Digital transformation in insurance: 3 fundamentals for success
Today, customers religiously stick to a different set of value additions, when opting for an insurance policy. Similar to other online experiences, they look for, rather demand, speed, accuracy, and transparency in their customer experiences with insurers.
They check for suggestions online, find relevant premiums, and prefer products personalized to their requirements. They expect a ubiquitous experience, where they search for insurance policies at their desktop, verify their auto-filled forms on-the-go through their tablets, and pay later from their smartphones. They are impatient to wait for their claims to be processed and demand immediate solutions.
The conservative insurance industry is becoming outdated, as they are built on a model prone to inconsistencies and lengthier wait times. As the filing of insurance claims is mostly manual, drawn-out, and involves stressful phone calls, traditional insurers are continuously facing pressure to keep pace with the digital demands of their customers.
Insurtech startups, who have a finger on the pulse of the millennials and Generation Z customers, offer highly innovative value propositions for customers. They leverage technologies, such as artificial intelligence (AI), natural language processing (NLP), and machine learning (ML) to gain deeper data insights and operate at a higher speed and efficiency.
To deliver faster, transparent, and efficient services online, it becomes essential for traditional insurers to transform their current operating model.
The three fundamentals of digital transformation
At first, insurers might find digital transformation to be a daunting task, due to the numerous options available in the market. Imaginea has accumulated vast experience and in-depth expertise by working with insurers across the spectrum. We have zeroed in on three key imperatives that can help insurers to modernize their organization and meet continuously changing customer needs.
In Gartner’s recent hype cycle report, AI tops the list on the CIO’s agenda for the next five years as a source of potentially transformational business impact. Cognitive automation uses AI technologies, like Machine Learning (ML) and Natural Language Processing (NLP) to improve the turnaround cycles and meet the high-speed demands of customers. With AI technologies, an insurer can automate both the structured and unstructured data, ensure fast and accurate operational delivery, and eventually improve market share and growth.
Lemonade, a digital insurance company, has an efficient AI to process claims within minutes. The AI can manage the entire workflow automation from data verification to quality assurance in no time. It also extends its ability by assigning tasks to the respective team members, running multiple automated tests, and delivering everything to the customers. The trusted AI improves process efficiency and handles customer satisfaction simultaneously.
Recently, Gartner highlighted cloud computing as a critical component for the next-generation solutions and organizations with a cloud strategy are more likely to find success in cloud initiatives. Cloud implementation enables insurers to digitize in-person processes, right from signing up the policy form to submitting a claim. With cloud infrastructure, insurers can interact with their customers anywhere and operate on more data, workloads, and applications. With the advancement in cloud-native technologies like containers and Kubernetes deployment, insurers can operate at scale by breaking down a complex monolithic application into a simple microservices application.
Trov, a leader in insurance technology, offers on-demand insurance solutions through their cloud-based platform. Trov has a cloud-hosted repository of customer’s ownership details and provides household insurance based on that information. In their mobility solutions, they provide insurance coverage based on real-time usage details from connected vehicles.
Data and analytics
Forrester predictions for 2020 mentioned enterprise data strategy as a top initiative for executives and it is critical to unlock a firm’s digital transformation. Insurers should quickly be able to prepare data for making better-informed decisions with greater efficiency. As a first step towards making sense with their extensive data, organizations need to access, prepare, cleanse, and manage data at scale. The next step is identifying the right approach in analyzing the data. By leveraging machine learning techniques, insurers can unlock key insights and identify trends from massive volumes of data.
Accolade Inc offers personalized healthcare advocacy through data and insight. Their solutions are designed to process millions of data-driven insights from multiple sources to help users make the right decisions for their health and well-being. With the implementation of various machine learning algorithms, they enable patients and employers to identify and select the most relevant and cost-effective health insurance policy.
Designing the future of insurance
From underwriting to claims processing, insurers who empathize with customer needs will have a profound impact across the insurance value chain. With advanced technologies, insurers can meet customer expectations by providing claims on time, user-friendly, self-servicing, any time customization, all at a lower cost. Insurers who consistently identify pain points and deliver innovative solutions are reshaping the insurance industry and retaining their customer base.
As insurers think of leveraging technologies to bring in digital transformation, it is essential to understand the risks involved to make such a change. Often, complete modernization initiatives lead to failure, as it is expensive, time-consuming, and might end up in dual workloads. In some instances, by the time initiatives are developed and ready for launch, the proposed change becomes obsolete as the market has shifted to other new solutions.
Insurers need to be cautious and make systematic changes that ensure continuity of essential business services and retain the core business value of legacy applications. They need to:
- Analyze their offerings and understand how they are positioned in the market.
- Find the processes that can be easily transformed.
- Plan a transformation strategy that aligns with the overall business strategy.
With continuous change being driven in their organizations and the technology fundamentals in place, traditional insurers can become more adaptive to pivot their current and future moves. However, insurers must embrace new operation models sooner than later, as new technologies keep hitting the market. It is vital that insurers act immediately to sustain and drive their future growth and avoid irrelevance.