By Adarsh Rachmale
During the past few decades, the world has witnessed technology advance at breathtaking speeds. Look at the first Apple Macintosh computer from 1984, and then look at the newest iPhone America’s pocket. An iPhone 12 has enough processing power to guide over a million Apollo spacecraft to the moon, simultaneously. Technology is advancing at an almost incomprehensible speed, and while it can be challenging to keep up, it’s facilitating innovation in every industry nationwide.
The manufactured housing industry is no different. Modern manufactured homes are full of smart technology to help homeowners save energy, time, and money. Lenders can take applications online and issue approvals in minutes. Home manufacturers engineer the home building process to keep quality high and prices low for American home buyers. Did you know that the amount of waste from the construction of one single-section home can fit into a trash can? Compare that to the typical site-built home, and you’ll see how well-engineered a manufactured home is. Just the concept alone, building a home in a factory on an assembly line, is more advanced than building a home on a building site, out in the elements. And though it may not be as glamorous as a new home rolling off the assembly line, property insurance has its share of technological advances as well.
The key components to a great insurance product are ease, simplicity, and value. All 3 of which can be improved with modern technology.
The Digital Application
With any financial product (insurance, lending, or otherwise), the hardest step for the consumers is the first step, the application. A financial application is long, requires lots of information, asks for uncomfortable information, and when finished, offers no reward because there is still the very real possibility of denial. Though it cannot eliminate the negative aspects of the process completely, technology can help insurance companies alleviate much of the pain of the application process and keep home buyers happy during their new home purchase.
Have you ever seen a home buyer look at a paper insurance application? Their eyes get wide as they stare at endless boxes (usually not large enough for the answer), long questions, tiny print, and seemingly 100s of “initial here” and “sign here” boxes. Technology in the smartphone insurance application all but eliminates that initial negative reaction. Conditional logic technology allows the application to ask for only the information it needs to make a decision based on that customer – this means no extraneous questions. The application also has fewer questions per page. Studies that there is a dopamine release from the sense of completion every time a user moves to another page on an application, which keeps them happy and moving forward.
The digital application also allows for much easier follow-up from the insurance company. If a customer took a paper application home and never finished it, no one would ever know, and no one would be able to check on the status of the incomplete paper application. In the case of digital applications, however, follow-up opportunities are endless. Because the application gives their contact information at the onset, insurance companies can follow up with incomplete applications, and proactively reach out to the applicant to help them complete their application. According to a study by Brevet, it takes five follow-ups with a customer before a sale is made. Technology allows insurance companies to do this more effectively, thus allowing for more sales.
Technology in Underwriting
Once the applicant has submitted their application, underwriting begins. This is the process by which the insurance company determines the amount of risk in the policy, and how to price the premium to account for that risk. Traditionally, this is a very labor-intensive process that involves looking at various actuarial tables, going back and forth with the customer, performing many calculations, submitting data to supervisors, and finally submitting a decision to the applicant. This process can take anywhere from a few days to many weeks. Because of the length of underwriting, many customers are lost, either to other companies or they simply lose interest and move on.
To help convert more applicants to customers, insurance companies use technology to significantly speed up the underwriting process. Data is instantly taken from the application, analyzed, and sent to the underwriter. There are no manual calculations or need for various actuarial tables. The computer takes care of all of that. Advanced algorithms look at hundreds, if not thousands, of variables and determine risk with much more detail and accuracy than a human ever could. This is especially beneficial for manufactured housing because the underwriting algorithm can account for the unique profile of manufactured housing risk, which a human oftentimes cannot. The technology in insurance underwriting allows for a better insurance product for manufactured homeowners. Modern insurance companies, like CoverTree out of Michigan, are working tirelessly to create technologically advanced insurance products specifically tailored to manufactured homeowners, giving the manufactured housing industry a quality insurance product to go with its high-quality, high-value, homes.
Claims Processing Technology
And finally, there is the technology in the claims process. Most insurance customers will never reach this stage. But if they do, there is technology available to make filing a claim much less difficult than it has been traditionally. Modern insurance companies all have smart phone apps that allow the customer to file a claim, upload photos/video, even do virtual inspections with a claim adjuster. Technology also allows for much faster funds disbursement. Experiencing any sort of loss or damage to a home can be one of the most stressful times in someone’s life, and technology in the claims process makes that time less stressful.
AI – The Next Step in Insurance Tech
What’s next? Like every other industry, Artificial Intelligence (AI), also known as machine learning, is set to make a huge impact in the insurance space. Insurance AI will be able to analyze millions of data points in real-time and adjust policies and premiums for constantly changing variables. Smart insurance companies can learn from their customers’ losses and benefit from data-network-effects to improve pricing and experience moving forward. This will be a huge win for the manufactured housing industry. While human underwriters may come with biases towards manufactured homes, a machine will be able to see the material benefits without the inaccurate, outdated stigma associated with a manufactured home. The future of housing is a manufactured home, and we look forward to seeing insurance technology play a key role in the growth of the manufactured housing industry.
About the Author: Adarsh Rachmale is the co-founder and CEO at CoverTree, the first and only insurtech focused on middle America and manufactured homes. CoverTree offers state-of-the-art rating, data-driven pricing, and first-time residents can go online and completely purchase a policy in three minutes without having to talk to anyone.