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In a year that tested our adaptability more than ever before, insurance companies found themselves at a pivotal moment. Long overlooked by the tech world and caught beneath the shadow of innovators in flashier sectors, the insurance industry had already set a course for digital innovation by the time 2020’s COVID-19 pandemic made landfall. As the stakes of business survival reached new heights, so too did the momentum of the digital revolution, with insurance companies making clear efforts to improve their agility, deliver better service, and better their customer and employee experience.
For insurance and other legacy industries, the need for digitization is no longer a question. Companies must now ask themselves: With digitization becoming the new normal, what should we prepare for in 2021?
Here are five digital transformation trends that insurance leaders should look out for in the coming year, as they make changes that will not only help them through the next stretch of the pandemic but will foster sustainable business models well into the future.
1) From Idle to Innovative: The Legacy Revolution
The insurance industry has long been slow to embrace innovation, but in today’s digital economy, the need to innovate is more palpable than ever. The good news is that it certainly is not too late to start.
An influx of new blood in the form of digital-first insurers, tech giants, and innovative startups has shifted the industry from its conservative path of the past towards an increasingly innovation-focused digital culture. The map to digital transformation begins with a new outlook on old systems, and if industry leaders continue to harness innovative applications of existing technologies to age-old insurance problems such as risk-assessment claims processing and policy sales, they will continue on the trajectory towards a nimbler, more efficient future.
2) Mo’ Code, Mo’ Problems: The Need for No-Code Development
No-code tools are nothing new.
In the SMB segment, no-code solutions became the norm at a time when many enterprises still relied on traditional development projects, driven by internal resources or external integrators. Fortunately, today’s vendors now offer mature, enterprise-grade no-code tools that prioritize compliance and security. This has allowed businesses to offload certain security and compliance tasks to third-party vendors, while ensuring high-quality security and compliance standards.
No-code development additionally offers simplified solutions to many of the burning issues that IT teams regularly face. These tools can effectively amplify overstretched internal resources and reduce backlogs, improving productivity overall.
Arguably the most attractive quality of no-code tools is the accelerated time-to-market for new digital applications and products compared with traditional development projects. In this increasingly digitized era, it is crucial that insurers deliver better apps, improve customer experience, and enhance service quality. No-code tools allow insurers to not only meet these needs, but to do so with new-found speed and ease.
3) The Rise of ‘Headless Tech’
When you click “buy now” on a new pair of slippers, the screen in front of you is very different from the screen at the slipper warehouse where your order appears. Headless tech is essentially just that; the idea that customer-facing and business-facing interfaces should communicate with the same information, while still being uniquely optimized for their respective tasks—a front-end designed for consumer presentation, a back-end designed for data functionality.
The growing trend of headless tech goes hand in hand with no-code tools for developing user-optimized interfaces. Particularly in the insurance industry—where back-ends are often mired with outdated legacy technologies that are incompatible with the modern front-end experiences that customers expect—headless tech will prove to be an indispensable tool for future-forward companies looking to create custom digital experiences.
In the near future, we can expect to see insurers increasingly implementing customer-facing front-end and back-end internal processes that remain separate from one another while still ensuring that data flows freely between the two.
4) Hybrid Cloud Architecture: A Building Block of Digital Transformation
Hybrid cloud capabilities have become a cornerstone of digitization across nearly all industries and sectors. In fact, the hybrid cloud market is expected to reach $128.01 billion by 2025, compared to just $45.7 billion in 2019, according to Mordor Intelligence.
Organizations are increasingly adopting hybrid cloud structures as they aim to leverage the advantages of both individual and public clouds, and there is no reason why insurance organizations should be an exception. Hybrid cloud architectures allow organizations to go back and forth between their internal tools and cloud providers’ toolkits, improving both speed and flexibility throughout the operation.
5) Companies in Good Company: The Power of Insurtech Joint Ventures
There is a simple explanation for why partnerships between InsurTechs and incumbents are a growing trend—it is often a win-win proposition.
By harnessing their legacy data and leveraging customer relationships, established insurers can create opportunities to establish new income streams. InsurTechs are positioned to provide incumbents with all the technology and support they might need to turn data insights from existing customer relationships, into digital developments that will optimize user satisfaction and strengthen customer relationships for years to come.
The insurance leaders who will maintain a competitive edge in the long run are those who are willing to embrace these mutually beneficial relationships.
Conclusion: Ushering in an Insur-renaissance
If our collective bout with the year known as 2020 taught us anything, it is that it is always a good time to embrace digital adaptability. Fortunately, the why and how of digital transformation is no big secret.
As they set their sights for the future, insurance companies must move away from traditional systems, move fast, and leverage new technologies to meet changing customer expectations. In a world where customers increasingly expect a simple, intuitive customer experience with their insurance provider, the ability for providers to develop responsive digital platforms that completely transform their customer experience is a decisive facet of success. By embracing the prevailing trends of digital-first, consumer-focused technology, insurance companies can boost customer satisfaction, increase revenue, and cut the costs associated with manual processes.
Adapting to new ways of working and thinking is never easy, but the insurance industry is ripe for a revolution, and it is up to industry leaders to understand the trends that will lead the way.