We live in challenging times where we must cope with uncertainty and constant change. Despite these difficulties, the global pandemic also brought an unprecedented opportunity for digital transformation in the insurance industry. For P&C Insurers, accelerating their digital transition and increasing their flexibility to the “new normal” are crucial steps to take.
Digital Evolution Forced by the Pandemic
Given that physical contacts became extremely limited, insurers already began to move their processes to a virtual space in the first half of 2020. As digitally submitted claims and the use of AI/data analytics for underwriting are slowly becoming a reality, the rest of the organizations’ digitization will naturally follow. In my opinion, a strategic digital agenda for P&C insurers should focus on the following 3 elements.
1. Let Go of the Burden of Legacy Systems
If Marty McFly from ‘Back to the Future’ would end up in our world, he probably wouldn’t know how to order goods from Amazon or store his favorite photos in a cloud service. But most likely, he would know how to purchase a car or home insurance, because so little has changed in the domain for the past 30 years.
Many P&C Insurers are struggling to keep up with newly emerging customer needs and changing circumstances. By carrying the burden of legacy systems and being a slow adapter of technology, insurers are only putting band-aid solutions on their outdated processes. In this sense, they are losing connection with the largest segment of today’s workforce with the most buying power: the Millennials.
I am aware that technology modernization is easier said than done in enterprise-level organizations, but stakeholders must embrace innovation to stay relevant in the market.
2. Create Offerings that Cater to the Millennial Market
Most P&C insurers still work with one-size-fits-all offerings, although that is not how the market operates today. Across the insurance industry, companies are being re-defined by their clients’ habits and expectations, but they rarely have customized offerings that adhere to the Millennials’ or the Gen Z’s lifestyle.
Just think about the case of Uber-drivers, or people who are driving their elderly relatives to the hospital. These situations are exceeding the limits of personal coverage, yet very few P&C insurers have a hybrid solution for them.
Another example is the lack of proper risk management for customized cars. According to a recent study by the Specialty Equipment Market Association, young car owners between the age of 16-24 spend $7.2 billion each year customizing their vehicles, adding more horsepower, upgrading to sport pedals, and alike. Currently, P&C insurers are not tracking these alterations, and therefore, they are losing millions of dollars in premiums.
The industry needs to be shaken up and reconnect with its end-customers, many of whom were born and raised in a digital environment. With the help of emerging technologies, the once complex and paper-intensive processes can be replaced with a rapidly configurable digital system, utilizing low-code and no-code platforms. For example, Innoveo’s no-code platform, Skye provides the ability to quickly launch new product lines or modify existing ones, so P&C insurers can address ever-changing customer needs and improve their operational resilience.
3. Choose the Right Technology Partner for Your Needs
If done smart, adopting new technologies to modernize an insurance company can result in immediate revenue impact. However, as explained by McKinsey, enterprise-level digital transformation journeys must be planned with caution, as many insurers miss out on the full benefits for 3 reasons:
“First, they don’t have a clear view of what sort of actions are needed or the impact such actions could have, which may lead them to undersell both the business value at stake and what is needed to capture it.
Second, many organizations have assumed that a “digital overlay” is all that is needed, only to find that some capabilities (such as rapid product configurations) require modernization of core systems.
Third, insurers that do embark on modernization may falsely assume that a platform replacement will be a magic bullet that will solve all their efficiency and data-conversion problems.”
Thus, the implementation of cutting-edge technologies, such as low-code or no-code platforms is only one part of the equation. Any successful digital transformation effort needs to put the end-customers at its core, recognizing their increased demand for autonomy and control and provide them a frictionless buying experience.
On top of that, if you want to exploit the full potential of digitization, you must find a technology provider who understands your business inside-out and is able to integrate your legacy and emerging systems, with a solution that is tailored to your specific requirements.
We at Innoveo are a trusted partner for some of the world’s largest insurance companies. If you are interested in learning more about our solution, please do not hesitate to get in touch.
Barbara Péterfi, Content Marketing Manager at Innoveo