Insurers are increasingly adopting digital technologies and mindsets. Yet challenges remain: traditional insurers are surrounded by InsurTech competitors unencumbered by technical debt, have to navigate in a challenging regulatory environment and must master consumers whose expectations of buying complex products are similar to any other shopping experience.
The panel at the Insurance Innovators: Nordics 2023 event
During the Insurance Innovators Nordics event in Copenhagen, I attended a panel discussion together with representatives from insurance companies If and Tryg. The theme was how to deliver operational efficiency through next-stage digital transformation, and I’d say we share the same view on both opportunities as well as obstacles.
Some of the highlights discussed included:
· Where digital can reduce costs. Looking at cost parts only isn’t enough; we need to include several aspects and consider the whole transformation journey – from partnerships to value generation.
Automation, with the help of AI and robotics, can surely pave the way for cost savings. However, quite often an “automation first” approach tends to get in the way of true transformation. First, you need to simplify and improve processes and secondly automate, or you risk adding costs without generating any value. Let technology become a tool and not the goal.
As insurers navigate in a heavily regulated environment, we see a huge opportunity to reduce the cost of compliance with RegTech.
· How AI and RPA can be leveraged. While tech tools are important, the mindset is even more important. You need to put the customer at the center and ask in what part of the process digitalization might help. Basically, all the base process services within insurance, such as customer claims, pricing and product management, have the possibilities to improve through digitalization and automation.
It’s worth noting that the core pillars of insurance haven’t fundamentally changed. What has changed is how the costs are split between the pillars, where for example operations are continuing to expand. There is a movement towards reducing the operative burden and moving into product development to remain competitive. You must boost innovation while still assuring agility.
Here, automation can solve workforce issues and free up time for more complex tasks. We see that RPA is used for both end-to-end processes and parts of the process to boost productivity in insurance. All in all, there is phenomenal potential, but there’s still a need for a human touch.
· How to remove barriers to change. The very identification of the barriers is critical – and it’s not often about tech, but rather about people and process. It’s about the whole organizational dynamics, where you have to get around the “organizational politics”. The advice is to have a process-first approach, identify key bottlenecks, get the people onboard and then chose the technology.
To large insurers, innovation is about balancing the muscles of a big cooperation with the mindset of a small startup. Start by understanding AI and what it can do for your process while also asking yourself tough questions: are we secure enough to share the information and are we mature and open enough for AI?
Without a doubt, these are exciting times for insurers. AI and automation used to exist in parallel but are now coming together. This means that the data-centric dimension and the process-centric dimension are merging, paving the way for enhanced customer experiences and efficiencies. I see a million benefits already. Let’s embrace the future!
If you’d like to learn more, please visit our insurance section of the web. Some of the highlights discussed included: