What are the current challenges being faced in the Insurance sector? Are most businesses plotting a course into unchartered economic disaster?
Christian Davis, Co-Founder, Insight and Design Group
Working in collaboration with Insight and Design Group (IDG), we put to you a series of articles to help support your understanding of the potential challenges currently being faced in the Insurance sector. IDG have used their experiences from the strategies they have helped develop and execute in the Insurance Industry, supporting executive teams as they faced into wave after wave of challenges over the last 25 years.
Article 1 of 3
From the ancient maritime trade routes to bustling modern cities, the concept of insurance has been ingrained in society for centuries. While the formal insurance industry as we know it today emerged in the late 17th century, the fundamental principles of risk mitigation and financial protection can be traced back to ancient civilisations. Throughout its storied history, the insurance industry has weathered storms, adapted to changing landscapes, and stood as a pillar of resilience in the face of uncertainty.
But where is the industry today, what challenges are being navigated and where is the C-Suite focussing their attention in the unchartered economic environment we’re all facing into?
Collaboration through partnerships
The industry hasn’t historically been particularly revered for its cutting-edge innovation. However, to give it credit, it has evolved and continues to launch new products and services as customer expectations change, driven by advancements in technology and the rise of a digital native population. Policyholders expect personalised experiences, seamless interactions, and simplified processes. Insurers are embracing customer-centric approaches, enhancing digital capabilities, and delivering tailored products and services to meet these expectations.
At IDG, we have led the charge in collaborating through outsourcing key components of customer and technology fulfilment, both overseas and in the UK. We have identified and deployed the lowest cost territories with incredible success, at scale and, we have invested in emerging territories to service the ever highly demanding UK customer. We did this through partnership with the outsourcing industry, to great effect. Entering a new territory is not easy, it requires a clear vision, strategy and investment in a leadership team that will stay the course. Finding the right partner for a time horizon that will surpass the 5-year mark is not easy, particularly on the back of a desk top exercise and a handful of face-to-face engagements to find the right partner.
An insurer’s search for an outsourcer should focus on a partner with ‘Digital Operations’ at the core of their service – a partner that can build and operate an efficient and effective human operation with a technological core to its DNA. The relationship management optics should shift from a ‘supplier’ orientation to one that forms strategic partnerships and ecosystems to enhance operational capabilities.
Collaborating with insurtech start-ups, technology vendors, and data providers allows insurers to access specialised expertise, innovative solutions, and advanced technologies. These partnerships facilitate the implementation of new operational strategies, enhance digital capabilities, and drive efficiencies. The more you can source from a single provider, the less friction and commercial tension there is – albeit there can be a sacrifice in terms of not sourcing ‘the best of everything’ in one go.
Selecting the right partner to outsource to
We’ve picked our top criteria we would encourage buyers to consider when selecting the right partner to outsource to:
1. Finding the technological edge: many insurers have moved from outdated legacy systems that hinder operational efficiency, agility, and innovation. Other Insurers are currently adopting strategies to modernise their IT infrastructure by migrating to cloud-based platforms, implementing scalable and flexible core systems, and leveraging emerging capabilities. This allows them to streamline processes, enhance data integration, and accelerate product development.
In our experience, these advancements need to run hand in hand with Claims and Customer Operations, and so the insurer must select an outsourcing partner that can seamlessly run the human operation alongside the technology enablers as one ‘digital operation’. It’s not easy to do, and so picking a partner that can reach into their estate vs sourcing ‘too many’ 3rd parties will both increase the prospects of a successful deployment as well as enable a better commercial proposition to be achieved. Here’s a few examples of the capabilities to look out for, having developed and integrated these alongside the core operations ourselves.
2. Robotic Process Automation (RPA) and Intelligent Automation: insurers have been embracing basic RPA automation to streamline repetitive and manual tasks – like claims processing, policy administration and underwriting – for a number of years now, but with mixed success. Automating the routine tasks reduces errors, enhances operational efficiency, and frees up resources to focus on more value-added activities. But, capability is progressing rapidly and the real gains, through the use of AI and complementary technology, is enabling automation where data is unstructured, decisions are less rule based and the actions needs a level of interpretation. AI-powered claims automation systems can assess claims, validate information, and make accurate settlement decisions.
It comes down to the ‘make vs buy’ quandry and at the pace this capability is evolving, it’s increasingly difficult to stay at the forefront of the capability without buying it in from a partner.
3. Customer Self-Service and Digital Channels:
Insurers continue to provide customer self-service options through digital channels whereby policyholders can access policy information, register claims, make payments and so on. By empowering customers in this way, insurers are reducing the reliance on traditional channels, and as by products, both improve customer satisfaction and achieve cost savings.
It’s not easy though, insurance ‘cases’ aren’t always ‘once and done’ and the capability takes time to develop and pass the stringent standards necessary to satisfy the regulators. Digital transformation for insurers is more evolutionary than revolutionary, given the complexity, so the course can be long and you need to be confident in your chosen partner’s ability to innovate their own capability….they must have a proven track record of innovation themselves.
4. Digital Claims Processing: Insurers are digitising and streamlining claims processing workflows to expedite settlements, reduce administrative costs, and improve customer satisfaction. By implementing digital claims management systems, insurers can automate claims intake, enhance data validation, enable electronic document management, and facilitate seamless collaboration between claims adjusters and stakeholders.
Be mindful of a provider’s offering though: ‘Straight through processing’ of claims is achievable but, in our experience, it is harder to replicate this holy grail across many claims processes.
If you would like to discuss further the challenges in the Insurance sector, the benefits of collaborating in strong partnerships or generally about any of the points raised, feel free to contact us email@example.com
Watch out for the next article in the series considering the role of Data Analytics, AI and Insights.