Today, almost every aspect of our lives is influenced by digital technology. Insurance is one of the industries where digital transformation is moving at a fast pace. For instance, electronic files have replaced bulky paper documents and professional transcription services ensure that digital voice and video recordings of statements are converted into error-free documents. According to a 2018 PwC report, digital is continuing to reshape the way insurers do business and that building a digital platform is critical for long-term success in the insurance industry.
Disruption is occurring in both internal and external areas of insurance companies’ operations. The following are the key areas where digitization is transforming the insurance industry:
- Cloud computing – Data from policyholders, products, and services are moving to the cloud. Insurance companies are leveraging cloud computing to access IT-based services, and update and streamline their infrastructure, applications, platforms and business processes, via the Internet. This improves their performance and competitiveness by helping them to better respond to the changing needs of the business, create new services and open new markets. There is little or no requirement for capital investment to enable usage of cloud services.
- Document digitization – Document conversion is one of the processes that have significantly transformed the insurance landscape. Significant progress has been made by the industry in the digital capture of inbound documents including paper, faxes, checks, cards and more. This has led to major improvements in business optimization and the customer experience. As vast amounts of paper continue to flow in and out of insurance companies, considerable opportunities still exist for digital capture.
- Data analytics – Advanced data analytics and machine learning tools are allowing insurance companies to get a detailed understanding of the customer and provide personalized services. McKinsey points out that besides internal data, digital data from social media and multimedia, smartphones, computers, and other devices-used in keeping with privacy guidelines-has become a useful resource for insurance companies to gain behavioral insights. Data analytics in insurance helps mark claims for closer inspection, priority handling and more; identify fraud sooner and more effectively; pinpoint subrogation opportunities earlier, and shorten claims cycle times for higher customer satisfaction. Insurers can also use analytics to compute a litigation propensity score to establish which claims are more likely to lead to litigation.
- The internet of things (IoT) – Leveraging IoT is helping insurers gather important information and offer more profitable and accurate coverage plans. Janrain, a leader in the Customer Identity and Access Management (CIAM) market, explains that insurance providers can increase safety among customers by using wearable health trackers to monitor alcohol levels and prevent their car from starting when the driver is under the influence. Some auto insurance offer customers the option of installing sensors in their vehicles to track driver behavior and performance. Customers who demonstrate safe driving behavior are rewarded discounts on their insurance costs. This is also a great way to create a competitive advantage over other providers.
- Mobile apps – With the increasing use of mobile devices, insurance companies are using applications to deliver claims-related information right to the user’s smartphone. This reduces the complexities of paper work and makes claims processing easier and faster. It is reported that mobile apps can improve the efficiency of handling insurance claims by 25-30 percent. Apps are also great sources of customer data, offering scope for targeted engagement to increase customer satisfaction, user engagement and loyalty, helping insurers gain an edge over competitors.
- Insurance dashboards – In the competitive insurance landscape, insurers need access to actionable, timely information. Insurance dashboards provide an immediate view to help insurers evaluate risk and reward related to customer policies and their agency’s operations. Data visualization software quickly converts spreadsheets with claims data into highly interactive, customizable charts, graphs and scorecards and displays key performance metrics on the dashboard. This allows insurers to monitor sales, client profiles, receivables and new customers. Real-time access to accurate and up-to-date information promotes effective decision-making.
- Enhanced customer experience – Digitization is helping customers vet complex policy coverage and costs at the click of a button. They can enroll then and there and get coverage in minutes, without even having to an insurance agent. Customers can also transfer from one company to another easily as all their history and data is digitized and available to all authorized agents. Blockchain is a trend that can further enhance the customer experience and minimize fraud. With all of a person’s insurance policies and relevant information stored on a secure, decentralized database, enrollment and claims processes will become even easier to complete.
- Marketing automation – Marketing automation software is one of the most powerful tools available for insurance companies today. It allows insurance agents to keep in touch with prospective customers and gain potential leads through social media, website inquiries, and other sources across the web. The software rates the leads, allowing agents to focus on targeting prospects that are most likely to produce results. Automated systems alert agents when consumer complaints arise so that they can respond quickly.
The new PwC report also stresses the importance of digitizing back-end processes to support a digital environment. In the rapidly advancing insurance industry, competitively positioned companies are those that are automating their repetitive, routine work. Outsourcing back-end tasks like insurance transcription, for instance, ensures that digital audio or video files transcribed into the required format. Partnering with an experienced digital transcription service provider will facilitate comprehensive documentation of data while helping insurers reduce costs, improve quality and increase efficiency.