Digital transformation has profoundly transformed commercial sectors such as healthcare, travel, manufacturing, hospitality, and retail across the globe. While the insurance industry has traditionally been slower to adopt this change due to its strict regulation and lack of investments, the industry is now recognizing the need to embrace modern technology.

As a result, this transition has pushed carriers to become more customer-centric, using digital technology to enhance customers’ buying journeys. Subsequently, it has driven carriers to innovate in the insurance industry with newer and unique business models.

In this blog post, we will explore some of the key impacts of digital transformation and how they are helping insurance carriers grow.

Improving Customer Experience

Moving away from the traditional approach of policy seekers primarily engaging with agents and brokers to understand their policy options, customers are now empowered to choose their channel of engagement.

Recognizing this shift in customer preferences, most insurers have set up a self-service portal for policy seekers to browse and purchase policies online. These portals include detailed information about the policy and coverages, enabling policy seekers to make an informed buying decision. To further simplify the buying process, carriers have integrated chatbots into these portals to provide real-time assistance and support to policy seekers, aiming to improve customer interaction and engagement.

The adoption of a consumer-centric strategy for digitalization has significantly improved customer satisfaction with online insurance purchases. According to a survey by Accenture, 71 per cent of the respondents stated that they would be willing to buy insurance online.

Enhancing Policy Management

With the digitalization of front-end activities such as customer interaction, the need for seamless automation of back-end processes arises.

Historically, the conventional method of policy issuance has been time-intensive and expensive, resulting in minimal premium rates and high operation costs.

However, with the introduction of cloud-based software and pre-built platforms for carriers, these pain points are being resolved with modern technology. These advancements have paved the way for countless benefits for carriers, such as increased sales, better customer interactions, and quicker product launches.

With the power of automation, insurers can now significantly reduce the time and cost involved in a claim’s processing. According to a report by McKinsey (Digital disruption in insurance: Cutting through the noise), automation can cut the cost of a claims journey by up to 30%. Moreover, the use of artificial intelligence and machine learning has created potential for the optimization of risk assessment and operations.

Innovating Insurance

Going one step beyond digitalization, insurance carriers have begun leveraging data and analytics to launch entirely new business models. These newly launched products aim to offer a tailor-made experience to customers.

With personalized pricing carriers can assess risk and charge premiums based on real-time information about the policyholder. For example, carriers can collect the health data of a policyholder through wearable devices and write policies in real-time. Similarly, microinsurance, which covers smaller risks for a specific period, event, or occasion, has become widely popular. These policies have been tailor-made to cover risks with considerably smaller premiums, making them more accessible for low-income groups.

By creating unique business models that cater to the needs of policyholders, insurance carriers are able to remain competitive in a rapidly evolving market.

Embracing Digital for Insurance

From enhanced convenience to personalized services, the benefits of prioritizing customer experience are propelling insurers to new heights of success in the digital era. By keeping up with modern technology, carriers can capitalize on potential market opportunities to expand their operations and explore new streams of revenue. While navigating the current insurance landscape and its dynamic needs, carriers must be prepared to cater to customer requirements with speed and agility.

As a result of this digital transformation, carriers will be able to futureproof their developments and continue to grow in an evolving insurance landscape.