Aviva are publicising a new system called Ask it Never and it has the ambitious aim of eliminating the need to ask customers any questions when giving them a quote. It will rely instead on big data to draw the insight needed to underwrite the risk being presented. Sounds pretty innovative, but what implications would this have for insurance claims?
Insurance is a pretty connected business. What happens at the policy design and underwriting stages can have implications later on for what happens in claims. So when a leading insurer introduces something like Ask It Never, should claims people cheer or worry? I suspect the latter.
If you don’t ask the customer any questions when accepting their business, then it will be pretty difficult to accuse them of non-disclosure when vetting a subsequent claim. After all, the customer will not know how you used all that big data to underwrite their policy in the first place.
And all that big data analytics will have worked out at inception what was material about the risk and what was not. So when a claim being submitted shows some significant variation from what you had anticipated, then again, what can the claims person do? After all, foregoing questions at inception causes materiality at claim to disappear. Surely the claim has to be accepted as presented.
Sounds pretty revolutionary, doesn’t it. Yet for a claims person, its implications could be even much profound. What role will left for claims personnel to play? If Lemonade can use artificial intelligence to settle a claim in 3 seconds, then are we seeing the end of the insurance claims professional as we know it?
And they’re not the only ones. There’ll be no mid-term adjustments – the big data will have picked up on those as they happen and altered your cover and premium accordingly. So wave goodbye to that customer service team.
And much the same could happen to renewals personnel as well. After all, why bother with annual renewals? Big data will tell the insurer when you acquire something that needs insuring and it’ll simply be covered.
That said, you’ll need to have paid with a card to be sure of cover – cash purchases don’t leave much of a digital footprint. And you’ll need to be pretty engaged with this digital world – people with only a light digital footprint will become statistical outliers and pay a higher premium as a result. Nothing new for vulnerable people there then.
How is the humble insurance policy going to live with all this fluidity? By becoming a smart contract of course, capable of having clauses and conditions added or removed as big data analytics pick up on changes in the risk, or the policyholder’s behaviour.
Should we be choosing a plot in which to lay the remains of what is left of insurance? Perhaps, for insurance offerings will evolve into a savings and loan product with a risk management wrapper. Innovations like Ask It Never are exciting, especially if you’re the chief executive with lots of pictures in the papers. Yet they also attract the sort of questions that a panel I was on at a Brussels conference recently was debating: ‘is insurance driving itself over a cliff or onto a superhighway?’
The near time danger is that, if insurance regulators are slow to pick up on big data trends (as appears to be the case in the UK), the market could be quite far ahead by the time the regulator wakes up and tries to rein in some of the more radical practices. The protesting howls of regulator overreach will be loud, and in contrast to other markets whose regulators equipped themselves so as to keep pace with the big data revolution. Interesting times.