27 Feb Insurers Face These Digital Transformation Challenges
Businesses are incrementally adopting digital practices to gain competitive advantage and distinguish themselves from their competition.
Technologies like AI and ML have brought in these drastic advancements to help businesses get the most out of their offering and provide the most value to their customers.
While most industries were quick to align their business goals with the changing market trends, the insurance industry was not fast to respond to the change.
But now, it’s time for the traditional insurers to buckle up.
Startups in insurance technology like Lemonade Insurance are gaining ground in the market with their quick solutions and rapid claims processing.
This leaves the traditional insurers with no choice but to use to their advantage technologies that help them get the most out of their years of experience, allowing them to stay in the game.
So, what should traditional insurers be doing to stay in business?
Consumer habits are changing every day.
This is forcing insurance businesses to keep in constant touch with them to know what is changing.
Digital technology allows for this with its quick data processing and analytical capabilities.
By closely studying these changes, insurers can draw an understanding of changing consumer trends over time and even make predictions of future behavior.
To categorize broadly the changes that traditional insurance companies must make:
- Focus on the customer: Today, businesses are turning their focus to the customer.
Business delivery is continuously evolving to meet customer expectations and staying competitive without delivering on customer needs is no longer possible.
Brands are building their business by simply helping customers with solutions that they require.
So, it’s pretty obvious, the traditional insurance players need to understand the vibe of their customers as well as where the market is headed and realign their strategy to meet this requirement.
- Upgrade legacy infrastructure: Insurance is an age-old business.
And, most big players have been following the traditional model of operating.
However, with new technologies like RPA, AI, big data and IoT changing core processes like underwriting and also the way customers see insurance services, it’s about time that the industry responds to this expectation and embark on digitally transforming their operations.
- Skills gap: Digital transformation will evoke the need to find the right talent and skills to accelerate the pace of adoption.
Insurance players would also have to extensively train their existing talent on the new platforms and methodologies to make the most of the transformation.
While these changes point towards new opportunities, getting started on the digital journey is not an easy task.
However, most insurance companies do not recognize the challenges when they happen.
And, that opens up the need to identify the roadblocks as they happen.
Therefore, to bring them to the fore, they are:
Challenges traditional insurers face in digital transformation
1.. Rebuild trust by delivering great experiences
Insurance is now an industry driven by customer experience. A survey by EY has found that 40% of consumers decide to continue insurer relationships based on the quality of the experience.
Now, customers want to purchase insurance just like they purchase any product on Amazon, by just looking at their options and clicking “Buy Now”. And they want to do it on the channels they’re on like mobile, laptops and so on.
Together with this, the agent and broker portals that are difficult to use, greatly affecting the user experience.
Therefore, the challenge would be in reworking insurance delivery models and making easy-to-use models of agent and broker portals.
2. Align experience and new ways of reaching customers
Insurtechs are transforming the way customers approach insurance and this has shaken up the predominantly traditional industry.
Insurtechs are leveraging the power of technology to provide quick and personalized solutions. To top this, traditional players need to think of how they can deliver beyond what the startups are delivering.
The challenge for insurers would lie in leveraging the deep expertise and experience they have and aligning delivery with digital models of reaching their customers, policyholders, agents and partners.
3. Delivering a seamless experience across countries
Traditional insurance players operate in multiple geographic locations.
Therefore, they need to understand the different regulations set by different countries and need to work on delivering a seamless experience for their customers across locations.
The challenge for insurers would be in customizing their solutions to meet customer requirements across the different locations that they’re present in.
4. Connected digital ecosystem
The rising competition in the insurance sector is making it necessary for businesses to connect with other companies to grow the potential of their services.
To deliver an end-to-end service to a customer, insurers would have to collaborate with various products or services.
This poses a unique challenge for insurance players as they would have to connect all the different components an insurance agency requires to ensure a smooth experience for agents, brokers, customers, and merchants.
There are several challenges facing insurance companies as they move towards digital transformation. Insurance companies need to focus on identifying the opportunities that these challenges pose and overcome the challenges to stand out from their competitors.