Here’s How Digital Transformation is Having a Positive Impact on the Insurance Industry
OCTOBER 21, 2020
In just a few decades the Digital Transformation movement has swept through all aspects of culture and commerce. Once seen as strictly the territory of high tech giants like Microsoft or IBM, digital technology can now be found firmly entrenched in medicine, agriculture, finance, and entertainment, just to name a few verticals. The insurance industry has also been greatly impacted by advances in technology and we discuss some of the positive implications below.
The Digital Transformation movement is often cited as beginning in the 1990s with the popularization of the Internet, mass adoption of home computers, and the advent of e-commerce. In reality, digital disruption was taking place as early as the 1950s.
First-wave adoption of digital tech focused on automating processes, performing internal functions more efficiently, and making work easier. Today, we see a greater emphasis on improving the customer experience, collecting mass amounts of data, and increasing revenues. Now companies are seeking a competitive edge by implementing cloud computing, big data, augmented reality, and blockchain.
Based on statistics from across industries, digital transformation clearly benefits businesses, with 80% seeing an increase in profits once digital technology is integrated. Other positive outcomes include greater workforce efficiency, better product innovation, higher employee retention, and more robust growth.
To meet consumer demand and keep up with competition, the insurance industry is using technology to make services more personalized, scalable, efficient, and agile. To accomplish this, agencies utilize tools like remote technology, artificial intelligence, live chat, and predictive analytics. Below are a few case examples:
Clovered Insurance embraced a digital transformation on their website, changing the way customers buy insurance. This resulted in homeowners being able to easily to shop for the exact coverage they’re looking for without relying on an agent and a new more profitable business model at Clovered.
Lemonade Insurance Company dramatically increased the speed and efficiency of claims processing by instituting a zero paperwork application and implementing artificial intelligence to deliver almost instantaneous service. The company even proudly boasts of setting a world record when it settled a claim in just 3 seconds.
Progressive Insurance is a leader in telemetrics. Telemetrics involves using monitoring technology to track an insured person’s driving behavior as a fraud and risk prevention measure. Progressive offers incentivized telemetrics to customers as a way to earn discounted insurance rates. The company benefits by collecting more accurate data to improve the outcome of insurance claims.
Slice Insurance solves a very unique customer problem by offering on-demand “usage-based” insurance. This type of insurance provides coverage over short periods of time. As an example, a homeowner renting out their property to temporary guests can purchase insurance for the time the renters will be using the premises. Slice makes its concept available to individuals and commercial companies by depending on cloud computing.