Insurance is an industry that has moved relatively slowly when it comes to embracing new technology.
Legacy insurance players have been slow to modernise compared to other financial sectors that have invested in technologies such as automation and artificial intelligence – cornerstones of new technology.
There are numerous big insurance companies that have focused on cutting costs to increase profits, rather than actively win new business and customers.
And because they’ve been successful for so many years, they may have stuck with traditional processes that have served them so well.
But for those insurance companies that still have paper-based processes, they are likely to find themselves at a disadvantage.
But even before the pandemic hit, customers didn’t generally expect interactions with insurance companies to rival the customer service that many fintech businesses are now known to give.
The insurance industry is ripe for disruption, and it may be your company that can take advantage of technology innovations to deliver more.
Read on to discover how.
Digital transformation in the insurance industry
Big data provides opportunities that businesses neglecting digital transformation will miss out on. As insurance relies on data, you can make decisions quickly and earn a competitive advantage.
Here are some of the areas you can explore when it comes to the benefits of data analytics in your insurance business:
One of the most critical tasks for an insurance company is to estimate the price of insurance policies based on risk assessment.
In motor insurance, for example, data analysis could allow you to accurately price policyholders by comparing driving behaviour and other types of relevant data.
Data analytics also applies to other types of insurance – you could better drive value in health insurance, for example, if you can accurately measure behaviour with wearable devices and the Internet of Things (IoT).
Insurers, for instance, could work with healthcare providers to provide real-time recommendations to customers at risk.
The data needed for processing when it comes to big data analytics is vast, and it’s only through advances such as automation, machine learning and artificial intelligence (AI) that systems can process and analyse the data in a real-time way.
Insurance customers are used to a long-drawn-out process when it comes to claims, where insurers through the means of an insurance adjuster assess damage or loss and recommend whether the claim should be paid, flagging claims that have incomplete information or which they suspect to be fraudulent.
Today, online insurance companies may have to process many more claims than in the past, and the information needed regarding claims may also have increased.
To manage this workload, it could be worth looking at robotic process automation (RPA) that can automatically flag issues and bring them to the attention of an insurance adjuster.
You could even consider using RPA to submit claims in their entirety, which could leave staff free to manage other essential business needs.
AI and machine learning hold rich possibilities, as they could revolutionise the claims process by adding risk monitoring, risk prevention and risk mitigation.
In the future, cars could send information about driving behaviour and the routes taken, updating insurance information in real time.
In the event of an accident, these systems could send data to your insurance business where you can automatically approve the claim.
In home insurance, IoT technology could be transformative, with devices that monitor activities in the home. You could collect real-time data about household risk and intervene before incidents occur – such a prompting a customer to set up alarms or lock doors.
Today, customers have an abundance of choice thanks to digital, which means their demands have increased correspondingly. Your insurance business needs to treat its customers well, or they will leave you for a competitor.
Coronavirus has further increased the need for good customer service, which is scalable, available at all times, and through various digital channels.
Through digital transformation, you can create a seamless and personalised customer service, allowing customers to use different types of device to pay their bills, view policies and even file claims, via one system.
Rather than wait on the phone, customers want instant responses through their digital experiences.
Like other customer-facing businesses, you can take advantage of AI via chatbots, which can respond to customers in an automated way. If advanced enough, they could help you manage customer claims quickly and efficiently.
This could serve in winning new customers, as you’ll have a personalised service for them.
Steps in implementing digital transformation
Through digital transformation, your business can become more efficient, powered by technology taking advantage of automation, machine learning and AI.
Digital transformation allows you to be more agile, nimble and scalable at both the back end and front end of your business operation.
Here are six steps to implement digital transformation in your insurance business:
1. Assess your digital maturity and identify the gaps
Plot your organisational maturity, which will a guide to where you need to elevate your digital capabilities.
Analyse how you can drive a digital culture, how you organise and resource to do this, and how you invest and take advantage of customer-driven insight to steer where they need to go.
2. Invest in core systems with a clear ROI
Digital transformation will come with significant expenses.
So it’s necessary to make sure that investments made in hardware and software show return on investment (ROI) when it comes to the cost savings made when it comes to the productivity benefits and cutting down of inefficiencies from investment in new systems.
3. Take a steady approach in replacing your legacy IT systems
To support digital transformation, you need the right digital architecture and cloud infrastructure.
You may have a mix of legacy IT systems to deal with, which means it’s best to take a structured, step-by-step analysis of which systems you need to overhaul to be ready for what you need when it comes to technology.
4. Go for quick wins
You could have two roadmaps – one that follows a path of quick wins and another that focuses on the platform investments needed.
Quick wins show improvements that are visible to the business, show benefits and can be delivered quickly.
5. Become agile
You need to use the technology you implement in the right way, which means implementing agile and adaptable support processes where departments other than IT are driven by technology.
It would be best if you had a culture where innovation can thrive, yet implemented in a way which is suited to the highly regulated nature of insurance.
6. Set up for the future
Successful digital transformation requires businesses to achieve improvement in customer experience across all departments.
Technology isn’t one size fits all – each company needs to find its way to make sure their transformation results in positive customer outcomes – the key metric that can help light the way.
Rather than being left behind, taking a digital approach can propel your insurance business to the forefront.
And by using technology to make your company’s processes more efficient, your people will have more time to offer the sort of customer service that results in you winning more customers and doing more business.