What's the other digital challenge confronting the insurance industry?

What's the other digital challenge confronting the insurance industry? | Insurance Business Australia

What's the other digital challenge confronting the insurance industry?

Last week, Insurance Australia Group (IAG), one of Australasia’s largest general insurers, released its very mixed half yearly financial results. The company posted a net profit of $173 million but cash earnings and insurance profit were both down by about 60%.

However, according to CEO Nick Hawkins, IAG’s digital transformation is underway. Hawkins said the company has “reset the business” and is seeing benefits from new technology and operational efficiencies, including more use of artificial intelligence (AI).

That could be good news for brokers selling IAG’s intermediated products.

Many brokers are often critical of the pace of digital change at insurance companies. With justification, insurers often blame the slow rate on the difficulty of upgrading massive legacy IT systems.

Read more: Is the insurance industry no longer a digital dinosaur?

However, with working from home now the new normal, Dale Hansen (pictured), CEO of Austbrokers Coast to Coast, based in Burleigh Heads, Queensland, said there’s another digital challenge confronting the entire industry.

“I think what’s happening here is two issues are getting wound up in one,” he said.

On the one hand, he said, insurance companies are heading in the right digital direction.

“There’s no question that insurers are looking to do things faster and more cost effectively but are also looking to secure data that they can use more responsibly and more intelligently,” he said.

Hansen said that process does have some brokers worried, especially in terms of the way it can facilitate more directly sold insurance products. However, in theory, digitisation should accelerate response times from insurance companies – another regular complaint from brokers.

“So there’s a flip side to that coin as well. While we might not like all the digitalization or the things that it does, it’s going to have its benefits in the long run,” he said.

However, the second digitisation question, said Hansen, is directly connected to how the last two years of the pandemic has embedded the working from home culture.

Many brokers say, as a result, response times from insurers have worsened. Last month, Carl King, managing director of Apollo Risk Services, told Insurance Business that the main Omicron impact for brokers - and their clients - is worsening turnaround times from insurers.

“I would say at least five times what it was pre COVID,” said King.

“My claims department has come to me with their hands in the air saying, ‘We’ve been on the phone for 45 minutes and as soon as we get through we get cut off!’” he explained.

King was concerned that many insurers are treating COVID-induced delays, caused by working from home disruptions and now staff shortages, as the new normal.

“I know, from our perspective, the responsiveness from various parties within the insurance industry is getting very difficult,” said Hansen diplomatically.

He said the new flexible, working from home arrangements represent a generational societal shift that is here to stay.

“Not everyone’s got a handle on that right now,” said Hansen.

He’s noticed that some of his staff just aren’t cut out for working from home.

“They either don’t have the work environment, or they don’t quite have the discipline of some other people,” he said.

“So I think in various little pockets in the insurance industry we’ve got these people working from home and I’m not convinced everybody’s as productive as they were post March 2020,” he said.

Hansen said that’s causing a “great level of frustration” from brokers, assessors, repairers and within the insurance companies themselves.

This second digitisation question is also two pronged. On the one hand, said Hansen, it brings benefits by allowing re-engagement with a workforce that was lost to the industry until now.

“Not everyone’s able to come to a tower in a capital city for eight and a half hours a day and perform a function that’s highly supervised and managed. They’ve got home constraints or family constraints and they can give you five, six or eight hours but it’s all broken up over various parts of the day,” he said.

Hansen added that a lot of those people are highly experienced, highly educated and highly motivated. However, what’s missing, he said, is finding new and effective ways to engage with this new workforce.

“We need to find new ways to manage and measure because if you can’t measure it, you can’t manage it and if you can’t manage it, you can’t measure it,” he said.

Hansen said these new tools are needed, not only to ensure productivity but to make sure employees at home are having their own individual and personal needs met.

Read more: Five tips for managing remote workers

“I do feel for some people who are working so remotely when their work environment is such a part of their well-being and such a part of their social life and we just removed that at very little notice,” he said.

Hansen said he’s had to help some employees - and clients - through this sometimes rough and radical change to the work culture.

“It’s something we need to be very cognizant of,” he said.

Hansen said AI is only part of the answer.

“I don’t think it’s all the answer and I just fear some people think it’s the total solution,” he said.