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Deloitte research predicts that insurance companies are anticipating more rapid growth in 2022. However, their survey admits it won’t be without a few speed bumps and success will depend on how organizations manage their people and technologies.
With that in mind, I have been looking at trends for the year ahead and believe there are three key areas of technology where insurers need to concentrate their digital efforts.
1. Get smarter about how to use your data
There are so many types of emerging and new data today. Data and analytics are king, so it will be important for insurance companies to understand how to put them to use in a smart way. For example, the emerging data relating to catastrophe losses: Storms have worsened with climate changes, and they have hit different parts of the country that insurers usually wouldn’t have to worry about. Insurers will now have to think about new ways to access and use data, like weather data, rather than only relying on historical data that is good for creating rates. Additionally, they will need to ask the question, “Where in our processes does data need to be reviewed?” and “Where are the touch points to acquire the data needed?” This will help them use and analyze the growing data they have to better prepare for policies and losses, forecast events, and make better, smarter decisions.
2. Bolder, accelerated digital moves
Insurers are realizing they need to commit to digital transformation and make bolder investments in developing digital capabilities. But there’s a lot of noise out there. Insurers need to get past the noise, look at the bigger picture, and figure out what success looks like for them in a digital world. It will force them to rethink their processes, their efficiency sources, and operational model.
The industry is ripe to succeed in the digital age as long as carriers invest in the right technology and do so decisively. McKinsey published a survey showing that automation can reduce the cost of a claims journey by as much as 30 percent, but so many companies are taking the shortcut and investing in smaller, less effective technologies, rather than looking at the bigger picture and choosing the right technology that benefits them in the long run. Automation is seen as playing a critical role in driving digital transformation but often falls short because carriers see digitization as the route to solve certain problems instead of realizing that it should be the core of their holistic framework.
This also has a huge impact on customer satisfaction and expectations, which is a top priority for many companies and has been transformed by digital technology over the past several years. McKinsey’s figures show that 75 percent of people who switched to digital channels for the first time indicate that they will continue to use them. This huge increase in digital newbies brings renewed expectations. Today, customers demand simplicity and quick delivery from every industry, including insurance, yet many insurers are not meeting these expectations. Digitizing their processes and business can significantly decrease cost and significantly increase customer lifetime value.
3. More strategically automating processes
Process efficiency is a competitive differentiator, but not all processes need to be automated in the same way. In insurance, there are both simple and complex processes. Take underwriting, for example. There is a big variation between personal and commercial, or life, and some things naturally lend themselves to straight-through processing. AI can manage so much of that, with little intervention needed. But when you think about complex underwriting, even though you’ll need a person to assist/manage, that is something that AI can also augment. For all processes, whether it’s claims or policy administration, insurers will start to look at the type of process and think about how they can use technology to augment and automate the work they’re doing, especially those simple tasks—ultimately resulting in better outcomes for every stakeholder involved. This is leading the industry into a tech-driven shift, with IT and business leaders working together to prioritize projects in all areas of the enterprise. Roles that focus on repetitive work and manual processes will cease to exist in their present form, as innovative technologies like no-code and content intelligence can help free insurers’ time to be able to deliver more personalized, higher-quality customer service. Recent research shows 58 percent of insurers plan to use no-code applications next year. This is the highest among all industry sectors, compared to only a third in healthcare and transport. It is seen as beneficial for improving many parts of operations including claims handling, onboarding, and skills shortages. This is particularly relevant as employees embrace new ways of working and organizations fight for scarce talent amid the Great Resignation.
If the last two years have taught us anything, it is that agility is the key to success. Insurers that have seen this disruption as an opportunity to innovate are the ones who have been able to successfully deploy projects to increase efficiency and improve customer experience. Yet moving into 2022, 52 percent of insurers say their automation budget is not enough, so it’s important for insurance innovation leaders to use their money wisely. Concentrating on these key areas is imperative and will help organizations not just meet new digital expectations but exceed them.
Accelerate Underwriting with Data-Driven Process Improvement
Very useful and informative pointers for insurers and insurance companies to be digital ready… good read!
I was surprised you didn’t address blockchain as a technology that insurers are exploring as a way to speed up accounts payable?