Digitalization of Insurance is Inevitable – Are You (Insurers) Ready for it?

A few years back, Mark Breading, vide his 'SMA White paper' suggested “..there were significant new opportunities to transform paper documents of all types into digital formats – yielding major improvements in business optimization and the customer experience.”

Even after years of advanced technology initiatives, insurers are still handling huge volumes of physical documents – files, written notes, letters, faxes, cheques, cards, and envelopes. A great deal of progress has been made across the industry in the ability to digitally capture documents and deliver them electronically. However, today also significant opportunities still remain untapped by most insurers. Mark Breading further rightly said...

“A typical mid-sized insurer creates and receives millions of paper documents each year. And large insurers must manage hundreds of millions of documents annually.”

Apart from contributing to additional expenses, the high volumes of paper adversely affect the efficiency of daily workflows and the operational effectiveness of the organization. Today, the emphasis on digitization is aimed at creating a more agile, responsive and competitive organization so that it can survive and grow in the highly demanding current market scenario.

Why there is need for digital transformation of Insurance Industry?

The global technology landscape is witnessing an epoch of digital transformation as everything including customer, equipment, device and apps is getting well connected. Such increased interconnection, as well as new technological developments and possibilities, promise to continue to transform the way people live and behave. The connected world creates a digital imperative for all companies including insurers. They must enable transformation through digital technology, or they’ll face elimination at the hands of their competitors who are more adaptable to digital change.

According to the study conducted by Tata Consultancy Services on digital transformation of insurance “..transitioning to a digital enterprise can help insurers develop new business models to address the disruptive changes occurring in the economic, social and technology environments and drive profitability and growth”. You need to become a digital insurer because you will be requiring much more capabilities to handle the highly demanding customers who are now looking for digital experience. Rather than being concerned about price alone, they look for advice, wish to interact with others when shopping for insurance, are open to new products and ideas, and hence want an Omni-channel experience. (Omni channel is multichannel approach to sales that seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store. Omni-channel competencies become more relevant in the mobile context – the mobile customer is used to carrying on dialogs via text, voice, social media and having constant access to information any time any where.) Digitization gives insurers the ability to provide faster and more accurate responses to prospects and customers. That’s why you need to become a digital insurer.

Forces compelling emergence of Digital Insurer

Computers, cell phones and the Internet per se have been bringing significant changes, but despite online insurance, these changes still well-suited for push model of insurance distribution. The real disruption will be from the four emerging technologies:

Social media: consumers are interacting with each other through social media about the insurance, breaking up the information monopoly that protected the industry for so long.

Mobile: mobile on the one hand means access the insurer/insurance distribution channel anywhere and anytime, on the other, it means new forms of interaction and business. Not all consumers will want to trade privacy for convenience or savings, but a large majority (especially millennial) is certainly there.

Cloud: due to cloud computing, access to huge amounts of information is no longer restricted to your computer, but is possible any where any time, even in your car. Therefore, cloud computing gives the insurer and the customer mobility with uninterrupted connectivity.

Analytics along with cloud change the way insurers operate and interact. Services can be highly personalized, risk and events are being predicted with a much higher degree of accuracy than ever before.

These foregoing forces along with others will disrupt the relatively comfortable 'push model' of distribution.

Digital Customer Experience

Policy holders are now demanding that their documents be delivered electronically. There are many other important types of documents, such as premium payments and claims documents, that currently have a low level of digitization. There are major opportunities to increase digitization of documents in these areas over the next few years. 'Claims' is an important area where insurers can significantly enhance the digital customer experience.

Creating E-delivery environment

Vibrant insurers are using 'customer communications management' (CCM) to improve their customer correspondence across the organization. Insurers should leverage these advanced CCM capabilities to create appealing, consistent, and effective communications for every document that touches the customer. The ability to track and manage the delivery of these communications in accordance with customer delivery preferences provides additional value to the customer and the insurer as well.

Today’s consumer wants to have things which are easily available, add value and customized to his/her specific needs. If you are not the best provider of that anymore, they will move away sooner or later, no matter how big a brand you are and no matter how brilliant has been your track record in the past. Insurers can use the digitization opportunity to deliver greater value to their customers and gain competitive advantage, engaging more intensely with existing customers and also attracting newer customers, and thereby improving both profitability and growth.