This Opinion piece is by Anurag Shah, Head of Products and Solutions, Americas, Newgen Software. Now disruption is an over-used word in the insurance industry, but yes, it still happens and more can be expected in 2022. Let’s take a look;
Any conversation today on where insurance, as an industry, is headed is incomplete without mentioning innovative offerings from insuretechs and “natively digital” insurance startups.
It can be tempting for large traditional insurers to look at this spread of offerings to dissect a pattern and identify a path forward. However, the moment one looks deeper than the common technological terms and broadly stroked themes, the specificity and super niche nature of many of these offerings become clear. So much so that when put together, the spread of variance starts to blur the vision rather than clarify it.
The varying shades of disruption
Yes, there’s a cumulative truth in the warnings of disruption emanating from these innovations. However, not every large or midsize incumbent insurer gets disrupted the same way or by the same disruptive offering(s) or even a set thereof.
For instance, price aggregators and comparison apps put a different kind of pressure on an insurer’s lead generation process than an insurtech that proposes to use non-traditional ways to assess risks (say, based on social media profiles and predictive assessment). In the same vein, different traditional insurers get impacted differently by insuretechs that are disrupting the back-office processes or bringing in innovative ways to outsource agency management or underwriting services.
And then, there are niche offerings that are changing consumer behaviors by giving the customers the options that were either inconceivable or infeasible earlier. The on-demand B2B2C (yes, B-2-B-2-C!) insurance in travel and e-commerce is one such example. Another example is real-time underwriting in commercial insurance or automated claims using visual intelligence in some super-niche insurance categories.
The shades of disruption are so varied that attempting to create a strategy based on these offerings can create a situation of indecisiveness out of the plentifulness of options.
It is, therefore, critical to go back to basics and assess what drives these innovations and why these offerings thrive.
It’s all about the customer journey
Essentially, offerings that appeal to customers are the ones that address their journey in their specific context. (This context is not based on the general demographic profile or life history but specific intent at any time.) When customers are booking a ticket for travel, for instance, a pop-up that offers to secure their impending journey against unforeseen delays or losses (or
situational e.g., COVID impact) is embedded seamlessly in the process and fits right into their psyche at the time.
To use their own example, a strategy that traditional insurers have used successfully in the past is to plug the insurance sales in the auto or property sales by creating the physical presence of the option. That is now moving into the digital world and may apply in a myriad of manners, but it still boils down to the customer journey.
What makes it difficult for insurers to adapt this in the digital world is their own internal burden of legacy. Unfortunately, as insurers scaled with decades of growth, the accumulation of technical and process debt has continued to pile on and has resulted in unintended silos across the processes. Consequently, even simple transactional workflows feel broken from a customer’s point of view, let alone the end-to-end customer journey that could be embedded in their lifestyle.
Disruptive innovation, the customer journey way
Large incumbent insurers must start by looking at their product and services portfolio and map customer journeys at various levels, incrementally going up the value chain and tapping digital opportunities along the way.
1. Streamline the transactional workflows
This is, of course, the most basic of process automation, wherein a specific process, underwriting, claims settlement, or billing, for instance, executes seamlessly by linking all working elements–systems, front office, blue-collar workers, knowledge workers, agents, and so on.
2. Tie-in the end-to-end customer journey for customer outcomes
Consider this as a journey from intention to outcome from a customer standpoint. From the time they indicate (through any action, say, through a social media post) the need or intention to buy an insurance product to the issuance of the insurance policy, multiple processes are involved that are traditionally separate from an insurer’s point of view. Insurers must create a seamless journey where all engagements and transactions with the customer are connected through automation without the ball getting dropped.
This includes omnichannel engagement, anytime-anywhere access to transactions including documents, intelligent processing of unstructured information and media formats, automation of processes, and application of artificial intelligence (AI) for decision making.
In the process of bridging the end-to-end customer journey, insurers can tap many opportunities to innovate and serve their customers better. It can be in the form of real-time underwriting, on-the-spot claims processing through cognitive intelligence, contextual
placement of relevant cross-sale opportunities, or on-the-fly tune-up of premium and renewals, and more.
3. Tap the ecosystem by creating a connected insurance paradigm
What’s changing rapidly is that most customers do not look at insurance as a separate life decision anymore. They expect insurers to be their lifestyle partners like other digital service providers in their day-to-day lives. This leads to a paradigm where insurers must create proactive partnerships through digital and physical integration – both forward and backward – in the value chain.
Combine this with the fact that the insurance world is moving toward predictive risk profiling and proactive risk prevention against historical-data-based risk assessment and mitigation. This means that insurers must find ways to partner with manufacturers and service providers in the respective areas–automotive, equipment, real estate, travel, health, and life, or financial services.
Creating a connected value chain through digital automation allows the insurers to become lifestyle partners for their customers and be the disruptors instead of getting disrupted.
Digital as the enabler of the connected value chain, a platform approach is pivotal
Insurers need a cohesive operational strategy backed by a technological platform that can help bridge the silos in the organization and become an engine for connected insurance.
It’s important to acknowledge, however, that silos in the organization manifest in many forms – disjointed processes, inaccessible documents, idly lying valuable audio-visual media, disconnected mobile or web-based front ends, ill-equipped front- or back-office, or even knowledge workers that are engaged in routine and mundane tasks – all leading to waste of time or effort, creating situations of broken experience.
A digital platform must address these gaps uncompromisingly. If executed well, a platform-based approach addresses the end-to-end customer journey while integrating all the digital capabilities enabling insurers to innovate (disruptively).