Simon Black, CEO, Awaken Intelligence
Did you know that the UK insurance industry is the largest in Europe and the fourth largest in the world? According to the Association of British Insurers latest report, UK insurers contribute £29.5bn to the UK economy and employ over 300,000 people, of which a third are employed directly by providers with the remainder in auxiliary services, such as broking. If you work in the industry none of this will surprise you and with over £45m paid out each day in motor and property claims alone, you’ll also know that it’s a complex one too.
As a recent PWC report highlighted, insurance cover has become increasingly commoditised with customers selecting providers simply based on social media (80%) and price comparison sites to compare policies, prices and claims’ experience (90%). Once that policy has been purchased most people tend to forget about it until it’s time to renew or make a claim. And here in lies the rub… how do you deliver great customer service when your customers fail to understand or underestimate the value of the cover you provide?
What Does it Mean for Customer Experience (CX)?
Comfortingly, when compared to other industries the insurance sector isn’t the worst performer, in the UK Customer Satisfaction Index, when it comes to customer satisfaction (that’s transport at 71.4) but at a score of 78.6, compared to a score of 78.8 last year, it’s hardly the best either (leisure is at 80.2)! However, it does highlight that there’s much that can be done to enhance the customer experience, especially during the claims process.
At Awaken Intelligence we work with insurance providers across the motor, medical and property markets, helping them to enrich the customer experience, no matter how complex the claim may be. And as the PWC report highlights, digital innovation and transforming traditional insurance processes is the way to develop a sharper customer engagement, while gaining greater insight, which in turn helps businesses to meet these more exacting customer demands.
Take a typical home insurance claim and place yourself in the customer’s shoes. They’ve just come home from the school run on a dark, damp November evening, after a long day working to find the lights are off. The homeowner quickly discovers the electricity is out due to a burst pipe and that water is pouring from the bathroom, through the sitting room ceiling into several ground floor rooms. Imagine you have tired hungry children to feed, there’s a hole in the ceiling and you can’t turn the stopcock off to stop the flow of water. Once the immediate water and electricity problem has been resolved the homeowner digs out her insurance paperwork to make that urgent claim call. The stress levels are still at an all time high and now she is having to call and wait to speak to an agent. That’s why most claim calls never get off to a great start, the adrenaline and cortisol has been pumping for some time before your agent even starts to speak!
How to Remove the Stress from a Claim Conversation
Unsurprisingly, agents regularly face a complex conversation from the off with many customers talking at them in great deal about their incident. And when it comes to capturing a claim statement, they need to get it down as quickly as possible, and correctly. How do you do that when your customer’s mind is leaping from one thing to another as he or she discusses their concerns and various elements of the incident that need addressing? As any experienced claims agent will tell you, you can’t take the customer through your processes step by step, you have to let them lead.
But it doesn’t have to be this stressful, for both the customer and the agent. By adopting Artificial Intelligence (AI) you can start to dynamically capture the claim statement that agents need while handling the customer call. You can literally take a mind-map approach to enable data capture all in the flow of a normal conversation. It means that agents can be flexible, not repetitive and engage in an empathetic conversation with customers while having access to all the information needed in one system. Today’s latest systems can then knit all the details together into one claim statement for the insurance provider. This approach allows the customer to discuss even the most complex claim in the comfortable way for them, without your agents missing any information along the way. In simple words, it means the conversation is productive rather than repetitive. We implemented this approach with many businesses and our clients have fed back that dramatically reduces the call time by 40%!
What About the Agent
Being faced with stressed customers day in, day out is hardly satisfying work and, unsurprisingly, call centres handling insurance claims face an agent attrition rate of between 20%-50%. That’s why giving staff the best technology to support their work helps to improve not only their performance but also their job satisfaction, hopefully motivating agents to stay in their roles for longer.
Insurance – Regulation is Key
Last year the Financial Conduct Authority (FCA) issued the highest level of fines since 2015, amounting to £391.8 million. While these fines weren’t all insurance related (and the amount was certainly boosted by a mobile phone provider company fine of £29.1 million) it is still an eye-watering amount for the insurance industry. And it’s a stark reminder why compliance is absolutely critical to the call handling of insurance claims.
The Benefits of Transforming Your Claims Process
We’ve previously discussed the reasons for deploying conversational analytics across call centres but in an industry such as insurance the stakes are even higher. By adopting this conversational claims process you’ll find that:
- Your customer experience is dramatically improved
- The process is shortened, greatly improving your ROI
- The data captured to process the claim is far more accurate
- And your compliance will improve because your agents aren’t having to re-enter data or format it.
If you want to reduce agent churn rate, resulting in less re-training and re-hiring and have complete peace of mind from a compliance and regulatory point adopting the latest technology is a sound investment.
HOW ALGORITHMS CAN BOOST YOUR TRADING PROFITS
Gabriele Musella is CEO and co-founder of Coinrule
Trading, whether for cryptocurrencies or stocks, is about buying and selling at the right time in order to increase your overall funds and make a profit.
There are over 14 million day traders[i] around the world. However, to make money when trading, you have to invest a lot of time.
It requires spotting patterns and identifying opportunities. It is this time requirement that has been a key driver in the development of algorithms to help when trading.
Day trading is when someone who buys and subsequently sells financial instruments like stocks, cryptocurrencies or futures within the same trading day.
Low barriers to entry and the ability to trade online make it tantalising for this age group. But, is it profitable?
Profit or Loss?
It’s estimated that 95% of day traders[iv] lose money.
There are lots of reasons why; with under-preparation[v] being most often cited as the main reason. People start too quickly and don’t have a strategy they stick to.
So, where do trading algorithms fit into this?
Trading With Algorithms
Put very simply, a trading algorithm or strategy is a set of rules that, together, define when trades should take place. The algorithm helps a cryptocurrency trader to either buy, or sell, at the right time. This enables them either to minimise losses and take profits.
The algorithm can be tested on historical data, on different and past market conditions, giving you scenarios that it will help deliver good returns when used on the current markets.
These rules can then be executed by trading bots to make the trades at the right time.
Why Use a Trading Algorithm?
There are three main reasons for using a trading algorithm:
The time needed to analyse the available market data and spot the right moment to trade is considerable. Most traders simply don’t have this time available, so a trading algorithm can help.
- Too much data
There is simply too much data available that needs to be analysed to make profitable trades. For example, with over 7,000 cryptocurrencies on the market, it is impossible to know everything about all of them without automated assistance.
- It’s a steep learning curve
What I see is that most hobby investors have about one or two hours a week available to them to learn ‘how’ to trade, ‘what’ to trade and ‘when’ to trade. This simply isn’t enough. Trading algorithms are constantly learning because of their ability to consume and analyse large amounts of market data.
What Are The Alternatives?
One alternative to using a trading algorithm would be to program a script. Trading scripts enable automatic trading, but they can only follow one strategy, are difficult to code and struggle to react to market changes quickly.
- Copying the professionals
Copy trading is where professional traders allow people to copy the trades they do. They get paid to allow public access to their trading activities. If the right traders are chosen, this can be a highly successful alternative, but the fees can be very high, up to 30% of the profit.
- Do it yourself
If you have the time – a lot – and the analytical skills, you may not need a trading algorithm and you can go back to trading manually.
How to Use a Trading Algorithm
Choose a supplier
There are plenty of suppliers of algorithm software. Most are for large firms, however companies like Coinrule aim to help hobby investors, occasional investors and professional traders, to have easy access to trading algorithms. Coinrule’s customers are trading anything from $150 a month upwards, to $millions per month.
You can sign up for free or choose which of the three pricing plans work best for you, based on your trading budget, template strategies and required execution speed.
Choose Your Strategy
Choosing the perfect trading strategy takes research and time. Bitcoin traders often use a long-term strategy, with trading on other cryptocurrencies being done using shorter-term strategies. However, you need to choose your own. To help you choose check out these videos:[vi] https://www.youtube.com/playlist?list=PLA9Pvtmlbvb5cp0Ou0ePADDGzAF-vt1
Pick Your Cryptocurrencies
Bitcoin is obviously the most well-known, but there are nearly 7000 others. Keeping track of all of them will be impossible, so choices need to be made, at least initially. You can, of course, move between them in the future.
Define Your Risk Levels
One of the most important aspects of implementing an automated trading strategy is to prevent significant losses that will potentially compromise a trader’s capital over the long-term. Before making money, it’s important to learn how to protect your crypto portfolio.
Protecting funds is one of the most important aspects of the algorithm. So set your risk levels accordingly and ensure the algorithm is set up to protect you from losses.
Allocate A Trading Budget
When first starting to invest in cryptocurrencies, it is vitally important to set a budget that can be lost without real impact on your personal finances. This initial budget should then be broken down into a daily trading budget, i.e. how much will be invested on a daily basis. The 1% Risk Rule is an often-quoted rule[vii]. If the portfolio is, for example, £100,000, no more than £1,000 is traded on any single trade. This protects your capital from big losses.
Cryptocurrencies are in-vogue, and you hear many stories of huge fortunes, and losses, being made by people trading on these exchanges. The low barriers to trading and it all being online can tempt people in very quickly, believing they will make a lot of money. This, as mentioned earlier, is a major reason for most day traders losing money. By following the guidelines above, investing time in learning what you can, and then making use of a trading algorithm, portfolios can be protected and, ultimately, grown.
WHY HIGH NET WORTHS SHOULD BE LOOKING AT ANGEL INVESTING IN A NEGATIVE INTEREST RATE ENVIRONMENT
By Oliver Woolley, Envestors
As England gets through its second lockdown, Bank of England policymakers report the UK we may be headed for negative interest rates. This would be the for the first time this has happened in the bank’s 326-year history.
With interest rates already at 0.1%, central bank officials announced an additional £150bn stimulus package, in an attempt to boost consumer spending during the second wave of the pandemic.
Despite news of a vaccine, the BoE has taken the total stimulus to £895bn, as double-dip recession forecasts emerge.
In the event of negative interest rates becoming a reality, banks would have the incentive to lend more by making loans cheaper, but account holders would likely be asked to pay to hold money in a savings account.
While plans for negative interest rates are pending, government bonds are already selling at a negative yield of -0.003%, with investors hoping for the safe haven of government issued bonds paying out to get their money back in three years.
Between negative returns on savings accounts, lower yield on bond holdings, a volatile stock market and a projected dip in property prices, investors don’t have many options to diversify their portfolio in a negative rate interest environment.
However, for investors who are comfortable with risk, early-stage investing may be the answer. Angel investors support early-stage companies through financial backing, typically in exchange for equity in the company. An additional benefit for angel investors is the generous tax reliefs offered under the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).
What is angel investing and why is it attractive?
An angel investor (also known as a private investor, seed investor or angel funder) supports early-stage enterprises by providing funding and getting actively involved in the business. Typically, the amount invested is between £5,000 and £50,000 per investment.
Early-stage investments are high risk as the number of early-stage businesses that grow through to an exit is low. Previous research suggested that 56% of investments in early-stage companies went bust. This is why experienced angels aim to build a diverse portfolio of 20+ investments.
While angels usually have to wait a number of years before recovering their initial investment, returns can be considerable. Due to the high risk nature of angel investing, high net worth individuals are usually looking for a 2.5x Return of Investment (RoI).
When first starting out, an investor should look for a well put together business plan with a defined exit strategy. Many angels choose to join an angel network when starting out, where investors can pool investment capital and invest alongside like-minded, experienced investors.
Tax relief through EIS and SEIS
In order to encourage investment in start-up companies which play a vital role in the economy, the UK government has launched several tax relief programmes, including the Enterprise Investment Scheme (EIS). This scheme, which makes investing in early stage enterprises tax-efficient, has encouraged £22bn in investment in 31,365 companies.
By investing in an EIS eligible company, angels receive income tax relief of 30% of the amount subscribed for eligible shares. Investors can put in up to £1m per tax year in EIS qualifying companies for the tax relief; this cap rises to £2m if investing in knowledge-intensive EIS companies.
In order to qualify, companies have to be trading for less than seven years and can raise a maximum of £12m.
Through EIS, angels receive a Capital Gains Tax (CGT) exemption, carry back and loss relief which can be offset against CGT or Income Tax.
Looking at a practical example:
If an angel invested £10,000 and the company failed, their actual loss would only be £7,000, due to the 30% income tax relief. However, a top rate income taxpayer paying tax at 45% will be able to claim loss relief on their tax liability at the 45% level. In this example, they’re eligible for further relief of £3,150, making their actual loss £3,850.
The success of EIS led to the introduction of the Seed Enterprise Investment Scheme (SEIS), promoting investments in riskier, earlier stage companies. About 80% of UK angel investors seek relief through EIS or its sister scheme, SEIS.
SEIS allows HNWIs to invest up to £100,000 and receive 50% tax relief on their investment. In order for companies to be eligible for SEIS, they have to have been trading for less than two years and cannot have more than £150,000 in previous investment.
Hot investment sectors
Reports from the British Business Bank and the UK Business Angels Association reveal that many investors are still seeing positive returns during the pandemic.
While angels are battling economic uncertainty, around three quarters are optimistic about the market bouncing back within the next 12 months.
Healthcare, Digital Health and MedTech, BioTech, Life Sciences and Pharmaceuticals are the leading sectors in terms of investor engagement during the COVID-19 crisis.
Software as a Service and FinTech have fared well throughout the pandemic and are still attracting a large number of investors.
Getting started with angel investing is now easier than ever, with an array of angel networks that can provide advice and support. Industry-association, the UKBAA, offers an Angel Investment Accelerator which is designed for those new to early-stage investing.
In order to choose the right angel network, HNWIs should look for the most active networks; Research body Beauhurst recently published a list of the most active networks in the UK.
Active networks will present a greater array of screened opportunities as well as connecting new investors to more experienced ones.
The best networks cover a variety of regions, sectors and investment sizes, and they’re forthcoming with examples of previous investments, so first-time angels can make the right choice on how to grow their portfolio.
So, while looming negative interest rates may require a rethink of current investment strategies for many – it might also open up a new and exciting investment class that offers much more than just financial gains.
ABOUT THE AUTHOR
Oliver Woolley is CEO and co-founder of Envestors. Envestors’ digital investment platform brings together entrepreneurs and investors across geographies, communities and sectors – creating the single marketplace for early stage investment in the UK.
Envestors partners with accelerators, incubators and angel networks to provide a white-label platform empowering them to promote deals, engage investors and connect to other networks.
Founded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club.
Envestors is authorised and regulated by the Financial Conduct Authority.
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