In 2016 our entire industry went from one that was slow to adopt emerging technologies to one that is well on its way toward digital transformation.
With increasing disruption in the form of innovation and new market entrants, we’ve moved more quickly toward progress than any time in history.
Although this is a notable achievement (especially in property & casualty insurance), reports show that there is a real movement for straight-through processing across all business processes.
In the employee benefits/group insurance space where I work, our experience is that insurance companies want to streamline all data. One of the prerequisites is eliminating the re-entry of data, for example, pushing customer relationship management data to a rules-based underwriting and rating engine.
Sending the information into illustrations and proposals and then populating an electronic application (e-app) into an enrollment component, where the insurer can cross-sell optional voluntary products is gaining traction. As are web services into various broker exchanges and automated renewals with seamless movement of data between claims and policy administration vendors into the sales and underwriting system. However, many manual processes are still dominant across certain areas of insurance, such as new case on-boarding, platform integration and voluntary product offerings, revealing there is still work to be done.
In just one year, carriers have had to mobilize intelligently. They’re making strategic decisions that salvage previous investments in IT and equip present ones for growth. Taking large strides toward innovation and the Internet of Things gives insurers the inevitable benefits of this shift more quickly, too.
Five key priorities
Goals drive action, and Celent’s “Life/Health Insurance CIO Pressures and Priorities 2016: North American Edition ”report outlined the following as some of the top business goals influencing CIOs of midsize and large carriers in 2016:
- Growth and retention.
- Process optimization.
- Regulatory requirements.
- Cost reduction.
Charged with finding the right solutions to realize these goals, IT departments have had important investment decisions to make. Not just for solutions that help achieve objectives today, but also ones that ensure mid-term and long-term success as well.
Adapting to disruptive technology
Insurance technology — often referred to as InsurTech — is now a fully fledged stream of financial technology (called FinTech) with $1 billion of venture capital invested in 47 deals in the first half of 2016, Life Insurance International revealed. That’s great news for insurers. Contrary to what some others experts think, I believe InsurTech to be more complementary than competitive to insurers.
Modernization of core legacy systems, new insurance exchanges and changing business models (platform and peer-to-peer) defined 2016. They will continue to do so as carriers adopt digital strategies.
Blockchain cryptocurrencies (Bitcoin for example), artificial intelligence and sensor technology (think wearables and autonomous cars) are taking hold in insurance and providing ample opportunity for disruption. The Internet of Things, the foundation for many emerging technologies, has irrevocably changed the way companies and consumers communicate. These trends are accelerating.
Of course, big data, analytics and cloud technology are all part of the mix as well. Juggling the onslaught of new innovation and understanding how it can be used to create a competitive edge very quickly can be disconcerting. However, these disruptive forces should be seen as the catalyst necessary for the kind of dramatic change required to spur growth and new insurance products.
2016 in a nutshell — and moving forward
A lot of progress was made in 2016, but there’s still a long way to go. It won’t take place overnight, within a year or even a few years. It’s a new paradigm that will continue evolve right along with us, the benefits of which will be felt as swiftly as companies are willing to change.
Automation, integration and digitization are creating solutions for straight-through processing. They’re yielding faster turnaround times, reducing errors and optimizing workflow, creating the kind of connected insurance that customers and advisors are hungry for.
“The secret to change is not to focus your energy on fighting the old but on building the new.” Those words of wisdom could have been uttered by a top management guru. But they were said by Socrates 2,400 years ago!
In 2017, it’s clear that’s what the insurance industry leaders intend to do.
Mike de Waal is president and founder of Global IQX, a leading software provider of web-based sales and service solutions for employee benefits insurers.He can be reached at email@example.com. Opinions expressed in this article are the author's own.