Digital transformation in insurance
The holistic shift to customers expecting a seamless digital experience accelerates the need for digital transformation. The rapidly advancing technology landscape gives rise to new and ever more convenient services that dramatically improve the customer experience and overall business processes in such a way that, if unaddressed, will heavily impact legacy insurers. This new paradigm is predominantly enabled by advances in intelligent automation, AI, IoT connected devices, and advanced analytics, with benefits across the entirety of the value chain. To better understand the current “digital state” of the industry, we will take you on a journey into how these innovations are impacting current business processes and leave you with an understanding of how you can evolve to utilize all the benefits that come with advancing your digital maturity.
New products and features
As a result of aggregating internal and external sources of consumer data, new products and features have recently been launched into the insurance marketplace. An example of this is micro-insurance, a product that allows single assets not typically covered by legacy insurers to be covered for specific time periods, saving customers money by allowing them to turn off coverage when their assets are not used for commercial business.
Similarly, usage-based offerings allow for dynamic premiums which fluctuate based on how often the insured asset is used, again saving the customer money and improving their experience. These are just two examples of how big data is leading to the creation of innovative products that meet the ever evolving needs of the customer.
Digital distribution and effective channel partners
While product offerings are a key area impacted by this digital revolution, sales channels are rapidly evolving also, as digitization is accelerating the adoption of online and mobile app-based channels, meeting the needs of millennial buying preferences. Research, purchase, and management of insurance products in a single application and seamlessly execute with accuracy, speed and quality.
These digital distribution and self-service channels, enabled through advances in cloud-based technologies and twinned with the high penetration of smartphones, are leading to increased customer satisfaction, and perhaps more importantly, retention.
Accelerated underwriting and personalized pricing
Automation has removed the human processing element of certain activities and is freeing up time to focus on more value-added work, while consequently improving the customer experience.
In addition to benefits such as improved underwriting, insurance policies are now being priced, purchased and bound in near real time, transforming the entirety of the internal process through intelligent automation. Not only are these policies being priced in real time, but they are leveraging new sources of internal and external consumer data to personalize policies.
With automation improving both internal efficiencies and the customer’s experience, and big data building highly personalized and accurate consumer profiles, technology is providing the necessary solutions insurers need to meet the increasing demands of the customer.
Improved claims management
The claims management process is fast becoming “hands free,” streamlining the process and eliminating human error with intelligent automation. Claims entry, confirmation, routing and resource assignment and payment are all rapidly being automated.
Major operational efficiencies include lower processing costs, reduced compliance risk and streamlined operational staffing models. Advances in AI are also leading to new types of fraud detection, technology that is allowing insurers to focus compliance resources elsewhere, not only reducing risk but also improving internal efficiencies.
Customer and performance management
Insurance customers are reaping the benefits of advanced technology pervading the industry even beyond the cases we discussed.
Connected devices enable hyper-personalization and predictive capabilities with the ability to send customers predictive alerts about issues before they arise as well as accurately predict likelihood of claims. Enhanced platforms are supporting customers in preventative maintenance across all types of insurance and becoming more advanced in the functionality they offer. Ever more realistic chat bots help to facilitate immediate customer service queries and solve problems with minimal wait time and inconvenience.
Technologies of all types are creating opportunities for insurers to exceed customer demands and maintain customer loyalty.
How do insurers avoid disruption?
Insurers who are willing to embrace this technology and change their current way of doing business can fundamentally improve their service offerings and relationships with customers.
Insurers need to take a strategic look across the value chain and identify the greatest opportunities for their organization. Clearly defined priorities, supported by leadership, are needed to advance operational processes and digitally transform.
Leadership needs to bring together multi-dimensional teams with both business and technical capabilities, with a specific passion for improving the user experience. Insurers need to understand the new technologies, data and partners available to enhance their existing capabilities.
Leaders must enable an innovative, digital culture focused on delivering exceptional experiences. Employees must be encouraged to share innovative ideas, and understand the benefits of these changes to their roles.
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.