The evolution of the insurance industry over the past decade has seen insurance digital transformation projects go from “nice to have” to “must have”. Spending on technology tools in the insurance industry looks set to increase by more than 25% over the next few years and we are yet to see the full impact technologies like artificial intelligence (AI) and machine learning will have on the industry.
What is clear is that the insurance industry is on the cusp of change and we are entering into a dynamic period for the industry as a whole – a period where agility and the ability to embrace digital transformation will play a decisive part in the battle for market share.
To help you figure out the best way to make a digital transformation at your insurance company, we have put together an all-encompassing guide that covers the evolution of the insurance industry, some best practices, insurance digital transformation tools, and some practical advice on how to successfully execute a digital transformation at your company.
Definition of Insurance Digital Transformation
Before we go any further, it is worth considering what exactly is meant by insurance digital transformation?
Digital transformation, in general, refers to the integration of digital technology tools into a business to create a new, more efficient operating model. Digital transformation transcends any system or function within an organization and, instead, lies at the heart of how a company operates its business. As much as digital transformation involves the implementation of new technologies, it is much more than that.
Technology, undoubtedly, is at the core of digital transformation and can act as a catalyst, but true digital transformation requires a fundamental mindset shift within the organization where leadership, culture, operations, and customer-facing teams are aligned in a cohesive and agile unit. To make this transformation a reality, revenue channels will need to be assessed and updated and so too will the organizational and talent model. Then, and only then, will insurance companies be able to put themselves in a position where they will be ready to embrace the next stage in the evolution of the insurance industry.
The Evolution of the Insurance Industry:
Developments in technology coupled with an ever-increasing set of customer expectations has sparked a paradigm shift in the insurance industry – particularly around the area of customer experience. Today’s insurance landscape is shaped by many disparate elements including emerging insurtech companies, legacy insurers, and digital giants making a foray into the insurance space further blurring the lines between the traditionally separate spheres of insurance and tech.
From the customer side, the heightened expectations around customer experience are shaped by the seamless services provided by companies like Uber. When it comes to the insurance industry, we are certainly witnessing an element of Uberization. For Gen Y and millennial insurance customers, friction is no longer acceptable. The growth of insurtech companies has been fueled by the younger generations who have little in the way of loyalty to traditional insurers and possess neither the patience nor the desire to partake in a customer experience that inconveniences them in any way.
The result is the situation that exists today – the digital transformation of the insurance industry is already well underway and those companies that fail to evolve will be left behind. Insurance companies who rely on inefficient legacy tools and processes will, over time, lose ground to companies who embrace digital transformation technologies that can both reduce costs, improve the customer experience, and, ultimately, drive revenue.
Insurance Digital Transformation – 6 Steps for Success
Having taken an in-depth look at the changing dynamics of the insurance industry, the question arises – how can an insurance company succeed in this digital age? To help you answer this question, we have put together 5 digital transformation tips for insurance companies. Some of our tips are quick wins that are easy to implement, while other tips refer to the all-encompassing nature of true digital transformation and require larger, more structural changes. All are worth considering as part of your digital transformation initiative.
1 – Think Holistically
Remember, digital transformation goes way beyond an updated tech stack. As a digital transformation leader, you need to think big. Focusing on isolated technology and system implementations will limit the impact of any digital transformation project and might prevent your company from getting the most out of any new tools introduced. There are many strands to a digital transformation project including strategic planning, talent development and acquisition, technology implementation, culture refocus, change management, and analytics. In addition, digital transformation will be an ongoing process, so think iteratively and seek out continuous improvements.
2 – Build cross-functional support
If thinking holistically is your starting point, it follows that building cross-functional support should be your second priority. A digital transformation leadership team should ideally consist of leaders from various functions across your organization. However, if the situation at your organization is different, you should take the time to loop in leaders from claims, finance, legal, marketing, and underwriting. Digital transformation does not work in silos. Insead, liaise with department leaders and involve them in the development of your strategic goals. You will need the support of power brokers from all across your company for any digital transformation initiative to succeed.
3 – Cultivate a Digital-First Culture
The often-heard maxim that culture is more important than strategy is not without merit. While there may be some degree of oversimplification in the famous “culture eats strategy for breakfast” quote, there is an element of truth here. If the culture is wrong, the best laid plans for a digital transformation at your insurance company will fail miserably. Digitalization and a “digital-first” mindset must be embedded in teams all across the organization.
Building this culture must be a key part of your digital transformation project. There are a number of steps you can take to build this digital culture:
- Ensure management leads by example – If your insurance company is investing heavily in a digital transformation initiative, but you and other senior figures at the company do not implement new digital tools and processes, then these behaviors will cascade down through the organization.
- Break down silos – Digital transformation does not work in a silo. One way you can remove silos at your company is by creating cross-functional teams that work towards shared goals using new collaboration tools. These teams – with their shared metrics and a focus on continuous digital improvement – can help you to implement your digital vision.
- Reward stand out employees – If, for example, an employee in claims or underwriting figures out a process improvement, they should be rewarded and held up as an example internally of the type of digital mindset your company values.
4 – Identify Quick Wins
With your plan starting to take shape and an exciting digital future ahead for your insurance company, it is time to identify some quick wins. Quick wins are those projects or tasks that are quick to implement and show ROI. If you can identify some quick wins in your digital transformation project, it will help you to build momentum and support internally.
One example might be looking at alternatives to email for customer document collection. Today many insurance companies are still using email to collect customer documents and information which is wildly inefficient and can lead to issues around compliance and security. Tools like PlanetVerify provide insurance companies with an alternative and highly secure document collection method that is quick to roll out and will help you to show some very demonstrable process improvements to senior leadership.
5 – Eliminate Legacy Processes and Systems
Similar to the example of email above, updating legacy tools and processes is a key part of any digital transformation effort. The first step is assessing your company’s current state and identifying what exactly needs to be done for your digital vision to become a reality. Depending on the size of your organization, there might be a level of pain associated with updating a legacy system, so you will have to weigh up the amount of work involved, the rewards, and how long before you can demonstrate time-to-value.
There will be some low hanging fruit in there too though. The use of email for customer document collection is one example and, for some insurance companies, there are still some paper-based processes that need to be digitized.
6 – Identify Digital Transformation Champions and Super Users
User adoption is key and you will need to figure out ways to boost the adoption of any new systems. One best practice here is to identify tech-savvy employees across the organization who can act as super users on any new system. Enthusiastic internal champions who will bring along their fellow team members will go a long way to making a new system a success.
Kickstart your digital transformation!
Transform the way you collect and share client documents and data. Save time, improve client experience, and ensure data compliance. Try PlanetVerify for free today!LET'S GO!