Increased efficiency in every area, from underwriting to customer service, brings big savings
- Your legacy system is probably why your operational costs keep increasing and your IT costs are astronomical.
- Digital transformation of your insurance company can reduce costs by 20% to 40%.
- Insurance companies that have digitally transformed realize high productivity, reduced IT costs, and provide a customer experience that not only sells to but retains customers.
- Only 40% of P&C customers say they had a positive experience. A stat worth paying attention to is that 80% of customers will go to a competitor after a single poor experience.
- The components of an effective digital transformation are intelligent automation; a human-centric, cohesive digital experience; and effective management and analysis of data.
Insurance companies have high operational and overhead costs that have a negative impact on both growth and profit. Executives must examine every aspect of their business to find areas to gain efficiencies, streamline operations, and reduce costs. Providing a wide range of product options adds complexity and expense, while a highly regulated and competitive environment provides few avenues for increasing revenue.
Today’s rising operational costs in insurance require adoption of a modern IT ecosystem, i.e., digital transformation. Your legacy system is likely the root cause of your increasing operational costs, lack of economies of scale, and high IT costs. Insurance companies with legacy systems – which are usually complex – are found to have low productivity along with increased IT spending. Conversely, digitally transformed insurers reach high productivity and reduce IT costs, along with providing the enhanced experience demanded by customers today.
Digital transformation reduces internal complexity and errors. It also can reduce costs by 20% to 40%. At a time when insurance companies are working with major disruptions from COVID-19, a shortage of workers, and only 40% of P&C customers say they had a positive experience, there’s no good reason for business as usual. Let’s take a deeper look at why leaders must embrace digital transformation as the only real remedy for rising operational costs that inhibit growth.
Digital transformation, which results in strategic cost transformation, frees up investment capital while creating a more simple, flexible business operating model. The old tool of targeted cost reductions doesn’t work anymore for insurance executives looking for sustainable growth. Efforts usually focus on headcount, streamlining management layers, and outsourcing some administrative tasks.
However, these types of cuts can have a negative impact on revenue, the customer experience, risk management, resiliency, and scalability, all while leading to poor results and loss of market share.
It is hard to align your operating model with your overall strategy without the aid of digital tools that offer real, ongoing efficiencies and provide a simple, frictionless customer experience. It is time to look past margins and other basic metrics to create real value via agile operations, technology-enabled processes, and offering the best in customer experience.
Digital transformation may sound daunting. After all, it completely disrupts the way insurers have done business for decades. But for those insurers who want to boost their bottom line and fuel future growth, it’s an absolute necessity. Executives should focus on intelligent automation, the digital experience for both employees and customers, and managing their data effectively.
Intelligent automation (IA) delivers change across your entire business, driving the customer experience, improving risk and fraud prevention, and ensuring regulatory compliance. It creates an augmented workforce by automating repetitive tasks, which allows them to scale and power productivity as well as the customer journey.
Efficiencies are achieved via the information technologies of intelligent automation: robotic process automation (RPA) and artificial intelligence (AI). These counter the rising operational costs in insurance and contribute to growth by:
- Reducing costs by augmenting the abilities of the workforce to improve productivity.
- Increasing the accuracy and quality of processes and data.
- Improving and speeding up the customer experience with faster response times, accurate answers, and data that leads to the right product offerings.
- Providing a better employee experience that leads to retention.
Automation, however, is only part of any digital transformation initiative. The next step is taking that automation and funneling it into a cohesive digital experience that is optimized for both employees and customers.
Bringing in new customers is one thing. Keeping them is quite another. Neither can be achieved these days without a positive customer journey. The same thing goes for your employees. Hiring is expensive, people are increasingly technologically sophisticated, and offering them clunky legacy systems is going to scare away top talent and encourage employee churn, both of which inhibit growth.
Customers and employees today want a cohesive digital experience across all channels and devices. They want quick answers, correct information, and intuitive design and tools. The smart insurance executive knows that a positive experience leads to more revenue through customer satisfaction and employee productivity.
Buyers expect the same personalized customer journey no matter what they are buying. This experience must be frictionless, offering them easy access to information facilitated by chatbots and an easy purchasing path that they can use whenever and wherever they are via mobile apps. It is worth bearing in mind that 80% of customers will go to a competitor after a single poor experience.
The right experience is vital. Providing the personalized experience demanded today takes data, and that data must be managed and analyzed properly.
As an insurance executive, you know making informed business decisions is the key to both restraining costs and expanding your business. This requires a 360-degree view of your data ecosystem. Data informs everything you do, and efficient analysis and management are imperative to compete today.
Where is your data? Without wrangling your data and putting it to work, you won’t achieve your digital transformation goals of reduced costs and sustained growth. Your data is likely siloed in different parts of your legacy systems or on a spreadsheet of current customers. All of this data – whether from internal or external sources – must be unified so comprehensive analysis can be done.
Large amounts of data cannot be processed efficiently without a smart event stream processing system. This system grabs and harnesses the power of your data from across your organization. This valuable data can be used to:
- Offer the personalized experience customers demand and provide them with the products they want.
- Perform streamlined, more accurate underwriting.
- Make well-informed business decisions based on emerging trends
A robust data analysis and management solution puts the ability to outpace your competitors right into your hands.
Industry leaders take note: You know insurance is a complex, competitive, ever-changing business. Digital transformation in insurance operations is reshaping the industry. It’s clear today more than ever that the time is now for digital transformation that fuels future growth and contains the rising operational costs in insurance.
RD Global empowers insurance companies with high-impact technology solutions rooted in a 5-star customer experience. Our unrivaled team of in-house technical experts can solve your most complex digital challenges with state-of-the-art custom insurtech software to power your digital transformation.
Only the digitally strong will survive and prosper. Schedule a discovery call to learn how RG Global can partner with you for success now and in the future.