This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.
With IT innovation making headway in the insurance industry, the momentum is now dramatically shifting towards digital transformation, and three forces are driving this change.
The millennial generation is becoming a driving force for change. Millennials, born from 1980 to 2000, grew up with Amazon, Google and social media via mobile devices and computers in their hands, on their wrists and in their bedrooms, have an entirely new framework for customer interaction. All generations benefit from a highly customer-centric, environment-driven digital technology. Consumers now expect to buy what they want to buy, when and where they want to buy it, with the ability to find it at the best price.
The second force in insurance is that the ubiquitous adoption of digital technologies means new opportunities for additional premiums, improved customer experience, better risk selection, boosting loss prevention and increasing governance. In order to compete, insurance companies must find a way to access and process telemetric data from devices and sensors, stream real-time data from social media and external sources such as weather, and monitor data from the explosion of wearables in the public and industrial domain. Existing systems simply did not envision the volume, velocity and variety of this data.
Finally, the last force all insurance companies must address is finding better and faster ways to meet the ever-increasing demands of the regulatory environment. The impact of digital innovation will drive new regulation, hence pressurises insurance organisations to efficiently and effectively meet these regulatory requirements.
As a result of these drivers, here are the business and technology trends for the next wave of digital insurance in 2016 and beyond.
1. Digital channels will replace and augment physical channels
A 2015 survey conducted by Bain involving insurance companies projected that digital channels will continue to significantly replace physical channels in the next 3 to 5 years. The survey found that 20 to 40 percent of physical activities in the insurance industry will be digitally transitioned. Specifically, pre-purchase, purchase, servicing, renewals, claims handling and management, payments and customer feedback and resolution will be the first to become digital, followed by other functions. This transition will require incremental IT and integration transformation.
2. The millennial effect on modern application design
If the success of insurance companies depends on millennials and that millennials would only want to interface with firms digitally, insurance companies must revamp the IT infrastructure of their user experience departments. Legacy systems were designed for human worker workflow, assumed the use of telephones and postal mail and assumed customers were willing to wait for a response. These assumptions are no longer true as the new insurance customer demands information and service on mobile devices and the web, which are completely different design philosophies for application user experience experts.
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