In this Opinion piece Rob Cretney, Marketing Manager at Node4 takes a look at online insurance and the ways in which a true digital transformation can really put an insurer ahead of the pack. Although a great deal has changed over the last decade, the industry still has a journey to complete as regards matching the online expectations of its customers.
Recent research by Ovum stated that spending on global insurance IT will reach $104bn by the end of 2019. Insurance companies that don’t embrace technology risk falling behind if they don’t expand their IT budgets and focus on utilising data. For this reason, the insurance industry needs to begin to undertake a digital transformation, to keep up with the modern world and make the most out of data provided. It’s time to disrupt the insurance industry.
The path to digital disruption
When it comes to taking the first steps towards digital transformation, insurers need to start by thinking ahead on the matter. The first steps include enhancing the 360-degree customer view they ultimately have from the data already collected, and renewing policies based on previous years of customer experience statistics. This will involve analysing lifetime customer value and identifying more upselling and cross-selling opportunities, as well as looking to improve customer relationship management systems and spotting trends in social media activity throughout the customer lifetime journey.
However, insurers may face some slight challenges when it comes to data. In the insurance world, data is collected from thousands of disparate sources, meaning companies are dealing with an unprecedented number of highly complex data sets – both structured and unstructured – demanding greater processing power and storage capacity. To combat this, EY predicts that in the insurance industry this year, Artificial Intelligent (AI) will move into the mainstream, alongside the increased use of blockchain platforms to achieve better data quality.
Insurers fully understand that more sources of information give the ability to gain a deeper insight into the risks associated, offering insight into the customer and more accurate underwriting and pricing. It also allows for more personalised product development, and a much smoother insurance application process. Instead of customers supplying lots of data themselves, insurers can pull details in from other services. This not only saves time and reduces hassle, but also allows brokers to spend more time with customers.
Nevertheless, the bigger challenge still stands – what should insurers do with the data collected, and what’s the best way to store it?
Protecting the data involved
When it comes to storing and protecting data, there are multiple different solutions on offer that can be utilised by the insurance industry. These include the cloud, data centres, or a mix of both. All three can play an important part in the business IT strategy, but according to Deloitte, cloud computing should be high on insurer’s agendas in 2019. Its research stated that insurance CIOs, who are under pressure to deliver digital capabilities, are looking at developing applications on the cloud as a faster alternative to on-premises deployments.
Beyond that, evolving technologies such as advanced analytics, telematics monitoring via the Internet of Things (IoT), and cognitive applications generally demand newer technology capabilities that are both quickly scalable and flexible, given the amount of data being generated and the processing power needed to leverage it.
With this in mind, a hybrid solution could be the answer for the insurance sector. Hybrid solutions can be specifically tailored to combine any IT infrastructure in order to fit specific business requirements. This includes storing, sorting and protecting the large accumulation of customer data produced daily to make it easily accessible and usable for the business, so it can begin its path to digital disruption.
Why disruptors should disrupt the market
Essentially, disrupters in the insurance market have turned the current industry on its head. These businesses focus on quick claims management and complete transparency; understanding its customers’ pain points and delivering an intuitive service that caters for all.
These disrupters are seeing impressive growth as they have avoided the mistakes made by other insurers. Many have a protracted claims process and risk compliance procedure that leaves customers with little idea of what their policies cover. Innovative insurers recognise that customer satisfaction is driven by tailormade customer packages, enabled by solutions like cloud analytics and machine learning.
Additionally, cutting edge insurers continue to scale new heights thanks to their work with AI. Chatbots are now dealing with claims at remarkable speed. One example of this is a claim that was settled by Lemonade in just three seconds. This included “cross-referencing policy details, running 18 anti-fraud algorithms and transferring the settlement into the policyholder’s bank account”.
Fundamentally, with customers looking for superior levels of customisation, security and business intelligence, the insurance industry must follow suit. As Steve Jobs said, “Innovation distinguishes between a leader and a follower.” Insurance companies need to be encouraged to embark on a digital transformation to ensure they stay ahead of the game, embracing changes such as AI, and ensuring that at all times, customer data stays protected.