The future may be difficult to predict, but it doesn’t have to be difficult to prepare for. Insurers are having to deal with the difficult new business, investment and regulatory environment resulting from the financial crisis. However, the industry also faces much broader challenges. Changing demographics, the growing power of emerging markets and changing consumer behavior will all help shape the longer-term future of the sector.
Digital technology is a global megatrend that is transforming a variety of industries, including insurance. The insurance sector has been a bit slow in adopting IT due to rapid technological change and because their distribution channels are still conservative, ie handled by agents and brokers and actually unwilling to adopt new technologies. However, customer adoption of digital technologies including social media, smartphones, electronic transactions, etc., enabled by cloud service models, e-commerce and mobility are affecting the technical and commercial capabilities of many insurance companies. Insurers are quickly benefiting from this trend.
The factors that we believe are driving these changes can be broken down into the following categories:
Social: The balance of power is shifting towards the customers.
Technological: Advances in software and hardware that transform “big data” into actionable insights.
Environment: The emergence of more sophisticated risk models and risk transfers to address the increasing severity and frequency of catastrophic events.
Economy: The Rise of Economic and Political Power in Emerging Markets.
Political: harmonization, standardization and globalization of the insurance market.
Important business drivers for IT implementation in insurance:
Engaging customers across multiple channels of customer interaction and engaging all age segments
Strategize to incorporate the growing investments in Internet and mobile channel strategies for faster and instant communication
Work with partners to bring innovative products to market in areas such as microfinance, wealth management, etc.
Automate underwriting processes using data analytics and business intelligence (BI) and predict fraud analysis and risk analysis in real time
Use the bancassurance banking systems and regulations available in each country to explore cross-selling insurance products, especially in emerging markets like India
While 63% of insurance companies say they are ready to shift to more digital practices, only 23% of those companies are ready, according to a joint study by Forrester and Accenture. To accelerate this process and ensure a successful transition to digital workflows, there are a few key areas that insurers will consider as they strive to create more automated, user-friendly processes.
Comprised of cloud-based and on-premises infrastructure
Just two years ago, 84% of businesses were working in the cloud, and more than half of those businesses reported that the cloud reduced the workload of IT teams, according to PC World. Still, IT teams in the insurance sector have struggled with what information regulators are allowed to store in the cloud or on-premises. In addition, the proliferation of legacy technology challenges the pure cloud-based approach. According to a recent report by TrustMarque, many insurance companies are using 40-year-old administration technology designed to manage the claims process. This type of technology hampers innovation, but insurance agents are a long way from immediately replacing this mainframe technology.
As the insurance sector adopts a more streamlined workflow this year, we can expect a significant increase in the deployment of technologies that can be operated via hybrid cloud and on-premise, providing ultimate flexibility for clients and clients and strong compliance with ever-changing regulatory insurance regulations.
Automation of business processes where necessary
The key to transitioning to a more digital environment and improving customer service is automating workflows where needed. With excessive social media use on the rise and across multiple channels, customers expect the ultimate in interaction and personalization from their insurance agents and brokers.
While normal face-to-face interactions between insurance companies and their customers are less common, relationships are still just as important, if not more important, than they have been in the past. As a result, insurance agents spend more time interacting with their customers and less time sorting papers, flipping through documents, and processing claims.
Customer-oriented selection of programs and systems
A Forrester Accenture report recently dubbed this year the “Age of the Customer,” in which the customer experience is at the heart of the digital movement. This means that technologies and new digital processes cannot be implemented with an administrative mindset.
Take something as simple as a digital job application, for example. While some technologies really do require three different phone numbers or two different email addresses from the customer, how convenient is that for the customer filling out the application? Today’s customers expect a smooth, intelligent process from insurance companies. While this may disrupt internal processes for the agent, the end result must be that the programs become easier to use for the customer, not just the IT team.
Social Media Analysis
Insurers are turning to social media as a marketing medium and collaboration platform. Social media is often used to network with friends and business partners. The use of social media is made easier by smartphones and mobile devices. Insurers can target new customers based on their life events and also use social media to communicate with internal and external stakeholders.
Focus on SaaS solutions
Insurance companies deploy applications by adopting SaaS solutions because of their superior infrastructure, high level of security and low risk. Insurance companies have the advantage of being able to access the latest infrastructure and IT platforms at low cost. SaaS offers a perfect solution for insurance companies to improve their efficiency with minimal capital costs.
Real-time architectures for agility
Real-time data sources are mobile technology and social media that can be used by insurance companies to become more competitive. Gathering real-time data from online channels is proving to be a gold mine for insurance companies as it provides insights into customer behavior based on insurance product strategy. Insurance companies use data analysis tools, BI platforms and data visualization tools to take full advantage of real-time data.
Data Analysis and Big Data
The ability to collect real-time data, big data and analytics play an important role for insurers with regard to potential customers. The recent trend is the introduction of sensor technologies called telematics, which are used to monitor the driving behavior of individuals. These technologies help insurance companies deliver usage-based insurance policies.
Information plays an important role in the insurance sector in relation to product pricing, development, risk management, claims processing and fraud detection. These functions can be performed by collecting data from multiple sources and using software tools to extract meaningful insights from data. In order to effectively implement insurance business, the insurance sector must adopt IT systems, new technologies and networks to collect real-time data and strengthen its data storage capacity for analysis in order to capitalize on more customers.