Pick up the pace or get left behind. This message is no longer relegated to fast-moving industries like tech; even traditionally slower-moving sectors like finance, healthcare, and insurance are currently undergoing a seismic shift.
From creating new bridges for digital customer interactions to optimizing internal processes with smart technology to even re-imagining fundamentals like the business model itself, digital transformation (DT) has the potential to affect every strata of today’s insurance enterprise.
Mobile applications add convenience, speed, and personalization for policyholders. Next-gen tech like Machine Learning (ML) and InsurTech, alongside paradigm shifts like remote workforces, are changing how business gets done from the inside out.
There’s a lot that goes into a successful transformation. But remember that there’s even more to get out of it.
How Digital Technology is Transforming the Insurance Sector
So, what is digital transformation? Here’s our definition:
Digital Transformation is a strategic approach to leveraging technology to transform from a traditionally analog business model to a digital, omnichannel model.
The most common misconception we see regarding DT is that it’s all about technology. The truth, however, is that it’s much more than just building a new application here or integrating a new solution there. It’s a strategy-informed process with clear objectives, and tech is just the tool that we use to reach those goals.
Not all tech investments equate to digital transformation, but you can bet that many of your competitors are planning, undergoing, or even completing transformations of their own. According to the Gartner Gartner CIO and Technology Executive Survey more than ½ of CIOs will be spending more this year in technology.
Whether these investments seek to speed up claims processing, enable underwriters to perform better risk assessments, or boost customer loyalty by providing a more seamless user experience, the smart money is directed towards tangible, measurable outcomes that are part of a comprehensive strategy.
What Insurance Companies Expect with Digital Transformation
The most important part of a successful DT isn’t picking the right solutions or finding the right processes to digitize. “To effectively transform your business, you’ll need to make more than just fragmented business line or functional investments,” writes PWC's 2021 Insurance Industry Challenges report. “Although an effective strategy will include ‘quick wins’ in specific areas, ultimate success requires an enterprise-wide focus.”
That’s why it’s a worthwhile exercise to find your North Star. This overarching strategy guides the transformation, and it shows how individual initiatives fit into a broader constellation of change.
With that in mind, let’s take a look at five specific areas in which insurance companies are leveraging technology to reach their goals.
1) Efficient Processes
As one of the easiest ways to get value from a DT, this applies equally well to internal processes as it does to external, customer-facing ones. Ultimately, it comes down to using technology, usually software, to speed up a process, make it more reliable, reduce manual labor (and the errors associated with it), and also create usable data that can then fuel other initiatives.
2) AI Assisted Underwriting
Another way that DT can improve underwriting is by using artificial intelligence to provide alerts around how products and portfolios are doing so that live teams can take action.
The idea here isn’t to replace experienced professionals with algorithms, nor is it to “augment” them in the sense of analyzing data to provide underwriting recommendations. Instead, it’s all about making sure that underwriters have the information that they need, when they need it.
3) Fraud Mitigation
Since insurance fraud costs U.S. consumers at least $80 billion annually, insurers have a major incentive to reduce it. Technology is a key weapon on this front, enabling insurers to add automation and intelligence to their efforts. This can include using AI to recognize unsual patterns or suspicious activity that needs further attention.
4) Maximizing Conversions
Especially among the newer generation of insurance shoppers, the best way to maximize conversions is to minimize friction. Make it as easy as possible to find information, apply for a policy, and get in touch with a human representative when necessary.
Today’s consumers are happy with self-serve options until they aren’t; maximizing conversions is all about giving them the digital experience that they expect when getting started, then letting them easily and quickly escalate to human-to-human service on demand.
Insurance companies should also ensure they have enabled omnichannel communication. This means conversations persist across platforms. A customer should be able to pick up right where they left off on social media when they reach out through email. When they call their local office the next day, the representative should already have all the information on hand about those previous interactions.
5) Heightened UX
What this comes down to is providing a better user experience (UX) for your customers. Keep in mind that they are judging you compared to all of the other digital platforms they use, not just those from other insurance companies.
In a previous article titled Digital Insurance Through the Generations: Ensuring Accessibility for All, we explained, “Retailers have done a tremendous job with creating immersive experiences that customers don’t even realize—they just expect those experiences to be great. Insurance companies should take a page from retailers’ books and seek to create the same kind of silent utility in their own digital experiences.”
What does Digital Transformation Mean for Insurees?
Let’s look at the other side of the coin. At the end of the day, your digital transformation serves your company’s interests, but this goes hand-in-hand with being able to better serve your customers. These are five ways that your DT will improve your customers’ satisfaction and yield better brand loyalty.
1) Convenience
It’s the obvious place to start. Customers can apply for policies online, make claims through a mobile app, or get instant answers to their questions from a chat-bot. Less of a nice-to-have than in years past, this convenience is a prerequisite to doing business for many of today’s customers.
“Today, Millennial and Gen-Z customers play by a different set of rules and expectations,” writes Jeff Fromm for Forbes. “Driven by technology and an on-demand culture, younger generations of consumers have grown up with media and services that are available at the push of a button, anytime and anyplace. You can call this the Amazon Effect.”
2) Personalized Policies
Another aspect that consumers transfer over from retailers and major digital platforms is an expectation for personalization. In insurance, this can involve serving data-informed recommendations for policies or services, but that’s only the beginning. With more data to pull from, including real-time data in some cases, insurers can offer hyper-personalized policies that more accurately reflect an insuree’s actual risk profile.
The result is less risk on the side of the insurer and more appropriate premiums and deductibles for the insured.
3) Usage-based Insurance
Drilling into the specifics, usage-based insurance is a growing trend in the industry. In a nutshell, it involves using technology to create a more accurate risk assessment or to even reduce it. For instance, in 2015, Liberty Mutual started offering discounts to those with Nest smoke and carbon monoxide alarms installed in their homes because it decreased their overall risk.
Another common example is InsurTech solutions that monitor driving behavior to enable auto insurers to provide more personalized policies. Someone who drives less miles and drives less aggressively, for instance, will pay less for insurance, while someone on the opposite end of the spectrum will pay more.
4) Automated Claims, Answers, etc.
A customer-facing mobile app is an essential component of any digital transformation. Our apps for insurance companies provide insurees with tools they need to keep them safer, in the car and at home, as well as access to their accounts, the ability to manage claims, and a simple way to view their insurance portfolio when necessary.
When you provide customers with a user-friendly mobile app that addresses their needs in a fast, easy, and convenient way, you’ll simultaneously improve the customer experience and free up service representatives for more complex cases that require a human touch.
5) Personal Data
It’s critical that insurance companies keep in mind their responsibility to safeguard user data, protect individual privacy, and offer transparency as they ramp up data collection and analytics. According to the Deloitte survey, “Only 11% of marketing leaders...strongly agree that their company is much more transparent now in how they collect and use a customer’s personal information, while eight of 10 agreed they are not doing enough to make customers feel in control over their privacy.”
Besides backend technical controls and cybersecurity to protect against data breaches, insurance companies should also provide customers with the ability to opt in or out while also being explicit—in plain English—about what data is collected and how it it’s used. Most customers will agree to reasonable terms in exchange for better service, personalized plans, and other benefits to themselves.
How Digital Transformation in Insurance Also Benefits Your Workforce
Adopting and embracing new technologies can also have a powerful impact on your employees. These effects can range from simplifying day-to-day tasks to paradigm shifts in how and where work gets done. These are the top four benefits of digital transformation for insurance workers:
Keep in mind, however, that change is not always immediately accepted, particularly among older employees who are accustomed to the status quo. One of the main issues we see post-digital transformation if companies aren’t careful is that the traditional, non-digital experience doesn’t match the digital experience.
That’s why it’s key to train your employees and agents in any new technology so that they can provide the same, if not better, level of service for their customers. At the same time, be patient and introduce new technologies gradually to promote a culture that accepts change and so that people can see for themselves how technology can work for them.
Digital Transformation in the Insurance Industry is Rapidly Evolving
Between advances in general purpose technologies like AI, cloud computing, and mobile apps alongside gains in InsurTech solutions that are tailor-made to address the industry’s most pressing challenges, we’re watching the insurance industry landscape rapidly evolve. For some companies, the pace of change may prove too much, yet for others it will beckon a new era of prosperity.
Get started today by contacting Mobiquity for your free Friction Report to gain insight into the mobile app features that are more important for your users. It’s the first step on your digital transformation journey. Get in touch with us now.
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