As the insurance industry pivots toward a digitized future, insurers are slowly but surely allocating more resources toward innovative technologies. But these new technologies are not enough to pave the way to a more intuitive and efficient insurance value chain – insurance companies must also reshape the way they operate.
Recent research from Accenture shows the time to do this is now. Insurers with future-ready operations are 2.8 times more profitable and 1.7 times more efficient than their peers. Yet only one in 10 insurers is at that stage. How can insurers get there? Here are three ways.
1. New tech-shaping operations
Insurance companies have traditionally invested in complicated core IT systems. That focus has recently shifted toward software-as-a-service (SaaS) applications, resulting in two key benefits:
First, instead of wasting time on IT maintenance, insurers can leave most of that work to the third-party software provider, concentrating on promoting growth and catering to customer demands, while lowering hardware and software costs and providing greater data security that’s baked into SaaS solutions.
Second, switching to SaaS applications can reduce the manual work linked to running legacy processes in-house. This is relevant for a wide variety of tasks, including distribution, operations and HR administration.
Alongside SaaS, other automated processes, digital applications and advanced data analytics are also proving transformative. When combined, these capabilities bolster the information gathering and document review stages of the insurance value chain, allowing customers a greater degree of self-service during the underwriting and claims processes.
2. AI and IoT
Two promising technologies emerging for insurers are artificial intelligence (AI) and the Internet of Things (IoT).
AI allows insurers to automate many of their most complicated and time-consuming tasks – everything from addressing customer questions and assessing risk to detecting fraud and even reducing human error in the application process. According to Deloitte, 98% of insurance executives believe such “cognitive computing” will play a disruptive role in the industry.
IoT technologies can also reduce manual intervention in claims and pricing, freeing time for agents to focus on higher-level tasks. According to a McKinsey report on technology and the insurance business, “Industrial IoT can enable real-time monitoring of equipment to allow for predictive maintenance before claims happen.”
For example, in home insurance, adding IoT building sensors that can relay data regarding risk and damage means there’s less need for in-person visits by claims adjustors. Similar IoT tech integrations on roadways, at work sites and in business can also prevent insurance losses by allowing insurers to perform dynamic risk assessments leveraging real-time data.
See Also: 4 Initiatives That Unlock IoT's Value
3. Getting future-ready through operational maturity
These advanced technologies can help insurance companies provide better service and reduce expenses. But not necessarily on their own.
How can insurers make sure their operations are primed to integrate these innovations and are poised to reap the benefits? Perhaps the most important starting point is: “Know your end goal.” This means prioritizing the stakeholder experience and ensuring that your business and technology run seamlessly in unison.
As stakeholders come to expect a more tailored digital environment, it’s essential that the business and technology sides come together. Start by envisioning your goal for reaching future-ready operations and building a strategy that provides an optimal experience for all stakeholders. This is crucial because, with the industry leveling and products and offerings fast becoming commodities, very soon the only aspect that will set players apart will be customer experience.
Reaching a heightened operational maturity level won’t look the same for all insurers, but there are several fundamental steps that are widely adoptable.
McKinsey reports that automation will be one of the top tech trends in transforming the insurance industry over the next decade. Automation holds a wide range of applications and is about more than just reducing the cost of work: Automation should augment human talent as well.
Here are two examples:
Natural language processing (NLP) has the potential to ease resource constraints and promote enhanced customer service strategies. NLP-powered chatbots can answer frequently asked questions, generate price quotes, provide account support and more, with little to no effort needed from human agents. GEICO’s AI chatbot “Kate” is a good example of automated progress in action.
Another type of automation, robotic process automation (RPA), changes the way insurers operate by improving back-office processes as well as customer-facing services. Servion Global Solutions estimates that by 2025, AI will power 95% of all customer interactions, including both telephone and online conversations.
AI fed by burgeoning data sets can help insurers scale, too. Most insurers recognize the importance of having good data, but the situation could be made even better by breaking down inflexible organizational structures that trap data in silos.
Because AI gets smarter over time as it and works with more and more data, the potential of AI is almost limitless.
Short-term impact and long-term effects
Futurist Roy Amara once remarked, “We often overestimate the short-term impact of new technology and underestimate its long-term effect.”
When it comes to the ever-changing insurance industry, we may already have passed the inflection point. To meet its challenges head-on, insurers must embrace a strategy that allows technology and business processes to flow together seamlessly. The good news is that, with the right technology, insurers can boost both profitability and efficiency. The more they integrate intelligence – whether from AI, automation, IoT, NLP or robotics – the better positioned they will be to meet whatever stakeholder expectations arise.
And that’s what it’s all about it – reaching a level of operations maturity to make smarter and faster decisions and stay competitive in a rapidly evolving insurance environment.