Founded in 2010

News & Entertainment for Mason City, Clear Lake & the Entire North Iowa Region

Insurance industry entering age of innovation

By Becky Yerak, Chicago Tribune

CHICAGO — The insurance industry hasn’t been known for innovation.

But imagine if you could file a claim after an auto accident by simply snapping a photo of the damage with your smartphone. Or buy coverage for your boat or motorcycle by the mile or for just a weekend.

Earlier this year, Allstate Corp.’s headquarters officially opened what’s known as its Insight, Design & Innovation Center, which has been studying those and other new ways to serve policyholders.

Efforts by the Northbrook, Ill.-based insurer and some rivals to modernize how they sell and deliver coverage and other products have been unleashed in large part by advances in the smartphone industry, which has made it possible to knock off an increasing number of everyday tasks with a hand-held device. Some banks, for example, have enabled consumers to deposit a check by snapping a picture of it with their smartphones.

“Why can’t I use the phone to take pictures of my damaged car and generate an automated claim?” said Pablo Azar, Allstate senior vice president of insight, design and innovation. “As you start looking at how these phones work, as they get better, they’re turning the world into a self-service environment.”

Social media also present opportunities for insurers. Trawling for information on Facebook, Twitter and other sites can enable underwriters and claims professionals to track individuals’ lifestyles, experiences and habits, letting them see, for example, if a policyholder claiming to have a serious injury has just posted a photo of himself or herself break-dancing.

Celent, a Boston-based consulting firm to the financial services industry, likens the promise of social media monitoring to how the insurance industry recognized a link between consumers’ payment histories and risky driving behavior, turning credit reports into an underwriting staple.

“Our industry is evolving rapidly due to trends associated with advanced technology in vehicles and homes; the power and ubiquity of mobile devices, tablet computing and social media; and customer expectations for a remarkable experience,” said Mike Lamb, a State Farm strategic resources director. In 2009, the Bloomington, Ill.-based company began what it calls a collaborative foresight and innovation program.

In June, Allstate highlighted its innovation center during an investor day.

“It’s a center that we have available to do quick research, prototyping, incubation and then market launch of customer product and service ideas,” Mark LaNeve, Allstate marketing chief, told investors at the time. The center was launched in February 2010, and its space opened in March. It has become a testing ground for more than 30 projects at any given time, though only 10 to 20 percent might come to fruition.

The first product Allstate’s Insight, Design & Innovation Center is credited with launching is Drive Wise, an auto insurance product that includes a device embedded in a vehicle that tracks certain motoring habits and makes consumers eligible for discounts if they engage in low-risk behaviors. Progressive and State Farm are among the insurers with a similar product.

The concept that Allstate is working on most actively now is an automated claims process. It’s testing multiple systems that use a combination of cameras, lasers and scanners to assess a vehicle’s damage and enable the vehicle owner to submit a claim without help from a claims center representative or agent.

One method has a drive-through setup, which could be established at an existing Allstate location or auto dealership.

“We have lasers and photo equipment taking pictures of damaged vehicles to understand, ‘How can we automate the process, so you can do it on your terms, drive up, and have it all done?’ ” without needing a person to inspect a damaged car, Azar said.

The Insight, Design & Innovation Center recently sent a team to Fabtech, a metal-forming, fabricating and welding event held in Chicago in mid-November.

“The reason we’re attending is, ‘How do we stage the cameras and lasers to do all this, to take pictures or do measurements?’ ” Azar said. “Could we move to a world where you take a picture of your damaged vehicle?”

Standard cameras alone make it difficult to see a dent of a millimeter or two from, say, hail damage.
“What kind of laser or photography works at that level?” said Azar, whose center has 54 employees who work in such areas as consumer research, marketing sciences and customer experience. “If you want to pick up hail damage, you might not get that out of a camera, but you’ll get that out of a laser” or, perhaps, a scanner.
“We’re talking to companies that specialize in high-resolution scanning now to determine whether we would send a customer to a facility or use their own smartphone: ‘If there’s hail damage, you’d use this piece of equipment.’”

Using smartphone technology to settle physical damage claims was bound to happen, said Jim Fish, executive director of the National Association of Professional Allstate Agents Inc.

“While it will likely speed up the claims process, the downside is that customers will forfeit the usual one-on-one meetings with their local adjusters, which can be useful when there are questions or disputes,” Fish said.

But he said smartphone claim settlements could be useful in remote rural markets, where it’s not cost-effective to deploy field adjusters.

State Farm has also been reshaping its insurance experience.

Two innovations emerging from State Farm’s collaborative foresight and innovation unit are On the Move and Driver Feedback.

The former allows Android smartphone users to preload messages that can be sent as automated responses to text messages while State Farm policyholders are driving. The Driver Feedback app, which relies on sensors in the iPhone, has technology that measures acceleration, braking and cornering. Policyholders who sign up are given a score for each, as well as an overall score for each trip.

Said State Farm’s Lamb, “We’ve seen husbands and wives compare scores.”

Its innovation program isn’t looking into new ways to use social media in underwriting or claims, though Lamb said State Farm’s claims department “occasionally” uses social media to investigate some claims.

“But it’s not a frequent practice and is usually used along with other investigative techniques when looking at claims that have a potential for fraud,” Lamb said.
In the hyper-competitive insurance industry, companies can no longer get by on price alone, said one insurance industry observer.

“A more lasting differentiator will be innovating the customer or agent experience, most likely through the disruptive use of technology,” said Craig Weber, senior vice president of the global insurance practice of Celent. “If you engage customers the right way, you capture hearts and minds immediately, and that’s much harder for competitors to combat than a new product or pricing scheme.”

Weber said he believes that “innovation is a habit” and is likely why insurers such as Allstate are devoting more resources to it.

“The real power of their approach isn’t having a room with ‘Innovation’ over the door,” Weber said. “It’s the consistent and public support for innovation from senior leaders,” which can turn an old-school company into an innovator.

Allstate’s Insight, Design & Innovation Center also sees potential to tweak its debut product, Drive Wise, which currently monitors only driver behavior, in a way that would more resemble On-Star, a safety system built into most General Motors models.

“Let’s say there was an accident, and your air bag deployed. Should we notify someone, do an emergency dispatch, that there was bodily harm?” Azar said. “Right now we don’t have that capability, but can we partner with someone to allow that?”

Historically, insurers’ engagement with carmakers has largely centered on crash safety and repair economics.

“Are there more things we can do jointly?” Azar said.

Azar is a 10-year Allstate veteran. He has a doctorate in marketing, with a focus on “new-to-the-world products,” from Northwestern University, a master’s in finance from Carnegie Mellon University and a bachelor’s in biology from the University of Minnesota. He also did two years of postgraduate work in the biotechnology industry.

“There are a lot of projects floating around,” Azar said. A recent employee contest generated nearly 290 ideas. One with some promise, he said, is to allow owners of seasonal vehicles such as boats and motorcycles to pay by the mile, or “have 10 days on this lake to drive with coverage.”

Azar also brings up Facebook. “Can we create a group insurance product?” he said.

Different groups within Allstate are also exploring how to take advantage of information available on social media.

“Allstate is looking into how information mined from social media and other online sources can be used to improve our marketing, product pricing and claims decision-making and processes,” Azar said. He called the work “exploratory.”

0 0 votes
Article Rating
Notify of

Inline Feedbacks
View all comments

Even more news:

Need help with your website?
Call your local professional,
Breakthrough Web Design:
or go to

Copyright 2022 – Internet Marketing Pros. of Iowa, Inc.
Would love your thoughts, please comment.x
%d bloggers like this: