Jim Close, Regional Vice President of Enterprise at Kofax takes a look at how traditional insurance brands can compete with insurtechs. The answer is, pick the low hanging fruit.
When it comes to the insurance industry, it’s a jungle out there. It’s true the global insurance industry is forecasted to reach a new record in premiums, surpassing $7 trillion by this year’s mid-way point, but it’s also well recognised the year will be filled with many challenges. Increasing inflation, economic uncertainty, stringent regulatory demands, cyber security, and the impact of M&A activity have made for quite a rocky path.
But traditional insurers must contend with another obstacle in addition to these challenges – a new enemy lurking among the vines and branches stealing customers. I’m talking about the rise of InsurTechs.
These modern competitors are disrupting the industry with digital capabilities, automation, streamlined operations, flexibility, and efficiencies. They’re quicker to the punch when it comes to launching new products, offering personalised pricing, expediting customer acquisition, and delivering a superior customer experience.
While InsurTechs will have to face the same obstacles the year is sure to bring, traditional insurers may find these challenges harder to address. Why? Because most are re-using outdated legacy technology and operating models to create digital businesses, while InsurTechs are leveraging state-of-the-art cloud-based technology – which means they can respond and adapt faster.
It may seem like all hope is lost for traditional insurers – that they’re bound to get lost in the jungle, left behind by agile InsurTechs. But there’s a way out, and you don’t have to reach too far for it.
Traditional insurers need to refocus their digitisation efforts and start with the low-hanging fruit. There are three key areas that’ll deliver big results in a short amount of time. Even better, they can be digitised as part of a hybrid model that enables insurers to deliver delightful multichannel customer engagements while still leveraging comprehensive datastores within legacy applications.
Get ready to swing from the vines with ease like the InsurTechs.
Why the Low-Hanging Fruit Is the Sweetest
As the saying implies, low-hanging fruit is the easiest to get. And when it comes to digital transformation, there are several areas traditional insurers can see big returns quickly. They are automating applicant onboarding, claims processing, and underwriting.
These three processes have several things in common that make them ideal candidates for building a solid foundation that can help insurance organisations achieve their broader digital transformation vision. Specifically, these processes all consist of:
· A high incidence of manual data entry
· Low cognitive requirements, like checking documents for completeness and/or data accuracy
· Redundant manual data extraction and document verification
· A high percentage of exceptions that require human review and decision-making
Customers want fast answers, real-time updates and personalised service. That’s impossible to deliver when everything is done manually. By automating these three areas, however, traditional insurers can see big gains when it comes to competitiveness and customer retention and acquisition.
1. Applicant onboarding: The onboarding process is a critical time for insurers. Today’s customers expect a seamless digital process they can complete on their mobile device or other preferred channel. They also want real-time status updates, won’t enter the same information twice, and demand a fast response. Traditional insurers stuck in paper mode can’t compete. Robotic process automation (RPA), however can automatically connect to external sources, extract third-party data, and deliver it to the appropriate internal systems. Other more advanced automation technologies like artificial intelligence allow customers to upload required documents to their mobile device securely. AI can validate document authenticity, making sure all required compliance checks are met. Add in electronic signatures, and it’s easy to see how a digital onboarding process reduces abandonment rates, improves compliance, and creates a superior customer experience.
2. Claims processing: The claims process involves a high volume of documents and data from multiple sources. A manual approach costs the business money, and slow processing times create a poor customer experience. Automation can help insurers input the First Notice of Loss (FNOL), automatically notify loss adjusters, and give assignments to claims handlers. On top of that, automation technology can integrate all the information pertinent to a specific claim across all sources and formats. Claims are processed faster and at less cost, saving money and improving the customer experience. In fact, one insurer saw a 75 percent reduction in adjudication times and a 15 percent increase in customer satisfaction by automating claims processing.
3. Underwriting: The underwriting process involves gathering information from multiple sources to assess risk, which is why it can take weeks to complete when done manually. Automation technologies like RPA and process orchestration, however, can gather and process the required data about the applicant from internal and external sites. Intelligent robots can update internal systems with the data and produce a report or premium recommendation. The automated approach is faster and more accurate, enabling insurers to win new customers while reducing risk.
Navigate the Jungle with Intelligent Automation
You may be loving the benefits that come along with automating claims processing, applicant onboarding and underwriting, but you may also be thinking it sounds complicated. Fortunately, just as low-hanging fruit is easy to go after, automating these three processes is easier than you think.
It’s important to note the first change needed is often a cultural one. It can be tempting to sit on legacy systems and outdated processes without realising the opportunity cost of innovating and creating value through new or better services. As InsurTechs continue to grow and capture the highly coveted customer base of traditional insurers, it’s time for leaders to embrace digitisation and automation. But you don’t have to rip out your legacy systems to get started.
An intelligent automation platform makes it possible to integrate the right mix of automation technologies with existing systems and leverage a digital workforce to connect to internal and external information systems. A flexible software platform saves insurers from having to replace legacy architecture before you’re ready, while providing the tools and technologies needed to compete with the InsurTechs breathing down your neck.
A low-code platform further speeds the process along with an easy-to-use interface citizen developers can use to build and deploy RPA bots in less than a day. Just imagine the time and cost savings when this approach is scaled across the business, not to mention the agility and resiliency it builds. Employees have access to accurate, real-time data and more time to spend on strategic work and personalised customer service.
Those that go for the low-hanging fruit and make the shift to digitisation will see a noticeable uptick in business agility, allowing them to improve speed-to-market and reallocate operational savings to investment areas that reduce prices and improve profitability. Supported by intelligent automation, traditional insurers can navigate the jungle market, give the modern customer what they demand and successfully compete with the InsurTechs.
How does that low-hanging fruit taste now? Ah, yes, it’s the sweet taste of victory.