February 13, 2019
How Agencies Must Embrace Tech in 2019
by Mike Furlong
While some insurance agencies have made updates to embrace disruptive digitalization, most are still woefully out of date.
When is the last time a P&C insurance application or renewal was a simple and comprehensive process? Chances are the applicant spent hours going through extensive and repetitive paperwork, much of which was the same information that was provided last year. The insurance agent likely spent an equally lengthy amount of time reviewing, reminding and processing. While some insurance agencies have made updates to embrace disruptive digitalization to alleviate these problems, most are still woefully out of date — causing incredibly inefficient work, unorganized communications and old-fashioned experiences for customers. The industry has reached a breaking point: Embrace insurtech or be left behind.
The U.S. accounts for $558.2 billion across P&C insurance, and changing trends have created a chance to establish a robust technology plan and take the necessary steps toward better business to compete in a highly competitive market. Established insurance agencies need to invest in insurtech if they want to compete with lean, mean and hungry startups. By leveraging new technology, agencies can address persistent challenges and take advantage of new opportunities.
Establishing Digitalization is Everything
There’s no one playbook or single solution to meet the digital age for all businesses. Without recognizing a move to a digital and on-demand world, companies can’t avoid falling behind their competitors and fading away. We’ve seen time and time again companies that fail to embrace change. The entire video rental industry went obsolete when Netflix and Hulu burst on the scene. An inability to transform like Walmart is what doomed lesser big box retailers. While a major shift like that has yet to occur in the insurance sector, no agency wants to be known as the Blockbuster or the Sears of the industry.
While the industry has been notoriously slow to adapt to the digital age, it is certainly not immune. Many insurance agencies have made a basic digital migration out of sheer necessity, but the challenge of how to stand out from competitors remains. Nine out of 10 insurance companies identified legacy software and infrastructure as barriers for digitalization. But simple changes like embedding digital capabilities directly into business models can produce big gains.
See also: Embrace Tech Before It Replaces You
For example, establishing a rich, secure database of digitally enhanced “smart” insurance forms and carrier applications that are regularly updated can save an agent significant time. Customer segmentation software can use data to strategically target and retain customers to make acquisition more precise and less of a guessing game. Risk management programs can calculate accurate policies to avoid having to make costly adjustments months or years later.
Pushing to evolve your administrative workflow with basic digital innovations is incredibly valuable to progress and process.
Improving Inefficient Operations
One of the fundamental roles of all technology is to make life easier for people using it. When enforced properly, technology can increase efficiency for internal and external processes. Seamlessly consolidating basic functions, which normally cost staff and customers inordinate amounts of time, can drive productivity and services with ease. Those who move fastest reap the most reward. The big challenge in 2019 is to enforce these processes.
Insurers that implement new internal tools like cloud management drive productivity from start to finish, increasing efficiency and ultimately saving resources by doing so. The tools also improve services like underwriting and claims. The ability to use real-time data to analyze the effectiveness of a workflow can better inform business decisions and can even help determine how to improve the agent-customer business relationship.
With that data as a technological foundation to a rejuvenated workflow, agents are able to get key information from a client or prospective customers through simplifying communications and streamlining tasks. This, in turn, delivers the kind of efficient experience that modern customers have come to expect.
Agencies that are hesitant to adopt any overwhelming innovation can look at it this way: Capitalizing on technology now would only enable stronger relationships in the future. Studies show these digital-minded insurance companies also generate revenue about 10% higher than the industry average, and are 20% to 30% more profitable.
Modernizing the Customer Experience
Ultimately, the consumers choose the winners and losers in any industry. Consumers have come to expect a certain level of customer experience that an agency cannot offer without incorporating technology. Customer experience is the foundation of the insurance industry, and a large part of that experience in this day and age comes from technology.
In today’s constantly connected world, insureds expect to be able to access their insurance information and documents digitally and certainly on their mobile devices. The bad news is that only 15% of insureds are satisfied with their insurer’s digital experience. The majority of customers are already accustomed to completing other non-insurance tasks online and will choose agencies that offer a simplified tech solution over ones that do not.
However, the power of human interaction remains an important part of the customer experience. Technology will empower insurance brokers to do their jobs even better, in a fraction of the time, while offering better service. The aim of technological advancement is never to replace the broker, as people often worry, as 57% of consumers prefer talking to a real person throughout their digital experience.
See also: 3 Technology Trends Worth Watching
There is a younger class of business owners who are founding companies, almost all of which will need P&C insurance. According to one Gallup poll, millennials are more than twice as likely as all other generations to purchase their personal health insurance policies online rather than through an agent. Conversely, millennials are the least likely to be fully engaged — and the most likely to be actively disengaged — with their primary insurer. This trend will translate to commercial insurance as more millennials become business owners. These younger business owners are inherently going to be more attracted to agencies that offer a tech solution to simplify the application and management process than those that do not. According to a PwC study, 70% of business owners who purchased personal insurance online would like to purchase commercial insurance online. This has serious implications for insurance leaders who will look to capitalize on the fact that millennials are the largest generation in the U.S. and will grow to dominate the market.
With tech-empowered customer experience (CX), digital tools will attract and retain customers by automating tedious tasks. For example, there are technologies that make it a possibility to set automated “smart” reminders, saving agencies the time and hassle of having to follow up and remind clients to complete certain forms. The technologies also significantly reduce risk for errors and omissions, which can result in inaccurate or even a lack of coverage. These can be costly in both time and money to update.
Some technologies allow users to log in to online portals or platforms from anywhere with an internet connection, to find their insurance forms, applications and documents. This omni-channel experience is a drastic improvement over the old way of looking through old filed paper documents, sifting through old emails or searching hard drive files.
Those services and that key information can offer a near-complete customer view, with 75% of consumers noting that such engagement tools will enhance their experiences. As such, modernizing the customer experience has empowered all parties involved with increasingly sophisticated insurance.
Many agencies have rapidly embraced technology, but so many more can still benefit. Their inadequacies and deficiencies will become more visible in 2019 and beyond the longer each waits to embrace technological innovation. Whether it’s to streamline systems or increase internal efficiency, agencies must embrace technology if they want to remain competitive beyond 2019.