Unpacking the top three challenges facing the insurance industry in an evolving digital world
You don’t have to dig too deep to discover that the insurance industry is undergoing immense technological growth and transformation. The results of a study conducted by PWC shows that “more change has occurred in the insurance industry in the past year than in the previous several years combined and its pace is only accelerating.”
This endless juggle of uncertainty and change is something that the insurance industry has dealt with for years and knows all too well. Insurance companies have been forced to evolve and adapt to the changes brought on by new digital technology, changing business environments, and completely new customer requirements.
As PWC points out – insurers used to be able to make transformation plans that were set five to seven years ahead, that approach is no longer viable. Now, they have to adapt to disruption, digital and transformation as swiftly as possible to stay ahead.
There are three challenges that really stand out in this industry, challenges that require inventive thinking and approaches to ensure the business is capable of the flex it needs to succeed.
Challenge 01: Finding value in the data
There is plenty of data. Big data, data lakes, data pipelines, and data swamps. Insurers are facing a singular challenge when it comes to this data – how to turn it into a valuable commodity. For underwriters, these zettabytes and petabytes of data represent immense opportunity, but they are struggling to put the information into an order and structure that’s accessible, or even useful.
Underwriters can potentially translate this data into improved service offerings and decision making, into streamlined workflows through automation, and into better customer communications and solutions. According to Deloitte Insights 2021 Insurance Outlook, a large percentage of insurers are undertaking transformation projects that go beyond just ‘automating routine, labor intensive data gathering and processing tasks’, towards solutions that allow them to fully pull on the potential of Artificial Intelligence (AI), and predictive models.
The challenge of data isn’t just in the volumes, and in finding the right solutions to manage these volumes to squeeze out the insights, but in making this a strategic investment focus. Even though the Deloitte survey found that automation was a top priority for underwriting in the US, this priority sat only in fourth and fifth place in Europe and APAC respectively. Investment into the right tools is invaluable not just for insights and processes, but for governance and compliance too.
With increasingly rigorous data protection regulation coming into play, alongside rapidly changing coverage parameters and digital engagements, the industry needs to get to know its customers better, through data, and manage that data more efficiently.
Challenge 02: The shaky economic outlook
The economic outlook is complicated. The International Monetary Fund puts the global economy on slightly firmer ground, but underscores the consistent impact of uncertainty on overall recovery. For the insurance industry, this unpredictable economic landscape is making it difficult to do business and manage strategic investment. Deloitte believes that this pressure is exactly what businesses need to encourage investment into disruptive technologies and digital transformation strategies that put them on a firmer foundation.
This is a view shared by Deloitte and by McKinsey & Company, the latter pointing out, quite rightly, that while insurers know that digital transformation initiatives can help them to increase growth and profits, it’s equally a line item that has to deliver real business value. There’s a very real need for IT investments to show measurable value, to prove they pay off, in a world where cost pressures are only going to become even more intense. This is where investment has to be about the right integration and automation platforms, and the right service providers.
Measurable value in tough economic times is as much a commodity as oil and gold. A collaborative partnership with an organization capable of managing automation workflow integration at the right touchpoints across underwriting, pricing, policy, claims, marketing and sales. This approach not only ensures consistent modernization within the limits of budget and legacy architecture, but also ensures the insurer can find the real value in their investment.
Challenge 03: Competition, competition, competition
The insurance landscape has changed – it’s still changing. Where insurance traditionally sat, with banks and insurance companies, it now has sidled into new companies, been disrupted by new industries, and been reinvented by entirely unexpected industries. The 2021 Accenture Insurance Report revealed a world where 27% of customers would consider insurance solutions from Amazon or Google as opposed to traditional service providers, and 24% would buy it from a supermarket or retailer. This trend towards the accessible and unexpected is further cemented by the fact that customers, across all generations, are increasingly comfortable with digital insurance solutions.
This translates to a very simple premise – quality, value, accessibility and ingenuity are the keys to unlocking customer engagement and loyalty. Programs need greater customization to suit different demographics – the millennial wants wellness, the silver surfer wants ease of use and accessibility, both want a blend of human and digital because it’s simpler and more customizable.
This is the time to switch up the competitive advantage with technologies that allow for improved customer experiences through seamless automation, data implementation, and accessible digital engagement. From the policy that takes the needs of a single generation into account, through to multiple customer touchpoints for support and engagement, through to constantly evolving solutions – the insurer of today can’t sit on the laurels of yesterday, especially if they’re not digital.
These challenges are not insurmountable. They’re also not prohibitively expensive to resolve. The right digital strategy that slowly integrates the right technology at relevant points along the business will deliver measurable value, and help the insurance company deftly manage ongoing complexity. This is where Synatic steps in. With proven industry expertise and the right integration and automation solutions, we can help you unpack the complexities and pack them back in as seamless efficiencies.