Benefits of Digital Transformation in the Insurance Industry
Digital transformation is slowly but steadily penetrating various industries. There are companies from all niches re-inventing their processes using emerging tech solutions. Insurance is one of the most resilient sectors when it comes to disrupting the status quo willingly. What do the insurers need to give digital transformation the green light?
Among many things, they need to learn what it has to offer to the insurance industry. Digital transformation can transform and digitize every aspect of an insurance operation, no matter how big or small.
Building data pipelines to streamline predictive analytics and improve fraud detection, offering live chat and mobile service are just a few perks of embracing digital transformation.
The entire insurance operation encompasses hundreds of unique processes. Each one of these processes has at least one repetitive task, if not a dozen. Repetitive tasks are the number one source of errors which often cause setbacks and delay the projects. The primary task of digital transformation is to optimize all processes and make them more efficient.
How digital transformation optimizes different aspects of the insurance operation for efficiency? It is not only about identifying a software tool or platform. Digital transformation encompasses actions aimed at re-inventing the processes and best practices currently in place.
Imagine not having to write a single insurance policy ever again, thanks to the machine learning ability to learn and create relevant policies. Imagine using a platform that processes and resolves claims automatically. What about having a state-of-the-art chatbot handling simple client requests while forwarding frustrated clients to human agents?
Digital transformation is currently the only initiative that can help speed up both front-end and back-end processes. It goes beyond new tech implementation and helps insurers adopt new practices with their goals and clients’ needs in mind.
Modern customers are nothing like a couple of decades ago. They know what convenience means, and they’ll gladly place their trust in a company that enables them to use the services effortlessly. On top of that, we have personalization, one thing that stands at the root of the customer-centric approach. Personalizing services to one customer’s needs and expectations is becoming tables stakes for a competitive insurance offering.
However, there is one problem here. Insurers often have thousands, if not hundreds of thousands of clients. There is no way to offer a personalized experience without overextending the available resources. Digital transformation has the potential to help insurers address this challenge head-on while enabling smarter resource allocation.
Thanks to modern platforms, brokers and customers can use only one system for all their ordeals. Customers can pay the bills online and receive instant feedback on their claims. At the same time, brokers have a complete overview of a customer and the past claims and signed policies.
AI and ML-powered systems are capable of learning from experience. Since every customer interaction and purchase is registered, these systems can custom-tailor the offers and automate the delivery process.
Thanks to data analytics, marketing teams in the insurance industry can leverage insights to custom-tailor offers to specific customer segments, thus boosting lead generation and increasing conversion rates.
Building Data Pipelines Facilitates Business Decisions
Digital transformation is all about building data pipelines. You’ve probably run into this term during your research. It does make one wonder why the data pipeline matters so much. The insurance industry generates copious amounts of data. It comes from the internal systems, customers, marketing teams, and often from wearable devices both staff and customers wear. Leaving the data collection practices as they are creates what experts call data silos.
Data silos are these big chunks of data only available to specific departments and often only available to people in top positions. This practice has serious implications:
- Wasting precious resources – having the same data stored in multiple places
- Limited view of data – renders an enterprise-wide view of data unavailable
- Poor data integrity – storing the same information across different databases often results in inconsistencies
- Impossible collaboration – when departments can’t share data, any effort to facilitate collaboration fails
Digital transformation helps insurers build a single data pipeline. What is a data pipeline? A data pipeline encompasses different data processing actions. It can be structured to reflect the specific insurer’s needs. With a data pipeline, insurers will be able to collect, process, and store all data under one platform. It refers to all data in a pipeline. It can be anything ranging from your quarterly finance reports and brokers’ success rates to customer interactions and IoT data feedback.
With the processed data in a centralized location, insurers can use the apps to gain instant insights and empower their business decisions. It also opens the doors for predictive analytics, discovering patterns and identifying valuable market opportunities to pursue.
Improved Risk Management Strategy
Insurance, like any other industry, has to do business in a risky environment. Digital transformation can help develop a data-driven risk management strategy on all fronts. Various technological solutions can help insurers deal with highly specific risks.
Frauds have been troubling the industry for quite some time now. Until now, insurers had very limited access to tools to help them transform their reactive mindset to a proactive one. High-end systems are capable of playing a vital part in combating fraud. Sophisticated ML and AI solutions can now identify relevant risk indicators in every policy and for every customer. By mitigating fraud risks, insurers can achieve a competitive advantage in the market.
Furthermore, the data loss failsafe mechanisms can help insurers prevent business interruptions that often cost more than they can afford. Embracing digital transformation can also help insurers plan the growth and expansion. Instead of basing decisions on 3rd party reports, a hunch, or experience, insurers can now leverage data pipelines to get real-time insights.
Future-Proof Insurance Industry
With the ever-changing markets and customer needs and expectations, insurers have trouble future-proofing their establishments. The answer to this challenge lies in innovation. The only roadblock is the status quo, and the only solution for it is digital transformation.
All the technologies that enables digital transformation will continue to improve with even more tech solutions coming into the digital transformation app mix. The new features will unlock new opportunities for insurers. The entire industry will be able to respond quickly to new customer demands, legislation changes, or emerging risks.
Digital transformation can truly help an insurance company to future-proof its operation. With an ongoing technology innovation strategy in place, insurers can easily build a digital culture and enhance the experience on both ends of their services. The current state of the insurance industry is not going to remain the same. The new customer expectations and market demand call for a change, and the only way to answer it is to embrace digital transformation. Feel free to check out how Pandio can help you benefit from digital transformation and provide support building data pipelines.