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28 April 2017
Digital transformation is a must for the insurance industry, that much is clear.
However, far less obvious is how we get there. Global law firm DLA Piper has put together a white paper mapping key challenges for insurers amid the “digitalisation megatrend”.
It says the number of internet users has risen from 400 million to 3.2 billion in the past 15 years, and there are now almost as many mobile phone subscriptions as people in the world.
“The pace and scale of this digital phenomenon means that insurers… need to re-evaluate and transform the customer experience to adapt for Generation C (connected), to avoid lagging behind the curve,” the report says.
Consumer expectations have rocketed, but insurers are still “digitally immature”.
Less than half have mobile functionality to provide a quote, and only 23% allow claims to be submitted and processed digitally.
Entrenched barriers – including the huge investment required to transform legacy technology systems, regulatory requirements and internal cultural constraints – are often cited as preventing digital growth.
“However, those insurers that have already started to embrace the digital revolution are illustrating the future interface between insurers and their customers,” the report says.
“They are moving away from periodic transactional relationships to ongoing customer interaction and engagement, and helping build more effective customer trust.”
The major challenge for insurers is achieving a “true digital transformation” of back-end systems, internal processes and end-to-end customer interaction models.
Calling for a rethinking of traditional insurance models, DLA Piper says an “innovation gap” is hampering insurers’ ability to produce innovative solutions relevant to their core business.
As a result, many large insurers are following the example of technology companies and others that use corporate venture capital to invest in digital start-ups.
Allianz, Aviva and Munich Re have set up significant venture funds to invest in early-stage technology companies.
“Insurers have entered the market with a bang,” the report says.
“CB Insights reported that by November [last year] start-up investments by insurers were up 43% compared with 2014, and a 725% increase from 2013’s figures with even stronger growth predicted for 2016/17.”
Insurers are right to get moving on this, because the technological shift is creating opportunities for companies with a strong online presence to challenge traditional players.
“This means technology, retail, e-commerce and non-banking financial institutions can (and do) enter the market, offering insurance services to their customers, and we see this as an area where there will be continued growth,” DLA Piper says.
“We are also seeing all manner of new market entrants disrupting and dramatically changing the traditional way of purchasing insurance and how their customers engage with their services and interact with them, such as the growth of peer-to-peer insurance, with new players emerging in this space such as Lemonade in the US and Bought By Many in the UK.”
The report says the ability to capture – and extract value from – data is growing.
Big Data involves using large amounts of information from a variety of sources to demonstrate patterns of behaviour and provide insights that can inform development of new products and services.
It can be difficult to process Big Data using traditional techniques, so there is growing demand for new technologies, such as “machine learning” – “a method of data analysis specifically designed for Big Data, [which] uses algorithms to learn from data”.
“It looks for patterns to produce reliable decisions, predictions and results on a vast scale.
“Machine learning can provide analysis of data as soon as it is recorded. For example, this could include up-to-date information to assist with fraud identification.
“It can identify opportunities for subrogation, shorten claims cycle times, improve forecasting of claims and calculation of loss reserves, and can help predict which claims are most likely to result in litigation.
“These benefits can transform customer relationships and can deliver potentially significant cost savings for insurance companies.”
The effect of automating and simplifying processes such as servicing customers, sales and handling applications and claims will mean a reduced requirement for people in the insurance sector, the report says.
“Redundancy programs will need to be carefully considered, mapped out and effectively implemented by insurance companies effecting such technology change,” the report says.
“Human resources teams will face a difficult task of managing the ensuing battle between man and machine when an insurance company has decided to introduce new technology that is going to dramatically change its business model or disrupt its organisation.”
Ultimately, the report concludes that now is not the time for complacency. Rather, it’s time for “digitally immature” insurers to grow up.
28 April 2017
This is a rare opportunity to be a part of TIO, and lead our NT commercial business to achieve continued success and growth.
18 April 2017
The successful applicant will be responsible for all ANZ Claims (ie direct) related strategic procurement for bodily injury (ie providers of services relating to health, recovery and injury management) and investigations (ie providers of investigative services).
11 April 2017
Westlawn Insurance Brokers is an established and respected local company with nine branches across Northern NSW. We are looking for an Insurance professional with drive and commitment to join our Lismore team.