Digital Transformation – For Insurers, the Time Is Now

BY: Patty Nicholson
FEBRUARY 17, 2022

It’s a battle for survival, and you need to make sure your insurance company comes out on top.

For insurance companies, digital transformation has become less of a business decision and more of a survival strategy driven by competitive threats from startups and the need to improve the customer experience.

The insurance industry as a whole had been slow to transform. Global changes and challenges since the start of 2020 led insurance companies to scramble to embrace digital transformation as online interactions became business-as-usual worldwide. This highlighted the fact that, in a rapidly changing industry, only the digitally strong will prosper.

In this post, we’ll cover what insurance industry leaders must know about what amounts to a complete business transformation. We’ll tell you what digital transformation is, why it’s important, and what it means specifically for insurance companies.

Table of contents

  • Key terms to know
  • The pluses of digital transformation and some pitfalls
  • What digital transformation can really do for your insurance company
  • A roadmap for your transformation
  • 8 Reminders and tips for your digital transformation journey

What is Digital Transformation (and why does it matter)?

Digital transformation is the integration of digital technology in all areas of business, which fundamentally changes both how you operate and how you deliver value to your customers. The technology is used to turn customer insights into customer-centric services and products, as well as to increase agility and operational efficiency.

Realizing these benefits takes connecting disparate systems into a single, unified insurtech ecosystem that is user-friendly and accessible to agencies, insurers, and customers. These technology solutions include robotic process automation (RPA) and artificial intelligence (AI). RPA works to automate tedious and error-prone manual processes while AI puts the intelligence in automation — allowing your system to process large amounts of data that provide actionable insights and business advantages.

Regardless of size, digital transformation is vital to all businesses if they want to stay competitive and relevant in our digital world. No matter what other reasons you have to undertake digital transformation, it really comes down to survival. While priorities may lie with analytics and other operational benefits, the real goal is a positive customer experience. The experience you provide your customers can make or break your business, and transformation is imperative to initiate and nurture those relationships.

What Digital Transformation means for Insurance Companies

While the traditional insurance business model has proven to be incredibly resilient, the digital effect is changing how products and services are purchased and delivered. In the future, it will likely change the nature of those products and services along with the overall business model.

Companies that move quickly and decisively will flourish, while those that do not will find it difficult to make a profit if they can stay in business at all. An important thing to remember is that the real opportunities for unlocking value lay in end-to-end operational transformation.

We’ve said a lot so far about how important digital transformation is for the customer experience, but carriers should keep agents in mind as well. A well-supported, well-informed agent is better able to serve their customers, sell your products, and bring in more revenue. Extensive research shows that most insurance customers say they trust their agents and prefer to buy from them rather than directly from insurance companies.

Ease of doing business is a big factor for both customers and agents; in fact, it has a huge influence over carrier choice for agents. Since they bring in the business, it only makes sense to bring agents into the fold and improve their digital experience so they can contribute to your company’s growth.

Be sure your new digital platforms provide agents with:

  • An intuitive user interface
  • AI-powered communications, including reminders and compliance information
  • Omnichannel payment options
  • A transparent claims process

These improvements apply to customer-facing technology, as well.

Concepts to know

Tech is rife with specialized terminology, so let’s go over some key terms you should know and what they mean.

Insurtech: Short for “insurance technology,” insurtech covers a broad category of custom-built technology used to improve the customer experience, streamline operations, and create cost savings specifically for insurance companies.

Robotic Process Automation (RPA): An application of technology that is governed by business logic and structured inputs to automate business processes. A company can use RPA tools to configure software, create a “robot,” capture and interpret forms, manipulate data, and trigger responses and communicate with other systems. RPA can be used for something as simple as automatic email responses to deploying thousands of bots, each programmed to automate tasks in an ERP system.

Intelligent Automation (IA): Intelligent automation is the use of automation technologies – artificial intelligence (AI) and robotic process automation (RPA) – to streamline and scale decision-making company-wide. It simplifies processes, frees resources, and increases operational efficiencies. An insurance company can use intelligent automation to calculate payments, make predictions for rate calculations, and keep in compliance.

Artificial Intelligence (AI): Refers to systems or machines that mimic human intelligence to perform tasks and can constantly improve based on collected information. AI takes a number of forms, including chatbots that use AI to understand customer questions and provide answers. AI is really about the process and capability for high-powered thinking and data analysis rather than any specific format or function. The fact that it significantly enhances human capabilities makes it quite valuable for data analysis to manage risk.

User Interface (UI): UI is the point of human-computer interaction and communication in an electronic device, which includes display screens, keyboards, mice, touch screens, and the presentation of a computer desktop. However, the term is usually used to describe the way a user interacts with an application or a website. An easily navigated UI is a priority for many companies that want to improve their site’s overall experience.

Omnichannel: Omnichannel is a lead nurturing and user engagement method where a company allows access to their products and services on all devices, channels, and platforms. Rather than offering support only on their desktop websites, omnichannel companies utilize live chat, email, phone contacts, and social platform messaging apps to interact with prospects and customers.

The Pros and Cons of Digital Transformation

As much as we would like to tell you that your digital transformation will be a walk in the park, every strategic change has upsides and downsides. So, before you begin, let’s talk about some pros and cons

The Pros

It will improve your customer strategy

You are sitting on a mountain of useful data. Insurers can leverage digitization to access information swiftly, perform deep analyses, and implement timely strategies based on the results. For example, predictive data analysis can reveal how many claims are likely under specific circumstances. Digital transformation can also improve underwriting, accelerate policy purchase and renewal, and improve the claims process.

Most insurers are using customer experience-oriented decisions to improve the journey. Boost the effectiveness of this technology by creating a dedicated C-suite position for customer service, because it is just that important.

You will save money

There’s no getting around it – in the short term, your digital transformation is going to cost both time and money. However, automation will reduce claims costs and enable personalization of products, which means insurers can price and underwrite policies with greater accuracy for individual customers. This opens a path to long-term growth opportunities while cutting costs.

Gain customer loyalty

Meaningful customer engagement through multiple channels is made possible by offering personalized experiences. It also means customers can process claims online in minutes. As you probably know, in the insurance industry, it can cost five times more to acquire a new customer than to keep an existing one. Satisfied customers are more likely to renew their policies than unsatisfied ones.

This all ties in again with the UX – customers want a smooth and hassle-free application process, 24/7 support, and a cohesive experience on every channel, which only digital transformation can provide.

The Cons

Digital transformation can be time-consuming

Insurance companies have a large stake in traditional practices, with plenty of paper, siloed data, and legacy systems. Creating a new digital infrastructure consists of implementing complex back-end processes, training employees, and educating customers, and all of this takes time.

You will need to increase security

Unfortunately, the digital world is full of cyber criminals just waiting to pounce on unsecured data. Everyone is concerned about data and payment security, and a data breach can put you out of business, so having robust digital security is a must, as is a method to ensure thorough background checks and claims are indeed genuine.

Implementation can be challenging

The insurance industry handles heavy and sensitive paperwork, which makes the transition from your traditional physical system to a digitized one a bit challenging. It is important to ensure that all data transfers accurately. Technology changes rapidly, which means your digital transformation will not only revolutionize your business but also keep evolving, which can mean minor disruptions in the future.

The rewards of digital transformation for insurance companies

Change can be daunting, even painful, but when you have no choice (and you really don’t), it is nice to know that you’ll quickly realize all the benefits of your company’s digital transformation, including:

Improved efficiency

One of the most noticeable effects of digital transformation is the efficiencies it enables. Powered by RPA, AI, and predictive analytics, you can optimize many company operations. For example, claims can be instantly processed via an app, writing a policy can take minutes instead of days, and customer service can be accelerated with the use of live chat and digital assistants.

This valuable information can help with more than just customer service. It also streamlines claims handling, fraud detection, reports, and financial projections.

The ability to personalize customer experiences

Customers today both expect and demand attention where and when they want it, and they expect it to be targeted to their needs, which has made personalization the new normal across every industry. Digital transformation gives you the tools to provide customers with stellar service without overstretching resources.

Customers can pay bills, view policies, and file claims without waiting on the phone. Digital technologies also offer customers more transparency. By using data analytics and AI systems, you can target your marketing as well.

Transform the underwriting process

With AI and RPA, labor-intensive tasks such as claims management and underwriting — which involve large amounts of data — can be automated with a huge reduction in processing time. AI-powered applications also protect against fraudulent claims automatically and accelerate the underwriting process to detect misalignments in policies and greatly reduce risk exposure.

Scale up or down

Digital transformation makes operations more nimble and scalable at both the front end and back end. It also allows your company to be more flexible to meet demand. You can offer service everywhere and anywhere via self-service dashboards and apps that collect valuable data at the front end. On the back end, the collected data means you can make more accurate decisions for underwriting and policies as well as new product and service offerings.

Future-proof your insurance company

Technology will continue to evolve, but the foundation you lay today with your digital transformation will allow you to take advantage of technical opportunities for years to come. The tools you implement today will help collect data, store it, pull reports from it, and use it to make better business decisions.

Now that you know everything digital transformation can do for your insurance company, it’s time to talk about actually doing it.

4 steps to start and drive your company’s digital transformation

The first step to digital transformation is to know what you want to accomplish. Then, define value and secure commitments from your entire senior management team. Next, you will:

1. Create clear targets for employees

Without targets, some staff may find it hard to accept that the old ways of doing things were incredibly inefficient. They might think a 10% improvement in cycle time is great when 100% is possible. Keep track of industry benchmarks and make sure they are met or exceeded.

2. Build an incredible launch team

If you decide to create a new executive position for customer service, they should be a member of this team. You also might consider adding another position, the Chief Digital Officer (CDO), to coordinate your transformation and be sure everything is in place, including people, design, methodologies, and day-to-day priorities.

3. Form a digital unit

Promote new ways of working that will foster digital success. Hire people outside your organization for teams that can make a swift impact in areas of agile product development, test-and-learn methods, and as subject matter experts on cross-functional teams.

4. Nurture your digital culture

Your current employees may not have the necessary skills to take full advantage of the fast, collaborative, and empowered working methods digital transformation provides. They will look to the C-suite for guidance, which means you should be looking for ways to not only kick-start the change, but also get buy-in from your entire staff.

8 tips and reminders for digital transformation

For a successful digital transformation initiative, we have a few tips and reminders that will reduce challenges and help keep your eye on the ball – delivering a better customer experience, boosting productivity, eliminating inefficiencies, and providing better compliance.

1. Do your research

This is a complex undertaking, so learn as much about it as you can. You’ll want to explore topics like AI, RPA, cloud technology, and data analytics.

2. Do a deep analysis of how business could be improved

This is a part of your roadmap you can’t spend too much time on. You have to look at how your business currently operates and set goals for things like data gathering and analysis, improvements in customer service, and how to improve collaboration. Insights will come from senior and middle managers but take the time to get the input of other staff as well.

3. Make sure everyone understands the undertaking

If the word “complex” isn’t enough, how about “risks”? Everyone on your senior management team needs to know the scope, including:

  • Opportunities and risks
  • The strategies to reach desired objectives
  • The investments of time and resources needed
  • The impact on employees and company culture
  • How to communicate with customers and stakeholders

4. Collaborate on strategy

Create a transformation strategy that includes:

  • Senior management who can identify company goals
  • Business unit leaders who best know how their teams can support the goals
  • Your CIO, CTO, and CDO, who can identify the technology and systems needed to reach those goals

5. Create a project plan and budget

Be sure your budget accounts for the unexpected and can be revised as needed.

6. Devise a way to track and validate performance

Think about things such as potential investments, implementation time, the impact on company culture, operational changes, and customer feedback. These will help you develop metrics to analyze aspects of your digital transformation and determine its ROI.

7. Train, train, and train again

Training and awareness activities can help get buy-in from employees during your transformation. Be sure all employees who could be frontline users of your new tech, including senior management, understand the system and how it works. Then, use their input to adjust your new system to better fit your operations.

8. Conduct regular reviews of system performance

Your work has just begun when your digital transformation project is complete! It’s important to analyze all financial and performance data against your established metrics. Report the results company-wide so everyone understands the value of the new system as well as their value to the company.

The 3 essential capabilities of your digital solution

When you are doing research and developing your strategy, it’s important to know what capabilities are really needed for your insurance business.

You should look for solutions that help:

  • Reduce policy management administrative time
  • Reduce underwriting time
  • Make accurate risk assessments using IA
  • Automate workflows for claims
  • Optimize your billing system

This takes the following essential tools:

1. Intelligent Automation

With IA, the outcome is a huge reduction in duplicate effort and elimination of redundant manual processes. It also aids better decision-making and contributes to higher employee and customer retention.

IA leverages cutting-edge technology including RPA, AI, and event-driven automation.

2. A seamless, optimized user experience

One goal of your transformation is a seamless experience for everyone, on every device, and in every single channel. A positive digital customer experience leads to higher revenue, and a quality digital employee experience reduces workforce turnover and boosts productivity.

3. Data analysis and management tools

This is a biggie: Corporate performance gets a big boost from customer analytics.

  • Turning data into actionable insights requires unification of all of your data, something that just can’t be done manually. To perform comprehensive data analysis, you need robust insurtech software that mines every single useful data point.
  • Smart “event stream” processing easily collects data from every part of your ecosystem and deals with a stream of continuously created data.
  • Data visualization is an important tool for not only understanding data but revealing the story contained within it.

Digital transformation is your key to survival today and tomorrow

Not only is it an economic imperative to digitally transform your business, it also offers myriad benefits that include operational efficiency and higher customer satisfaction. To help you get started, we’ve developed a roadmap for your digital transformation, some sound advice to optimize the agent digital experience, and tips on how to manage risk.

The digital transformation of insurance companies is reshaping the industry. To be prepared for the future, insurers today must implement the tools of digital transformation and think creatively about all phases of their operation.

RD Global: High impact technology solutions for your digital transformation

At RD Global, we partner with insurance companies for the best in digital transformation. We work with you to implement world-class digital solutions to improve customer service, streamline operations, and help you boost the bottom line.

Our solutions include robotic process automation, intelligent automation, and a unified user experience that bring together the essential elements for digital success.

Start your digital transformation journey now.

Written by Patty Nicholson

"With an exceptional ability to execute and implement enterprise-wide, highly complex strategic initiatives building trust with teams and cross-functional partners, and over 20 years of demonstrated leadership skills, Patty Nicholson oversees all operations while maintaining a commitment to 5-star customer success. Most of her career has been working with insurance organizations on ways to automate manual processes to new digital platforms."

FEBRUARY 17, 2022
RD Global Empowers Insurance Companies to optimize total digital experience, unify data, and harmonize processes by developing high impact technology solutions infused with a 5-star customer experience.