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How Code Halos Are Changing the Insurance Business


By finding meaning in the data that accumulates around people, processes, organizations and things, insurers can reinvent how they operate and remain competitive in an increasingly digital marketplace.

By finding meaning in the data that accumulates around people, processes, organizations and things, insurers can reinvent how they operate and remain competitive in an increasingly digital marketplace.

It's difficult to think of an aspect of our lives that hasn't been digitized. In one way or another, how we work, play and interact increasingly happens online. Even the things we use – our homes, cars, fitness devices, even pill bottles – are increasingly connected and able to communicate with us, each other and additional entities over the Web.

This rampant digitization of our behavior is causing a major disruption in many industries, including insurance. Businesses are increasingly collecting the digital bits of information surrounding consumers, employees, companies, products and processes (which we call a Code Halo™) and turning those data volumes into insights. When effectively analyzed, Code Halos can help insurers reshape the customer experience and reinvent how they operate, introducing unprecedented levels of brand equity, quality and performance.

When combined with Code Halo thinking, we believe digital technologies such as social, mobile, analytics and cloud (the SMAC Stack) and the Internet of Things are essential to the future of the insurance industry and will help insurers win in the digital age.

Understanding Code Halos

To understand Code Halos, insurers need to first understand five universal truths:

  • Everything is data and data is everything.

  • Making meaning from data is the new competitive frontier.

  • Digitization requires new operations and business models.

  • Prediction and prevention trump compensation.

  • Data insights fuel personalized service, which consumers increasingly demand.

When effectively captured, analyzed and acted upon, Code Halo data can provide insurers with valuable insights about supply and demand, product preferences, communication preferences, satisfaction levels, lifestyle habits and risk profiles. By combining insights from customer, product, enterprise, employee and process Code Halos (what we call Code Halo "collisions"), insurers can proactively gauge customer sentiment, anticipate the need for rate increases or claims assistance, analyze and respond to media coverage (i.e. regarding recent litigation) and forecast financial performance.

A carrier, for example, could create a tailored risk profile for each customer and match premiums with risk characteristics. Or it could influence customers to change their risk behaviors to reduce premiums. Code Halo approaches can also equip insurers to preemptively offer appropriate coverage at specific intervals in customers' lives. Insurers could also be alerted when an emergency or hazard arises, enabling them to inquire about the customer's safety, proactively coordinate assistance and proactively file a claim to make the settlement experience hassle‑free.

Ultimately, Code Halos will result in faster claims settlement, a more proactive approach and a business model based on customer engagement.

To get there, insurers should consider taking the following steps:

  • Analyze the company at the process level and choose key processes for transformation.

  • Treat people, products and the organization as code.

  • Address security, privacy, regulatory and legal challenges (while working collaboratively with IT and legal to say "yes" instead of resisting change).

  • Embrace SMAC and IoT technologies.

  • Apply Code Halo thinking to everything you do.

Overcoming Challenges

Not withstanding the plethora of opportunities presented by the Code Halo economy, insurers face a host of challenges. To overcome the five biggest obstacles, we offer the following advice:

  • Influence and change perceptions. Insurers must change their perception of their role as compensating customers after adversity, to acting as virtual guards that wrap a security blanket around the insured. An auto insurer, for example, should influence safe driving habits; a home insurer should reduce risky behaviors around home ownership; a life and health insurer should boost customers' health quotients. By offering relevant coverage at the moment of need, based on the customer's personal situation and reducing risk and premiums, insurers can establish a trusted relationship, in which customers are comfortable with sharing their personal data rather than seeing it as an unwanted intrusion into their privacy. Within their own organizations, insurers need to establish the right talent mix and groom employees to nurture a welcoming culture, by enabling them to collaborate and engage more effectively among themselves and with customers.

  • Build an effective partner ecosystem. Insurers also need to improve engagement with their intermediaries. Particularly as they establish more personal contact with customers, they should be aware of the potential conflicts that can arise with agents and brokers with new models of sales and distribution. For instance, Snapsheet, which creates branded claims apps for insurers, gained patronage from major insurance carriers and its customers after launching a mobile self‑service app that reduces cycle time and cost per claim and improves the end user experience. Similarly, insurers should look to collaborate with telematics providers, sensor manufacturers and social data aggregators to build a more valuable network.

  • Identify white space. With the evolving digital economy and enhanced customer expectations induced by the technological revolution, new opportunities beckon. Particularly in the shared economy, fresh players and newer models are evolving and insurers need to capitalize. For instance, on‑demand, peer‑to‑peer ride‑sharing startups such as Lyft, Uber and Sidecar are considering liability protection for drivers and passengers. This could be a target customer segment to which insurers could offer custom coverage by gathering data and analyzing the unique risk appetite. Like any industry, insurers need to be on constant watch for opportunities to disrupt the marketplace.

  • Make core processes smart. Insurers can delight end customers by making meaning from process Code Halos and finding ways to transform how they carry out transactions. A life underwriter, for instance, could be referred to a recent development in the medical field that would make coverage acceptable at a fair price while reviewing a prospect application. Or a change in a state law could be seamlessly applied to core processes; for instance, laws can affect young and middle‑aged drivers differently and notifying them in a timely way would reinforce customer loyalty. Insurers are expected to examine the varied liability possibilities that smart devices present and document them with an appropriate response. The goal is to settle claims in a hassle‑free manner for the insured.


Figure 1

  • Work around security. There is no doubt that the issues of security and privacy posed by the connected world are very real for insurers. The possibility of cyber threats and malicious attacks is on the rise and the underlying risks are difficult to quantify from an actuarial point of view. Risk avoidance is not always the best risk management strategy, however. Consequentially, insurers would be wise to learn the language of Code Halos to gauge risk and work around the security challenges. To do this, insurers need to work closely with device manufacturers, service providers and IT professionals to understand and prioritize risks in order to enhance security measures. When insurers are transparent about how they handle customer data and demonstrate that customers receive higher value in return for data‑sharing, customers will be more willing to opt in to sharing data.

Becoming a market‑leading Code Halo insurer will involve many challenges and hard questions. But by adopting Code Halo thinking, insurers can reimagine the future of work and attain market prosperity, while avoiding irrelevance.

For more information, read our full white paper Building a Code Halo Economy for Insurance, or visit Cognizant's insurance practice.

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How Code Halos Are Changing the Insurance Business