Recent years have proven enormously challenging for nearly every industry, and insurance is no exception. Companies grappled with unexpected transitions to remote workforces as governments worldwide instituted lockdowns to address the COVID pandemic. Supply chains halted, and world economies slowed drastically.
On an individual level, consumer spending power plummeted as jobs disappeared. Insurance companies stepped in to do what they could for their financially strained clients, offering payment reductions or holidays, often to their own financial detriment. At the same time, consumers were increasing their demands for both more competitive pricing and more automation in their interactions with companies.
New pressures on profits, new remote work paradigms, and new client demands highlight the need for innovation in insurance operations and service delivery. Although the industry’s digital transformation was already underway before the pandemic struck, much remains to be done. And the changes arising from COVID may cause companies to rethink their prior digitization efforts.
The primary lesson that all companies must learn from COVID is that new digital transformation efforts must focus on responding rapidly to change. COVID evolved quickly, and so too must the insurance sector. To build the most robust, resilient and adaptive systems, companies must look to cutting-edge technologies, including evergreen technologies, automation tools, and artificial intelligence.
The idea of evergreen technology is relatively straightforward. Simply put, evergreen technology refers to systems that are constantly up to date and quickly and easily scale as companies and their customer bases grow.
But what does this mean in practice? For one thing, becoming evergreen requires moving away from legacy systems hosted entirely in-house towards more managed cloud-based services. Gone are the days where companies needed large and expensive server rooms managed and maintained by equally large and costly (and usually overworked) IT staff. With cloud-based platforms, businesses can easily integrate new services, new staff and new locations (including home-based offices) as needed.
There are many ways to incorporate evergreen technology, with an option for companies of every size. Those just beginning their digital transformation efforts or those with limited budgets may consider an entry-level software-as-a-service (SaaS) offering. SaaS insurance products provide capabilities such as policy administration, underwriting, claims processing, automated customer communications and more. These systems are generally powerful, easy to use, and automate as much of the business' workflow as possible.
Companies more comfortable with digital transformation may shift even farther away from the in-house model, adding platform-as-a-service (PaaS) or even infrastructure-as-a-service (IaaS) to SaaS products. At a high level, these services define a spectrum of transitioning system management responsibility from the insurance company to third-party cloud-based service providers, as shown below:
Figure 1: The spectrum of cloud-based services
As management responsibilities shift, so do update responsibilities. With cloud-based services such as SaaS and IaaS, insurance companies can focus more time and effort on the insurance business rather than on whether their internal systems are current. Updates are left to the cloud providers, who are specialists in building, improving and securing their offerings.
Companies gain rapid access to new features and functionalities as they are released. And they no longer need worry about how long it will take for their internal IT staff to apply software patches and install product updates. Out-of-date software creates more significant problems than simply inefficient workflows. Indeed, it is a common access point for hackers and cybercriminals, so rapid updating is crucial for maintaining the security of your customers' sensitive data.
Companies transitioning from in-house systems to cloud services must be aware that data security responsibilities never entirely shift to outside providers, unlike infrastructure and application management. Instead, cloud service providers work on a shared responsibility model for cybersecurity.
Automation is an increasingly important aspect of evergreen technologies. Automation simplifies many day-to-day tasks, substantially improves the overall experience for their customers, and eases the daily workload for employees.
Clients across industries increasingly expect rapid, if not instantaneous, responses to their inquiries and concerns. They also expect immediate access to large amounts of information specific to any question they may have. Unfortunately, it is frequently not realistic to expect company employees to respond to every contact as rapidly as customers prefer.
Automated tools such as chatbots allow companies to provide rapid and constant communications with their customers. They help keep the lines of communication open, making customers feel heard and valued. They also remove burdens from employees, who can then focus on other tasks.
Internally, companies need to find ways to simplify workflows and allow their employees to accomplish more during their workday. After all, improved productivity leads to improved profitability. And given the number of repetitive, time-consuming tasks insurance company employees handle, workflow automation where possible is a no-brainer.
Insurance companies have many functions that can benefit from applying artificial intelligence (AI) tools. You don't need an in-depth understanding of AI theory to understand the general principle. AI tools use the power and speed of computer systems to replicate essentially human tasks, including complex pattern analysis and decision making.
It is not difficult to see the possibility of AI in the sector. Companies collect, process and attempt to extract useful information from increasingly large data sets every day. The sheer amount of information is more than human employees can effectively handle. AI tools can quickly sift through these extensive data collections and turn them into information that employees can use in their everyday work. Whether the task is identifying undeveloped marketing opportunities or creating new types of policies, AI speeds and simplifies the process.
Despite frequently raised concerns, AI tools are far from overly complex. Indeed, AI is already in use in many available SaaS and PaaS products.
Insurance companies must evolve as quickly as the world around them. Therefore, the systems they rely on must be easily adaptable and scalable to accommodate any situation, no matter how unexpected. Fortunately, the tools are already there. Companies only need to take the necessary steps to put them in place.
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As always, please feel free to reach out for more information or to inquire about a specific insurance sector. We're happy to help and hope to provide some relief during this trying time.