Every industry is grappling with how to achieve successful digital transformation and what processes to prioritize as consumers expect organizations to operate as intelligent enterprises.
The digital mission in the insurance industry is to create simple, transparent and unique experiences that are rooted in the principles of proactive risk management and secure, seamless engagements across the customer journey. In order to meet these expectations, insurance firms need to transform from a traditional, product-centric mindset to a customer-centric mindset, enabled by the power of data and analytics.
The insurance industry is welcoming innovations such as autonomous vehicles, connected homes and the sharing, on-demand economy, but some are struggling with how to glean insights from data generated by these technologies. A 2018 LexisNexis survey found that 70% of property and casualty insurers believe it’s important to collect IoT data, but only 21% have an IoT strategy, and only 5% that do gather data use it in their daily analytics. Firms must redefine their digital strategy in order to effectively compete in today’s market. For instance, telematics has been a big investment area in the past few years in the property and casualty insurance space. While insurers gained better understanding of risk with telematics, they struggled with making use of the data and identifying the right customer engagement to drive premium growth. The following outlines the digital processes insurance firms should prioritize, and how these processes impact the types of policies offered and the timeliness of transactions.
The digital playbook
Not all insurance firms have reached complete digital transformation, but a recent SAP study, commissioned by Forrester Consulting, shows that digital initiatives are top of mind for insurers. This includes:
- Digital Transformation: When it comes to specific digital transformation initiatives, the study found that insurance firms prioritize risk and finance processes (87%), business support (86%), data management and insights (86%) and mobile/digital channels (85%).
- Recent Initiatives: For insurance companies, the most recent digital initiatives focus on finance (67%), risk management (49%) and customer engagement/marketing (41%).
- Motives for Moving to the Cloud: Most insurance firms are interested in the cloud to support operations such as sales, infrastructure, asset management and integration between lines of business.
Given that insurance is a heavily regulated and risk averse industry, it’s no surprise that firms are focused on minimizing risk while working to improve the customer experience via sales channels. Rapidly changing customer expectations require insurance companies to quickly respond to needs through technology to help the end consumer achieve their individual goals. Connected insurance is no longer a concept, but an actionable model that is being implemented across some of the biggest carriers and InsurTechs.
Embracing the usage-based business model
The above mentioned digital strategies enable insurance companies to offer connected insurance and move to usage-based business models. Customers only want to pay for how they use the insured items, and for the duration in which they use them. The ability to compile data and insights based on IoT technologies will help organizations operate as intelligent enterprises by launching personalized insurance packages and making the transaction process faster. Not only that, insurers have the ability to provide better value propositions to their clients such as providing cost-saving incentives for positive driving behavior. Delivering a concept of shared value between insurers, partners and customers will continue well into 2019.
Whether it’s making the payments process easier, providing tailored coverages or managing huge amounts of data, digital transformation is now at the core of the insurance ecosystem. As long as insurance companies prioritize digital transformation initiatives, they will be able to streamline processes, which frees up time to spend on product development and customer engagement. Today’s insureds are looking for tailored solutions and quick, easy touchpoints with their insurance providers. It’s important to take the right steps toward a digital future to become an intelligent enterprise that puts the end consumer first.