Insurance providers have found themselves at the forefront of the Covid-19 pandemic, but whilst the level of disruption we’ve seen at the hands of the Coronavirus is unprecedented, a quick look at the history of the sector raises the question as to whether it could have been better prepared.
by Vijayamohan Keshav, Senior Principal Business Consultant, Expleo
The SARS pandemic of the early 2000s should have been a wakeup call to all businesses about the importance of agility. After this event, insurance companies should have taken steps to future-proof themselves, as they did their claims ,by automating vital processes, updating their digital channels, and building a digitally savvy workforce.
Instead, concerns around time, costs and potentially just a general underestimation of upcoming challenges, meant many took a slow and steady approach to digitisation. So, when the Coronavirus hit, up to 70% of providers were still relying primarily on legacy applications – applications that just weren’t prepared to deal with the unprecedented wave of activity associated with a pandemic.
Post this pandemic, insurance providers must put the lessons they learn into action and put automation at the heart of their operations. As Lloyd’s of London announces an expected pay out of between £2.5 and £3.5 bn, their biggest pay out since 9/11, we examine how technology will help bring the industry back on its feet.
Focus on what counts
Whilst costs will inevitably need to be cut over the next few years to make room for more capital, Covid-19 has focused the industry’s attention on what matters when it comes to digital innovation. Far from hindering technological progress, we can expect more investment, with insurers focusing their resources on priority areas.
Blockchain, for instance, is likely to take a backseat in the list of immediate priorities, but automating production processes – whether that be underwriting, claims or complaints – is a no-brainer. There have been far too many delays and mistakes made in recent weeks for this not to become a sector standard. We can expect investments in AI and machine learning to be primarily in the areas of intelligent process automation.
Implementing more robust security measures, meanwhile, is paramount. This has been low on the priority list for investment so far, but with hackers on high alert and remote working becoming the norm rather than the exception, every provider needs to make sure its infrastructure is infallible. For an industry centred around processing money and data – particularly personal data – there can be disastrous repercussions if there is a failure to implement cutting-edge security at the enterprise level.
Earn back trust through innovation
Insurance providers are built upon security, trust and their ability to deliver upon that trust at critical times of need. The performance and customer usability elements of insurance businesses will come under more pressure than ever.
These usability elements include enhancing the customer experience when using digital channels, making claims processes clearer, or providing additional customer service channels through more contemporary routes, like social media – all of which can be enabled by technology.
The critical need for quality covers both back and front-end processes and the clearest path to delivering this is through a quality assurance process that primarily uses automation tools to save insurers critical time and money whilst dramatically minimising risk.
Transformation, consolidation, and regulation
As part of the industry-wide digital transformation process and potentially as a result of the Covid-19 crisis, we can expect a higher rate of mergers and acquisitions over the coming years. Insurers of all shapes and sizes will look to digitally native firms, or InsurTechs to help them grow, scale up or simply survive. We’ll also see a similar chain of events occur within the InsurTech community too, with bigger players acquiring smaller players and key technologies and approaches coming to the fore.
Whether you consider the need for innovation in reaction to Covid-19, or in terms of market competition and disruption, there are few upsides to be found for insurers sticking to legacy systems and ways of serving customers.
More change to come
With entire economies crippled by the virus, for the first time in many years, the insurance industry has had to be proactive in adapting to change. And while it may have been borne out of necessity, we should see this change in pace as an opportunity for the sector to make some much-needed improvements as long as it never takes its eye off security, performance and the quality of delivery.
The road ahead will not be easy – especially with the adjustment to remote working, and accompanying challenges around security and productivity. But if insurance providers can make sure to address and update these crucial aspects of their businesses, and embrace an automation-first mindset, they have a good chance of emerging stronger.