- Where Insurance & Technology Meet

The Nice Thing About Standards: They are So Flexible

Canadian Underwriter‘s Greg Meckbach recently described concerns by brokers focused on differences in insurance coverages for water damage to homes. In the article, Glenn McGillvray, managing director of the Institute for Catastrophic Loss Reduction (ICLR), said that the host of wordings by different insurers “causes and will continue to cause confusion, as premiums, deductibles, caps/limits, exclusions and policy wordings are all over the place.”

McGillvray provided an example: three insurers in Nova Scotia had discrete coverages which depended on whether damage stemmed from sewer backup, overland water, or groundwater.

Gina McFetridge, President of the Insurance Brokers Association of Nova Scotia (IBANS) told Meckbach in an interview, “There is a high level of misunderstanding among general consumers over what historically has been covered and what may or may not be covered moving forward.”

Whither Standards?

Having spent some time (measured in decades) working with insurance data standards, I could give you an explanation without blinking an eye: “We can define standards for data, but we cannot define standards for business usage.”

The idea is that a third party can’t tell implementers what to do. As a result, in this example, brokers have to read all of the wording and be prepared to update these as individual insurers make changes.

That might work if the broker represents a limited number, of markets but it gets complicated as insurers increase and conditions become more complex.

But there are technology alternatives which could turn the requirements upside-down.

Enter the Engagement Era

Keith Stonell, Managing Director, EMEA at Guidewire is looking at InsurTechs and seeing trends that are “strongly changing the game.”  Writing in Finextera, Stonell sees us entering the ‘Engagement Era’, meaning,

Now the imperative is how well insurers employ technology and systems to satisfy the experiences and demands that their users want. In this context, users extend to include customers, agents and insurance company employees.

Specifically, Stonell says that, to be effective,  systems need to offer

  • Unified core, data, and digital
  • Omnichannel design
  • Consumer-grade UX
  • Predictive, guided process
  • API-driven design

While all the elements are required, the last item – API driven –  is most interesting for the end user; the broker, in our example. Instead of the broker sorting out the information needed to advise the customer, the API would marshal the data and information to recommend a particular solution (along with any conditions) to the consumer.

The Mandate

In our example of the flood coverage, the broker could expect that the insurer suppliers would provide the data concerning the coverages and the processes would feed the broker – or the consumer – with the information through the API.  Presumably, the API could gather the information from smart detectors in the insured’s home (risk) and from 3rd party sources (flood plain, previously losses, etc.).

Stonell is convinced that engagement is required to meet the expectations of consumers.  He writes: “General insurers now find themselves in the Engagement Era because of how technological change has accelerated faster in the last two years than the last 20 years.”

What do you think?

Standards organizations have provided significant value by defining ‘standards’ with  tight definitions..  Implementations requirements are intended to be defined by business partners, outside the scope of the data Standards. However, as we move to fully digital constructs, the Standards may be pressured to include implementation definitions as well.

I’d be interested in your comments.