The conversation on the digital transformation of the insurance industry has been one to spark debate for many years now. With a number of new entrants in the market, mainly insurtech startups driving the change, the impending digital transformation is no longer an option, but an imperative for all. In the US alone, the insurance industry is one of the most competitive and largest markets with a net worth of $1.32 trillion. The market is oversaturated with players who have little to no differentiation. The drive for innovation is ongoing, with technological innovation leading the way.
As we transition into a digital world, 81% of insurers acknowledge that technology has become an intrinsic part of the customer experience. The rise of the on-demand consumer means that customers are so used to being waited on and spoilt for choice, that if companies don’t interact and respond to them in a timely fashion, they are under threat of losing business. With technology comes the need for speed and expectation of instant gratification. The accessibility of information and the power of online reviews mean the shift of balance from the marketer to the consumer.
Although a colossal task, the switch from legacy systems to digital cloud-based systems is one that is quickly becoming a necessity, and not just an option. Reimagining your business’s digital transformation services is no easy task and we are here to help you map out your journey to success.
What does digital transformation really mean?
Out of innumerable definitions on the internet, McKinsey sums it up as “Creating value at the new frontiers of the business world, creating value in the processes that execute a vision of customer experiences, and building foundational capabilities that support the entire structure”
Digital transformation in the insurance industry translates into leveraging digital solutions to provide a highly customer-friendly, mobile optimized suite of services for your customers.
The main drivers that have brought about these changes are:
- Changing customer expectations
- Need for instant fulfillment
- Free access to information
- Innovative digital-first competitors
- Rapid rate of change
How your organization can benefit from a digital transformation
- Enhance customer experience:
By streamlining the customer journey, by allowing your customers to access all their information in one place: policy quotes, claims management, claims prevention messages, etc, you automatically align with the customers expectation of a seamless interaction, user-friendly interface, and smooth payouts. Digital insurers, in return, are able to offer their customers with lower premiums, quick payouts and transparency
- Reduce costs:
A focus on your cloud-based insurance platform ensures that your operation costs are substantially reduced. Automation, online platforms and cloud-based storage improves the overall efficiency and reduces the dependency on sales and support staff. Rising insurtech companies have observed an immediate 10% drop in their expense ratios when compared to traditional insurance companies.
- Minimize risks and fraud:
Most modern-day devices, homes and automobiles are fitted with sensors, trackers, fire-alarms, etc. to monitor customer activity. AI and Analytics play a crucial role in helping insurers verify the authenticity of claims. This process is also easily automated, helping insurers assess damage and instances of fraud.
- Increased Scalability:
One of the biggest hurdles in insurance is overloading your customer support. By digitizing your insurance processes, you can eliminate frequent status update calls, and lower broker retention while being able to serve more customers.
Making the digital transformation leap to success
Undertaking a digital transformation for your insurance company may appear to be a complex task. The ideal approach to get the ball rolling is to using your small-scale success to drive your long-term digital transformation goals. Here is how your organization can get started:
- Conduct a thorough digital maturity assessment:
Every firm has their unique level of digital capabilities. Be it overall or specific digital maturity, certain companies have a tendency to follow the ‘fail, learn and succeed’ route, whereas others are more technologically equipped for a smoother transition. It is essential to have a concrete understanding of where you stand in order to focus your efforts effectively.
- Chart your digital opportunity map:
By creating an opportunity ranking, you can tie together an assessment of your business value as well as your readiness impact. By conducting market analysis, the nature of opportunity, financial impact, etc, as well as understanding the extent of your organization’s technical abilities to utilize the opportunity. By creating a heat map of the opportunities across the value chain, your organization can prioritize and execute initial projects.
- Set up a cohesive core digital team:
Setting up a coordinated team of decision-makers from all impacted areas of your organization to drive the digital transformation is vital. Apart from being cross-functional, the team should show extraordinary resilience to failure and perform exhaustive ‘test and learn’ experiments in order to cover all bases and prepare for various scenarios.
- Run pilot testing:
To establish a foundation for your digital transformation, pilot testing should be carried out in multiple core processes and a single customer journey. Over a short time frame, a 20- week process reinvention should take place to develop an optimized and cost-effective experience.
- Build on your success:
In any digital transformation, it is essential for all the employees and the leadership to put their faith and trust in the transformation and involve employees across all levels in this transition. Growing gradually and steadily while adopting test and learn measures will ensure all levels of employees are equally invested in the business success.
A digital transformation, by no means, is a small task. The leadership of the company needs to make sure that the whole organization is behind them by explaining the benefits and the smooth and seamless transition from legacy insurance systems to modern and highly efficient technologies. The success of your insurance digital transformation lies in the cohesion of various departments to commit to the approach and realize the enormous value in terms of cost reduction, improved efficiency, and customer satisfaction. Doing so will ensure that your organization is catapulted to the forefront of the insurance industry.