Digital transformation has transformed countless businesses – from manufacturing and retail to hospitality and healthcare. The insurance industry is no exception. This industry is embracing digital transformation in various ways to mitigate complex challenges and meet the demands of customers.
The digital transformation of the insurance industry – powered by emerging technologies such as artificial intelligence and the Internet of Things (IoT)- is enabling insurers to meet customer demands with greater speed and efficiency. This further leads to improved customer experience and growth of companies.
Moving further, to assess the real impact, let’s explore several benefits of digital transformation in the insurance industry.
Benefits of digital transformation in the insurance industry
With the innovation in insurance industry, digital transformation has generated great business value and other benefits such as:
1. Operational efficiency: The first and foremost benefit of digital transformation is improved operational efficiency. Emerging technologies like AI and machine learning have accelerated every aspect of insurance operations. In the current scenario, insurance companies can process claims at lightning speed, and accomplish policy writings instantaneously. Digital transformation is also improving the customer experience. Live chat and digital assistants are helping customers to get the best services in no time.
2. Advanced data management: Compared to traditional data management systems, advanced data analysis will allow companies to offer new products and services that are personalized and profitable. The ability to design a service or product that takes into account the real needs, preferences, and lifestyles of customers will allow insurance companies to improve the customer experience and performance of their business.
3. Increased customer satisfaction: Digital transformation agency is empowering insurers with the tools they need to give excellent services to customers without overextending their resources. AI and machine learning create a seamless customer experience. Customers can pay bills, file claims via an app, and view policies without any hassle. Insurers, on the other hand, can receive and process all information on their end under one system. You don’t have to wait anymore to see if your claim is being received and processed. With digital technologies, you can get instant feedback. Digital transformation in insurance is also helping in the personalization of marketing efforts. AI systems and robust data analytics can tailor and target marketing efforts for insurers with the help of social media to reach audiences they can truly impact.
4. Increased scalability: With the advent of digital transformation, the insurance industry has become more scalable at both the front and back ends of the operations. The new technologies have made this industry more flexible to the current demands. On the customer-facing front, insurers offer services everywhere and at any time via apps and self-service dashboards. Valuable data can be collected from customers via IoT-enabled devices and wearables. Talking about the back end, this technology helps insurers make more accurate decisions on underwriting, policies, new product offerings, and more.
5. Agile transformation: Digital transformation is empowering insurers to become future-proof. Since these technologies will keep evolving and creating more opportunities, insurance companies will become more agile. Various prominent technologies like AI, machine learning, and IoT have already found their way into the insurance sector and are helping insurers to adjust to new technologies and capabilities.
Trends in digital transformation for the insurance companies
Insurers looking for a competitive edge should consider embracing one or more of these emerging trends in digital transformation.
1. Predictive analytics: Predictive analytics allows insurers to collect a variety of data to help them understand and predict customer behavior. However, there are several new ways it can be utilized to improve the accuracy of data. In 2021 and beyond, this technology can be used by insurers for:
Identifying risk of fraud
Pricing and risk selection
Anticipating trends
Identifying customers at risk of cancellation
Adopting this technology has also proved to increase revenues and accuracy for many insurers out there.
2. Internet of Things (IoT): Through IoT, insurers have access to a huge amount of data and real-time data of policyholder’s lives. Using this information, insurers can create new innovations and opportunities in the insurance industry.
3. Insurtech: Insurtech or insurtech companies leverage the latest insurance technologies to improve operational efficiency, reduce costs for both customers and insurers, and improve customer experience. The advent of insurtech has changed the way real-time and predictive data can be captured and used to promote development of insurance products.
4. Chatbots: As per some reports, 95% of all customer interactions will be driven by chatbots by 2025. This stat proves the huge potential of chatbots in the future, and many insurers are introducing these virtual assistants into their platforms. These bots can help customers with complaints, service requests, or answering frequently asked questions.
5. Cloud computing: As per a survey, 80% of insurance providers agreed that they are either moving some of their business functions over the cloud or have already shifted to cloud storage. Cloud architecture improves speed and flexibility, allowing organizations to manage their data simply by taking advantage of the services and tools offered by cloud providers.
6. Social media: Social media has been playing a crucial role in the development of the insurance industry. With the rise in popularity of social media, the process of communicating with customers has become easier. Customers can also research insurance companies, read reviews, and even review a product via social media platforms.
7. Artificial intelligence: While shopping for insurance policies, customers are looking for a personalized experience. With the help of AI, insurers are able to customize unique experiences for customers. Besides, the high-speed demand of modern customers is taken care of using AI. Through this approach, insurers are able to change the underwriting process and improve the turn-around time of claims. With AI, insurers can access more accurate reports in a short amount of time.
Final Note
To be prepared for a digital future, the insurance industry must adopt the tools of digital transformation and find creative ways to launch innovative products. In fact, 90% of insurance executives today state they have a long-term plan for technology innovation in place. Undoubtedly, digital transformation is reshaping the current future state of the insurance industry. The new technologies are enabling insurers to stay on top of things and remain at the forefront.
