Understanding the benefits of digital insurance
Consumers expect instantaneous communication; going digital provides self-service portals, live chat and more to meet those expectations.
Insurers know the intrinsic value of being on the cutting edge of the industry — insureds want to know and trust they are working with a company that is using the latest tools and technologies to give them the best service possible. Implementing digital insurance solutions is the simplest way to communicate that, and insurers will quickly see the benefits.
There is a lot of discussion around digital insurance — understanding where to begin, how to go about it and the fundamental steps to get it right. While these are all important questions, it’s imperative that insurance companies also understand why they’re doing it and recognize the benefits that it can bring to both themselves and their customers.
Meeting & exceeding customer expectations
Today’s consumers expect everything to be instantaneous, when and where they need it. Whether it be communication, payment or even service, insurers must have the infrastructure to meet insureds where they are. Digital insurance makes that possible, with features like self-service portals, live chat, and insurance apps catering to modern consumers and making key insurance functions like policy administration, claims and billing a nearly automatic process.
Fraud detection
As mentioned before, the greatest benefit of digital insurance applications is the sheer volume of data that they generate. And while it is generally positive data that helps insurers perform their jobs better and customers to get better rates, data is also catching criminal activity. Customer relationship management software can be used to search customers’ social profiles for any activity related to a claim, and predictive analytics is being used to spot trends in customer behavior that might be a red flag for fraud.
Cost reduction
Going digital has been shown to greatly increase cost savings, both for insurers and insureds. With more accurate underwriting driven by big data, AI and predictive analytics, insurers and insureds both save big. Digital insurance is also increasing the speed to market of new products, another revenue generation opportunity. The McKinsey report, “Digital Disruption in Insurance: Cutting Through the Noise,” says “Digital technology puts margins under pressure as premiums fall under the weight of price competition and as new ways of mitigating risk emerge. Under these conditions, insurers will need to harness digital to make their operations more efficient, aggressively lowering costs.” The report says insurers can expect cost savings of as much as 40% from the claims process.
Employee experience
Digital insurance is just as sought after by insurance brokers and employees as it is by consumers. Digital tools such as comprehensive dashboards, SaaS applications and tools, and unified data systems not only make their jobs easier, they help them perform their job duties better as well. With all the tools possible at their disposal, insurance companies are investing in their employees with digital insurance.
Low-code capabilities
There is a common and valid concern that converting to a largely digital operation will require hiring developers, IT professionals, and people who are well-versed in working with these digital insurance tools. Fortunately, low-code solutions exist to mitigate these fears. Low-code is an easy-to-use development methodology that lets users drag and drop application tools and features to build their own digital solutions. No computer science degree required, and no need to hire an entirely new team of web and application developers.
Ready or not, insurance companies are being forced to adapt to digitalization and offer new solutions or risk being left behind. Although the industry as a whole is still in the early stages of adoption, those companies that embrace digitalization early on will have a competitive advantage over others, keep/attract the best talent, and will be the best suited to meet the ever-changing needs of customers.
Jeff Wargin is chief product officer at Duck Creek Technologies. Contact him at jeffrey.m.wargin@duckcreek.com.
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