Insurance is a very traditional industry; almost as old as banking. And yet banking has far outpaced its financial sibling in terms of digital transformation and adoption. Many insurance companies still rely on traditional business processes like in-person broker sales, paper-based forms and literal pen-and-paper claims processing and management to get things done.
Fortunately, more insurance companies are rethinking their old ways and starting to adopt digital technology and modern processes.
Let’s review some of the major digital transformation trends that are changing the way insurance companies operate in 2020.
Blockchain has been on every blog’s “digital transformation trends” list since it first came out in 2008. Despite increased development and support, it still hasn’t been adopted by most insurance companies.
The core concept is sound, however, and experts from both the technology and insurance industry believe it’s only a matter of time before insurance companies implement at scale, either to disrupt or support the status quo.
Singapore-based FidentiaX, for example, allows customers to use blockchain to buy, sell or store their insurance policies. Dynamis is a peer-to-peer insurance company built entirely on the Etherium blockchain platform. Even Microsoft is getting into the game by making blockchain more accessible through blockchain-as-a-service offerings, which are being used by smaller organizations that can’t afford to develop their own.
Insurance is, at its core, a relationship business. This has been a mainstay concept of the industry and why there is such an emphasis on personal interaction. However, changing consumer preferences and new technology has led to the rise of AI chatbots as a means of providing front-line customer interactions. The chatbot answers simple questions and asks them to the customer in return, laying the groundwork for a deeper conversation with an actual agent.
But chatbots don’t just help consumers. Agents can benefit from digital assistants as well. Instead of calling up an underwriter multiple times in a discovery conversation, an AI digital assistant can recommend follow-up questions depending on how a customer answers. Information is collected and recorded faster, and the sale is closed faster as well.
Unlike blockchain, which has enormous potential for the future but is being used in few actual, practical instances today, cloud technology is currently enjoying widespread application at scale by insurance organizations all over the world.
Cloud technology already benefits insurance companies thanks to its ease of deployment, flexibility, and reliability; but it’s been further upgraded with increased security, which is a must for the kind of data insurance companies handle. And even if some areas of the business are considered too risky to be hosted online, it’s absolutely possible to implement hybrid cloud solutions that take advantage of both private and cloud setups (as in the case for customer service and support applications).
The insurance industry is rife with repetitive tasks and processes that only exist because there used to be no other way. Process automation is quickly being adopted in order to perform both back office and front office tasks, from data capture and extraction to filing and archiving.
Automation is a quick win for most insurance organizations, as it provides large benefits for a quick return and is visible proof of the power of digital transformation. Especially if it results in end-to-end automation of important work processes like claims submission and processing, policy administration, and compliance checks.
Self-service is popping up everywhere, from grocery stores to telecommunications, and from restaurants to mortgages. Insurance is now also offering limited self-serve options through online claims submissions and dashboard monitoring.
As artificial intelligence and blockchain technology develops, customers will be able to purchase entire policies and manage claims processes by themselves online as well.
Non-Traditional Insurance Products
With new technology comes new ways of doing business. Insurance providers are seeing more interest in non-traditional insurance products that have adapted to modern trends.
One example is insurance-as-a-service, where customers can choose to insure expensive items like jewelry only when they’re in use. This allows customers to keep their goods safe where needed, instead of being locked into an expensive long-term policy for rarely-used items.
There are also new insurance products being developed to accommodate how tech has affected the workforce. Companies like Jauntin are creating products specifically for gig workers (in this case liability insurance), and it’s just a matter of time before the bigger financial institutions follow suit. Hybrid insurance products are also in demand, where Uber drivers can have a policy that covers them both commercially when they drive on the clock, and personally when they’re not. For self-employed workers as a whole, organizations like Freelancer’s Union provide exclusive discounts and plans targeted specifically for that kind of worker.
Data Management and Analytics
Collecting data isn’t a problem for modern insurance organizations. Data is coming in from so many different directions and at such a rapid pace that the challenge is actually wrangling it all into something useful and preventing data from falling into isolated silos.
This in itself is not a new problem. But only now is the insurance industry changing its approach. More insurance companies are now seeing Big Data for more than data for its own sake. It’s evaluating, trying to decide what the right data to focus on is, where the gaps are, and whether or not the data they have helps fulfill their business objectives.
Another difficulty insurance companies are encountering with data is the issue of privacy. It’s a hot-button issue, and insurance companies are in the position of having to anonymize the medical data that they receive from hospitals before being able to make use of it beyond simply populating a customer profile.
Not all companies have yet adopted the technologies mentioned above, and not all of the technologies listed are ready for scalable application across an insurance organization. But there is plenty of positive movement across the industry and increasing support for digitizing operations.
As more customers demand more convenient digital solutions, more insurance companies will realize that digitization is the new standard for running an effective business, and therefore implement digital transformation strategies that will both leverage existing tech and explore innovative solutions that will address future needs.