The insurance industry has been around since 1861, but like most other industries, it is facing a pressing mandate to digitalize in the information age. Many insurers are exploring digital solutions to help them operate more efficiently and increase revenue, whether that's by leveraging analytics to track and accelerate the application-to-closing process or using new cloud technologies to combat challenges. Here's how insurance digital strategy is helping insurance companies run more intelligently and profitably in 2018:
Digitalization is Changing the Insurance Industry
Digitalization is affecting the insurance industry in several ways. According to a recent study from Bain Digital, seven technologies are particularly disruptful to this industry: infrastructure and productivity, online sales applications, advanced analytics, machine learning, the Internet of Things, distributed ledger, and virtual reality. Additionally, the impact of these technologies on how insurers do business is only expected to expand over the next three to five years. Consumers are expected to benefit from this transformation, particularly when it comes to choice, transparency, and convenience.
Insurers themselves stand to reap the rewards that digitalization offers as well, particularly if they capitalize on insurance solutions to transform their existing business processes. In addition to rolling out a state-of-the-art app with a top-quality client experience, digitalization also means re-envisioning how the day-to-day workflow of an insurance company takes place.
Insurers are increasingly realizing the tremendous opportunities that lie before them in employing a digital strategy. As Tech Target reports, nearly two-thirds of insurance companies responding to a recent survey believe that digitalization is the key to their organization's commercial future.
How Insurers are Digitalizing Their Businesses
One way insurers are digitalizing their businesses is through streamlining the application process. For example, as TechCrunch notes, one insurtech startup allows potential customers in Australia to snap a photo of something they want to insure with their smartphone, upload it into an app, then apply for insurance coverage for a set period of time. The app analyzes data about the customer and the item they want insured, returning a personalized offer in just a few minutes. The customer can accept it with the tap of a button and be on their way, satisfied that they've taken a prudent step to protect an important asset. Customer acquisition solutions like these accelerate the process of closing sales, too, drawing revenue to the insurer's bottom line.
Some insurance companies are pairing automation with chatbot technology to take customer service to the next level. Insurance policies can sometimes appear quite complex and opaque from the client's perspective, and so it is not uncommon for prospective policyholders to have questions during the application process. Insurers can minimize friction at this critical step in the client acquisition process by providing them with instant customer service in the form of a chatbot. This ensures that they always have the information they need to feel comfortable moving forward with a policy.
Insurers can also deliver more satisfying customer service and enhance existing business processes by integrating their business communications software with their CRM. For example, by integrating a unified communications system with Salesforce, an insurance firm can put detailed client information at agents' fingertips, allowing them to answer questions faster and more thoroughly, and delivering a higher-quality customer experience. What's more, an insurer can leverage CRM analytics on customer interactions such as phone calls to better understand where service processes can be improved, allowing the company to continually refine and optimize their service.
Insurance Digital Strategy Opens the Door to New Business Opportunities
In addition to enhancing business productivity and boosting client satisfaction, digitalization is also opening the door to new business opportunities in the insurance sector. For instance, as Insurance Journal reports, millennials drive much less often than Gen Xers and baby boomers, creating an opportunity for intrepid insurers to offer them a new product tailored to their needs: lower-cost, pay-per-mile automobile insurance. And while they may not be purchasing homes at the same rate as previous generations, they still want to protect specific assets. This presents a business opportunity that insurers — particularly those that have pursued a path of digitalization — can capitalize on.
Insurers are using digitalization strategies to better understand shifting client needs such as these, using analytics to forecast what they'll need next and leveraging demographic information, such as policyholders' marital status and generational cohort, to proactively market products such as home insurance and life insurance. In this way, they are anticipating clients' emerging needs in advance, devising personalized products and services that serve both existing and entirely new markets. Insurers that take advantage of such data insights now will likely gain an edge over those that fail to tap this golden opportunity in a timely manner.
Insurance companies have historically had a reputation for being risk averse — which one could say comes naturally to them due to their line of work. But these companies are increasingly awakening to how a bold insurance digital strategy can boost their competitiveness and enable them to be more agile. As they streamline their business processes and innovate the service experience they offer, insurers are attracting new clients and driving growth to the bottom line.