Digital transformation is pushing businesses to stay relevant among their peers like never before. But few sectors have been more highly impacted than insurance. Platform advancements, rising insurtech competition, and evolving customer needs have hastened this shift. Now, companies large and small are feeling the crunch.
From data gathering to user experience, modernizations are reshaping every aspect of the industry. The digital world and insurance changes are intersecting in new ways daily:
- Adding AI processes, such as for underwriting
- Using predictive analytics
- Creating live chat for convenient customer contact
Although many companies have expanded their online presence, others have yet to emerge. According to BDO1 surveys, among institutions planning to unite their digital world and insurance changes, only 30% have launched the process. But companies willing to adapt instantly widen their customer reach.
As the market reshapes itself, the digital world and insurance changes follow suit. For instance, a McKinsey2 report noted that 90% of sales conversions were completed in person in January 2020. But by May, respondents noted a sharp decline, to just 5%. This decrease indicates the immediate need for digital transformation. Companies unable to keep pace risk losing customers and becoming irrelevant in the marketplace.
Impact of the Digital World and Insurance Changes
While the process can be challenging, companies that jump into the digital world typically reap numerous benefits. Advantages include higher operational efficiency, expedited processes, elevated customer service, and easier scalability.
1. Efficiency in Operations
A comprehensive benefit is the ability to streamline operations. On the front end, customers receive easier access. For example, by employing apps, companies enable customers to problem-solve on their own.
On the back end, the information collected from the apps can be used to better inform agents. The data can apply to underwriting, policies, marketing, and more.
2. Quicker Processing
Digitization also allows for more efficient processing. Policies can be written quickly, and claims can be submitted via apps, expediting every element of service.
Since automation decreases the paperwork done by hand, it also reduces the risk of human error. With a merge of the digital world and insurance changes comes higher accuracy. Likewise, new systems can extract data from documents and quickly identify fraudulent claims.
3. Improved User Experience
With easier access to service, including live chat and apps, customers come away satisfied. Online systems provide a more tailored experience, allowing instant feedback for users and fuller research tools for brokers.
As a bonus, this customized experience also aids with marketing. By collecting data, analytic systems better target potential customers, generating higher value for future clients.
4. Easier Scalability
When the digital world and insurance changes align, companies instantly expand their reach. Now, agents can engage with clients worldwide, utilizing video calls and chats to offer their services anywhere, anytime.
While implementation may seem challenging, the benefits far outweigh the negatives. Online insurance companies gain a strong competitive edge over those that are slow to embrace digital transformation.
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1“2021 Financial Services Digital Transformation Survey.” BDO, 2021, www.bdo.com/BDO/media/Report-PDFs/Digital%20Transformation/2021-Financial-Services-Digital-Transformation-Survey_web.pdf.
2Kaesler, Simon, et al. “How Insurance Can Prepare for the next Distribution Model | McKinsey.” McKinsey & Company, 12 June 2020, www.mckinsey.com/industries/financial-services/our-insights/how-insurance-can-prepare-for-the-next-distribution-model.
The Impact of Digital Transformation on the Insurance Industry