The insurance industry is rapidly being disrupted by digital technology. Insurers are using smart, digital tools to improve operational efficiency, reduce costs and enhance customer experience to set themselves up for long-term success in a competitive marketplace.
Although the impact of technology is already evident, we are yet to see how it will fully transform traditional insurance sectors. Arguably, there is no better place to achieve digital disruption in the industry than in younger insurance markets such as the growing pet insurance sector, comments Mark Colonnese, director at Aquarium Software.
Pet insurance is a fast-growing market. During the Covid-19 pandemic, more people took on pets, leading to a growth in pet insurance. The global pet insurance market is forecast to grow to $5.89 billion USD in 2025 from $3.21 billion USD in 2020, so it is no surprise that insurers across the world are investing in existing or new pet insurance businesses and turning to the latest digital platforms to maximise competitiveness.
Driving fundamental change
Digital technology can be deployed in all aspects of insurance, from launching new products, to policy quotes and claims processing. A major benefit for insurers entering the pet insurance sector is the opportunity to deploy a fully digital solution from the start. This in turn is setting much needed industry disruption in motion in areas such as claims management.
In pet insurance alone, the Association of British Insurers reported that UK insurers dealt with almost one million claims in 2019. Pet insurers can drive deep seated change in this area that also has consequences for other sectors. In claims management there is a strong business case for choosing automated rather than labour-intensive manual processes to deliver improvements in the speed of customer service and significantly reduce operational costs.
Digital technology means claims can be processed and settled quicker than before, helping to drive long-term customer satisfaction and loyalty. In all digital solutions, claims can be settled in seconds rather than hours or weeks.
Claims settled in an instant
Imagine a vet advises someone that their pet needs an immediate operation costing £800. In a non-fully digital environment, the owner must make a quick decision as to whether to go ahead. Initially, this might expose them to unexpected cost before making an insurance claim, hoping the cost is covered by the policy and then eventually receiving compensation, minus an excess payment. Along the way the process may involve several calls to the insurance company, explaining the details each time to someone new. This process is stressful for policyholders and labour intensive for an insurance company.
Now imagine an alternative scenario. The pet still needs the operation, but the vet is directly connected to the insurance company. The vet inputs all the details of the treatment required, sends this to the insurer’s digital platform that analyses the age of the pet, the treatment required, the time needed to perform the operation, the average cost of such treatment both from this vet and others in the region and nationally. Analysing this data, the platform recognises this is a legitimate claim, within the parameters set and responds with an approval code for the vet in near real time. The policyholder is asked to pay the excess and receives a text message telling them the claim is paid and how much cover is left on the policy.
Benefits for all
The policyholder has been saved hassle at a time when they are already concerned about their pet. They do not need to consider how to finance the operation until the policy pays the claim and can simply pay the excess immediately.
But the insurance company benefits too. Not only can it cut out significant administrative time and cost, but it also reduces paperwork and ensures all relevant data is stored in the cloud. There will be less need for customer services and claims professionals can focus on anomalies rather than standard claims. The insurance company is also building up insight into the cost of treatment in different vets. If something is awry, it is easily flagged up for human intervention.
This scenario may sound futuristic, but it is being deployed already by some of the most innovative insurance companies around the globe.
The potential for other insurance sectors
Automating the claims process is just one part of the insurance proposition, but it is an area that often causes customer frustration with multiple calls into call centres and paperwork to complete. Digital innovations used in pet insurance have huge potential for a broader range of insurance sectors including household, car, medical and travel claims: customers could make a household claim, have this paid within minutes and a repair company booked at the same time; a car insurance claim could be made at the scene of the accident, backed up by images and GPS data.
Key to delivering these experiences to customers is intelligent and customisable technology as no one insurer, customer, or pet, are the same. The pet insurance sector is a hub for digital innovation and is already using technologies that are transforming how insurance is delivered. We expect to see this applied in other insurance sectors soon. The outcome is speed, ease and convenience of service that addresses current pain points for many insurance customers