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7 October 2016

How a data-rich and innovative world is about to transform the insurance industry

By John Brisco, Chief Information Officer and Chief Operations Officer, Manulife Asia

First published on LinkedIn - Reproduced with permission

Asia personifies the digital revolution sweeping the world, with some researchers forecasting that the Asia-Pacific region will have two billion unique smart phone users by 2019. Never in history have we been so connected or produced so much data.

Consequently, customers are now better educated and versed in what technology and data can offer them, and thus are far less tolerant of pain points when purchasing a service or product from a business. They are no longer willing to accept slow, inefficient procedures or even “fit for all” service – nor do they have to.  For the insurance industry, one of those pain points is underwriting.

While most people are unfamiliar with underwriting – the process of assessing a customer’s risk profile before agreeing to sell them an insurance policy – it’s an integral part of every insurance transaction. Underwriting is the foundation of the industry, and ensures that the business is sustainable over the long-term.

Nevertheless, underwriting has evolved little since the concept was developed in the seventeenth century through ship merchants agreeing to divide losses from voyages among numerous merchants. Modern day underwriting still essentially relies on asking insurance applicants to complete a lengthy form filled with medical jargon most customers don’t comprehend, and on many occasions, many customers are also required to follow up with a physical examination as part of this process. Customers are then asked to provide more documentation before waiting weeks to find out if their insurance application has been approved or declined. Sound cumbersome, intimidating and intrusive? It is.

Here’s a thought we are driving at Manulife:  Why not use the explosion of technological innovation to redesign how we create customer experiences in the modern, digital world in which we now live? Technology advances and the new information revolution have presented us with an opportunity to turn underwriting from a negative experience to a positive, seamless one for both the customer and insurance providers.

Never before have individuals generated so much data, whether it is via health apps, smart phones or other sources. This plethora of information can enable underwriters to more accurately evaluate risk, better price premiums for individual customers and process claims quicker.

Take for example, Japan where a majority of people go for annual health check-ups. At Manulife, we have introduced an innovative approach in using the data from medical visits that was not previously used to now bypass the traditional underwriting tools of questionnaires.   The result is that we have a strong indicator that they would pass acceptable underwriting standards and most importantly, the underwriting process has become simpler and more efficient.

Additionally, radical innovation in healthcare is close to being at the cusp of our fingertips.  The current Qualcomm Tricoder Xprize competition with a US$10m prize is focused on developing a consumer focused wireless device that fits in the palm of the hand and monitors as well as diagnoses one’s health.  Imagine a world, where you can accurately diagnose health conditions and health vital signs - independent of a health care worker or facility.  We at Manulife are imagining a world like this, and the profound implications this will have on our business model if we are to drive an unparalled customer experience.

What must the insurance industry do to ensure these types of truly transformational opportunities are fully realised and successfully executed for both customers and insurance companies?  I’d suggest prioritizing the following:

1) Bring customers on the journey. It is their data and this must be respected. It is incumbent upon the industry to simply and transparently make a case for increased use of data analytics for better customer outcomes. We must create an environment where in return for information, customers enjoy a genuine relationship of trust with their insurer with full confidence that the insurer knows them and is committed to finding ways to enrich their lives.

2) Invest in understanding medical technology innovation.  The data and new experiences generated by medical technology can be used to create more tailored and personalized solutions for individual customers.  Understanding the emergence of its innovative capabilities will help support product design, business design and customer experience design – and ultimately lead us to genuinely connect to the customer.

The insurance industry has been presented with this once-in-a-lifetime opportunity to innovate and address the significant under-insurance gap that exists in Asia. If we dither, we leave the door wide open for data-rich non-insurance companies – those with access to a vast reservoir of information from individuals who are leaving behind important imprints through the internet and social media activity -  to fulfil the insurance needs of our customers.

I’m confident that if executed well, we will tackle this long-standing pain point of underwriting. We are about to enter a new age where insurers will be in a position to deliver tailored products and service experiences that fit customers’ lives and ultimately provide genuine “wow” in customer experience.

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