How Digital Transformation is Redefining the Insurance industry

The Chinese insurance industry is a light year ahead of the European insurance market regarding digital transformation and innovation. The new digital players in the Chinese insurance market are a critical challenge to traditional players. The new players engage more directly with customers than conventional players and develop offerings targeting unmet needs. This is something that the European insurance industry should learn from. All executives in the European insurance industry need to understand how critical technologies, including big data, cloud computing, artificial intelligence (AI), blockchain, and the Internet of Things, for their business.

Many Chinese examples of how insurance has been transformed through digital transformation can be found. Efforts are reduced, consumer communication is done via chat, claims are processed automatically, and brokers may consolidate their data to work more quickly and precisely.

What digital transformation means for the insurance industry?

It is much easier for consumers and potential customers to change their current supplier, regardless of the product or service. Today, various apps and sites make it easy to run a price comparison on products and services online, get recommendations from friends and family, and eventually share customer experience of a product or service. All of this can be done from a smartphone.

This exponential change is so drastic that today’s companies that want to expand or keep their customer base need to transform and change their current business model. How is this done? This is done by making a solid commitment to innovation and being ready to evolve and change their current business model, which is outdated and from the last century. In the case of insurance companies, the traditional model includes designing and developing packages and distributing them through a network of agents. It is essential to understand that digital transformation implies constant innovation and that if the industry wants long-term benefits, it is necessary to develop a corporate business strategy where digital technology is put in the proper context as a tool to support the business strategy. Not the other way around, where technology comes first. Technology is only a tool for a business to achieve its goals.

The benefits of digital transformation for insurance companies are.

Today, consumer use their smartphones to upload documents and apps to make payments, so there’s no reason they can’t get updates and reminders for insurance policies. Insurance companies that have already embraced digital innovation, the ones that did it early on, have generated excellent business value and other benefits such as:

-?????????Automation of manual processes for core business operation

-?????????Enhanced insights via data analysis

-?????????Efficiencies through workflows

-?????????Reduced business operations cost and time

-?????????Integrated design and systems enhanced customer experience (CX)

-?????????Improved risk management

What insurance companies need to understand is that:

Insurance companies need to be able to interconnect their portals and systems: communication is essential for digital businesses. There are partner portals, enterprise portals, and intranet portals already implemented and used by insurance companies. Now it’s necessary to consolidate all possible channels and create an omnichannel digital ecosystem. Additionally, modern consumers engage with insurance companies on multiple media. Consumers search, recommend, and share via omnichannel apps. Insurers must combine all the components that can drive customer engagement at various levels. ?Self-service portals: It is beneficial for the customers and partners to have an overview of their performance, policies, prices, maturity, and payment dates. Having all vital information in one place is becoming a must for insurance companies.

Seamless claims management: Customer is now using their devices to make claims. They take photos, upload documents, and select their policies to make claims; insurance providers must scan and screen documents to settle these claims. This whole process should be digitised. Cloud computing: Not only insurance companies but almost every business that wants to go through a digital transformation is moving its business functions to the cloud.

European Insurance companies should learn from the new Chinese insurance market entry companies how to use big data and analytics to get to know their customers better, understand their needs and adjust their policies to meet them. Advanced analytics will help them prepare for better risk predictions, pricing strategies, and other customer-related insights.

IoT (Internet of Things) - This implies using the digital trail customer leave to get a better price for their insurance policies. In short, it means going back to the origins of insurance - having personalised policies that adapt to the needs of each customer, something that has been done in other industries for a long time, like financial services. European insurance companies must be able to adapt to the new environment, the new customers’ demands and the possibilities of change. The technological advance implies that, gradually or quicker, insurance companies will need to adopt the changes and use new technologies to their benefit if they want to grow or at least subsist.

There are countless possibilities for insurance companies that reaffirm their commitment to innovation and effectively implement innovative solutions. They should be working with new partners; through this, they will be able to adopt new paradigms through an innovative ecosystem. This will enable companies to stay on top of things and remain at the forefront of the market.

The European insurance business is only scratching the surface regarding new technology. At this point, insurers must utilise digital transformation tools and discover creative ways to optimise all aspects of their business. The future of the insurance industry is being reshaped by the digital transformation that is taking place—powered by AI, ML, and predictive analytics, personalised insurance platforms.