by Candice Abante & Charles Sybert –
Being more customer focused requires digital interaction innovation driving an improved customer experience drawing upon the insurance company’s enterprise capabilities. This is very easily said and can be illustrated by an architect. Still, the challenge is shifting the culture into one focused on the customer experience driving decisions on how we service our customers in a delightfully efficient manner.
Why is digital transformation necessary in the insurance industry?
If the insurance companies do not drive digital transformation, new players, business models, and demanding customers find a solution to their demand in new digital first companies. Consequently, the insurtech market is expected to grow by around 45% annually between 2021 and 2025.
Insurtech: Both enables and forces traditional insurers to adopt digital applications
Some insurtech companies are building solutions for insurance companies that target traditional insurers’ pain points such as inefficiencies in auto, P&C, health/travel, life, and home insurance processes with a customer-centric approach. These new players can help traditional insurers improve those inefficiencies to gain a competitive edge.
Other insurtech companies follow a direct to consumer approach, aiming to upend existing players. They force traditional insurers to adopt digital technologies and launch easy-to-use products.
Rapidly transforming business environment: Increasing importance of being agile at scale
As competitors rapidly deploy new solutions, insurers are expected to launch pilots and roll them out in their organizations expediently. They will measure success and determine the next phase of the deployment. They can accomplish this radical shift from traditional release approaches due to low technical debt and agility in their data management systems.
Demanding customers: Personalized Products & Services
The customer experience is increasingly critical for a business to differentiate itself from its competitors. Customers want to process policy quotes, bill payments, and communication without delay. According to TechSee, survey11% of insureds are canceling their insurance policy due to poor customer service, with 18% of the 11% canceling due to a one time interaction. Ensuring the customer experience is consistent and frictionless will maintain the customer base.
What are digital transformation use cases in insurance?
According to a McKinsey study, 25% of the insurance industry will be automated in 2025 thanks to AI and machine learning techniques. The industry is full of bottlenecks and manual processes in claims processing, fraud detection, underwriting, policy administration, and customer service.
Process mining tools are beneficial for insurers who wish to identify processes that can be handled autonomously. Some tangible automation use cases include:
Claims processing has multiple layers: review, investigation, adjustment, remittance, or denial of the claim. For each interaction, insurers need to process a large volume of documents that can be automated by document automation tools. With document automation, insurers can systematically extract data from documents, identify fraudulent claims and validate claims that are in line with policies.
CLAIM FRAUD DETENTION
Insurers feed predictive analytics tools with data captured from the claimant’s story and use text analytics to detect fraudulent claims based on business rules.
Insurers can collect data about individuals’ historical health records to assess a risk point for each individual based on lab testing, biometric data, claims data, patient-generated health data, and then they ask for the price according to the risk score. AI can improve underwriting processes from data collection to calculating risk scores of clients.
Designing a self-service portal where customers and insurers can access to find answers to questions, conduct business (transactions, orders, make a claim, pay bills, etc.), check on status, submit support tickets, and download resources is a practical approach to increase customer experience
Blockchain-based InsurTech companies create better risk-sharing models while giving people more custom and affordable insurance options. For example, Nexus Mutual aims to replace existing insurance models with innovative contract-driven mutual markets. By enabling people to share risk across larger populations, their purpose is to lower insurance costs and replace the need for more prominent insurance companies.
What are the benefits of digital transformation?
According to PwC’s Annual Global CEO Survey, insurance companies are more receptive to the technological changes in recent times.
Insurance companies that can leverage digital technology to improve their business now see benefits of digital transformation such as automating manual processes, enhanced insights via data analysis, increased customer retention rates, efficiencies throughout workflows, cost savings, better risk management, and more.
As what we have now are modern customers that require quick and instant resolution to their needs. Companies that can transform digitally are more likely to create high customer engagement.
RCG has developed a proven roadmap methodology to make technology investment decisions considering business objectives, existing technology stacks, trends in technology, and strategic goals. We would like to show you how this can bring clarity to the difficult decision of where to go next.