Business Transformation in the P&C insurance industry

The age of “customer delight”

The Insurance industry is faced with a challenge of delivering its products and services promptly, and with a seamless user experience. The customer experience bar has been set high by B2C companies like Uber, Amazon, Shopify, and Airbnb, to name a few. Insurance companies need to transform, keeping in mind that we are in the age of Customer Delight, and to be a leader in the insurance industry, customer experience with your company should be much better than with any competitor. Click here to read more Articles on The Global State of Operational Excellence: Critical Challenges & Future Trends - Research Report 2018/19.

The insurance industry

Insurance industry is in dire need of end to end business transformation.  It however, faces multiple challenges such as multiple legacy systems, unintegrated / partially integrated vendor systems, as well as difficulty with cultural transformation. The transformation strategy further complicated by multiple options available such as Internet of Things (IoT), Autonomous vehicles, Artificial Intelligence (AI), Robotic process automation, Blockchain technology, Virtual reality and Big data.

The pressure to transform is compounded by InsureTech disruptors entering into the marketplace like Lemonade, Friendsurance, Huddle Insurance, and Amazon. Insurance companies have recognized that partnering with InsureTechs / FinTechs is a way to achieve transformational initiatives and move the organization from its legacy practices to the future state that more and more customers are wanting. This mutualism is key for the survival of the InsureTech startup, as well as, provides the Insurers a medium to slowly move over their business from a legacy platform to something more futuristic. Insurance companies have set up innovation labs to harness the potential of start-ups for developing new ideas and capabilities and driving insurance innovation for their customers and brokers. Insurance companies are also partnering with business accelerators and incubators to provide help to their InsureTech partners.

For a successful end to end business transformation, Insurance companies need to build a transformation roadmap using this three-pronged approach –

1. Transform Internal Systems and Processes

The first step towards transformation / automation is to streamline and lean the existing processes and understand value added steps, regulatory or compliance requirements, risks associated, information required, and decisions that are made within a process.

Once there is a thorough understanding of the processes and systems, streamlining decision making with the use of tools and calculators and system built validations, such as Claim reserving calculators for different lines of business, triaging tools for getting the policy / claim in the hands of the right underwriter or adjuster, reinsurance calculator, duplicate payment check, fraud checks, etc. help set the stage for automation. These business rules used in the legacy system, calculators, and validators, can be applied to build decision trees and achieve process automation. Business rules are intellectual property of the insurance company that gives it its edge in the competitive landscape.

It is important to take this approach as it will help develop an automated process that is robust. It will also make it easy to identify outliers and exceptions that may require to be pulled out from the automated process for manual intervention. Once automated correctly, these will provide a huge competitive advantage.

Companies that embark on an automation journey by following a happy path and not going through the systematic approach run into roadblocks at every stage an exception is encountered. The cost of transactions that go through the happy path, that should have been exceptions or should not have been allowed to go through automation, also pose a huge risk as they may drain money much quicker than if the process was not automated.

2. Integrate with external partners

Along with the automation within the company’s own system, the organization should look at building capabilities using API’s that could connect quickly with external partners and service providers. API’s could be used to bring in information that is used for underwriting or claims settlement. Insurance companies should build their API strategy considering both public and private API’s. This approach helps insurance companies with their strategy on ease of doing business. Data and information can be quickly transferred out to customers or could be bought in based on what customers / brokers / service providers send using the company’s web, mobile apps, or portals. This would help speed the end to end business transformation program. Some of the API’s that can be used are for bringing in information about the license information, VIN number decoding, Property Data validators, credit scores, and transportation ministry records. Some software companies have developed products that integrate with the legacy system and create custom AI and automation workflows. BAAR from Allied Media is one such product.

 3. Strengthening Broker / Agent Sales Channels

Brokers and Agents are losing business to the direct channels. This problem is also amplified by new brokers that are coming in with new technology solutions, better online presence, and processes that provide a much better user experience with their app/ website. Helping brokers and agents develop their digitization strategy and technology roadmap would go a long way in strengthening the broker relationships. Facilitating brokers and agents to works with companies like Kumaran Systems with its Submitto product, would help align processes right from the point of contact of the customer with the broker, right through to the lifecycle of the customer with the insurer. This will provide better opportunity for the insurance company to provide customer delight. Insurance companies should think beyond their short-term interests to gain long term benefits from this strengthened relationship.

Companies that focus on building the end to end transformation roadmap of streamlining internal processes, providing a seamless customer experience, and strengthening their partnerships with brokers and vendors will emerge winners in this dynamic environment. The cultural transformation of the organization will be much easier as the staff will see the benefits of the transformation along the way, with minimal disruption to their work. In fact, the staff will benefit from the added efficiencies due to streamlined processes, quicker access to information, and reduced customer touchpoints, while still providing the customer with a great experience.