If someone had asked ten years back which industry should be the first to taste digital innovation, many would have pointed towards the insurance industry.
There was a reason behind this hypothesis. For instance, if we breakdown the insurance business to its core, you would realize that the industry is built on incomplete information, where insurers pools together subjects with similar but indefinite risks, charging a premium calculated on uncertain probabilities as a shield for future liabilities instigated by that group plus a profit.
For many years, the insurance industry remained isolated from the digital disruption wave. Things, however, has changed dramatically in the last few years and the industry begins to feel the digital effect. The way products and services are delivered is changing, and the opportunities abound for insurance companies in this new world.
Digital Disruption in the insurance industry
Be it slow underwriting process, lengthy claim filing procedure or lack of data and analytics for personalized customer experience, insurance is ripe for disruption.
Digital disruption was an imminent threat for many years, and the reasons can be many — capital requirements, regulations, historical data and lengthy contracts. Insurers can witness a credible wave of digital disruption that is set to change the dynamic of the industry, defining a new set of winners and losers.
If they choose to move swiftly and decisively, insurance companies can flourish in the digital age. Conceptually, the winners are those that are focusing on one step ahead of the value chain. Insurance players that will offer something unique and valuable to the customer leveraging some digital capabilities will definitely going to be successful. Those who do not will find it increasingly difficult to generate attractive returns.
Triple Prize: Happy Customers, Higher Growth, Lower Costs
With advances in data, technology and advanced analytics, we can expect to see insurance change its way. In the last few years, customer expectations have dramatically changed. They are demanding better services, and customization. Customers today want 24-hour access, relevant information about a product’s features & pricing, and innovative services designed for the digital age.
Within traditional business model that was successful for many decades, insurance companies have a hard time to understand which technology they need to adapt to meet customer expectations. Digital technology and data analysis can help companies to know their customers better, which means accurate pricing and underwriting along with better identification of fraudulent claims.
Digitalization of insurance means faster processing times and improved service. And higher customer satisfaction and increased customer retention is itself a driver of profit. Insurance companies, nowadays, are smartly digitizing their existing business, thereby removing significant cost across the value chain.