Everyone's talking, Insurtech events are bursting with attendees. VC's invest unabated in start-ups with many such making the headlines like Lemonade, TROV, Hippo. Digitilisation is to a greater or lesser part in every insurer's strategy but actual implementation is patchy.
Some carriers are fully committed across the organisation.
Keeping the animal theme, you can see digital transformation of a specific product. See "Make a pet claim"
Simple to just press a button on the website and there's a tailor-made pet claim form to fill in. No mobile app to have to fire up, no emailed claims lost in the system- straight into the process and quick resolution for the pet and the owner.
Insurance executives do have challenges to face when planning digital transformation: -
- Reconciling speed of settlement with the time to detect and deter fraud
- Delivering “uber” digital customer experience from complex, inflexible, slow-to-change legacy systems
- Competing with agile, single product Insurtech competitors like Lemonade whist offering a wide range of products
- Improving customer service whilst stripping out supply chain operating expenses
It all looks like high risk for uncertain returns which is probably why Insurance C-Suite and senior execs often talk about it but then often take no action.
The good thing about having delayed is that others have taken the plunge, found out the challenges and come up with proven solutions that will not break the bank. First in other industries and now across the Insurance Industry.
Take one example- 360Globalnet headed by insurance professionals. Instead of trying to just digitalise current products and processes they started with what insurance customers want now and in the future.
Started with a blank sheet of paper (digital of course). They then decided how to achieve that and created an insurance platform to deliver the promise of better customer experience at a lower operating cost. Not just on one simple product, and the front end experience but the whole cycle from:-
- First Notice of Loss (FNOL) to
- Replacement, repair, or cash
You're talking building and contents, road traffic accidents, pets, travel and other services here. Not just replacing a lost or damaged coat but serious damage to buildings and multiple vehicle accidents.
Going back to the four challenges 360Globalnet has developed and deployed to some major insurers proven and scalable solutions.
Reconciling speed of settlement with time to detect and deter fraud
Simple claims can be settled in minutes, and even complex ones often in the same day. Claims handlers do not have the capacity to spend more than a few minutes on claims forms to decide to accept or investigate further. The answer?
360Insight highlights those claims with potential fraud letting investigators focus on those that are suspicious. In fact they can show that 30% and more of claimants using the self-serve claims tools walk away when asked to provide photo or video evidence!
You can reconcile the challenge between speed and due diligence
Delivering "uber" quality digital UX from complex, inflexible & slow-to-change legacy systems
Legacy, core systems of record are good at many things and the vast investment in them needs to be exploited. Cloud Platforms will link, via a unique url the digital experience with the back-office to provide a single digital record over the new digitally transformed claims process and the back-office.
A record that can be shared securely with everyone from the customer to the tradespeople and companies repairing, replacing or paying out. Securely so people only see what they are authorised to see,
The customer can see the state of the claim and the contractor/body shop/vet etc the necessary details to quote and deliver the solution to the claimant's problem.
Rejuvenate core systems of record with a digital platform and only replace when the timer and resources allow.
Competing with agile, single product insurtech competitors
Well now you can. You can equal the 3 second settlement for an expensive jacket which, let's face it, is hardly complicated. But also speed up more complex claims to the delight of customers. Harvey Keitel's Motor Insurance ads for Direct Line show the way.
The advantage the traditional insurers have is that by applying this digital transformation across multiple product lines is that they could provide a wider range of products to each customer (each product must be world-class of course). Otherwise they face the "death by a thousand cuts" from Insurtech innovators and disrupters.
Improving customer service whilst stripping out supply chain operating expenses
It's no good delivering a world-class service if it eats away margin and threatens cash reserves! Digital transformation must cover the whole process from FNOL, though liability assessment to fraud detection and flow through to the supply chain that delivers the outcome the customer needs.
Consider the waste in dealing with building and contents damage. The inspections, specifying (and over-specifying) and quoting, dealing with variations and delivering the quality of repair, replacement or cash settlement. Time and waste materials can be 30% of the costs of these processes. Using photo, video and where necessary live video-streaming will substantially reduce these costs, speed up the whole process and combine great customer experience with lower cost.
Do you have to do everything at once?
Not if you want to stay sane and solvent in most cases. The beauty of a digital platform like 360Globalnet is that you can start with one product and even one part of the process. Then build it out but get the best practice customer experience started in weeks.
If you are a global insurer with many different legacy systems in each country and a frightening mix across every geography it might take 12 months to be able to join and analyse the data from disparate systems for a 360degree sight of customer and the business.
But you can start with one product line now, not have to touch the legacy systems and cause central IT nightmare. Deliver excellence and bottom line profit where it most counts.
The other surprise is that all costs are claims based and so viable:
- Fixed part of claims cost
Insurers can be as disruptive as any Insurtech competitor whilst exploiting their core strengths- the excellence of under-writing, actuarial knowledge, capital and cash reserves, fraud investigation skills, breadth of product, geography and customer coverage.
There need be no elephants or hippos in the enclosure
For heritage players in the market, the need for fundamental change to product, service and operations is rapidly becoming less of an elephant, or Hippo, in the room. Now the topic of avoidance is which technology to make big bets on, which parts of the business to disrupt first and how to execute quickly enough to avoid insurtech's with their inherent nimbleness and millions of dollars of investment capital eating up their market share.