Insurance has managed to weather the storm of Covid-19 better than many other sectors, but a rapid shift in consumer behaviour and the threat of continued pandemic-related disruption has forced a reckoning within the industry. Insurance leaders are expediting their digital agendas as a key bulwark against evolving industry trends that will continue to create challenges post-pandemic.
A 2021 Forrester report finds that Covid-19 has accelerated insurers’ digital transformation agendas. The survey finds that 50 per cent of global services decision-makers at insurance firms say they have implemented and are expanding their transformation efforts; a further 18 per cent are planning to implement their transformation in the next 12 months, while 11 per cent say they’re currently undergoing digital transformation.
The most common reasons respondents gave for accelerating their digitisation push was gaining improved existing IT capabilities to promote agility and innovation (41 per cent) and to improve customer experience (40 per cent). The latter is now increasingly important given the shift in consumer behaviour during the pandemic, which saw an unprecedented embrace of online services. For example, 56 per cent of insurance company Aviva Direct’s motor and home claims were submitted online in H2 2020, up from a mere 18 per cent in 2018.
All stages of the customer journey are set to increasingly play out online: Forrester predicts 83.4 per cent of new motor, property, and travel insurance sales will be digitally influenced by 2023. As customer experience becomes more tied to digital services and devices, it’s crucial that insurers keep up, and offer competitive experiences relative to other digital-focused businesses. As more customers peruse and purchase insurance policies online, it will be companies with the slickest digital offerings that will prevail.
How an investment bank boosted its financial performance through automationBy Hexaware Technologies
Automation is set to play a key role in helping the insurance industry meet evolving consumer demand by increasing operational efficiency. Insurers are eager to digitise contact centres and the claims functions – two areas that were the most stressed during the pandemic. Claims management is well suited for AI adoption because automated processes have the potential to significantly speed up claims payment.
Research shows that insurers regret not spending more on artificial intelligence before the Covid-19 pandemic. Insurers are now looking to make up for the lost time: 51.3 per cent plan to invest in cloud transformation and 46.2 per cent in data, machine learning and AI technologies.
Insurers must figure out how enterprise platforms powered by intelligent automation and artificial intelligence can be harnessed to strengthen their digital capabilities. To remain competitive, they must continue maximising their data sources and upgrading their technology infrastructure. This will also enable seamless settling of claims more rapidly, accurately, and at a lower premium.
A robust automation solution such as Hexaware’s TensaiTM will be vital for upgrading the whole stack and transforming end-to-end operations – from initial customer contact and issuing policies to claim handling. TensaiTM employs AI, robotic process automation, and machine learning to meet the changing needs of the customer, leverage advanced analytics that helps insurers grow and launch new products, ensure compliance, and modernise legacy systems.
A major advantage of automation in the insurance industry is that professionals are freed up from performing repetitive, low-level and time-consuming tasks. Automated solutions that seamlessly interface with all of the moving components of a refreshed stack release employees from routine data gathering and administrative work. This means they are readily available for more valuable activities such as higher-level data analysis, fraud detection, coverage analysis, and dispute resolution for outlier claims.
The traditional activities of claims’ professionals including data collection and verification, loss estimation, and claims settlement could soon move into the background as automation solutions mature. While claims processing in the coming years will remain a primary function of carriers, many claims activities will likely be replaced by automation. Advanced algorithms will soon be able to handle initial claims routing with increased speed and accuracy.
A high degree of automation requires changes to the entire stack because every layer of IT infrastructure is affected. Also driving the need for changes at the architecture level will be the deployment of big data and advanced analytics systems that generate insights through predictive models or machine learning programmes.
A sense of urgency is required in the insurance industry to drive forward digital transformation. Future-proofing your insurance business is essential in an age where digital-first upstarts can compete fiercely on technological innovation – with the potential to derail slower-moving incumbents. Insurance leaders who act now to capitalise on next generation disruptive technologies and lead their business model into the future, will be the ones who thrive in the coming years.