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Does Digitalization Imply Business Profits for Insurance Sector?
Digitalization has taken all the industries by storm and is the latest trend because of the numerous benefits it provides. It has been facilitated by many technologies in the market like mobile technology, CRMs, cloud computing, artificial intelligence, and much more. The insurance industry is also not far behind in adopting the latest technologies & trends.
Opinions of industry experts on how digitalization is affecting the insurance industry.
1. Remote Work Culture Dominating the Market
Scott W. Johnson, Manager & Chief Executive Marindependent Insurance Services LLC
“Digitalization is required for more than just profits. It is required for insurers, agents, and the industry as a whole to survive. 30 years ago, insurance agents needed an office for three main functions-
- To advertise for new clients
- To house employees
- To store records
The internet, and hence digitalization, has massively shifted that need. Agencies can advertise, often for free, online.
Employees no longer necessarily need to come into the office. Lastly, digitalization allows for the electronic storage of all signed applications and forgotten paperwork accessible to any employee with the correct access online 24 hours a day virtually anywhere in the world.
Just imagine an agency working on the same old analog methods. Would you buy from an agent if they asked you to stop in their office to sign some paperwork?”
2. Digitalization has Simplified Processes
Patrick Frank, Head Of Sales at Biproxi
“In many ways digitalization is great for businesses. It can simplify processes and documentation and it can greatly increase productivity. It can also introduce new tools that teams may find extremely useful for their day-to-day processes. Digitalization can also reduce business/overhead costs, despite the steep price some software providers charge.
The downside is that there is a learning curve with any new software introduced, it can be costly in some cases, and if the time ever comes that they need to switch/add any new programs, the team must tackle the learning curve again.”
3. Increased Sale Conversions
Danish Yusuf, CEO, and Co-Founder of Zensurance
“Insurance is the ideal industry to benefit from digitization and automation. The industry uses massive amounts of data to make predictions about loss costs and decide on claims and distributes its products via very manual channels. The first wave of digitization was focused on cutting costs by way of Robotic Process Automation (RPA), eliminating paper through digital forms, and providing customers self-service options for their most common tasks. Many big insurers announced hundreds of millions in savings through large cost transformations.
The more advanced carriers are now using digitization and analytics to increase sales conversions and improve indemnity payments. For sales conversions, common approaches include:
- Leveraging advanced analytics to price risk more accurately and continuously
- Personalizing each prospect’s experience, including allowing them to engage at the time and channel of their choosing
- Using machine learning to identify potentially fraudulent claims, thereby allocating claims resources most effectively
A digitization effort does not have to be a multi-year and multi-hundred-million-dollar effort. The most successful initiatives start by setting up an agile team to tackle a single process. Once complete, this same team can help set up additional teams, and so on.”
4. Digitalization – the Change that Customers are Seeking
William Taylor, Career Development Manager at VelvetJobs
“I have observed that digitalization presents an immense opportunity for insurance businesses. The companies that benefit the most are the ones that are using the impetus of digitalization to rethink all their operations, from underwriting to customer service to claims management.
The impact on both revenues and costs can be enormous. Customers are pressing for change. They now expect their insurers to offer simple, transparent and flexible products and services -all online. So, if you really wish to stay in business, you must embrace digitalization.
Bottom Line: “To stay in business, you must embrace digitalization.”
5. Bringing Efficiency and Speed to Insurance Processes
Mitch, Marketing Associate at Insurance Shop LLC
“The insurance industry has been slow to adapt to technology. In 2020, the industry is forced to adopt multiple types of technology to compete in the current marketplace. Digitalization can help all areas of the insurance industry including agents, brokers, carriers, and claims.
For agencies and carriers, digitalization allows companies to meet customers where they are. Most often that place is online. With technological advances, carriers and agents can communicate with customers in many new ways including a chatbot on a website, a simulated quote form on a carrier website, a certificate request form, a video, or a photo shared on social media.
Carriers are using digitalization to speed up several processes. Claims are now processed quicker, more accurately, and fraud is detected more often. A Customer Relationship Management (CRM) System allows insurance employees to quickly obtain necessary information about a customer to help them with their policy.
Another big possibility is for carriers to use Artificial Intelligence to better predict the likelihood of a claim. Historical claims data is a valuable bit of information insurance companies possess. With the power of Artificial Intelligence, carriers can more effectively predict the likelihood of a claim and better price coverages.”
6. Eliminated Manual Processes
Keith Murray, Founder and President of Integrity Senior Solutions Inc
“Digitalization has completely transformed my insurance agency. When I began in 1996, I drove hundreds of miles a week to meet with clients to discuss their Medicare coverage options. We also did every application by hand.
Those applications were mailed or faxed to the home office of the insurance company and the data was entered into their system manually. There were many opportunities for mistakes by the agent or in the data entry at the company.
Today, all of our business can be done over the phone while utilizing screen share technology for clients to follow along on their computer or tablet. This allows us to talk to many more people each week, thus increasing our production. The applications are completed and signed electronically, leaving little room for error.
This doesn’t even include digital marketing opportunities through YouTube and social media, which saves us thousands of dollars every year in our marketing budget.
The number of applications submitted by our agency per year has quadrupled within the last 5-6 years and expenses are way down thanks to the digitalization of the insurance industry.
7. The World is Shifting Online
Chane Steiner, CEO at Crediful
“The world is going digital on the whole. To expect that insurance businesses could bypass this is unrealistic. As the expectations of customers shift, insurances have to become increasingly digitized. People don’t want to deal with phone calls or in person meetings if they can avoid it.
And with so many companies out there, it’s easier for consumers to swap over to another company if their current one doesn’t meet their standards. This ease means that loyalty programs become essentials as does online management.”
8. Streamlines the Insurance Process
Sarah Franklin, Co-Founder of Blue Tree AI
“The way technology has developed paving the way for online businesses to grow with advanced digital marketing techniques meant it was only a matter of time before insurance businesses made the change to also work with the web. It’s not necessarily the profits that may arise, but about the way things in life are changing and are of greater benefit.
By using an online system, a business can be more valuable for customers, because of its easy method, flexible schedule, and clear communication. It is more time-efficient, doesn’t make you drive, saves paper (for all those eco-friendly people out there), and can store data that can always be accessed with extremely high security.
Digitalization will streamline a great flow of customers for insurance businesses, as more people are becoming digital nomads after the boom with SEO skills, there will be a greater market for people who need their financial and personal information in good hands with a trusted provider.”
9. Technological Advancements
Alexander Kizir, Co Founder of Quote Chief
“Digitalization in the insurance sector is the biggest game-changer of our generation. By digitalizing risk, insurance companies have a lot more data to calculate premiums with. Using Big data analysis, the accuracy of the risk profiles is second to none and a lot can be automated, which means less overheads for insurers.
With mobile technology, smart devices and the internet of things, the power to accumulate data to calculate risks has exponentially increased. Insurance companies are also now better equipped at combating fraudulent claims. Fraudulent claims hit insurance business profits, and these are usually made up in subsequent years with increased premiums for all.
An exciting development in the insurance sector is the use of blockchain technology, theoretically, every point of the insurance process could be totally automated with a robust widespread blockchain. And the greater automation is in any industry the greater the profits are for businesses. Are there any downsides to digitalization? Yes, for employees, with digitalization a lot of automation can be used so there may be job losses or a need for retraining employees into new roles.”
10. An Aid for Insurance Agents
Gary Cubeta, President/Founder at Insurance For Final Expense
“Digitalization is great for insurance carriers and also for insurance agents. Since you must interact with a licensed human agent to actually purchase a policy, any help from technology is more of an assistant to the agent than a replacement for the agent.
For example, you can go online and get quotes for the best insurance rates as a consumer, but you are still going to end up in the hands of a trusted agent to complete the policy. This benefits everyone, as the information is readily available for you, digitally, but also the agent still gets to give you the personalized service you deserve.
Other advantages of digitalization include a quicker process for applications vs. the older and much slower paper apps and lightning-fast medical reviews. Insurance, unlike many other industries, is helped more than hurt by all technological advancements.”
As mentioned by all the experts above, we can conclude that the insurance industry has and will immensely benefit from digitalization. The latest technologies have been incorporated flawlessly in the insurance operational structure and are proving to be beneficial for both the insurance businesses and their customers.
Today, with the advancement in technology and digitalization, insurance processes have become more efficient, cost-effective, and time-saving. Digitalization is the need of the hour for the insurance sector. However, it is a time-consuming process, and while in the process of digitization, you might need external help.
Let us, at Cogneesol, help you with all your back-office tasks. Insurance outsourcing is trending nowadays, and businesses across the world are seeking benefits from it. We are a leading global provider of insurance solutions and can manage your insurance tasks like insurance reporting, claims management, policy management, insurance accounting, and much more. Contact now, at +1 646-688-2821 or email us at [email protected].
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