps you understand risk-pools and what products to target to which individuals. »

McKinsey notes that by building more flexibility into insurance products and pricing based upon metrics established through data analysis, insurance companies will be able to share more risk with customers. 

Employing robust data analytics will allow life insurance carriers to identify riskier populations and customers, just like the auto insurance industry has been doing for years now. 

Stay tuned next week as we explore how modernizing your distribution can augment your connectivity to consumers.