Digital Transformation In The Insurance Industry

The insurance industry has dramatically evolved over the past several years. Today it is embracing digital transformation in various ways to address complex challenges from consumers, regulatory and digital ecosystem. There is also a need for agile workflows, better data access & processing, and advanced data analytics to improve risk assessment and informed decision-making.

To realize the actual advantage of digitalization in the insurance industry, it would require data analytics, reporting on the financial performance of products (BI), and strategic plans to offer a bird’s eye view of all the micro and macro indicators of the business.

Through this article, we wish to address, what lies ahead, and what must the insurance leaders prepare for to develop sustainable business models.

Here’s what we’ll cover

• Insurance Digital Transformation Trends
• Insurance Digital Transformation Challenges and Benefits
• Insurance Digital Transformation Strategy
• Insurance Digital Transformation Examples

• The Future is Headless Tech For Insurance Companies
  Free data flow between front-end and back-end is an essential component of web performance for a future-oriented insurance company. The headless tech with no-code tools will see an extensive application to eliminate the challenges of legacy tech reliability for insurance companies. It would help deliver custom digital experiences by getting rid of web development incompatibility between modern front-end experiences.
• Hybrid Cloud Architecture Gains Momentum
  The hybrid cloud market is set to touch $128.01 billion by 2025. Organizations are increasingly adopting hybrid cloud structures to leverage the advantages of both individual and public clouds. It would allow organizations to relook at internal tools and cloud providers’ toolkits while improving both speed and flexibility throughout the operation. And, while this is happening across industries why insurance organizations should be an exception. To harness the benefits from cloud adoption for your insurance business, do read how we help make the transition journey to cloud smooth & successful.
• A Push towards Algorithmic Risk Assessment
  Artificial intelligence plays a critical role in shaping a new future for the insurance industry. AI-based tools help in creating solutions that address the challenges faced by the claims settlement teams and insurance operations. However, the potential of AI with ML, DL, NLP and more, lies way beyond just claims to process. It enables end-to-end automation of processes. With an increase in the number of digital files, ML algorithms can easily analyze this data and eliminate manual processes. Read more about how to harness data analytics in insurance to cut down on claim handling time & costs and eliminate potential fraud.
• The Rise of InsureTech Joint Ventures
  There is steady growth in the partnerships between InsureTechs and incumbents. Popular companies are tapping on customer data to create new income streams. InsurTechs on the other hand, are stepping forward to provide technical know-how, technology and all-around support.

The acceptance of the idea of change has been one of the biggest industry challenges. However, due to the pandemic, more players in the industry were forced to embrace change and address technological challenges.

Listed are some of the hurdles we believe industry players will face:

• Various Systems that Combine Past & Future Processes
  The processes you have in place for developing policies, storing data and settling claims are important. Leveraging new technologies for your business does not mean taking the one out and bringing in new ones. It is about harmonization and considering the best practices of both. For instance, there will be a lot of customers who prefer to work with you traditionally. Not everyone is comfortable with adapting to new technologies. There is also a lot of important data that you would require in filing claims & for accounting-related tasks. Even if you are starting from scratch, understand that technology will keep evolving. It will make way for new trends & innovation in the industry. Thus, your digital strategy will change as new technologies disrupt the market.
• Taking User Experience and Upskilling a Notch Higher
  Even though people are excited about the latest changes and updates, they may not be equipped for a smooth transition. You may have to consider designing interfaces for a wide range of customers who leverage services on a variety of devices. Testing your platform across a variety of users is important to identify how engaged customers are. Similarly, you can get employees on board as well to help them adapt to the changing processes. Their first-hand experience will help solve the complicated challenge as they must be the first to effectively navigate the platform from a user’s perspective.
• Vast Amounts of Data
  Digital transformation can produce massive amounts of data that are processed differently. It becomes even more critical to ensure that everyone interprets this data in the same way without any quality issues. For instance, a single claim could be allocated to a car accident. On the other hand, it could be assigned to each individual in the car accident. Wrong interpretations, thus, can result in inaccurate predictions and results. Further, with multiple systems in place, data integration may not take place. You may need to assign individuals to manage data, from receiving to storing and accessing it. This will help you build a strong data strategy that enables better decision-making.

What are the Benefits of Digital Transformation in Insurance?

The consumers of today expect information to be easily accessible & available across devices. That means even traditional insurers have plenty of opportunities to innovate & change the way they interact with their customers. Currently, the average lifecycle of the development of an insurance policy to actual delivery to a customer takes typically four to eight weeks. In cases where the underwriter requires the support of an Attending Physician Statement (APS) with proof of health history, it adds another three to four weeks to the delay. The reason for this delay is the use of manual processes. However, the insurers of today cannot afford to wait this long to issue a policy. That’s where the need arises for optimized underwriting processes.

Just like the above, there are several advantages for business. For instance, customers would expect convenience & hassle-free upload of documents, easy payment options, seamless claims processing and receiving updates & reminders on their policies. Early adopters of digital transformation would accelerate their processes to reap long-term rewards. Here’s a look at how it can impact your business:

• Automated processes for key operations
• Predictive Analytics helps you make critical business decisions faster
• Running business operations at reduced time and cost
• Quicker time to market for products & services
• Enhanced efficiency in underwriting and smoother claims processing

Now that you have an understanding of the benefits and challenges, let’s discuss the core aspects of the required strategy for business.

Emerging technologies like AI, machine learning, cloud, predictive analytics, big data and more enable digital transformation in insurance. For insurers with IT systems, the idea of evolving digitally may sound like a daunting task. However, the shift is more seamless. With a cloud-based infrastructure in place, you can take on an agile approach that helps in driving digital transformation. For example, you can consider one part of your business and enable it with a solution that helps you collect & store your data in one place. It does not matter where or when you begin. By leveraging these technologies, you will be able to stay relevant & be ready to innovate when the time is right.

To achieve true digital transformation, an organization requires a new way of thinking and operating style that supports a wider market reach strategy. Listed are some of the points in this reference;

• Automate Existing Processes
  Today consumers expect quick and excellent services that take place through apps. They expect the best possible user experience and quick communication to address queries. Since more and more consumers are relying on digital services, automating processes using digital technologies is critical. Here are some examples:
  • Automate underwriting process and generate leads through improved workflows
  • Develop live chat functionality and automatically respond to customer queries in real-time
  • Automate payments and claims
• Optimize for Key Business Focus
  It is critical for processes with a direct impact on the business. This step is not about automating tasks. Rather, it involves stepping up the game and differentiating the products & services from the competition. This is where digital technologies play a big role as they would have a huge impact on your business.Here is some scenario:
  • Product is King – Some industry players are emphasizing product innovation and delivering them to very specific markets
  • Faster Time to Market – Another group of insurers focuses on optimizing pricing and product offerings to deliver new insurance products faster than competitors
  • Customer Service – There is a third group of insurers who focus on delivering the highest quality of services
• Train Resources & Implement The Change
  In this phase, the focus is on making live the mature ecosystem that would help meet the changing needs of consumers. The idea is to make the teams and systems familiarize with the new processes, thinking orientation and operating guidelines of the insurer organization.Here is what you must focus on
  • Clarify the orientation of every decision and process that puts customer needs and expectations on priority
  • Train internal and external business units — each with their sets of data and processes — to ongoing, real-time communication and data sharing
  • Prepare them on how to deal with the radical changes in relationships between partners, competitors, suppliers, etc.

Let’s discuss some of the practical use cases that CIOs should know about and how can they be put in action to create the difference.

• Claims Processing
  It involves a lot of tasks that include review, adjustment, investigation, approval, or denial of a claim. Each step requires financial advisors to process multiple documents. However, this process can entirely be automated. Through that, advisors can automatically derive data from documents, approve or reject claims accordingly.
• Risk Analysis
  Insurers can derive personal data about applicants that include age, pre-existing conditions, medical records, claims data, lab testing and more to accordingly set a premium for the individual.
• Omnichannel
  It is equally important for insurers to develop a portal that helps them send information to customers. It should also serve as an information center where individuals can review their policy status, download resources, make payments and submit tickets. This not only improves the customer experience but ensures that individuals do not have to struggle to access information or reach out for help.

The gap between insurers – digitally enabled and those that are not is accelerating. And it is no longer a question of replacing just the legacy core systems. But it’s practically about addressing the how aspect. Many insurance frims — especially small-to-medium carriers and those with smaller set up with the right tech talent are effectively leapfrogging the competition. They are addressing the concerns around revenue, retention, and customer experience by implementing advanced technology.

We combine our domain expertise, strong partnerships in the industry and technology prowess to develop custom solutions that help insurers digitally transform. Our approach rests on the understanding of APIs, Analytics, Data Virtualization, Agile Delivery and DevOps to meet the growing needs of global insurers.