Benefits of digital transformation in insurance industry

Benefits of the Digital Transformation in the Insurance Industry

Digital transformation is changing the landscape of the insurance industry. Consumers expect insurers to provide fast and easy access to the core functions of insurance operations, as well as to insurance products themselves.  Frictionless interactions with pricing, underwriting, and claims processes demand the use of digital technologies such as AI, ML, Big Data, Predictive Analysis and IoT to provide better value and keep up with consumer needs.  

Following is a list of benefits to be gained through the digital transformation of insurance providers, all of which begin with a foundational enterprise data warehouse and its possibilities for predictive and real-time analytics.  Implementation of these items has shown to reduce overhead in the auto insurance industry by as much as 30% (Source: McKinsey), while dramatically improving customer satisfaction and even reducing payout on fraudulent claims.

Personalized Policies

What if you could more deeply understand the needs of your consumers, to tailor your marketing and outreach specifically to their life circumstances?  The use of data in both public and private databases can help you customize your sales pitch and consumer interactions by offering you insights on their life events and other behavioral characteristics.  Has your prospect recently purchased a new home or taken a new job? What are his or her interests, hobbies, or brand loyalties?  Which devices are they inclined to use?  AI, including chatbots, can help you personalize your insurance policies and the channels through which you market them to the consumer.

Precision Underwriting

Similarly, the automated collection and analysis of important consumer data can yield more precise pricing guidance.  External data sources and the IoT can provide data on the physical behaviors of your consumers, ranging from buying habits and driving behaviors to fitness routines and medical treatment adherence.  What if you could automatically and more accurately assess risk in the pricing of your coverage without burdening your consumers with paper questionnaires and physical examinations?  AI in tandem with your data integrations can inform and enhance your underwriting algorithms.  Even leading insurers have seen loss ratios improve three to five points, new business premiums increase 10 to 15 percent, and retention in profitable segments jump 5 to 10 percent (Source: McKinsey).

Shorter Wait Times, Transparent Status, and Automated Payments

Personalized policies and precision underwriting are only as good as the speed in which they can reach and be purchased by the consumer. It is imperative that insurers incrementally migrate towards a cloud-based environment of workflows, APIs, and third-party data integrations, where the benefits of the digital world can be experienced by the consumer.  A cloud-based environment can reduce the cycle time of application, underwriting, and claims processing from days to minutes, rendering select call center and back-office functions defunct over time.  Cloud-based payment processing for automated, direct deposits versus manual check-cutting and mailing can further reduce overhead and delight the consumer; the efficiencies are endless.

Fraud Detection

An estimated 5 to 10 percent of all claims are fraudulent (Source: McKinsey). According to the FBI, this costs US non-health insurers more than $40 billion per year.  Authenticity and ownership of goods, police and medical reports, as well as identities are mostly verified through manual, reactive, human-based operations. With a foundational enterprise data warehouse and integrations, and shift towards a cloud-based environment, AI, automation, and the possibilities of Blockchain technology can be used to accelerate fraud detection with a higher rate of mitigation and lower incidence of payout.

Ensure a successful digital transformation with Nallas

At Nallas, we can help you predict the magnitude of your digital aspirations, during and after implementation.  We can organize and prioritize your projects based on ROI– investments inclusive of top-notch resources and bite-sized but impactful scope.  We offer a stable low churn, low management overhead, and a flat/self-governing delivery team of seasoned experts with deep data and cloud engineering skills. 

At Nallas, we care about what you care about and at the end of the day, what is most important – the business outcomes you are driving towards. This is your metric of success – and so it is ours.  

Check more about our digital transformation services here.