Staying Competitive with Business Transformation for Insurance Companies
The insurance industry has specific challenges to face, particularly when it comes to consumer outreach and customer satisfaction. Digitization, modernization, automation, and adoption of artificial intelligence and machine learning are all critical to remaining competitive in today’s rapidly changing insurance market.
Current Challenges Facing Insurance Verticals
Insurance has multiple verticals and may be bundled with other products or services by various organizations encroaching on the insurance space. Common challengers include financial organizations, fintech companies, and insurers from other verticals trying to expand their offerings.
Banks may offer life insurance policies as an addendum to savings accounts. Auto and homeowner’s insurance are increasingly bundled together. Health and disability insurance may be tied to employment or offered independently. Travel insurance can include a variety of additional services or products.
To innovate effectively, insurers must be ready to streamline their business operations by eliminating unnecessary processes. The goal is to add value and increase profit margins through business transformation. However, the biggest challenge of all may be meeting changing consumer expectations.
According to Accenture’s Global Consumer Study, the main concern for two out of three insurance consumers is getting what they need quickly and easily, no matter which channel they are using to reach out to a company.
Insurance is a very competitive industry and offers multiple complex products. Centering customer experiences and streamlining their journey must be a priority. Physical and digital channels will have to be fully integrated to deliver on what consumers now demand from their providers.
Data Sharing as a Business Transformation Strategy
According to Accenture's “2019 FS Consumer Study for Insurance,” a majority of insurance customers are willing to share a wealth of personal data in exchange for more personalized offerings and lower premiums.
This is a marked change in customer behavior, which had formerly been centered on a reluctance to share data, and heightened concerns about the safety of such data. With data capture cookies being phased out on digital platforms, freely shared data from consumers becomes even more important to insurers.
There is a lot of room for improvement in data usage by insurance enterprises. Insurers who commit to gathering and analyzing data for effective customer profiling and targeting will find themselves better equipped to differentiate their offerings and service in a currently saturated market.
Another key area for data analysis is in underwriting, risk management and fraud prevention. Data analysis can also be leveraged when assessing risks and claims and provide long-term benefits for companies by accurately identifying patterns of behavior that should raise red flags for insurers.
Internet of Things (IoT) connected devices can transmit highly valuable data to insurers to help underwriters develop an accurate risk assessment of the consumer. Premium discounts could be given for connection to:
Smart home devices that note changes in humidity and could alert in case of a water leak (preventing extensive damage and high dollar amount claims)
Smart car devices that can provide information on drive habits and crash data in case of an accident (including whether rollover occurred, speed at impact, seatbelt use)
Wearable health devices that deliver relevant medical data (fitness levels, activity, blood sugar control, blood pressure levels, respiration, heart rate, medication regimens)
Business Transformation is Customer-Centric
Insurance companies weren’t the first major verticals to board the modern digital transformation train. Other financial sectors committed far in advance, with banks and fintech companies pushed hard by the pandemic to realign their offerings and customer relationship management flows to accommodate a suddenly remote customer base.
Mobile apps proliferated as the ability to conduct business and financial transactions without visiting a branch or office location became a must-have for discerning consumers. Insurance companies have been playing catch-up as they struggle to meet altered needs of insureds who want service where they are, when they want it and how they choose to interact.
Developing interfaces that meet consumers on the devices and through the channels of their preference is step one. A mobile-first experience is now the expected norm. Self-service options are helping to streamline customer service, but personalized care when needed is viewed as a premium.
Leveraging machine learning (ML) and artificial intelligence (AI) to run chatbots and unmanned kiosks allow routine matters to be handled by the customer without human interaction. These processes use natural language processing (NLP) and learn over time, becoming better at handling customer needs.
Automation of core processes using software-as-a-service (SaaS) can help reduce the burden of repetitive back-office tasks, freeing up staff to provide the all important second line of customer service to swiftly address and resolve customer complaints.
Business Transformation is Measurable
To be able to accurately benchmark, track and measure results of business transformation efforts, you must identify the right key performance indicators (KPIs).
Define clear and short-term objectives
Clearly articulate what you want to achieve
Figure out how to measure progress
Establish a baseline to start from
Identify KPIs to act on to improve performance
Report on results at regular intervals
Be aware that legacy IT systems can be difficult to overhaul. As you move forward with your digitization, choose software and cloud vendors that can slowly bring your entire organization forward, replacing legacy systems as you go until your insurance business is completely transformed and future-proofed.
Don’t make the mistake of buying every tool and system out there because it’s digitized or cloud-based. Be discerning and select solutions that are scalable, adaptable, and capable of helping you achieve your outline goals.
Now, more than ever, it’s critical for insurance companies to stay the course when it comes to modernizing. Only by aligning business goals with industry trends can insurers stay relevant and capable of meeting rapidly evolving consumer expectations and demands.
By integrating digital technology with your company goals, you’ll be able to boost the value of your business through the lens of technology and maintain a competitive edge in an increasingly complex and distributed industry. For more information on how ECI can help, contact us today.