If you feel like you’re listening to a broken record when it comes to the calls for digitization and modernization in insurance, you’re not alone.
It seems like every year around this time we hear how far the global insurance industry lags behind other industries.
To be fair, there is much progress still to be made. However, we’ve seen great strides over the past few years as insurers develop and implement advanced technology like robotic process automation, telematics and more user-friendly digital apps. These advances shouldn’t simply be dismissed.
Productivity and profitablility
The next step will be tying it all together in a meaningful way that both anticipates customer needs and enhances business productivity and profitability. Across the globe, business and IT executives have come to accept the correlation between committing to digital transformation and advancing business. A recent study from The Economist Intelligence Unit (EIU) on behalf of CSC showed as much.
The study surveyed more than 500 CEOs, senior IT professionals and other C-level executives across global enterprises and industries. A mere 8 percent qualified as “digital leaders” based on their organization’s level of digital integration. However, this 8 percent was much more confident in the ability of their IT systems to deliver strong financial performance than those lagging behind. And, compared to other industries surveyed — such as healthcare and banking — insurance executives were among the most committed to digitizing in the years ahead.
The question then becomes: Where can insurers make the biggest impact?
Today's consumer prefers using technology to gather information and communicate. (Photo: iStock)
In the immediate term, there are a few key areas every insurer can shore up to better meet customer needs:
1. Tying together agile customer-focused solutions
One common pitfall IT and business executives make when investing in technology is looking internally first. Customers dictate how they interact with their insurer or leave for another, not the other way around. With this in mind, every technology decision should be made through the lens of the customer experience. If not already developed, insurers should immediately evaluate their multi-channel approach.
Whether a customer prefers to engage through face-to-face meetings, over the phone, online or through a mobile app, the experience should be optimized for each channel. The key is having the same data available to support the experience regardless of channel.
2. Integrating legacy IT systems
In the move to a truly digital environment, insurers must grapple with bringing together disparate (and sometimes outdated) IT systems across business functions. In simpler terms, organizations need to find a way to make different business systems speak to one another. For example, claims processing systems need to work seamlessly with finance and accounting, and tie into customer-facing capabilities like telematics systems and customer portals.
This is a real challenge almost all insurers will deal with, especially given continued consolidation and M&A activity where disparate systems are being patched together. To address the challenge, enterprises will realize the power of application program interfaces (APIs) and working with an experienced service provider. APIs are more than a development tool — they create new channels for service integration, information coordination, ecosystems of information sharing and economies around information derivatives.
The core of a digital strategy depends on democratizing information access, and APIs play a central role in that process. APIs often wrap around older systems and act as the key to information access and exchange between systems. This enables organizations to combine data from legacy applications and new applications, a critical piece of integrating systems.
3. Securing cloud-based infrastructure
As insurers prepare for the digital future, they must ensure the best foundation is in place, which may include an orchestrated hybrid cloud environment to accelerate the provisioning of the workload. Incorporating cloud-based infrastructure should be one of the first steps of digital transformation. However, many insurers are reluctant to fully commit due to concerns about compliance and security.
The global insurance industry has been at a digital crossroads for some time. We’ve spent the last few years in the midst of a digital revolution — developing new technology to better serve existing and new customers, and deal with growing cyber threats. Emerging from this period of innovation, the winners will closely tie technology and IT development to business operations and strategy, following a customer-focused approach.
Jim Reesing is vice president of global property & casualty sales at CSC.