Prior to the Covid-19 pandemic, the insurance sector was already a highly competitive space. Now, with more demand than ever for insurance, the market is going into overdrive.
In such an overly saturated market, how can companies secure a competitive advantage? According to a recent blogpost by Cloud Insurance, the clue may be found in harnessing digital transformation and InsurTech.
Digital transformation is commonly the process of adopting digital technologies and InsurTech to change the way a company operates, meet evolving market needs and deliver more value to customers.
Cloud Insurance highlighted in the blogpost that technologies like AI, machine learning, blockchain, predictive, internet of things and data analysis are quickly spreading globally and setting a strong foundation for the digital transformation strategy of many successful insurance companies.
The company highlighted two key matters companies’ should consider when considering InsurTech is that more robust backend processes often result in better customer-facing ones, and not all technologies are reliable and will need thorough implementation before they are implemented.
Digital transformation changes
What do insurance companies need to do before they transform their digital offering? The first is they must undergo cultural and organisation change.
According to Cloud Insurance, one of the chief issues holding back insurers on their digital transformation journeys in legacy. However, this isn’t just technologically. There are also ‘old cultural and organisation mindsets’ which can hinder companies when it comes to digital transformation.
The second necessary step for insurance companies is for them to establish a customer-centered human approach in their dealing with potential clients.
The company said, “To become genuinely customer-centered, businesses should take an approach that combines solid digital fundamentals underpinned by the so-called ‘human touch’. A study by Forbes found that 86% of consumers prefer to interact with a human agent while 71% said they would be less likely to use a brand if it didn’t have human customer service representatives available.
“Therefore, it’s essential to understand that technology should primarily elevate human experts, not completely replace them. Combining these two practices are a significant step towards being truly customer-centric.”
The third step is the need for insurance companies to change with the future, and evolve with current markets trends. This includes setting up flexible organisational structures and strategies then allow companies to constantly adapt to new trends.
Why digital transformation is appealing to insurers
Digital transformation in the insurance space was already picking up way prior to the pandemic. However, since its effects have been felt, this process has sped up at a breakneck speed.
The question is – what makes digital transformation so appealing to insurers? According to Cloud Insurance, the most common reasons are scalability and agility, efficiency and innovation, personalisation and digital-first.
In the area of scalability and agility, the firm claimed IT systems that can’t scale restrict insurance businesses can often provide opportunities for competitors to leap ahead. When companies enter their digital transformation journey, they are recommended to consider not only what they need now but what they may need in the future.
In addition, modern cloud-based technologies that are common in the insurance sector are often built with scalability and future readiness in mind. Alongside this is the fact that a key functionality in new insurance systems is third-party integration.
Another vital reason for digital transformation in insurance is efficiency and innovation. Cloud Insurance claims that by leveraging InsurTech and technologies such as AI and machine learning, firms can increase speed significantly throughout their insurance operations and enable more efficient workflows. These can help create solutions such as instant policy creation and rapidly quicker turnarounds on claims as well as automatic billing and communication.
In addition, the use of chatbots and live chat is recommended as key tools to help foster efficiency and innovation.
Cloud Insurance commented, “Being available to the customer lowers the threshold for communication, improves the insurer-insuree relationship, and helps minimize the customer service backlog.
Personalisation of products is also key for insurance companies when undergoing a digital transformation. In the blogpost, Cloud Insurance said that it is important for companies to ‘enter a completely new mindset’ where digital in their primary medium, and starting develop products and services for a digital customer base, instead of adapting old ones to fit new standards.
By undergoing digital transformation and implementing InsurTech, companies are also able to analyse data from a number of platforms including social media, wearables and smartphones to provide more personalised products, services and marketing. Predictive analytics also enable firms to define when an insurance event may occur and provide customers with incentives and services to prevent it from happening.
Cloud Insurance said, “With digital transformation and insurtech, technology doesn’t hold you back. It removes the barriers to product development and allows for much speedier launches. Consider all the aspects of your customer experience to bring optimal value to your policyholders, from all-day service to new business and cover models, payments, etc.
“Whatever type of insurance or wherever in the value chain you might operate, digital transformation and insurtech should be a part of your long-term business strategy. The first is essential to modernise the company, and the latter to drive innovation throughout the business. And, if employed correctly, it will undoubtedly lead to a strong, sustainable competitive advantage.”
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