By Sam Vickerman, Practice Director, Insurance & Retail, Grayce
Insurance companies can find it difficult to adopt new technologies. Held back by legacy systems and business models, the industry also lacks the technology talent required to speed up innovation. According to Deloitte, just 4% of millennials want to work in insurance, with many more being drawn to exciting roles in technology, consulting or other financial companies instead. Insurtech start-ups are beginning to emerge, who are focused on developing software for the sector. Yet the gap between these fledgling firms and traditional insurance companies is growing. Exacerbating the problem further is the impact of Covid-19 on the sector, with customer demand for more digital products and services growing. If insurance companies are to prosper in the post-pandemic world, they need to find ways to adopt digital technologies at a faster rate. And that must start with changing the next cohort of workers’ perception of the industry as one that is slow to change.
Finding and retaining digital champions for insurance firms
Immersed in technology since birth, millennial and Gen Z workers are confident in using digital tools – it’s argued that the brains of digital natives are actually wired differently to ‘digital immigrants’ (those who have adapted to the new world as adults), due to vastly different kinds of early learning experiences. In the workplace, this translates to differing communication and information-gathering styles, and according to Forrester, these workers prefer greater mobility, tech autonomy and software diversity compared to their older counterparts. Insurance firms must find ways to tap into this talent pool more widely if they’re to digitalise their operations and compete with the emerging start-ups in the sector, and they should start by employing individuals that show a curiosity and willingness to continuously learn. These individuals can act as digital champions for their organisations, helping them to embed the latest technologies into their operations and shape the future of their business.
Here are a handful of those technologies that could drive widespread transformation of the sector.
- Highly personalised insurance policies via IoT and social media – traditional risk assessment to generate insurance quotes and premiums relies on datasets that consider a range of factors such as the customer’s age, gender, location, marital status and so on. But today, endpoint devices and social media can provide much more personal insights into the individual – in a model that is beneficial to both the insurer and the customer. Wearables, for instance, provide deep insights into a person’s physical health, measuring factors such as blood pressure, temperate and number of steps per day. The insurance provider gets a more accurate risk assessment, and the customer gets a more tailored policy that suits their needs. This model is growing in popularity, with a recent study by Accenture finding that more than three-quarters of consumers are willing to share their personal data in exchange for more personalised insurance offers and cheaper coverage.
- Paperless records – the insurance sector is a heavy user of paper-based records, with firms typically keeping thousands of files in paper archives, gathering dust. If files are digitised, analysed and stored in the cloud, documents can be automatically reviewed, helping to reduce inconsistent information or errors.
- Workflow automation via Machine Learning and RPA– automation enables firms to reduce the time spent on routine paperwork and administrative tasks, freeing up employees to focus on more creative, value-add work with their clients. Robotic Process Automation (RPA) can help address repetitive work, including preliminary assessment of each claim, data entry and payments. In turn, this results in more efficient decision making, reduced call times to customer service teams and far greater accuracy of data entry.
- AI-powered chatbots – customer service agents spend thousands of hours on the phone, often supporting clients with simple requests. Chatbots can help automate many of these conversations, using AI to filter through the chats and route priority customers that require urgent attention through to human service agents. This can drastically cut costs in customer support and sales.
- Blockchain – according to PWC, blockchain implementation could cut costs by $5-10bn for reinsurers worldwide. Key benefits include reducing verification and validation time, eliminating errors and minimising reputational risks. Blockchain enables all required parties to be connected by smart contracts, meaning reinsurers don’t have to interact with the insurer to get access to the client’s data.
Why a digital revamp of the sector is critical to future success
Insurance companies risk falling behind if they do not start investing in digital innovation today. However, by giving ambitious digital natives licence to research and embed new technologies, they can transform their operations and compete with new market entrants. Technology is driving several disruptive trends in insurance, such as personalisation, automation and more accurate risk assessments. If insurers can get digital adoption right, they will benefit from cost reduction and better communication with their customers on the channels of their choosing. The next generation of workers can help drive this change – shifting the perception of insurers from dusty to digital-first. It’s time for insurance companies to start investing in these individuals now.
Global Banking & Finance Review
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