Digital Transformation in the Insurance Sector: Key Technologies and Insights
Innovation in the insurance sector has led to a rise in digitalisation, adoption of the Internet of Things and increased use of AI.
For years, industry experts warned of the insurance sector’s slow pace in adopting digital technologies. But now, insurers across the world are waking up to the benefits of digital transformation.
Greg Baxter, Chief Digital Officer of MetLife, Inc notes that “digital technologies have changed the way that you can connect and relate to customers”. Indeed, as consumers continue to turn to mobile apps and the internet to access their key financial services, truly digital solutions in insurance will become increasingly important.
What is the digital transformation, specifically in the insurance sector? What are the key technologies driving this transformation? What challenges will need to be overcome before insurers can properly take advantage of the benefits of our digital world?
What is Digital Transformation in the Insurance Sector?
To undergo a digital transformation is to integrate digital systems & processes into your organisation’s workflow. The key goal of a digital transformation is to reduce costs and alter the way your organisation interacts with your customers.
In insurance, the need for such a transformation is clear. Oxford Economics found that 90% of insurers say that, within five years, consumers will buy most of their insurance through online and mobile apps. The way that insurance customers want to interact with their providers has changed.
It is now up to the insurance sector to respond to these changing consumer tastes and adopt digital processes. Why do consumers need a digital experience?
McKinsey found that most of all, consumers want simplicity and 24-hour access to their services. Conversely, insurers are always looking to drive down costs. Digital processes can solve all of these demands.
Primarily, digital transformation in insurance revolves around these four key areas:
- Claim Fraud Detection
- Risk Management
- Omnichannel Digital Experience
Many insurers have been able to completely digitise their claims procedure – making it easier than ever for customers to make insurance claims. Some insurers are also using automated AI tools to process and evaluate these claims.
What are the technologies driving the digital transformation in insurance?
To explore the process of digital transformation, it’s important to look at the technologies and processes that are at the forefront of this digital disruption.
Any digital process requires agile & adaptable cloud infrastructure. To deliver an omnichannel digital experience for consumers, insurers will need to deploy their insurance platforms in the cloud.
Cloud storage of customer data and analytics is the most secure & efficient way to store insurance data. Furthermore, cloud resources are far more scalable than physical systems – facilitating rapid growth & scalability.
To migrate your data to the cloud requires careful oversight of the whole process. Considering moving your data from an on-premises solution to the cloud? Get in touch with us today to ensure a safe, smooth cloud migration!
According to McKinsey, insurers can cut the costs of the claims journey by up to 30% by turning to automation. Indeed, using AI & machine learning to automate and streamline processes is one of the biggest ways insurance companies can boost efficiency and improve their bottom line.
WorkFusion found that automation reduces the human input into claims by up to 80%, cuts the time it takes to process claims by 50% and also drastically reduces errors.
Automation is also particularly useful in underwriting, as algorithms can automatically judge creditworthiness, health risks, financial limits etc.
The availability and integration of data into insurance platforms is a key driver of automation & efficiency gains.
For algorithms and AI to accurately predict & analyse claims, policies, underwriting, etc, systems will need to access a sea of data on consumers, their habits, their vehicles, their homes and their lives.
Insurers looking to use digital AI tools to optimise their processes and policies to better suit their customers will need to understand what consumers need from insurance through insurance data.
Forbes writer Gary Drenik writes: “the [insurance] industry is finally undergoing a customer experience overhaul focused on loyalty and retention”.
As the industry becomes even more saturated and competitive, insurers will need to turn to improve their customer experience (CX) to gain an edge over competitors.
CRM – or customer relationship management – the software allows insurers to manage their customer interactions more seamlessly and ultimately helps build a more positive customer journey.
A CRM – like Dynamic 365’s Service platform – gives customer service teams great visibility into all their interactions with leads and customers. Insurers also benefit from automated chatbots and live chat systems to deliver a quicker, more responsive support system.
What are the benefits of a digital transformation to your business?
There’s a reason so many insurance companies are turning to digital technology to fuel their growth & expansion.
Why should your business embark on this digital journey?
- Improved Profitability: The efficiency and resource management gains we touched on before lead to a dramatic fall in costs. The business opportunities afforded by a digital workflow also boost revenue – we’ll touch on that below. McKinsey predicts that an established insurance provider can double its profits by going digital.
- New opportunities and business models: We’re close to a tipping point. Up until now, digital transformation has focused on using digital means to improve the efficiency of existing processes and business models. However, as consumer confidence in technology continues to rise and overall tech literacy improves, insurers can turn to new pricing models and strategies to find new revenue streams.
- That’s exactly the thinking behind the Insurtech industry – with many companies like Lemonade in the US and Zego in the UK launching digital-only insurance platforms.
- Deliver more personalised customer experiences: Digital experiences can be moulded to best suit customers. For instance, younger consumers want fast, convenient claims and support systems akin to shopping on Amazon. Embracing digital technology and especially mobile-first online platforms will improve the customer experience and increase satisfaction – letting your business stand out amongst the rest.
How we can help
The digital transition isn’t easy for any business – especially not in the insurance sector where thousands of customer accounts, insurance claims and bucketloads of data will need to be migrated.
Let us guide your digital transformation and leave the complicated processes like cloud migration, and configuring software solutions like ERP or CRM software to us.
Want to find out how we can best help bring your insurance firm into the digital age? Get in touch with us today!