The innovative customer-centric InsurTechs and pandemic have accelerated digitization in the insurance industry. In fact, these have been one of the greatest catalysts in helping the sector keep up with the changing demands of tech-savvy customers who expect on-demand, transparent, and seamlessly connected services. Therefore, the need for digitization has given fledgling insurance technology companies the opportunity to refine their products and services and reimagine their core processes. The usage of new-age technologies like artificial intelligence (AI), machine learning (ML), blockchain, big data, the Internet of Things (IoT), etc has contributed to this shift.
To compete in today’s evolving insurance industry, insurers have to provide the speed, agility, accessibility, and ease of use that only digital insurance platforms can deliver. Therefore, insurers must migrate from their legacy systems to a modern SaaS-based insurance platform. These platforms enable them to provide their internal and customer-facing offerings entirely through online channels – a huge deviation from their traditional insurance business model.
Given this background, it would be safe to state that the year 2023 and beyond is going to be all about platforms – that is, insurance technology platforms, if insurers want to invest in their growth to become future-ready. So, here’s a look at how the insurer of the future can keep up with changing business landscape and harness the power of insurance software platforms.
Where Do Digital Platforms Feature in the Insurance Value Chain?
Insurers have realized the value and potential of digital platforms across various touchpoints in the insurance value chain – some more in segments like health and finance than others like housing and education. Regardless, the transformative approach requires the active participation of the insurance business and an insurance technology company to orchestrate and implement a digitally-native ecosystem. Here are a few areas where it may be possible to leverage digital platforms:
New Product Development
Traditionally, insurance products have received continuous flak for not changing with the times and going with a blanket approach while offering coverage. However, that is all about to change with the involvement of insurance technology software platforms.
To begin with, the industry is overcome with waves and waves of structured and unstructured data from multiple sources. At the same time, InsurTechs are developing techniques to leverage this data and transform them into actionable insights to drive new business models. Here’s where we will witness product development platforms that will compute large volumes of data and distil out the relevant data sets that can improve and upgrade the insurance product. Thanks to such intervention, every insurance product would be personal to the customer and their circumstances. Plus, it will give insurance companies the opportunity to break into new market segments or offer complementary products that will add value to the customer’s life while increasing the revenue for the insurers.
For instance, Damco has helped customers in the Caribbean to upgrade their P&C insurance policies to factor in the effects of climate change. As a result, policyholders are also protected from the devastating effects of natural disasters and other events.
Better Customer Acquisition and Retention
Different customers have different expectations of their insurance policies. Some may be price-sensitive to the extent that the cost of insurance would be the only clinching factor in their purchase decision. Others would not mind paying a premium for more elaborate and comprehensive coverage that caters to their personal requirements. As such, insurers would have to recalibrate their marketing and sales strategies to win over different customer segments differently. Here’s where insurance technology software platforms come in handy to set up and initiate dynamic marketing campaigns that change according to the target audiences.
Once you have gone through the journey of lead capturing, qualification, and segmentation, tools like insurance CRM software can maintain the dynamic nature of your engagement and nurturing campaigns to make the customer journey more value-loaded until you close the deal. Why just stop at customer acquisition? After all, it costs 5x to acquire a customer than to retain them. Plus, a 5% increase in customer retention could up profits by 25 to 95%! With insurance software platforms by your side, you can increase policy renewal rates and increase customer lifetime value. All in all, a win-win situation on both fronts.
Automated Underwriting and Dynamic Pricing
So far, underwriting and pricing in insurance have been fairly intuitive. However, insurance platforms are eliminating much of the guesswork involved and replacing it with cold, hard logic that rests on immutable data. As a result, insurers can maintain consistency and justify any decisions related to policy underwriting and pricing. Plus, the involvement of digital platforms expedites the decision-making process by injecting automation into the end-to-end cycle.
At the same time, it rests on an exhaustive model that fetches information from multiple sources, processes high volumes of data, and computes risks to peg insurance pricing such that every policy is personalized according to the policyholder. Even though the process sounds overwhelming, the underwriter can effortlessly carry it out with just a click of a button. As such, the introduction of insurance software at this stage of business operations culminates in several benefits in the form of insurance product personalization, capitalization of upselling/cross-selling opportunities, increased customer satisfaction, higher employee productivity, and faster service delivery.
Simplified Claims Management
Claims management is yet another facet of insurance that has undergone rampant disruption thanks to insurance platforms. Claims management systems are eliminating all the barriers to faster and more transparent raising and settling of claims. For starters, policyholders can now submit claims through mobile phones, which makes it easier to report a first notice of loss (FNOL). Along the same lines, the claims process has undergone automation or semi-automation with pre-filled forms, online submissions, and algorithmic claims assessment that make claims handling a piece of cake.
Naturally, such lightning-fast responses paired with absolute transparency and objectivity are giving a boost to customer experience and instilling trust in the industry. Apart from enhancing customer-facing activities, it is also boosting internal operations. For example, the use of AI, ML, and big data is playing a key role in preventing and minimizing insurance claims fraud, which is making businesses more profitable and insurance more affordable!
Ready to Transform Insurance Using Digital Platforms?
The applications discussed above are just the tip of the iceberg of cases where insurance software platforms can transform operations. The difference in capabilities of digital insurers compared to those that are not leveraging the insurance platform technology is stark. Be it modifying insurance products or rates, managing the agents, or tweaking workflows, the insurance platform helps in increasing speed-to-market and agility for insurers. It can improve customer experience by easily building unique omnichannel experiences across customers’ preferred channels.
Either way, digital insurance platforms cut across the entire insurance value chain to generate more opportunities to maximize profitability and maintain resilience against disruptions. So, act now!
