SMART INSURERS IN THE AGE OF DIGITAL

Nitin Verma

In the age of digital it is becoming extremely pertinent that any company in any industry pioneers its own digital transformation. Actively seeking opportunities to leverage new technologies to implement across the organisation is something that will put firms ahead of their competitors. The trend of waiting for new technologies to emerge before adopting them will only leave companies behind in the race towards digital advancement. Therefore, each company, in its own unique way, must weave an innovation strategy into its larger growth plan instead of deliberating over which technology will fit in with their organisational needs in the future. Because whether we like it or not, the future is already upon us.

This white paper is a roadmap for visionaries in the insurance industry that are in the nascent, middle or final stages of digital adoption. It breaks down the process requirements for a digital revamp, and explores digital transformation from an organizational and strategic perspective. This multi-dimensional approach allows businesses and their leaders to assess which stage of transformation their firm fits into and what is the future roadmap that they envision following.

Of course, the underlying assumption through this paper is that disruption in the insurance sector could occur at any stage and the more firms that are prepared for disruption, the less cumbersome will be their transition to the new era of digital.

SOME TRENDS THAT ARE DRIVING INSURERS TO BECOME DISRUPTERS:

1. Customers are becoming increasingly used to digital channels to engage with providers and make choices based on these interactions.

2. Customers are also less likely to be loyal to a provider if they witness unsatisfactory customer service or their expectations are not met.

3. Insurance as an industry has relied heavily on agents, physical paperwork, slow processing and turnaround time, and the rise of new technologies has left many providers out of the race. As a result, insurers are facing mounting pressure from competitors and investors to upgrade their systems and processes to provide state-of-the-art services in a customized manner.

4. The transition of physical data from claims and forms to online portals and CRMs presents new and significant opportunities for insurers to map this data and use it to deliver higher quality customer service. However, the ability to co-relate and analyze this data in a relevant fashion is still a challenge for many insurers. At the same time, the threat of data proliferation and added cost of data protection remains high.

5. In many instances technology has evolved at a faster rate than insurance companies can keep up with. Therefore, the quick transition from the initial to final phase of the digital cycle is causing some companies to make large investments across the board in new technologies to amp up the rate of transformation.

6. The dependence of insurance firms on partners, aggregators and vendors means that as these companies evolve and adopt digital transformation, insurers will be forced to do the same to keep up with the rate of change.

ASSESSING YOUR DIGITAL STARTING POINT

Before mapping out a detailed digital strategy, it is imperative to know your starting point, including the strengths and gaps that will dictate where to channel investment flows. We’ve found it useful to do this assessment along the six dimensions described below:

DIGITAL SYSTEMS REQUIRED TO KICK START AN INSURNACE COMPANY

What does it take to create a digital ecosystem for your company?

A combination of processes and infrastructure such as the front, middle and back offices are the integral components that make up a digital landscape. But to go a step beyond that is to create a work culture where digital transformation is an inherent part of the organization’s vision and identity. In the insurance domain this digital identity may be cultivated at the agency, but should ideally branch out to include agents, vendors, third party agencies and so on. After all, everything comes down to people, and a work force of digitally enabled people will only lend value to any organization looking to enter the orbit of disruptive transformation.

Below are the ideal requirements that make up a digitally enabled enterprise:

FRONT Office

· Customer Portal and Mobile App

Enhanced customer experience and seamless feedback loops to analyze and predict customer preferences are the immediate benefits of creating a customer portal and mobile app. Companies with these tools are able to reduce reliance on insurance agents to collect and collate customer data, and can interact directly with their policy-holders thus building a stronger relationship with them.

· Agent Portal and Mobile App

The implementation of an on-the-go service equips agents with a 360 view of the customer and his or her policy, allowing agents to make quick decisions regarding the status of a policy holder, and onboard them with ease. This efficiency also guarantees customer satisfaction as it reduces the time that a prospect would have to wait to be approved and accepted into the system. It also reduces the burden of collecting paperwork and records of previous claims and eligibility documents.

· Partner Portal and Mobile App

Mobile apps create a unique touch point between the agency and the partners who are selling policies on their behalf. Having a portal and app to liaise between the two entities enables insurance companies to remain connected to their partners and allows the partners’ to be seamlessly integrated with the providers.

· Employee Engagement

Employee engagement and retention is critical to any organization. In order to keep the workforce motivated, an intranet portal or mode for employees to share knowledge and stay up-to-date with modern technologies helps boost morale and productivity.

MIDDLE Office

· Underwriting Rule Engine

Rule engines with tailored customer profiles are formulated on the basis of indicators such as age, lifestyle, health and medical history, loan liability etc. This enables companies to propose premium estimates to their target audience for different insurance products.

· Claim management System

An automated claim management system to replace the multi-tiered approval system guarantees process efficiency and reduces the turnaround time for claim filing and approval. It also significantly mitigates the amount of labour required to file and check claims manually

· CRM

A robust CRM is the backbone of the sales function of any organization. Similar to other industries, insurance companies can streamline lead capturing, nurturing, KPI tracking and management of the sales funnel through their customized CRM.

· Agent/Partner On-boarding and Recruitment system

A critical component of insurance companies is their partnership with other vendors. These vendors selling policies essentially act as an extended arm of the insurer and therefore have to be integrated with the main systems of the insurer.

· Aggregator On-boarding and Recruitment system

· Service Bus / Middleware

BACK Office

· Core Policy Issuance System

The policy issuance system is the heart of the digital ecosystem. This is where all policies are generated, where all customer information resides, and it is the repository from which agents, partners and the insurer itself extracts information.

· HR and Payroll

· Finance & GL

· Treasury Management system

· Asset Liability Management system

· Vendor Management and Procurement

· Knowledge Management

· BI and Analytics

External Systems

· TPA- Third party administrators to handle claims

· Partners- Banks

· Vendor Systems

· Aggregators

Infrastructure

· Data Center

· Server Computing

· Cloud Computing

· Hardware

· Telecom Network

· Information Security

New insurance-industry ecosystems, driven by the advance of digital technologies, could disrupt the industry and put unprepared insurers at risk” according to a new report by The Boston Consulting Group and Morgan Stanley Research.

KEY CAPABILITIES THAT WILL ENABLE INSURERS TO ACHIEVE DIGITAL TRANSFORMATION

Digital transformation cannot be achieved overnight, but IT managers and team leaders need to strengthen their existing processes and infrastructure to allow for the wave of digital to sweep the entire organization.

Collaboration between units to amplify the legacy systems not only spurs digital transformation to occur strategically, but it puts into place a self-sustaining model whereby which new trends can organically be integrated into the company without excessive paradigm shifts.

So what is the recipe for success to transition to a digitally sound ecosystem? We have listed some below:

1. INNOVATION

Companies that can generate of new value propositions through a test and learn approach, and manage business launch through a structured process will ultimately lead the wave of digital transformation in the insurance space. Resilience to failure of propositions and the ability to bounce back, re-learn and re-create new products or offerings will test the extent to which companies can be deemed “innovative”.

2. EXPERIENCE DESIGN

In the experience economy, compelling content isn’t enough to retain consumers’ attention. In fact, consumers are increasingly short on time to spare and expect an attention-grabbing experience at their fingertips. The use of mobile to create these experiences is already on the rise. However, companies need to prepare to deliver these experiences via an Omni-channel approach as users become more unpredictable with their modes of interaction. (Laptops, tablets, mobile, wearables etc.)

3. AGILITY

Agility and flexibility to adopt an iterative approach towards the development and teaming of new digital initiatives is mission critical for the digital adoption cycle.

4. DATA AND ANALYTICS

The integration of traditional and digital analytics across the insurance value chain ensures that customer behavior can be predicted in advance, that future offerings can be customized to their past preferences and that there is a trend of top-class customer service that is delivered to each policy holder.

5. WORKFORCE AND DIGITAL CULTURE

The need to cultivate a “disruptive” culture and create an organization that constantly adapts to change — i.e. is digitally savvy- is being recognized by companies primarily in the insurance field. The insurance industry has one of the highest latent potentials for technological adoption.

6. DIGITAL ARCHITECTURE

A robust digital architecture that leverages micro-services to create platforms that are flexible and allow for fast integration is of utmost importance. Such architecture also enables the enterprise to be more agile.

7. CUSTOMER ACTIVATION

An important but sometimes overlooked element of digital transformation is the use of digital social tactics to activate consumers and spark their interest in new value propositions. Whether it is to provide feedback, deliver customer service or launch new products, a socially connected insurance company will reap the benefits of reaching out to a multitude of users while enhancing their brand image.

8. DIGITAL GOVERNANCE

Establishing the right combination of ownership and processes to support cohesive digital innovation is the trademark of a sound digital governance framework. Adherence to international standards in this regard also lends credibility to the company’s operations.

9. CYBERSECURITY AND RISK

One of the major concerns related to upgrading the digital infrastructure of a company is its security and threat mitigation. In order to successfully transform an enterprise, rigorous cyber risk protection protocols against vulnerabilities in this hyper connected world must first be vetted and then established. A PHASED APPROACH TO ACHIEVING DIGITAL TRANSFORMATION

One of the major concerns related to upgrading the digital infrastructure of a company is its security and threat mitigation. In order to successfully transform an enterprise, rigorous cyber risk protection protocols against vulnerabilities in this hyper connected world must first be vetted and then established. A PHASED APPROACH TO ACHIEVING DIGITAL TRANSFORMATION

WHAT WILL A DIGITALLY TRANSFORMED INSURANCE COMPANY LOOK LIKE?

Digitally Transformed insurance companies typically reflect the following characteristics:

· Digitally enhanced customer experiences. Insurers need to understand customers’ digital behaviors and priorities in order to design the appropriate offerings and experience. The leaders are reengineering moments of truth, such as lodging a claim, to integrate digital components.

· An omni-channel sales and distribution model. Customers increasingly expect their insurers to have robust online and mobile channels, with technology integrated seamlessly into activities such as contact center conversations.

· Optimized operations using digital technologies. Digital can play a big role in simplifying operations by trimming redundant and manual processes while speeding up turnaround times and reducing error rates.

· Advanced analytics and Big Data applied throughout the business. Big Data holds the potential for step change improvements in customer segmentation, risk calculation, fraud identification and other areas. But it takes time to develop an advanced analytics capability staffed by the right people and then to focus them on the highest-priority issues.

· Technology activated to enable a digital transformation. The challenge is to cost-effectively enhance IT infrastructure and capabilities, either internally or through off-the-shelf systems.

· An innovation-ready organisation. Becoming a digital innovator requires creating an environment that fosters rather than stifles innovation, and encouraging active collaboration across functions and business units.

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