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Digitization, Automation And Innovation Are Revolutionizing The U.S. Home Insurance Market, According To A New Study From LexisNexis Risk Solutions

Home Insurance Carriers Using Digital Business Models and Leveraging the Right Data Will be Best Positioned to Make Smart Decisions and Deliver a Superior Customer Experience

LexisNexis Risk Solutions, a leading provider of data, advanced analytics and technology for the insurance industry,  released findings from a new research study revealing how disruption, innovation and the COVID-19 pandemic are impacting the U.S. home insurance industry. The Innovations Transforming the Home Insurance Buying Process report illustrates how consumer expectations are evolving. As a result, carriers need to streamline their insurance buying processes in order to modernize their customer experience.

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To conduct the research, LexisNexis Risk Solutions surveyed the top 50 U.S. home insurance carriers1 about the home insurance buying process. Results showed that carriers are prioritizing automation in home insurance buying as the impact of COVID-19 on claims activities continues. Additionally, self-service apps, drone imagery, the gig economy and insurtechs are emerging as market disrupters. Home insurance carriers can turn these market disruptions into opportunities by finding ways to more effectively leverage data analytics.

“While digital disruption to the home insurance buying process was already on the horizon, the pandemic accelerated carriers’ needs and consumers’ demand for virtual interaction,” said George Hosfield, senior director of home insurance at LexisNexis Risk Solutions. “Carriers that have not already implemented investments in automation need to act now to catch up to market leaders. We see from this study and our conversations, it’s just the tip of the iceberg. Carriers have the opportunity to improve the customer experience by using the intelligence at their fingertips to reduce time and expenses, maximize efficiencies and better know their customers, the risks and the return opportunities.”

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Innovating the Home Insurance Buying Process
To keep up with consumer demand for a digital insurance experience, most U.S. home insurance carriers are relying more heavily on available data sources to reduce the questions asked during the policy purchasing process and cut back on in-person inspections. According to the study:

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  • 67% are in the process of making changes to their investments in the home insurance buying process.
  • 43% have already made significant changes in the past two years.

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The top three goals of these investments are:

  • Improve customer experience (77%)
  • Increase profitability (63%)
  • Reduce underwriting expenses (53%)

As a result, the study predicts that by 2022, more than two-thirds (67%) of the Top 10 U.S. home insurance carriers will guide their customers on the best policy options by using a mostly automated approach, and only 10% of these carriers will conduct on-site inspections for most new policies. Carriers are also looking to leverage automation to increase speed and reduce frustration for customers in the binding process.

Digitizing the Home Insurance Experience
As the use of data prefill, advanced analytics and aerial imagery are increasing, these solutions are disrupting the home insurance industry. Carriers are mindful of new market entrants that are filling current gaps in the home insurance product set. To compete, 93% of carriers that are concerned about insurtechs are investing in digital and mobile capabilities, product innovations and ways to improve the customer experience.

Carrier Challenges and Looking Ahead
The current challenges and areas of focus for home insurance carriers vary based on size of carrier. Overall, losing targeted customers based on price is the top concern, followed by the cost of home inspections, agent attrition, and the time it takes to provide a quote. Looking ahead to the next three to five years, carriers are concerned about increasing customer expectations and the growing use of websites and comparative raters.

“Even as home insurance automation continues to evolve, the carriers that utilize quality data to optimize their customer experience will be able to offer a more consultative and trusted customer experience, while positioning themselves for better segmentation and helping them make decisions faster. They will do this by both confirming data versus collecting it from the consumer, and by leveraging prior policy information to guide them to the right coverages for that consumer,” said Hosfield. “Now, more than ever, carriers need to evaluate their home insurance process to see where enhancements are needed. And at the end of the day, the carriers that use data to reduce customer friction throughout the policy lifecycle and to proactively address pain points like weather and roof condition will be those best positioned to compete in the post-pandemic marketplace.”

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