At least 40% of all businesses will die in the next 10 years… if they don’t figure out how to change their entire company to accommodate new technologies – John Chambers, Cisco System
Complete digital transformation in the insurance industry can bring about a productive disruption. There is a growing need for ‘one-click processes’ in every sector across the globe. The biggest ‘why’ for automation in the insurance industry is to give the customers what they want. InsurTech start-ups raised USD 244 million in Q4 of 2019 alone! That’s how high the demand for insurance digital transformation is!
The Need for Technology and Innovation in the Insurance Sector
90% of CEOs believe the digital economy will impact their industry, but less than 15% are executing on a digital strategy – MIT Sloan and Capgemini
The benefits of digital innovation in insurance market are multifold:
- Appeal to the Millennials: The millennials are all about technology, and a majority of the insurance buyers are from Gen Y. Anything that is not digitized is ‘old-school,’ and they won’t connect with it. This makes it one of the greatest reasons for digital transformation in the insurance industry.
- Transform Legacy Processes: These legacy processes lead to high operational costs, inefficiency, etc., holding your company back. Technology can transform how you used to do things to new processes that are quicker and more efficient.
- Supports Scaling: You cannot scale without state-of-the-art technology that optimizes your processes.
- Actionable Insights: Collecting data and understanding analytics can lead to valuable insights about your processes and customers.
- Beat Competition: In the next 5 years, most of your competitors will be taking advantage of digitization. To keep up, you need to do the same or risk losses.
- Automated Regulatory Compliance: Automated regulatory compliance software allows your company to be confident of meeting the mandatory, statutory requirements.
- Better Customer Experience: Ease of use and hassle-free processing are just some of the things your customers get. This improves the overall experience and boosts satisfaction, ultimately improving revenue through insurance digital transformation.
Digital Innovation in the Insurance Market: What Processes Can Be Automated?
There is no alternative to digital transformation. Visionary companies will carve out new strategic options for themselves — those that don’t adapt will fail. – Jeff Bezos, Amazon
1. Internal Workflow Automation
AI and automation in the insurance industry are redefining internal workflows. 96% of insurance executives have reported that the pace of innovation in their companies has accelerated over the last three years. AI augments human workflow, getting rid of duplication or petty tasks, allowing your company to focus on more important things.
2. Fraud Detection
In the United States alone, fraudulent claims account for USD 80 billion! Every insurance company worries about such claims. Using anomaly detection and a machine learning algorithm that is trained to spot suspicious activities by analyzing past claims, you can save a considerable sum.
3. Claim Management
Automation can reduce the cost of the claims process by an impressive 30%. A speedy insurance claims process can be achieved by implementing technology solutions like Natural Language Processing (NLP) or speech or text recognition.
Using an automated claims workflow can eliminate human errors in claim intake, assessment, and settlement. This can improve accuracy, reduce manual work and delays, improve customer satisfaction, and streamline the entire process. For example, by using drone technology with image recognition for car, home, or field insurance claims and then further analyzing it with AI, you can determine claim validity.
4. Peer Review & Underwriting
The process that takes the maximum time is underwriting. Data from certain pre-set parameters like age, financial information, creditworthiness, health conditions, and other information can be used with intelligent tech solutions like RPA and AI, to fast-pace this process. The market for underwriting improvements is set to grow by 60% in 2020.
Similarly, for peer review, where using the traditional approach makes it difficult to leave an audit trail and prove compliance, mapping and automation can help.
5. Policy Administration
Automating the complete cycle of policy management from policy updates to communication can be automated, saving time and resources. All the document-intensive processes can benefit drastically from digital transformation, eliminating the need for physical processing and checking of documents.
How to Go About Innovation in the Insurance Sector?
The next 5 years will be more disruptive than the last 15. This is NOT business as usual. A lot of technology that came in three years ago doesn’t work anymore – Saul Berman, IBM
- Technology and innovation in the insurance sector can be brought about through digital solutions like RPA, telematics, predictive analytics, extended reality, artificial intelligence, and machine learning. Here’s more about technologies that can be used:
- Open APIs that support agile, flexible, and robust app development.
- Personalized insurance pricing to collect real-time information and assess risk (robo-advisory systems).
- Consulting digital transformation experts like Suyati Technologies to analyze, plan, and execute the journey of innovation in the insurance sector in the right way.
Digital Insurance: Journey to Embark Upon
We went from being the Flintstones to the Jetsons in 9 months – Dan Schulman, PayPal
One of the most important things you need to implement for your insurance company is cybersecurity. It allows you to find out about your security vulnerabilities and prevents your company from digital attacks. A secure interface also helps in inspiring trust among your customers. You can consult market experts like Suyati Technologies to chart a path for the digital future. Before you start the digital transformation journey, ask yourself these questions:
- Are your employees ready for the digital insurance shift?
- Do you have sufficient financial resources, or do you need more?
- Do you know what your customer wants?
- Will you do it in-house or hire an expert from outside?
The scope for digital innovation in the insurance market is massive and unexplored. Other processes like customer onboarding and marketing can also benefit through a digital transformation in the insurance industry. Are you ready for the age of digitization?
Alexander Eck works with Suyati as Insurance Risk and Technology Advisor. He has multifaceted expertise in managing diverse insurance operational and strategic risk. In addition, Alex has experience in how newly emerging technologies such as Cloud Technology, Cybersecurity, Data & Analytics, Process Automation, Agile Software Development and IT Sourcing can mitigate traditional risks in insurance companies with a lense of process optimization and operational excellence. His current focus is on emerging technologies, digital transformation and strategic business-technology alignment utilizing an Enterprise Risk Management framework and Internal Audit framework to meet overall organizational objectives.