Transforming to a Digital Insurance Ecosystem
Little has changed in the insurance industry for over a century. The insurance business processes for writing policies, collecting premiums and paying claims have remained almost the same. Recently though, new technologies have brought in much needed change and the industry is going through a substantial transformation; impacting every aspect of insurance business.
The competition in the insurance industry is growing fiercer driven by changing customer expectations coupled with the ‘disruptions’ introduced by the new generation of InsureTech companies. To stay relevant today and in future, insurers need to go through a complete digital transformation of their business – culturally and technologically. Rather than focusing on select dimensions of business, building a complete digital insurance ecosystem will allow insurance companies to stay ahead of the curve and adapt to the future changes in the industry quickly and easily.
Breaking the Myth – Traditional vs Digital Channels
Digitalizing your insurance business does not mean the end of the traditional business model. Being a digital insurance company requires more than just adding web and mobile channels to your business. To fully transform into a digital organization, insurance providers need to digitalize every aspect of their existing business and rebuild the existing channels with help of new technology. For example, an insurance company can build an Agency Portal and a Mobile App for their agent partners with the agent’s own branding. Such white labelled software products will help agents and in-turn the insurance provider to create the digital footprints of their businesses.
Insurance companies must also look at augmenting the traditional insurance distribution channels with new web and mobile channels. Digital technologies allow insurance companies to introduce additional business channels preferred by a completely different demographic which insurers were not able to tap into before. The tech savvy millennials expect their service providers to be available when and where they need served. These are the customers who do their research over the internet, make purchases online and use mobile phones for everything.
Here are the key aspects to consider while building a digital insurance ecosystem
1. Choosing a right solution and technology partner
Very easy to understand and yet most difficult to implement due to numerous reasons. Finding the ‘Right Fit of Technology and Vendor’ is the most important element for driving smoothly into the digital future. There are multiple factors insurance providers need to consider while choosing a technology partner and their solution.
Technical expertise is obviously the most important aspect. Additionally, you must look for references, existing customers and recommendations. Real-world results and success stories from reputable clients are more noteworthy than flashy technology demonstrations.
2. Striking the right balance between traditional and digital business models
The next generation mobile apps have even more to offer to insurance agencies. Existing business of insurance providers is built on the traditional insurance channels. Insurance companies must upgrade these channels to enhance their effectiveness. Digitalization of traditional channels will create cost advantage, allow faster processing of transactions and service requests and improve post-sale service. Digital transformation will also help in managing the current channels more efficiently.
Digitalization of the traditional distribution channels should be augmented with the new channels. Introducing new insurance technology will help in adding more channels to your business and enter new customer segments. Business will grow at greater speed if you are able to harvest greater benefits from the existing traditional channels along with the new digital ones.
3. Driving cultural change within the organization and across the value chain
Cultural shift is very critical yet among the most neglected facet of any transforming business. Digitalization of insurance is as much about the culture as it is about the technology. Organization culture and business strategy go hand-in-hand and altering one will always have great impact on the other. Digital transformation will require substantial changes to your organization structure, business processes and technology.
The entire organization has to go through the change in thinking process – from traditional to much broader digital thinking. Cultural change is a gradual process which requires time and significant efforts. Something that works to drive this change is to set up short-term and long-term goals for each team. Then insurers can track the progress and realign whenever necessary.
4. Customer at the center
Digital transformation provides insurers an opportunity to upgrade their business processes to adapt to the changing business environment. The customer comes first in the new digital ecosystem. Putting customer at the center will help insurers make their processes more flexible and future-ready. This approach helps insurers to shift from a transactional mindset to building new and meaningful customer relationship that will significantly improve the customer experience and customer loyalty.
For example, a Chatbot in claims process. Claims Chatbot is capable of having a meaningful conversation with the customer trying to register a claim. This Chatbot will gather important information required for the filing of the claim and will provide immediate required assistance to the customer. This reduces the efforts required from claims team allowing them bandwidth to handle more meaningful tasks. The customer too is satisfied with the quick service and immediate response mechanism which helps when they need it the most.
Transforming into digital insurance ecosystem has the potential to increase revenue, reduce business costs, unlock new opportunities and improve overall customer experience. The challenge is precise implementation of new technologies transform business processes to the core. Insurers will experience much greater benefits of digitalization by completely utilizing its potential across the organization.