Digital transformation of insurance companies

The world is becoming digital and fast. We are edging closer to an era of enhanced consumer experiences at our fingertips in every aspect of our lives. And this trend is not slowing down; evolving technologies continue to disrupt innovations that were disruptive themselves just a few years ago. Major disruptors like NetflixUber, and Amazon to name just a few have transformed industries with their seemingly simple yet highly effective consumer-focused business models. Enter COVID-19 in 2020 and the trend towards digital has accelerated. 

So, what impact is digital transformation having on the insurance sector, and how can insurers proactively prepare for shifting consumer preferences to stay competitive (and even lead disruption)? 

Digital transformation continues to impact insurance 

The insurance industry is embracing digital transformation in various ways to mitigate the complex challenges it is facing from consumers, regulators, and digital trends in other industries. In the process, insurance has become a hotbed for innovative new products, routes to markets, and enhanced consumer experiences. 

Behind the scenes, global insurers and developers are  setting up digital enterprise portals designed with future needs in mind. These platforms use predictive analytics to meet future demand, report on the financial performance of specific products, and offer a complete picture of an insurance company’s micro and macro indicators. 

Indeed, many insurtech early adopters are now seeing business gains including: 

  • faster time-to-market for insurance products and services, 
  •  shorter decision-making processes thanks to predictive analytics, 
  • process automation of key business operations, 
  • increased sales, productivity, and profits thanks to synchronized processes, 
  • enhanced customer experiences through integrated designs and systems, 
  • reduced cost and time in business operations, 
  • streamlined claims processing, 
  • increased underwriting efficiency and, 
  • attracting more customers. 

On the consumer side, people are now using their devices to upload documents, make claims, use mobile apps for payments, and receive updates about their insurance policies. This shift has made insurance a much more fluid and seamless experience within people’s lives and consumer expectations have been pushed high—largely thanks to similar disruptions in other areas. 

How insurance companies can achieve digital transformation 

What are the key ingredients to navigating digital transformation in insurance? The key is to become more customer-centric. Consumers now engage with insurers via multiple channels. They research products, recommend and share them across several channels—often before even committing to a purchase. Therefore, digital insurance providers need to combine all the key components that drive exceptional customer engagement. 

Here are the main areas where you can align your systems with customer demands: 

  • Innovation and agility. Allow customers to engage online and offline with reduced direct human interaction, except at key touchpoints (e.g., online chat). 
  • Company culture and workforce. Train your team members, executives, and partners on insurtech products and how to better engage digital customers. 
  • Interactive design. Develop seamless shopping experiences that include clear instructions at each stage and transparent upfront pricing. 
  • Data and analytics. Harness customer data to better understand behaviors and use insights to deliver better-informed purchase decisions. 
  • Governance and policies. Establish clear rules and guidelines for every product and policy to ensure full compliance. 
  • Risk and cybersecurity. Update all cloud systems, sites, and apps to protect data and privacy and ensure GDPR compliance. 
  • Digital architecture. Develop robust omnichannel digital experiences for your customers and clients. 
  • Customer dashboards. Differentiate your products by creating personalized dashboards for customers. 

The insurance disruptors embracing systems and processes like these, as well as customer-centricity and digital channels, are  rapidly becoming some of the most significant players in the industry. For longer-standing insurers, there are three key phases to transition through to become established digital disruptors. 

The insurance digital transformation phases 

Insurance companies can steadily transform into digital insurance providers (and even disruptors) with a clear roadmap. Initially, insurers looking to adapt should perform a comprehensive audit of their situation, systems, and infrastructure before planning which processes and parts of the organization will transition to digital. Performing a pre-transformation review like this will help with prioritizing investments in specific business areas and establishing digital processes.  

Long-term evolution with near-term added value is the most effective strategy to drive effective digital transformation, and there are three primary phases to achieve this:

1. Evolving. Includes insurers at the beginning of realizing the potential digital transformation holds. Begins with working on several initiatives to automate internal processes and recalibrating their business model to adapt to upcoming changes (e.g., mobile apps, integrated systems, digital processing, and customer portals).

2. Matured. Includes organizations that have adopted digital technologies and enterprise portals (e.g., big data, predictive analytics, and smart business models) as they adapt to emerging trends and rapidly develop and launch new products.

3. Optimized. Insurers developing solutions to meet current consumer demands and industry pain points by analyzing systems, consumer experiences, and innovative products. 

Identifying which phase you presently sit in will help align your development steps and goals (and help you prepare for future trends too). 

Emerging insurance digital transformation trends 

Fortunately, the global insurance industry is set to make a strong recovery in the coming months—with premiums recovering and emerging markets gaining an advantage. Furthermore, most insurance trends over the next year will be driven by new technologies and innovations streamlining processes and improving the customer experience.  

The main insurance trends set to grow in 2021-22 include hyper-personalized experiences, holistic insurance planning, and ethical commitments: 

Hyper-personalized experiences 

Insurers are harnessing new technologies to tailor their services to customers’ individual needs and shift from offering fixed cover to proactively preventing claims. Leading the  customer-centric trend are tailored products and fairer premiums. Driven by big data, insurance products are becoming more flexible every year. Millennials and younger age groups (i.e., customers in their 20s and 30s) are now some of the biggest population groups. Finding new ways to market insurance products to these tech-savvy groups is vital to stay competitive. 

Indeed, younger generations expect (even demand) greater product personalization and higher customer engagement—meaning insurers need to brush up on their digital skills. For instance, drawing on data from IoT devices (e.g., wearable fitness trackers and car telematics) is a simple yet effective way to personalize insurance products for discerning younger customers. This way, customers feel they are getting good value on insurance products that are priced according to their needs and behaviors. 

Holistic insurance planning 

To build long-term resilience against systemic threats, forward-looking insurers are shifting from functioning as closed providers to operating as strong, resilient networks—including health and wellness products, venturing beyond insurance, and offering niche products. Health and wellness are at the forefront of customers’ concerns. Insurers have responded by bolstering their medical and life cover with an array of digital health and wellness products and services. Carriers that quickly establish a strong presence across the health ecosystem will be set to gain a big advantage over competitors. 

More insurers are venturing beyond insurance too. Advances in digital technology are opening a host of opportunities for insurers eager to expand beyond their traditional markets. The flat premium revenues and low investment returns predicted for 2021 are set to accelerate this trend. Indeed, many carriers are likely to announce surprising partnerships as they look to broaden their revenue base. 

Niche products are beginning to shine with insurers launching an array of innovative risk-management offerings. Demand for tailored products (e.g., small business continuity cover, cyber threat protection, pandemic insurance, and event-cancellation policies) are set to increase. Interest in insurance products aimed at specific demographic groups—such as young adults or retirees—is also looking strong and presents partnership opportunities for traditional carriers and insurtechs. 

Ethical and “green” commitments 

Driven by consumer expectations, many leading insurers are taking an ethics-driven role and shifting from providing blanket policies to stepping up as responsible guardians. As fossil fuels continue to lose favor, insurers are stepping up their commitments to green energy and some carriers may well cut ties with companies that fall short of their own “green” policies. Auto insurers may introduce incentives for customers to switch to electric cars, and some may even announce their intention to stop providing cover for petrol and diesel vehicles altogether. 

Indeed, many see sustainability as the future and insurers will likely come under growing pressure to demonstrate their support for sustainability initiatives addressing climate change, environmental pollution, and social injustice. Proactive insurers that make visible changes across their organization to address these issues and become truly “sustainable insurers” will very likely outshine competitors. Plus, they will strengthen their brand and avoid having to catch up with regulatory requirements that could be mandated later. 

Open a digital disruption channel directly to your customers 

These tech trends are paving the way for the future of insurance. In their wake, they are enabling insurers to create new products that suit younger generations and generate savings brokers can pass on to their customers. Insurance providers who embrace digital disruption early will be set to gain a significant competitive advantage and be well equipped to adapt to future trends. 

Gambit’s innovative and personalized life insurance products can help you open a digital distribution channel directly to your customers while reducing costs and increasing your bottom line at the same time. Automation,  client centric processes and services, and open architecture are all key elements to delivering our  customer centric insurance products and services. 

View our digital insurance products and request a demo to see how they can help you begin your digital disruption journey!