Technology
Embracing digital transformation in Insurance
Global Banking & Finance Review®
Company
By Oliver Werneyer, CEO, Imburse
Modern consumers’ expectations are shaped by the experiences they receive in eCommerce. In 2021, 2.14 billion people shopped online (Oberlo report). That is 27.6 percent of the whole population. The pandemic has made consumers more tech-savvy than ever before, so it isn’t surprising that they turn to digital for everyday tasks. Ecommerce provides them with hyper-personalized customer experiences from when they search for products to when they receive them at home. Live chats offer instant customer support, live tracking enables customers to keep updated with their deliveries, and fast checkouts allow customers to pay for their purchases with a simple click of a button.
Equally, the shift to digital has also made customers aware that they do have options, which makes customer loyalty increasingly difficult to get, and a pressing issue that needs to be tackled. According to a McKinsey report, 3 out of 4 customers have tried out new brands during the pandemic. This doesn’t apply exclusively to eCommerce brands: customers are pickier and more demanding for every sector, so they will seek out and analyse different options before making a decision.
Any experience that doesn’t remotely resemble the experience customers get in eCommerce is most likely seen as unsatisfactory. This is a red alert for every industry because digital transformation needs to be implemented across the board. For some industries, however, the path to digital transformation is particularly bumpier. That is the case of insurance – a traditional sector that isn’t known for being the most innovative and relies on decades-old processes and systems. Insurance sells products that customers need, not that customers want. Therefore, it is already more challenging to make the journey of buying insurance products appealing.
Each customer base has a unique set of needs and demands. In fact, personalisation in insurance goes as far as customising the product for every individual. For instance, payments are the moment of truth for every insurer. Customers buy policies with the expectation that their insurer will be there to support them if something goes wrong. If policyholders travel somewhere and lose their baggage, they need immediate compensation to their most convenient channel. Failure to provide immediate compensation to this customer automatically makes for an unsatisfactory experience. That is why insurers need to focus on each, and every single point of the customer journey, claims reimbursements included.
When it comes to payments, insurers are aware that they need to invest in their area. However, it isn’t their core competency, and they don’t have the in-house expertise to solve their most pressing payment hurdles. Aside from this lack of in-house payment-specific knowledge, insurers face a whole range of barriers when integrating with various providers and technologies. These integrations are time-consuming, resource-draining, and expensive, mainly because the insurers’ IT infrastructure is old and incompatible with newer technologies.
There are also considerable risks in updating an IT system that has been used for decades and powers all the operations, so this is an option that insurers tend to avoid. They would rather make smaller changes than risk disrupting their systems and investing too much money into something that isn’t their core competency. In a world where instant solutions have become the norm, waiting months for integrations to be complete simply isn’t enough to keep up with the market.
Connecting to multiple Payment Service Providers (PSPs) and technologies is crucial because one single provider is unable to offer insurers every payment method for every market. Plus, insurers need to cover both collections and disbursements and choose technologies that are local and country-specific, as well as use case specific. For instance, insurers would need credit and debit cards from a PSP, bank transfers from a bank, and vouchers from a voucher provider. Thankfully, the payments world already offers this multitude of solutions. The only question left to be answered is how to connect with all of these solutions in a more cost-efficient, faster way, without using too many resources and while getting the necessary payment guidance.
The rise of FinTechs and InsurTechs in the last couple of years has opened up a new realm of possibilities for insurers. Insurtechs are closing gaps that insurers can’t and enabling them to finally jump on the path of digital transformation, optimising both their internal and external operations. 74 percent of insurance companies recognise the ongoing disruption in their sector, and 80 percent see cost reduction as one of the main benefits of partnering with Insurtechs (PwC report). Other benefits that insurance companies acknowledge include differentiation, improvements in customer retention, and the possibility to get additional revenues.
Partnering with Insurtechs enables insurers to access any payment provider or technology they want, in any market, for both collections and payouts. Instead of lengthy and cumbersome integrations, insurers can rely on the heavy lifting of external providers to complete these integrations for a fraction of the cost and time. They also won’t need internal resources to focus on payments and can allocate them to other important areas. Plus, these solutions can provide the agnostic expertise they need, enabling them to make the best decisions for their business. In an era of hyper-personalisation and seamless customer journeys, embracing the rise of InsurTechs as key enablers of change, and choosing to benefit from them, is the only way forward.
About the Author:
Oliver Werneyer is the founder and CEO of Imburse. Oliver spends most of his time overseeing the overall operations of the company, but with a strong focus on powering international growth. Before founding Imburse, Oliver held various roles in the insurance industry, with the likes of Liberty Life, Swiss Re and Genworth. He also founded Flynrate, an innovative flight tracking and flight delay insurance app, and became a leading member of London’s startup ecosystem, sharing his industry knowledge and passion for entrepreneurship with London-based startups.
Digital transformation refers to the integration of digital technology into all areas of a business, fundamentally changing how it operates and delivers value to customers.
InsurTech is a term used to describe technology innovations designed to enhance and streamline the insurance industry, improving efficiency and customer experience.
Customer experience encompasses all interactions a customer has with a company, including their perceptions and feelings about the brand, products, and services.
Hyper-personalization is a marketing strategy that uses data analytics and AI to deliver tailored experiences and content to individual customers based on their preferences and behaviors.
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