Business Transformation in Insurance: 5 Must-Know Trends for CIOs
Business transformation is taking place all across the insurance industry. Technology is having a positive effect on processes throughout the customer journey, from lead acquisition to the underwriting process to claims filing and customer retention.
These five trends are ones to watch for chief information officers working in the insurance space.
Companies in the insurance sector are driving business transformation via digital adoption, but top-down buy-in is critical. Accenture notes that 43% of insurers agree change management expertise is critical. You need to be able to effectively:
Present the business case for digital adoption to stakeholders
Convince the C-suite to take a strong leadership role
Empower managers to drive change forward
Encourage employees to take advantage of digitalization
Digital adoption platforms (DAPs) provide a surface dashboard to overlay common software applications, delivering guidance for users and streamlining changeovers to new systems. By giving users familiar tools that make new applications work smoothly, you can drive digital adoption forward across your organization with less resistance.
DAPs can also be leveraged for customer-facing situations, relieving pain points and reducing support requests due to new or unfamiliar technology or applications. Overall, DAPs create self-guided experiences and on-demand training to increase user adoption and minimize frustration.
The same Accenture study reports that 63% of insurance organizations believe that the implementation of cloud-based technology for the purpose of improving operational efficiency is currently generating the greatest positive impact on their organization.
Common cloud computing integrations involve:
Replacing on-premise option in whole or part with software-as-a-service (SaaS) solutions
Moving non-critical data to cloud databases from physical data centers
Eliminating paper files in favor of mobile apps for customer use
Shifting systems to the cloud exponentially expands the amount of data that can be stored, and improves accessibility. Real-time data can be reached from anywhere by anyone at any time using any device, assuming the correct permissions are in place.
Cloud migration is crucial for business transformation in the insurance industry, and provides the following cost benefits:
No on-site IT maintenance is required for SaaS solutions, resulting in organizational labor costs savings
Scalable SaaS applications allow insurers to upgrade functions and add user licenses at a low cost on demand
The cost of physical storage space and maintenance can be eliminated with cloud data storage options
Cloud computing delivers instantaneous information sharing, reducing time and labor required for internal collaboration
Machine learning (ML) and artificial intelligence (AI) are powerful tools that can be leveraged to process the vast amounts of data in the insurance industry. By implementing ML, insurers can provide faster, more personalized service, from suggesting needed products or services to fast-tracking communiques from insureds to the right department and speeding claims processing.
ML is also extremely useful for back-office processes. Paper files can be rapidly scanned, digitized, categorized and filed to create a database. This can be leveraged in turn to develop personalized insurance plans and help insurers perform better risk assessments.
Effort on the customer side can also be reduced with ML, which can drive the development of chatbots and other self-service models and inform mobile apps for claim filing and policy modification.
An Accenture paper on machine learning in insurance notes most insurance organizations that still rely on manual data entry can only process 10% to 15% of their available data, leaving valuable insights on the table. Automating processes using ML can help insurers manage larger amounts of data with less time and effort.
Being able to handle vast datasets is becoming more and more critical in the insurance industry, as data analysis informs risk management. Embracing open ecosystems allows insurers to leverage open application programming interfaces (APIs), sharing data across systems and benefitting from external data sources. Insurers can use data from smart home devices with leak detection, car streaming systems that record driver habits and deliver crash data, and wearables that track user health data.
Accenture’s “Ultimate Guide to Insurance Ecosystems” points out that the complementary nature of the ecosystem works to benefit each party. Insurers can effectively expand their offerings through partnerships with other businesses. This allows insurers to provide a wider range of services and increase their market competitive edge.
Currently, ecosystems are being viewed as an important facet of business transformation in insurance verticals.
Four out of five insurance executives believe ecosystems are an important part of their business strategy
More than half of insurance executives say that they are actively seeking ecosystems to access more data
One of the biggest challenges facing insurers across verticals is fraud. In the health insurance space, biometric identification digital technologies are being adapted for use in insurer’s business models.
Biometric identification verifies patient identity using fingerprints, iris scans, and/or facial recognition technology. This can help prevent insured people from sharing their insurance cards with other people, prevent hacked data from being used by a third party to access benefits, and track medical professionals to prevent them from padding their billing with unnecessary tests or services that were never provided.
Biometrics can benefit the insurance industry and help support business transformation by:
Reducing health insurance fraud by patients or medical providers
Preventing scammers from committing fraud using stolen data
Helping to sync medical records and files across disparate systems
The time to embrace digitization and modern technology is now. These trends will continue to drive business transformation in the insurance industry. Data from Accenture’s “Insurance | Digital Transformation Remaking an Industry” report verifies that:
More than 60% of insurers say that technology already has a positive impact on their underwriting processes
More than 63% expect technology to have a significant positive impact on risk management, distribution, and finance