Embracing the Crowd in Life Insurance

February 12, 2016 by Anne-Frances Hutchinson

Many P&C and health insurers have opened their collective arms to the crowd, using its power to solve complex problems, improve processes, develop new products, boost productivity, and extract answers from the best of the best. That creak you hear from the life insurance sector is competition, that ultimate pry bar, slowly jimmying open a perennially defensive stance.

With crowdsourcing, meaningful intelligence can be gleaned from virtually anyone, at anytime, anywhere, in any field. The crowd allows users to get as granular as they like, from high-level predictive surveying (Example: Kaggle, which draws upon hundreds of thousands of PhD-level thinkers to tackle sophisticated queries) to as task-oriented as they like (Amazon Mechanical Turk, which blends human and artificial intelligence to answer questions that can’t be handled strictly by computer).

Read about how Captricity uses MTurk to verify disparate, miniscule pieces of data to produce data capture accuracy rates of 99.9+ percent.

As they give careful consideration to joining the sharing economy, with a wary eye affixed to new entrants in the field, life insurance execs have generally accepted crowdsourcing as a way to generate ideas. While ideation is critical, viewing it as the best function of the crowd leaves a metric ton of potential on the table. The temptation to walk away from that potential is understandable, but unwise.

For many life insurers, the crowd is exhilarating in its potential and daunting in its sheer scope. Attempting to harness that mind-bending power is causing what Steve Domeneck of Innocentric calls crowdxiety. “Businesses are always slow to change as organizational resistance is high due to the anxiety on what this means for me, but the walls of resistance get higher the more complexity you throw at us.”

Accenture’s Timothy Li charts what he terms the collaboration evolution from a passive ideation tool to an active process that can push insurers out of their comfort zone. By making collaboration a key part of business processes, personalizing customer and employee interactions, and expanding their outreach from workforce to crowdsource, Li posits that insurers have the opportunity to “drive new relationships and conversations.”

Shifting the perception of the crowd from a limitless idea machine to a specialized component of a collaborative process is a fundamental step towards making effective use of its potential. Mark Breading of SMA notes that collaboration has always been central to existing business processes and communication systems. “By tapping into the creativity, experience, and expressed needs of agents, customers, and employees, insurers are able to identify new products and new ways to enhance service and improve operational efficiencies,” he says. “By leveraging collaboration technologies in communications with these same groups, insurers are able to provide higher value and demonstrate that they are capitalizing on the modern capabilities that many are coming to expect.”

In their Insurance 2020 and Beyond report, PWC analysts stress that once insurers turn their best ideas into workable strategies, “it’s important to determine how to target individuals through different messages and channels, simplify product design, and re-engineer distribution and product economics. Further considerations include how to reshape the underwriting process to capitalise on new analytics and sensor information, as well as steps to make the sales and policy administration process more straightforward and real-time.“ Crowdsourcing and collaboration can deliver the intelligence required to make those determinations. Given the high barriers to entry that life insurance startups face, time may be on the side of established firms that are still working out how to leverage the crowd – for now. Opening up to the wider usage of the crowd is the first step.

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