{"id":40059,"date":"2022-03-24T18:13:15","date_gmt":"2022-03-24T17:13:15","guid":{"rendered":"https:\/\/intellias.com\/?p=40059"},"modified":"2024-07-10T16:36:35","modified_gmt":"2024-07-10T14:36:35","slug":"insurance-resilience-business-transformations-under-the-looking-glass","status":"publish","type":"blog","link":"https:\/\/intellias.com\/insurance-resilience-business-transformations-under-looking-glass\/","title":{"rendered":"Insurance Resilience: Business Transformations under the Looking Glass"},"content":{"rendered":"

Ever read Alice in Wonderland?<\/em> The deeper Alice progresses into Wonderland, the fewer things she considers impossible. The insurance sector has gone on a similar journey of self-discovery over the past several years.<\/p>\n

Many who viewed remote work as improbable before the COVID-19 pandemic had to make the switch as soon as lockdowns began. Others who previously believed their policies made a digital customer journey impossible successfully switched to providing online service.<\/p>\n

Innovation in the insurance industry might be less visible for users, but it sure does happen in the background. We break down why there\u2019s no use for the insurance sector to go back to yesterday\u2019s practices and where it\u2019s heading instead.<\/p>\n

Insurance resilience in the digital-first world<\/h2>\n

Insurance markets have had a bumpy period in the past year: claims volumes<\/a> are up by a sizable notch, life insurance payouts saw the biggest spike in the past 100 years<\/a>, and the overall risk radar across regions<\/a> has expanded.<\/p>\n

Despite all these calamities, most insurers are back on the high-growth track.<\/p>\n

\"Insurance<\/p>\n

Source: Deloitte \u2013 2022 Insurance Industry Outlook<\/a><\/em><\/p>\n

Dwindling premiums and reduced profitability aren\u2019t the only defining characteristics of the \u201cnew normal.\u201d<\/p>\n

Similar to other industries, the insurance industry has gotten a strong taste of the remote \u2014 and subsequently hybrid \u2014 reality. In a matter of weeks, most businesses had to close offices and switch to fully remote operations (insurance offices included).<\/p>\n

Despite making tempered progress, digital innovation in the insurance industry was far less sweeping compared to innovation in adjacent financial sectors<\/a> like banking, payments, or wealth management.<\/p>\n

In 2018, half of the insurance leaders<\/a> surveyed by PwC said they were \u201cextremely concerned\u201d by the speed of technological change. At the same time, 72% admitted they were relying on \u201corganic growth\u201d as their prime method for generating revenue and didn\u2019t place technology investment higher than other priorities.<\/p>\n

This sentiment makes perfect sense. Insurance companies weren\u2019t as severely undercut by tech players as their counterparts in finance. The sector has fewer digital-first players, challenging the status quo and raising the bar for customer experience (CX).<\/p>\n

Unlike finance, InsurTech players didn\u2019t go for the highest margin revenue lines and mostly concentrated on lower-entry, consumer-facing products such as renters\u2019 and homeowners\u2019 insurance (Lemonade), auto insurance (Clearcover), or travel insurance (Insured Nomads).<\/p>\n

Digital transformation in traditional insurance companies happened at a leisurely pace: there wasn\u2019t a rush to adopt new back-office technologies or push digital products to the market.<\/p>\n

Then the tide changed in 2020. Businesses and consumers alike switched to online mode. Everyone now wants to get things sorted online, without lengthy trips to the branch for selecting a policy or in-person claims submission.<\/p>\n

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41% of consumers say they are likely or more likely to switch insurance providers due to a lack of digital capabilities.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t <\/span> PwC<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

The insurance claims management process itself underwent major transformations: submissions come from different channels, B2B clients demand streamlined integrations with their data systems, B2C consumers want convenient online tools and fast issue resolution.<\/p>\n

These mounting pressures have fostered a new wave of insurance industry innovation \u2014 one that\u2019s focused on rewriting business processes that hinder operational effectiveness, service-level agreement (SLA) compliance, and growth potential, with and without technologies.<\/p>\n

Key priorities for insurance business transformations<\/h3>\n