Data, algorithms and artificial intelligence are changing insurance in near real time. Insurers that fail to embrace a digital mindset, risk missing out on the $1.6 trillion of value that next-generation insurance is set to create in the next three years. Here’s what insurers need to master to survive if not thrive in the years ahead.
Once insurers have established the right vision for market differentiation, they will need to embed the right operating model to support it. To execute their strategies successfully, we believe insurers need to develop and sustain the following six capabilities:
1. Creating an agile IT architecture. Insurers must rewire their IT in a way that enables them to engage consumers in new ways (e.g., omnichannel, voice assistants, robotic advice and wearables), add value through actionable insights (e.g., big data meaning-making via data lakes), participate in third-party ecosystems via open application programming interfaces (APIs), and speed new product and service developments.
2. Reinventing value. The old, reactive insurance model is on its way out. Leading insurers that can master preventive models and go a step further to create new value propositions will drive down claims costs, generate more capital efficient revenue streams and ultimately own the future. Since claims commercially represent by far the largest single cost to insurers – up to 80% of all insurance premiums are spent on claims payment and handling – insurers stand to gain a great deal from newfound operational insights and improvements.
3. Establishing a partnering mentality. Insurers will not be able to seize new market opportunities on offer and develop new sources of value for clients on their own; they will need to become highly effective at a new partnering model. This entails not only including more partners into the insurance value chain, but also leveraging outside technical experts.
4. Embracing human-centered design. As insurers look to shape new value propositions based on coaching customers to mitigate risk and positively influencing their behavior, they must take a human-centered approach to service design. This is the final piece in the puzzle and typically includes behavioral nudges and helpful information to reduce risk.
5. Benfiting from AI and automation. Using artificial intelligence (AI) helps streamline the insurance claims process as well as cut down costs and improve customer satisfaction.
6. Exploring self-service portals. A self-service portal can improve customer experience. A single data repository lets customers access their personal and policy data, make changes, request quotes and perform other functions once available only through the call center. Customers can access the portal from a variety of devices, view their policies and perform 60 to 70 percent of required processes on their own.
Future insurance success will depend on smart humans and intelligent machines working together. If'd like to read more, please also check this white paper about how insurer’s holistically can embrace more powerful intelligent process automation.