Effective customer relationship management (CRM) is key to successful business, especially when it comes to smaller insurance carriers, where the focus is on the client relationship. But smaller insurance carriers are falling behind on efficiency and speed. Larger carriers are gaining market share because of innovative digital tools and techniques, ranging from new data sources, robotic process automation (RPA), advanced data analytics such as machine learning and cognitive computing, to IoT (Internet of Things).
For instance, larger carriers can deliver quotes (whether personal or commercial lines) in real time and allow binding and paying online.
For small and mid-sized traditional insurance carriers, to stay relevant, and increase their growth and profitability, they need to partner with insurtechs and firms providing technological infrastructure to insurance firms.
Here are three reasons why this is necessary:
1. Competitive Edge
Insurtechs have a natural competitive edge over traditional insurance carriers, because of their lack of legacy systems and typically narrow focus. This leads to a much quicker service delivery model. What customers have expected traditional insurance carriers to deliver in weeks, insurtechs are now delivering in minutes or hours. To reduce the gap in service delivery models, smaller insurance carriers can partner with insurtech startups to yield innovation and improve efficiency.
See also: Insurtech: Unstoppable Momentum
2. Internal Efficiency
Legacy insurance carriers have slow internal processes, i.e. the long cycle between brokers, carriers, underwriters and customers, and lack of digitization of customers’ requirements or customer files. If all the file work is still actually on paper and not digital or in the cloud, then searching for and acting on information does not take seconds but takes minutes or even hours. Thus, the more digitized carriers win again. The small and mid-sized insurance carriers can overcome this gap by strategically partnering with insurtechs in a very cost-effective manner.
3. Effective and Improved Service Delivery
Smaller insurance carriers need to have an effective service delivery model, which reduces the dependence on long communication channels and is completely customer-oriented. To do that, traditional smaller carriers need to show a willingness to adapt and innovate. They need to start by identifying and then partnering with startups that can improve their service delivery model.
Small and medium-sized insurance companies should start to track investments and advances that are emerging within the insurtech community and consider partnering with insurtechs to move from a traditional service delivery model to an innovative customer-centric and technologically enabled model. Such partnerships will be mutually beneficial — the carrier will benefit from new techniques and digital infrastructure such as cloud-based services in a very cost-efficient manner while the insurtech will benefit from the carriers’ legacy customer base and industry knowledge.
See also: Insurtech: The Approaching Storm