What the Months Ahead Look Like for Insurance
Blog: Appian Insight
Insurers, reinsurers and intermediaries are under pressure to adapt to new customer expectations. Insurtechs have made omnichannel digital experiences the norm. And COVID-19 has forced the issue further, on top of necessary operational and claims process changes. Digital transformation is no longer a buzzword or something that can fix just one area of an insurance organization. Based on what we’re seeing from customers and the market as a whole, here’s what I predict for the rest of 2021 in insurance:
The pressure cooker of COVID-19 only intensifies
Insurers are caught between the need to invest in new tech and controlling costs. It’s an age-old problem for a risk-oriented market (as I wrote this time last year), but digital transformation is no longer optional for most insurance companies. Traditional incumbents will need to improve and modernise their product offerings to adapt to new customer behaviors and expectations. They must also invest and integrate new technology into their existing IT environment and operations processes.
Flexibility continues to be king
Long before the pandemic, the insurance industry was facing challenges from insurtech disruptors, as well as increasing demand for digital and mobile services among customers. The “open insurance” strategy, like open banking, remains a priority, with insurers looking for new ways to bundle insurance into product purchases through open APIs and partnerships. But, to excel and open up new revenue streams, open insurance requires operational agility, technological flexibility and a culture of adaptability.
Our customers have been using Appian to stay agile and move into new markets or straddle competing priorities. For instance, Abdul Latif Jameel started offering financial services and insurance services as an automotive brand, Aegon reorganized their “spaghetti” IT to automatically process 80% of all online transactions, and CNA built an end-to-end system to manage commercial underwriting workflows across 160 countries – all through Appian.
Pre-COVID challenges remain
Insurance businesses are still under pressure to reuse and unite legacy systems. IT departments continue to be challenged to build an “agile” layer to improve efficiency and better serve customers. And a changing market requires flexibility baked into whatever technology insurers choose to implement.
Change isn’t new
For insurers, rapid change isn’t news. Insurance companies must constantly adapt to regulatory changes from the industry, country, and region they operate in. In the coming months, that means meeting a new International Financial Reporting Standard (IFRS17) to account for insurance contracts and dealing with the ongoing impact of Brexit.
Claims processes will be further forced to adapt
A potent mix of COVID-19, regulatory changes, and changing customer expectations will mean that claims processes – which have already adapted to the pandemic – may continue to evolve in two ways:
- Firstly, to human behavior. As the way we live and work in the last 12 months has changed, so too have the types of claims insurers. Travel and hospitality cancellations have spiked, for instance, but burglary claims on home insurance have understandably lowered. As always, insurers must adapt their products, services and operations as human behavior and risk changes.
- Secondly, to new ways of operating. Remote working has forced changes to how customer services and claims are handled, for example. Customers are now much more likely to use digital contact points rather than phone or mail. We know that change in how customers access services is revealing potholes in insurers’ “digital roads” where data remains dispersed across siloed systems.
Long before the pandemic, insurance was an industry under huge pressure to change. Now, more than ever, insurers, reinsurers and intermediary agencies must adapt to stay competitive. They need to meet new digital customer expectations, handle different types and volumes of claims with scale and speed, and invest in digital transformation projects for the long-term while keeping an eye on risk and cost.
Appian holds the key to bringing systems together, orchestrating between emerging technologies and legacy systems. We live in that complexity.
Feel free to Read The Forrester Wave: Insurance Agency Portals, Q3 2020 Report if you would like to learn how technologies can help you stay agile and competitive.