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In an industry known for well-established, colossal companies that dominate the market, newcomers to the insurance provider field have some distinct advantages when it comes to the implementation of digital solutions. A great example of this is Lemonade that uses AI in the form of chatbots to handle claims and provide insurance policies. Policies can be purchased and claims paid within a few minutes or less.
The question then arises: can the incumbent juggernauts modernize quickly enough to provide the kind of experience that customers have come to expect in a world of digital transformation?
Meeting customer expectations
Studies across industries have shown that younger generations (particularly Millennials and Generation Z) are less than satisfied with traditional processes, and have come to expect the same kind of seamless digital experience in all areas of their lives - from entertainment to health and financial services.
The insurance industry is far exempt from these expectations and is one of the largest and most traditional. Disrupting well-worn practices and digitalizing workflows is just the beginning of the steps needed for insurance to be able to pivot and adapt to rapidly changing expectations for customer experience.
The challenges of insurance digitalization
Beyond being a well-established industry with an extensive customer base, insurance faces a variety of additional challenges when it comes to shifting into a modern, secure, and streamlined process.
Extensive training requirements
Due to the highly detailed and often complicated processes often involved in claims and underwriting, it can take years for staff to be considered fully trained and experienced in dealing with the different cases that can occur.
Because of this lengthy and complex process, it can be incredibly difficult to implement new systems. Switching from paper-based steps to a more automated process can be daunting and challenging to introduce, especially with staff at different stages of training and still ensure that the right knowledge is being transferred effectively.
A highly competitive market
It’s no secret that even the largest insurance companies face intense competition from both existing and newcomers alike. Insurance companies are constantly looking at ways to be able to offer the lowest deductibles, the best rates, and to appeal to customers that might not be particularly happy with their current provider.
This market includes companies at all different stages of a digital transformation, meaning that some have significantly more online workflows, customer interfaces, and tailored onboarding. They are more equipped to work towards an agile approach and meet shifting customer needs.
Competition in the insurance industry is nothing new, but how a company chooses to handle the acceleration of digital interaction can determine how well they will continue to handle the pressure of appealing to customers.
Massive amounts of data
In insurance, while most records today are held in a digital system, many of these are themselves quite antiquated and difficult to navigate. There is often a huge amount of customer data that must be stored for future potential claims, and the systems used are an important aspect of working with customers. In addition, endless back-and-forth of emails to gather additional information tend to be standard operating procedure.
The sheer amount of data that is stored makes it difficult to make changes. Managing and retrieving the data is crucial in effectively working with customers, so updating these systems can cause major interruptions if there are any complications.
Making changes to these systems can be difficult but shifting to a new system can help to simplify the process, providing clearer links between policies, customers, and data. Change doesn’t need to happen immediately, and moving towards more connected workflows can have a significant impact on how effectively data is managed and accessed.
Towards digital insurance workflows
Digitalization is no longer a concept of the future. Well before the onset of covid-19, new insurance services were appearing, aiming to fill niche gaps in a major market. These gaps appeared where larger, slower-moving businesses struggled to adapt and transition to provide a more digital experience for both employees and customers.
However, this distinct inability to use an agile approach to changing technology has been exacerbated by the pandemic, exposing the challenges faced in dealing with analog, paper-based systems and extolling the benefits of digital alternatives.
We’ll take a closer look at the distinct benefits for insurance companies working with digital solutions in Part 2.