By Glenn Barnes, insurance lead at Restore Digital, explores the digital transformation of the sector, the challenges of legacy systems and why a small change could deliver a more joined-up customer experience.   

According to 55% of insurance professionals, one of the most significant obstacles to digital transformation is the persistence of legacy software systems in their ecosystem [1]. Unsurprisingly insurers have tended to take a measured approach to risk when evaluating their change strategy, with a tendency to shy away from the big decisions. Consequently, systems have been adapted rather than outright replaced.

The big problem here is that many of these legacy systems are past their shelf life, and are therefore not a suitable platform to drive digital transformation. For the IT team, this feels similar to a wobbly tower of Jenga bricks: remove one, and the whole stack could come crashing down.

Often these systems do not talk to each other, and integration isn’t possible, or cost prohibitive. Internally, this reduces productivity and efficiency. For customers, this often results in a poor customer experience.

Imagine, for example, a customer that has both public liability and buildings insurance with one provider. They might want to add business insurance. To cost this, the provider may need to get details on the existing policies from two different systems, then feed that into the costing system. Actions along the way also go into the workflow system. Potentially, underwriters need to use a minimum of four different systems to complete one customer request.

Industry disrupters

This is where new entrants have the advantage. Without the weight of complicated legacy systems and processes holding them back, they can adapt much more rapidly. They can build seamless online platforms which deliver an engaging user experience. Being founded in the digital era, new entrants often have mobile apps, allowing them to leverage their connected system to cross-sell other insurance products.

While new disrupters might have the advantage when it comes to digitalisation, traditional insurers can keep pace. They have the benefit of existing customers and a strong reputation, and there are a number of options available which can help to unlock their digital potential, without requiring the wholesale replacement of their entire legacy software platform.

There has been a lot of talk in the past few years about using Robotic Process Automation (RPA) in this sector. Many RPA systems can easily be adopted by non-technical staff, and leveraged for the purpose of automating repetitive manual tasks. Not only this, RPA solutions can effectively build bridges across multiple legacy software platforms, allowing information to be requested and instantly retrieved at a much lower cost. It can also be implemented much quicker than a full replacement of the Jenga tower.

It is worth noting that incoming mail drives the daily workload for insurers, and the way it is managed has a huge impact on productivity, efficiency and customer service. As physical mail has declined, e-mail and other electronic messaging has exploded, creating significant challenges in how this volume of inbound communication is efficiently managed and allocated.

Automation in the Jenga tower

One approach is to create an automation model where all inbound communication is captured using an integrated multi-channel platform. This is often referred to as a “Digital Mailroom”, an outsourced business process where all documents – physical and electronic – are managed. Key information is automatically extracted and then, according to an applied set of rules, distributed across the enterprise or fed into the RPA engine for more sophisticated data manipulation.

These documents, digitised and categorised, can be stored securely in an electronic document management (EDM) system, instantly accessible to any authorised user from any location. It also builds in retention and destruction rules to maintain compliance with specific legislation, such as GDPR. Furthermore, they can be instantly assigned to specific workflows using an automated process for recognising the document type, recipient etc.

Once the information is pushed into the workflow system, underwriters can complete the actions within the EDM, to then assign next steps back in the workflow, with AI providing a safety net. Or, if outbound communication automation is considered, many of the manual actions can also be automated and further streamlined.

This could include transactional daily communications, mass marketing campaigns and customer service information. But where insurance firms are making the most competitive gains is when inbound communications can trigger actions in workflows. Web chat, WhatsApp and social media can all be used by customers, which would then generate actions for the business.

What this all comes down to is improving customer experience. Automation, RPA and AI all allow insurers to be more responsive and knowledgeable, supporting a seamless workflow and informed decision making.

It is increasingly clear that the firms that will dominate the landscape over the coming years will be those that are able to deliver a frictionless and engaging user experience, leveraging technology in an appropriate way to provide better service, value and engagement. Gaining control over the way information flows through the business is the first critical step on this journey.

• https://www.insurancetimes.co.uk/news/legacy-systems-tipped-as-main-barrier-to-insurance-digitalisation/1433747.article