How the Insurance Industry Can Significantly Improve Operational PerformanceAdd bookmark
Change is Now...
Now is a particularly significant moment for the Insurance industry, which risks lagging behind in what McKinsey calls its “digital maturity.” It’s an industry notoriously resistant to change, having proved remarkably resilient for a long time. But the industry is starting to feel the effect of the digital wave – or rather, what it feels like to be missing it.
Today’s customers demand the automated simplicity they have come to expect in their private lives in their professional lives, too. Where they are satisfied, they will stay. The improved experience through data-driven engagements promises to be productive across a range of factors: cost, cross-selling, more tailored products, innovation.
Insurance, traditionally characterized by fragmented, intermediated relationships often delegated to third parties, is waking up to the modern, digitized age, however – though somewhat unwillingly. An archaic industry, it is defined by complex regulations, various stakeholders, and multiple handovers. Policies are painstakingly researched, written, amended, updated, and renewed … with lots of crucial data entered and shared, again and again, across multiple parties.
Driven by the disruption of the pandemic, the inherent inefficiencies of insurance processes have come under the spotlight as customers’ expectations around real-time service, digital access, and improved experience are not adequately met. The solution is simple, but complex: data must be rendered digital, so that it can feed analytics, drive automation, and provide the customer insights that are sorely needed to keep up in today’s markets.
Know the Data = Know Your Customer
For insurance, that means digitized data ingestion at the initial point of entry. Why? Because customer experience lies at the heart of insurers’ success, and that means ensuring you really know your customer’s business. Every data point is valid, and all data points need to be integrated and connected to drive optimal proposals and decisions. Speed and accuracy are of the essence. The journey starts the moment you gather the first data point that sets off a chain of events culminating in a written insurance contract.
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With the majority of incoming data still largely in unstructured format, however (paper, handwritten, emailed, etc.), the primary concern must be to first read and recognize, and then convert this data, quickly and reliably, to a digital format that feeds all downstream processes and activities.
Up to now, commercial insurance customers have, by and large, patiently accepted lengthy and bureaucratic processes that are not tailored to their specific needs or demands. However, the digital wave is changing all that. Consuming insurance will soon be no different to consuming a video on Amazon. Options will self-populate, alternative prices will be shown … anyone who gets ahead of the curve will benefit from first-come.
The impact of data-driven digitization extends beyond customer satisfaction (and retention). Efficient insurance processes require fewer resources and less time. Where reliable data drives proposals, these cycle through more efficiently. There are also powerful opportunities to identify and drive additional revenue through cross-selling and new business potential. Operational and administrative costs are reduced by more effectively leveraging data and automation to verify policyholders’ identity and contract validity, register claims, and enable third-party confirmation of a claim’s validity. Today, understanding your customers, your business, and the potential for expansion hinges critically on data. Never has it been more important to ensure that data is usable by digitizing it the moment it enters an enterprise.
One critical element that will need to change is how commercial insurers are currently set up. A digital-ready operating model is one in which IT works closely with all other parts of the business. Yet, most commercial insurers are still organized around functions such as risk, underwriting, claims, marketing, and sales. That operating model is not conducive to embracing opportunities to transform.
Furthermore, the customer needs to be central to the transformation journey. Siloed functions tend to have specific focus areas, not all of which align to the end-customer’s experience. In addition, these siloed functions are often too rigid to be able to respond rapidly to change. As part of the pivot to better servicing customers, therefore, internal partnerships will need to be reassessed.
Next time: Rethinking the Digital Strategy