For some time the industry has been under pressure to digitally transform its services to provide more efficiency and better customer experience. This is no easy task.
Convincing insurers to put down paper trading slips and take up an iPad is a huge cultural change in itself, that’s before even considering how best to migrate legacy systems and all the other difficulties that come with it.
For this reason, insurance has perhaps lagged slightly behind in its use of digital. And to some degree, businesses have been able to get away with it by citing their long-standing reputation as a traditional and trusted institute that does things ‘proper’.
While this may be true, it’s no longer enough. Technology companies with insurance capabilities have stormed in with the ability to offer cheaper and faster services. All this has accomplished is to strengthen the customer’s expectation for services at the click of a button.
Therefore, if you’re an insurance business that’s aiming to meet these needs, as well as continue competing in this space, you’ve got to take a leaf out of the tech-savvy competitor’s book. Now is the time to consider how you can integrate technology across your business, from underwriting to customer services.
Many have put off dealing with the issue, but now with the strain placed on systems as a result of COVID-19, this is no longer possible or sustainable.
Cancellations around every corner, an increase in deaths, and pauses to trade have accelerated the number of claims or requests for advice astronomically. Even for insurance companies who have digitally transformed, it’s been a busy period. So, for those who lack an integrated digital system, this year has no doubt been overwhelming, and mistakes and wait-times have likely increased – jeopardising business all the more.
Why and how digital transformation can help
There are two areas that need to be considered when digitising services to meet customer needs. Firstly, you need to give yourself time to innovate what the customer wants. Secondly, you need to actually understand what the customer is looking for.
Automating processes can improve the time it takes to process claims and answer queries as soon as it is implemented. This is a useful quick win to convince employees who may be sceptical of incorporating tech into their processes. Plus, the time automation gives back to the company can then be used for innovating new digital services that may take longer to build and scale across the company.
This innovation should, of course, be informed by what your customers need. And a common mistake is digitising for the sake of it. Your transformation should be backed by customer insight, which can be gained from data. This data should provide a clear picture of challenges the customer is looking to resolve, as well as indicate what they’ll expect further down the line. Essentially, it’s about keeping your finger on the pulse.
Obstacles hindering the sector’s embrace of tech
Your business’ past can haunt you when digitally transforming. This can be a huge hindrance on progress and can take a great deal of time to resolve. Therefore, it’s important to be prepared for these threats prior to them appearing.
Legacy systems are one of the main contributors to slowing down processes and creating inefficiencies. It’s common to feel apprehensive about moving away from your legacy system, especially if you’ve invested heavily in upgrades and add-ons.
However, you’ve got to ask yourself what the riskier and more challenging option is in the long run – continuing to use a complex legacy system or transitioning the legacy system? My advice is that the latter is the more sustainable option for long-term success, and this is what insurance businesses should be aiming to do.
Another challenge that must be dealt with upfront is skillset. Your employees’ skillsets may not be relevant for creating and integrating your future system. This creates a lack of resources and can strain IT teams who are usually the only people to already possess these skills.
As I’ve said already, preparation is key for digital transformation in the insurance sector, so you must have enough skilled employees to manage this transition.
Additionally, digitally skilled employees should sit within different areas of the business to prevent a concentrated strain on a single team. It’s also important from a cultural perspective because everyone needs to be bought-in and wanting this transformation to work.
Low-code’s role in the transition
For a lot of businesses already battling with overwhelming levels of work, upskilling staff from across the company in coding and system integrations just isn’t realistic, despite being ideal.
An alternative which has been rising in popularity over the past few years has been low-code. While its compatible with migrating and building upon legacy systems, it doesn’t require coding-specific expertise. I would describe it as having a copy and paste quality, which can be modified to individual business needs.
This enables those who may have great ideas about how to digitally transform the insurance industry, but might not have the technical knowledge to do so.
Essentially, it widens the amount of collaboration that can occur on a digital transformation project. In turn, this creates collective ownership which leads to everyone in the business wanting to succeed.
Ultimately, the combination of technology and collaboration achieves three important objectives for insurance companies looking to transform:
- Operational capacity is increased to meet growing customer demands.
- Digital transformation projects meet your firm’s needs.
- Firms are better able to compete with Insurtech rivals.
Automation, data, and low-code can all act as vital tools throughout these changes. And this is imperative because it’s these digital changes that are going to help the insurance industry to catch up with those ahead of it.
By David Kuhn, Insurance Solutions Director at Mendix