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How to Implement Digital Transformation in Insurance Companies

Team Kissflow

Updated on 20 Jun 2024 7 min read

 

Digital transformation in the insurance industry is the key to the future of insurers as it automates core functions and builds effective self-serving tools. With more advanced technologies, insurance has become a hotbed of digital innovation, helping insurers personalize products, deliver exceptional customer experiences, and improve internal operations. 
Yet, insurance companies lag in digitization because they stick to legacy systems flooded with many technological barriers, dimming their efforts to run successful internal operations. When insurers embrace digital transformation and rethink their business models, they transition to a more compliant, secure, and digitally-enabled organization to enhance customer and employee experiences. 


Modern technology, with new digital tools and capabilities, can increase productivity and profit margins, streamline product development, cut costs, and transform key business functions. As businesses increasingly adopt new technologies and methods to remain competitive in a rapidly changing market, here's how to implement digital transformation with low code platform for insurance companies.

How do Insurance firms benefit from digital transformation?

When insurance companies digitize their workflows, internal operations streamline, employee collaborations and interactions improve, businesses automate claims processing and realize a greater return on investment. But the real impact of embracing digital transformation is:

1. Improved customer experience:

The future of insurance firms depends on best-in-class customer experiences. Data analytics and advanced, real-time reporting can help insurance companies better understand customer needs and preferences and leverage the information to provide omnichannel engagement and transform customer experiences to greater heights.


Fast-changing customer expectations force insurers to digitize their products and processes and provide a more digital experience. Customer insights also help insurers identify new growth opportunities, and offer and deliver more personalized services that raise customer retention rates.

Digital transformation for insurance companies will streamline operations, improve customer engagement, and drive growth. Digitizing processes to create a seamless digital customer experience can increase the customer satisfaction net promoter score by about 10-15 points

Automated self-serving tools also provide insurance quotes and create customized policies, making it faster and easier for customers to make policy changes, and improving the quality of service. For instance, accessing data and costs for liability insurance for plumbers has become straightforward. Digitization also speeds up customer service, with live chat and digital assistants serving customers faster. Additionally, many businesses are automating the issuance of their certificate of insurance, allowing them to save time and improve overall operational efficiency.

2. Better decision-making

Industry-leading insurance firms cannot afford to wait until they lose their competitive advantage and insurance digital transformation trends turn the market upside down. They need to rethink their business models, simplify processes, and offer seamless interaction methods to stay ahead of the curve. 

Full-scale implementation of digital transformation for insurance companies helps industry players become more flexible to current demands and nimble in both their front and back-end operations, ultimately transforming the entire business. 

The power of data analytics can help insurers gain insights into customer behavior and claims trends to improve their risk management processes. With this, they can use predictive analytics to identify risks before they occur and take proactive measures to mitigate them and ensure a successful transformation. 

Analytics also help insurers collect and interpret large amounts of data from multiple sources, including weather reports, traffic patterns, and social media posts. This information lets them make real-time decisions on insurance coverage, pricing, and new product offerings.

3. Enhanced efficiency

Digital insurance transformation optimizes operations in insurance companies for speed. It's easier to process claims instantly via self-service dashboards and apps, enhance accuracy, and improve back-office procedures. Automating manual processes expedites underwriting procedures, minimizes human error, and provides better data-informed insurance policies.

Technology can boost efficiency by extracting data from insurance claims, collecting customer information, and running background checks in the shortest time. Implementing digital transformation for insurance companies can increase ROI by 200 percent.
Digitization can streamline claims processing, reducing the time, energy, and cost associated with manual processing. It also frees up time for employees to engage in higher-value activities, increasing productivity, and efficiency and boosting employees' morale. 

4. Boosted agility

Digital transformation makes insurance companies more agile. They become faster, leaner, and more effective in providing insurance services. Digitization also helps insurers identify and take advantage of new opportunities better tailored to customer needs. Agile digital methods help insurers maximize accountability and future-proof themselves against rapid industry changes.

Digital transformation for insurance companies also enhances fraud detection, helping insurers detect and prevent fraud. With data analytics, biometrics, and other identity verification technologies, insurers can identify patterns in claims data that may show fraud and ensure only genuine customers access insurance products and services.

When insurers partner with third parties to offer pre-built solutions, they increase the speed and variety of services they provide and avoid lengthy, complex, and costly integrations. 

Best Practices to implement digital transformation for insurance companies 

Many opportunities abound for insurers that quickly adapt to industry changes and implement high-level practices to tip digitization scales in their favor. Insurance companies fail when tackling digital transformation because they don't follow best practices, including:

Develop and follow a realistic digital strategy: To prepare for digital insurance transformation and encourage flexibility, insurers must adopt the right tools and find creative ways to optimize their operations.

The best place to start is with a clear, long-term plan for technology innovation that acts as a digital roadmap to transform the entire business. A workable, realistic digital strategy that clarifies why, how, when, and where will help you implement technologies in the most successful use cases.

Commit to innovation: Digital transformation for insurance companies is more than just a stack of tech tools. Continuous innovation helps eliminate inefficiencies, minimize cost, optimize data use, and align operations across insurance units.

Innovatively using data and analytics helps insurers better understand their customers' needs, maximize the use of tech tools, and allow top talent to focus on more relevant, revenue-generating tasks.

Digitalize core operations first: Inefficiencies and silos are major hindrances to transformation in insurance firms. To focus on value-added activities, audit your processes and operating models, then digitalize your firm's core operations.

Process audit prepares your organization to implement new initiatives seamlessly and efficiently, reducing redundancy and bottlenecks that stall your workflows.

Facilitate a cultural change: Even the most well-designed strategy will fail without a cultural change. Real digital transformation for insurance companies begins with people who share your organization’s vision and mission, then processes and technology.

Create an environment where employees feel comfortable sharing and trying new ideas. To help break down data silos and facilitate learning, encourage and motivate employees to experiment and challenge themselves by trying new ways of doing things.

Key use cases you can improve through digital transformation

Customer service


Digital tools can enhance customer services in the insurance industry by creating a hybrid customer service model that transforms core steps across the customer journey.

Such a model leverages digital innovations to improve collaboration between cross-departmental teams, employees, and customers to develop solutions to complex problems.

As more businesses become customer-centered, insurers can leverage digital solutions such as data analytics, cloud technology, and customer relationship management (CRM) software, to create successful digital sales strategies.

With these, insurers can make closing sales more efficient, improve customer satisfaction and loyalty and identify sales opportunities and untapped areas for future profits.

Human resources


Digital transformation for insurance companies can also improve human resources, eliminating manual work and paper file systems. It also streamlines internal HR processes and creates better employee experiences.

The labor market is experiencing major shifts, where workers are switching companies, leaving industries, and even starting consultancies. The insurance industry is no exception. Digital tools can keep employees more motivated and productive, increasing employee retention. 

Simplify insurance purchase

Digitized insurance systems leave no room for guesswork. Insurance companies are leveraging technology to remove complexities and generate insurance quotes faster and more accurately via an all-in-one connected business process. Digitally processing insurance claims helps consumers access services conveniently at the touch of a button. 

Digitized insurance payment methods offer customers convenient contactless payment options that save time and reduce human error. Technology also helps insurers provide pay-as-you-go insurance products based on real-time customer data, which increases customer loyalty and boosts business sales.

Overcome the barriers of Digital Transformation in Insurance companies


Legacy systems:

They impede digital progress for insurers and stop them from keeping up with rapid technological advancements. Legacy systems are obsolete and prevent insurance firms from providing modern digital solutions. Insurers are often reluctant to update their outdated software and advance digital transformation efforts because the process is complex, time-consuming, costly, and risky. Migrate to modern cloud-native insurance systems for greater agility and scalability. 

Data privacy & security:

Insurers hold extensive amounts of sensitive customer data. With digital transformation in the insurance industry, this data is increasingly stored in the cloud, which makes it more vulnerable to malware and cyber-attacks. Insurers need powerful security measures to protect their data, including multi-factor authentication and data encryption. They should also remain extremely alert against threats to safeguard customer data and their online platforms.

Talent shortage:

While the right IT infrastructure and processes can boost digitization transformation, proper digital skills and in-house capabilities quicken your efforts to achieve IT modernization goals. But difficulties in attracting and retaining skilled talent have worsened the digital insurance transformation struggles. Select technology that supports a virtual workforce and digitally educate your teams to build the abilities they require for digitization. Alternatively, outsource talent or new hires to support your digital journey.

Resistance to change:

It's often difficult to push workers to adopt new ways of thinking and break old habits they're accustomed to. Encouraging a cultural shift and implementing digital communication tools to support the transition can help. Also, provide a more standardized environment and offer training to enable employees to handle more complicated situations. Design straightforward digital interfaces for use by diverse workers and test platforms to ensure they are as intuitive.

Regulatory and compliance challenges:

Insurance is a highly regulated industry in which companies must comply with multiple rules and regulations. For this to happen, insurers maintain extensive data and paperwork, making it difficult to digitize processes. Insurers need to work closely with regulators and ensure their data collection and overall transformation efforts comply with relevant regulations.

Inefficient data management procedures:

Digital transformation for insurance companies causes an explosion in the data needed and different ways to process it. While the data collected can lead to more business opportunities, companies must address data quality and completeness issues because different data interpretations can lead to inaccurate results and predictions. Data management solutions and a comprehensive data strategy can help insurers standardize their data and assign staff to enter, store, and manage data consistently across the organization to drive business results.

What are Emerging Technologies in Insurance?


Digital insurance transformation trends will seismically impact the broader industry in the next few years. Emerging technologies underpin insurance solutions, compelling large numbers of insurers to implement these three digital tools:

Artificial intelligence (AI) 

Insurance is a data-driven industry, so adopting artificial intelligence-powered tools provides an opportunity to gain new data insights with greater accuracy and speed. AI specifically benefits the insurance value chain, back-office, and customer front-end processes such as risk management, underwriting, benefits management and claims, product development, pricing, distribution, and sales.

The Internet of Things (IoT)

Industry-leading insurance firms already use telematics solutions to advance their core insurance products. Telematics is the future of connectivity, as it promises to reshape insurance products. When customers use their IoT-enabled devices, insurers collect their data shared for a more accurate understanding of their needs and the ongoing risks involved, especially when people make purchases.

Robotics

Robotics technology is already making a splash in the insurance industry, with a handful of insurance firms already using robotic applications. For a data-focused industry, intelligent process automation (IPA) and robotic process automation (RPA) are exciting because insurers can now automate manual, tedious, back-office processes faster.

The right partner to support digital transformation for insurance companies

Some insurers consider digital transformation a tremendous undertaking or are ignorant about the advantages of adopting digital technologies. But the benefits are undeniable, especially with the right digital partner to help you improve internal operations for better outcomes and surpass your competition.

Kissflow will analyze digital transformation needs for your insurance companies, bolster your digitization efforts, and help you deliver the best services. You'll increase efficiency and productivity across the entire insurance company. You'll reinvent workflows and processes, deliver value, ignite long-term growth, and make more informed business decisions that respond to changing marketplace expectations with advanced, real-time metrics. 

Even better, Kissflow connects your business teams and IT successfully through its unified low-code/no-code platform. Don't go at it alone. Implement digital transformation projects, meet customer needs, drive operational agility, address strict regulations, and minimize costs with an intuitive platform.