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Digital Transformation in the Insurance Industry post COVID-19

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Digital Transformation

The pandemic has catapulted digital transformation from being good-to-have to a must-have for many organisations. Insurance is one such industry that has been hit the most. With soaring demand for health insurance in the last few months, insurance companies are finding it difficult to cope with the sudden surge in web traffic, app traffic, and support. This is due to resistance to adopt digital practices. With all the profits invested in sales, marketing and scaling up offices that might symbolize tangible growth, investing in upgrading their IT, adopting digital transformation, and investing in IT innovation is just a line item in their agenda, or a topical subject to talk about in seminars and press conferences.

COVID has changed it all. Now every insurer is talking about ‘going digital’. Digital is the fastest and only way they can meet any sudden spike in demand, with scalability-at-will. Digital transformation helps businesses to be agile, and resilient with comparatively less cost-of-ownership.

Earlier, physical inspection of a vehicle was a key factor for auto-insurance companies. Without physically inspecting the vehicle, there was no way to process or pass a claim. With the sudden pandemic, complete lockdown and employees working remotely, all insurance companies were facing the same conundrum: How do you function and continue business-as-usual with one key factor missing? How do you inspect a vehicle virtually and still be able to pass a verdict? Well, digital solutions were the key. It was the only way to survive the disruption caused by the pandemic with customer queries piling up every day. With technological advancements in AI and predictive analytics, insurance companies are now able to process claims in minutes without any manual intervention.

It weren’t just the companies facing the challenges, but the customers too. While digital services apps for insurance policies, groceries, cab rides were booming in metro cities, people in TIER 2 & TIER 3 cities were oblivious to such digital apps. Their exposure to mobile apps was limited to well-known and viral apps. Some of them still consider going to a bank branch for banking services, and they still fill out physical application forms for insurance claims at their respective insurer’s branch.

But as they say, need is the father of invention. The pandemic changed the way these people carried out their business-as-usual. With more and more companies spreading out across geographies, and reaching out to rural parts of the country, people have started exploring, and have exceled at, digital apps for banking, insurance, food delivery, shopping, etc.

Digital transformation should not be looked as a temporary fix. Rather, it should be an imperative part of your business strategy. Digital is the key to blend-in and accelerate growth in a dynamic business landscape. It means changing your business approach with time. Most of the traditional business approaches are redundant and obsolete now. If you ask a teenager to physically go to an insurance branch, stand in a line, fill an application, attach document copies, and then get an insurance policy, you will be laughed at. Digital transformation paves the way for new, agile, and dynamic business models that enables businesses to enhance their efficiency, accuracy, cost of resources, and provide a customized experience to their customers.

Let’s look at how insurance companies can change their approach, steer ahead of their competition, and benefit from digital transformation:

Customer Experience

The emergence of smart devices has paved the way for an omni-channel customer experience. Customers today want a curated, efficient, and convenient content experience that feels tailor-made. Customers are ready to pay more for convenience. Comfort and mobile-friendly are one of the key parameters of decision-making amongst customers. Insurance companies can take incremental steps towards their digital transformation journey. They can start by converting their engagement processes such as customer on-boarding, verification, etc. into a digital engagement model. The acquisition, on-boarding, and engagement can happen via mobile apps, or web. According to a well-known insurance provider, customers buying insurance via online channels have quadrupled in the last 3 years. Digital process leads to accuracy in the data with no need of manual intervention. This leads to faster claim processing as data claim rejection due to mismatch is reduced. Processes such as Policy renewals, and tracking pending claims also get easier with the use of digital channels.

AI & Data Analytics

The demand for insurtech has seen a spike in recent years. One of the key component of insurtech is AI and Data Analytics. The technology advancements in AI has made predictive analytics possible, which can prove beneficial to insurance providers to accurately predict health disparities, accidents, and so on. With the help of customer data points, their diet, fitness regime, and health history, AI can help the insurer identify and predict if the customer is going to claim any insurance in his given policy period. Also, data such as car manufacturer, travel frequency, past incidents, location of travel can help insurer determine and predict future claims by any customer with an auto-insurance policy.

Process Automation

Insurance claims processing involves a lot of paperwork to be filled due to involvement of various parties. For instance, in a health insurance claim, the insurer has to look into customer data, past illnesses, past reports, current reports from the hospital or clinic, policy terms and conditions, validity, exceptions, and finally the value of the claim. The source of these documents could range from internal acquisition team to third party such as a hospital. Process automation can help them transform all of the above data and processes digitally, thereby enhancing workforce productivity, time, and efficiency. Robotic Process Automation (RPA) tools can help them free-up their resources, increase data accuracy, generate EOD/BOD reports, and so on.

Digital transformation is, however, a continuous process. It is a journey where businesses move away from their orthodox business models and legacy architectures, and adapt to the current technological landscape and environment to create new markets that support innovation and growth. With new approach comes new risk. Insurance companies have to also consider the need to invest in a robust security tools that can curb unforeseen cyber-attacks. Insurance companies will have to make room for digital transformation in their overall business strategy. This could involve finding the right digital tools to start with, budgeting for capital investment in ICT, and sourcing the right talent or leveraging incumbent talent to become digital-ready. Those who adopt digital transformation will leapfrog their competitors, and those who don’t will have to suffer their inevitable extinction.

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