The modern insurance buyer prioritizes hassle-free experiences, is mobile-savvy, and happy to buy policies from new players. In other words, consumers prefer P&C insurance companies that have already made their digital transformation.
Yet, according to Business Insider, “fewer than 1 in 3 insurers say they believe they have the digital capabilities to digitally transform the customer experience.” What’s worse, when Covid-19 forced organizations to switch to remote work, 79% of insurance executives said the pandemic revealed “shortcomings in their company’s digital capabilities and transformation plans.”
Your P&C insurance business needs to begin its digital transformation if it hasn’t already, and a digital adoption platform (DAP) can help you achieve your goals.
The Benefits of Digital Transformation on P&C Insurance
P&C insurers moving towards digital transformation feel positive ripples in their customer experience, their bottom line, and their ability to scale.
Improved customer experience
A digital transformation helps companies streamline the customer journey. Customers are able to access all information in one place: quotes for policies, claims prevention messages, first notice of loss, claims management, loss assessment, repair, and settlement. This aligns with customer expectations from insurance companies — timely wellness advice, a wide selection of policies, anxiety-reducing interactions, and quick payouts.
Digitally-savvy P&C insurers can also offer customers:
- Lower premiums: Root Insurance considers driving habits, credit scores, demographics, and location to offer better deals to good drivers. One study found that about half of customers are happy to share behavioral data in exchange for such benefits.
- Quick results: Insurtech Lemonade’s claims bot assesses and pays out claims in three seconds. It also provides quotes for renters insurance and homeowners insurance in as little as two to three minutes.
- Transparency: Standardizing claims calculations with artificial intelligence (AI) allows customers to see a complete breakdown of their claims. This also reduces the chances of litigation for insurers.
Online platforms, cloud storage, and automation improve efficiency and reduce the need for support and sales staff, which in turn reduces operating costs for insurance companies. This focus on digital-first operations is one reason why up-and-coming insurance tech companies already enjoy lower expense ratios (10-15%) compared to established insurers (25-35%).
Lower costs mean higher profits. As per one report, Ping An Life Insurance’s P&C unit grew operating profits 70.7% YoY, thanks to its investments in loss assessment and customer profiling technology.
Self-service digital platforms allow companies to serve more customers while reducing pressure on customer support staff.
Case in point: AXA’s broker platform helps 3,000+ brokers see the status of the claims in real-time, identify suppliers, and track the next steps. Prior to using the platform, the company struggled with a never-ending stream of status update calls and low broker retention.
Reduced risks and fraud
Smart devices in homes, cars, and workspaces, and wearables and drones help insurance companies monitor customer activity and gauge risks. When a claim is filed, they help assess the damage and reduce instances of fraud.
The SmartRide program by Nationwide tracks miles driven, nighttime driving, hard braking, and acceleration to offer appropriate quotes.
Analytics and artificial intelligence platforms help insurers identify false claims. They refine social and publicly available data and apply it to claims decision-making.
Top Barriers to P&C Insurance Digital Transformation
Seventy-three percent of enterprises failed to derive any benefits for their business from digital transformation. Here’s why:
Inefficient change management
The digital transformation causes companies to “change the organization, talent model, policies, processes and procedures – basically, the entire service model or business model,” Peter Bendor-Samuel, CEO of Everest Group, notes. Leaders who fail to manage this change will struggle with digital transformation.
It’s no wonder 42% of companies cite change management as an important factor in digital transformation. To reap the benefits of a digital overhaul, leaders must clearly communicate the degree of change and retire old processes. Merely implementing new technology is not enough.
Dependence on legacy systems
In 2016, a CAST software study found 69% of insurance organizations in eight countries were run largely on COBOL applications. This is a decades-old technology that needs regular maintenance, is often deprioritized by developers in favor of new technologies, and presents serious security threats. Another 2018 study confirmed legacy systems were still a barrier to digital transformation for insurance companies.
What’s more, even when insurers build a new claims platform or a billing system, they “tend to keep the old systems and build a layer on top,” says Mark Andrews, domain director at a UK-based consultancy.
While such systems help companies present a digitally-forward picture to consumers, they “become more bloated over time creating layers of complexity.”
Lack of training and skills
Everest Group found a lack of internal skills and talent to be a major barrier in technology adoption among insurance companies.
There’s also a high skills gap in three major areas driving innovation in P&C insurance: artificial intelligence, cybersecurity, and the internet of things.
Additionally, insurance companies also need to train employees once they switch to new systems. Inadequate training results in low adoption and little value for employees.
One survey found employees considered adequate tools and proper training as important job characteristics. When employers failed to provide adequate training, it made their job difficult and they were more likely to leave.
How to Fast-Track Digital Transformation for P&C Insurance with a Digital Adoption Platform (DAP)
Digital adoption platforms (DAPs) help companies tackle change management, the lack of digital proficiency, and an affinity for legacy systems, all at once. They empower employees to get the maximum value out of your P&C core platforms for billing, underwriting, policy issuance, and claims management.
While employees use the platform, a DAP provides step-by-step walkthroughs, self-help widgets, and videos, to improve usability.
Let’s take a closer look at how DAPs such as Whatfix help insurers improve digital adoption of core P&C platforms and accelerate digital transformation:
- Interactive guides: Instead of overwhelming agents with mounds of documentation, DAPs provide contextual cues as they try to navigate your core platform. This reduces ramp-up time for policy agents. It’s also a better way to train independent insurance agents who may work with multiple platforms and providers at a time.
- Microlearning paths: With a DAP, you can break down different platform components into small sets of sequential courses, such as claims, underwriting, and billing. You can also assign goal-based tasks to each agent based on their proficiency with the platform and track the completion of tasks
- Contextual learning: All content is surfaced as and when a user reaches a specific feature of the platform. For example, if an employee is in the “Claims” tab, they’ll only see learning material relevant to that section.
- Automated form filling: DAPs reduce friction by auto-filling form fields such as claim type and loss type, based on their specialty. In turn, this reduces the time for policy processing.
- Compliance reminders: Insurance is a heavily regulated industry, with small errors resulting in huge losses. A DAP provides helpful pop-up reminders to insurers as they process claims, so they don’t make a compliance error.
All in all, a DAP helps insurers train agents and employees at scale, automate repetitive parts of their work, and improve compliance.
Digital Adoption Is the Key to Digital Transformation
Digital transformation in P&C insurance doesn’t end with buying a new CRM or building a claims bot; it starts there.
As one study on software usage shows, enterprise companies use 288 SaaS apps each year, but they also churn through over 30% of them. The annual wastage on orphaned apps for mid-market companies stands at $135,000.
To transition to new technologies and get maximum value, CIOs must clearly convey the benefits of new processes, wean their teams off of older systems, and invest sufficient resources in employee training.
A digital adoption platform such as Whatfix helps companies meet each of these goals in a measurable, scalable way.
Want to learn how the Whatfix DAP can drive digital transformation in the P&C insurance industry? Request a demo today.