• Phillip McGriskin, CEO at Vitesse


• 25.10.2022 12:30 pm
#insurance

In the insurance industry, the majority of executives accept the necessity of digital transformation. However, only a few companies have recognized the first-mover advantage. These leaders are optimizing end-to-end and creating consistent, reliable workflows that cross the organization.

The result? A more uniform customer experience across policy types and engagement channels, as well as more streamlined and efficient operations. Carriers in this realm are reducing overall costs and improving revenue, but how did they get there?

While insurers take different approaches to digital transformation, there is one critical key that starts the process: data. Through data standardization, insurers realise first-time-right results that simplify transformation initiatives and boost performance outcomes. Here is how it works.

It all starts with high-quality and accessible data

In the traditional world of insurance, data is entered manually, often multiple times to facilitate different policy options. This siloed manual approach to insurance operations presents a number of problems when handling data. The first is a highly error-prone environment.

Research conducted by Raymond R. Panko reveals that instances of human error during manual data entry of numbers can be as high as 40%. Even worse, spreadsheet errors slip past checkers 50% of the time.

As errors are introduced, they are replicated and soon spread across the organization. Imagine missing a zero when entering the value of a $1 million dollar property, and it’s easy to see the complexity and severity of data entry mistakes.

Unfortunately, a highly error-prone environment is not the only issue insurers face with data. Because of the siloed nature of data storage, information is not always accessible across the organization, hindering the enterprise-wide insights necessary to initiate and guide transformation efforts.

To access and utilize their own data, as well as information collected from third-party providers, insurers need a data standardisation plan. Data standardisation provides a means to digitally capture information for greater accuracy and to share it across siloes, ensuring accurate and uniform output and insights.

The importance of data to digital transformation

Once an insurer has simple and consistent access to accurate enterprise-wide data, it becomes easier to lay out a strategy for digital transformation. Analytics can be used to isolate patterns in current data sets and turn the information into actionable insights, helping insurers to establish a plan around key elements of the digital transformation, including:

• Distribution models, channels and tools. Implementing front-end digital distribution channels is just the beginning of how an insurer should look at the transformation. A number of digital tools can also be employed to attract customers and keep them engaged with a carrier’s products, including robo-advisors and artificial intelligence. Data on customer behaviour is valuable in determining which channels and tools to use.

• Process efficiency. Successful digital transformation requires an insurer to look beyond a simple digital sales portal and to use technology to optimise processes end-to-end. Analysing big data stores can identify where it makes the most sense to substitute manual workflows with automation, to improve organisational efficiency and reduce costs. Insights surrounding claims, for example, can help insurers identify the tools and systems they need to optimise payouts and improve customer relationships for long-term retention.

• Ecosystem prowess. In an Amazon-style world where customers expect the ability to bundle à la carte products into a single transaction, insurers are turning toward ecosystems. These digital marketplaces operate on platforms, allowing insurers to easily adopt new products and services to streamline customer claims and payments as well as distribution. McKinsey predicts that ecosystems will account for 30% of global insurer revenues by 2025 as insurers also offer ecosystem products to streamline complete customer journeys. Analytics will play a large role in identifying opportunities and ensuring access to services.

• Evolving with the times. A digital transformation is not a once-and-done proposition: insurers will need to continuously upgrade with technology advancements. As with the initial transformation strategy, standardised data and the application of analytics can provide targeted insights to help guide future efforts.

As insurers enter the digital age, data and strong analytics capabilities will be the key to successful transformations. Data insights will guide the initial transformation strategy and then future-proof the organisation, providing decision-making insights to keep the company at the forefront of competitiveness for years to come.