ACORD conference offers food for thought

Serial entrepreneur and CEO of MIP, Richard Firth, was guest speaker at two events staged by the Association for Cooperative Operations Research and Development (ACORD), dedicated to insurance technology, business and networking in improving management and operations for the NGO's 1 200 insurance and financial service member companies based in 80 countries.

Firth was chosen from 130 potential guest speakers from around the world to present at the ACORD International Conference in Las Vegas, which took place in May, and more recently as the opening speaker at the inaugural ACORD SA forum held in Johannesburg, attended by leading insurance players in the local market.

ACORD's mission is to facilitate the development of open consensus data standards and standard forms within the industry. It looks to emerging trends and how best practice can be incorporated into the process.

"We came away from the conference with much food for thought," says Firth. "For a start, we have a better understanding of how to balance risk and reward in using numerous new digital media options and applications in opening up direct communication channels for research, sales and gauging customer feedback. Insurance and financial services companies will increasingly use these tools to go directly to source.

"Social media applications are powerful tools in bringing client relational management back to a one-on-one basis, with a positive spin-off for companies that are quick responders and offer applications to make contact and interact with insurance or financial service consumers.

"Internally, we are taking a holistic look at integrating analytics, cloud computing, enterprise architecture and mobile technology with regulatory issues, business strategy and the development of social media tools in advancing the agility of the industry," he adds.

He points to the introduction of sophisticated geo-tagging tools such as !Waytag to make social media support more meaningful, both as a research tool and as a means of providing better information for insurers to target customers. "Big data, combined with location information, is a major step forward in better understanding the risk profile of those insured," he says. "For example, car insurers can analyse this type of data to establish which drivers are lower risk and which are higher risk, and can tailor packages as a result."

Data also enables simplified underwriting through targeted marketing. For example, the process for underwriting for platinum cardholders can be simplified without extensive due diligence, as this market can ostensibly afford insurance products. The process can be automated through integration into a rules engine, and a variety of platforms are available to provide complex information in a simplified format that traditionally needed to be analysed by brokers, without all the necessary information on hand. Industry members need to embrace the changes and evolve to remain competitive, says Firth.

With customer data becoming more accessible, and product offerings becoming more complex, the question of whether insurance is bought or sold becomes a consideration, he adds. "Customers are empowered through the adoption of technology and we need to hone what we develop in line with their consumption of online communication for the decision-making process, especially for sophisticated clients who understand their insurance portfolios. These tools need to be tailored as financial modelling becomes increasingly complex and tailored for specific levels of understanding and media consumption, based on the information the company gathers about existing and potential customers. Essentially, there is a need to educate customers to make their own decisions."

So, as brokers are increasingly getting a bad rap from customers with commission earned leading to distrust, there is a shift to cutting out the 'middle man' and essentially pushing risk selection from underwriting to marketing. As customers increasingly embrace a new buying experience, delivered through the adoption of technology, there is a fundamental requirement to bring the broker into the ecosystem. It is therefore incumbent on the industry to match information on policies with consumer needs, and brokers must have the ability to support their consumers with real-time and relevant information.

Firth emphasises that technical staff need an understanding of the business, as technology and business are becoming entwined. "So you need to remove the IT department and put programmers with the business and marketing people. Centralised innovation means it can run from the highest level.

"The pillars for targeted marketing are mobile technology, information, social media and cloud computing. To integrate these pillars, big insurance companies are looking to start-ups to better understand how these factors are changing the work processes and people management. This means moving away from traditional approaches and processes, which is a big mental shift and financial investment, but one that needs to be made for the sustainability of the industry," concludes Firth.