Accelerating the Slow March Towards Digitization in the Insurance Industry
Blog: Enterprise Decision Management Blog
Let’s face it – while many see digital disruption as the future in insurance, in fact new entrants into the space have been hindered by the product complexity, distribution systems and legacy infrastructure that the insurance industry carries with it. The landscape is changing, however – consumers (and businesses) are moving quickly to go with insurers that offer targeted, more transparent, 7×24 services. Digitization is indeed alive in insurance, it’s just taking longer to infiltrate – but it is arriving, and insurers that move quickly to upgrade their technologies – particularly, decision management systems – will gain (and grow) a distinct advantage over those who wait.
Is the software to blame?
Like the industry itself, the insurance software that is used to help make decisions is also stuck between business as usual and the immense possibilities offered by digitization. While policy and claim management system vendors have evolved product functionality and performance and even offer cloud options, one-size-fits all approaches have actually hindered insurers that are looking to “break out of the pack” and apply their own organizational DNA to transform their businesses. And indeed, with the massive growth in areas such as machine learning, analytics and data science, there has to be some way to incorporate the best of those capabilities without having to rip and replace existing investments.
Let’s consider a specific use case to highlight how businesses can introduce disruptive digitization.
What’s hampering intelligent automation in commercial underwriting
Historically, commercial underwriting has been a broker-driven, highly manual process – which creates delays that can create unnecessary risk (particularly if human biases enter into the picture) as well as frustrating delays for the customer. Even partially automating the process can deliver substantial profit improvements, but there’s the rub – to automate effectively, you need to have an intelligent, agile decision infrastructure in place that consistently flexes in response to new data and analytic insights.
Five things you should be doing to digitize
In the commercial underwriting world (and also more broadly in any line of business), you may already have some or many of the core ingredients you need to digitize. Any one or more of the above issues – not to mention company-specific issues such as resistance to change, lack of ability to prioritize projects, or simply too many siloes – are likely holding you back. While different approaches fit specific organizational needs and appetites, our own work with insurers in commercial underwriting and beyond typically include these elements to succeed:
- Adopt a decision-first approach: Align your decision strategies first, and then add data and analytics.
- Improve your agility by optimizing resources: Empower business experts to rapidly modify, simulate, and measure decisions – without getting stuck in the IT queue.
- Automate high-volume operational decisions quickly and effectively: Highly repeatable, “need for speed” decisions can be automated, and encompass any combination of data, analytics and other decision assets.
- Collaborate to operationalize and institutionalize your decision strategies: Decision-first collaboration goes beyond “breaking siloes” – it enables business analysts, policy managers to work closely to harmonize and simulate strategies, reuse decision assets, and drive measurable value across the enterprise.
- (Carefully) consider a Cloud-based platform as a digitization accelerator: IT is being inundated with requests to do more, even as data, analytic and decision systems proliferate. Adopting a Cloud-based strategy is on the shopping list, and a platform-centric approach can help.
In our next blog, we’ll dig deeper into these five areas to understand the value of a decision-first approach to digitizing your business. In the meantime, download our executive brief to learn how you can put these concepts to work in your organization.
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