How The Insurance Industry Is Digitizing For The Millennial Community
Insurance by smartphone is the trend among the younger customers of today since most of them already wanted digital solutions for their protection. Insurtechs have recognized this customer need and the established insurance companies are following suit. The industry is on the verge of upheaval. The technological potential is massive, and so are the challenges.
Digitalization has reached the insurance industry later than in other sectors. The pressure is coming particularly from the customers themselves: They expect a consistently digital insurance experience, starting with the conclusion of the contract, through consulting, to the reporting and settlement of claims.
The established insurance companies are aware of these customer expectations, but consistent implementation is still missing. Most processes are still paper-based; contractual changes must be made in writing; many employees spend most of their working time on trivial copy-paste tasks. This is time-consuming and ties up resources. Repetitive work processes are also more prone to errors, as employees become tired and less able to concentrate over time.
At the same time, the potential for the use of new technologies is enormous: many customer inquiries, damage reports or data analyses could theoretically be standardized and automated — ideal prerequisites for using intelligent machines.
According to several studies by strategic consultancies, the consistent automation of manual processes and the use of new technologies could increase premium income by almost 25 percent and simultaneously reduce costs by almost 30 percent. According to experts, the greatest savings are possible in claims settlement and acquisition costs.
For most established insurers, meeting changing customer expectations and fully exploiting the potential of digitization is a mammoth task. They are not lacking in willpower, but the hurdles are great.
On the one hand, life, health, and property & casualty insurance sectors are often separated into independent legal entities, which often work with different IT systems. On the other hand, cost and competitive pressures in recent years have led to smaller insurance companies being bought up by the “big ones” without integrating the IT infrastructure. The result is a patchwork of incompatible hardware and software in which customer data cannot be exchanged within a group or across multiple departments or divisions. Under these circumstances, it is difficult to realize a digital customer experience.
Also, most insurers work with brokers who, in turn, know their customers’ lives much better than the insurers themselves. The motor insurer knows what kind of car the customer owns, the liability insurer at least knows the family circumstances, the household contents insurer can conclude the income and assets of the customer. But even full insurers do not have an infrastructure that allows them to bundle customer data over the entire contract term and all interfaces. In particular, the question of where customers come from remains unanswered despite cooperation with brokers.
Insurtechs, on the other hand, have two decisive advantages here: they build their insurance solutions without any inherited burdens, so to speak “on a greenfield site”. Obsolete IT infrastructure, skeptical employees who act according to the motto “We’ve always done it this way” — a foreign word in startups. Agility is the order of the day here, and while established insurers need months — if not years — to introduce new software, Insurtechs spurn reflection in favor of implementation. The (partially blind) activism of the “boys” may cause head-shaking among established insurers — but it is also clear that their speed is an important strength.
Figuratively speaking, a maneuverable and partly D.I.Y. sailing ship is competing against a giant steamship. The steamship has an experienced crew, well-rehearsed processes and a venerable captain who has proven his skills over many years — but the sailboat sets the pace and the course. The steamer can better withstand a storm on the high seas, but as long as the sea remains calm, it will reach its destination much later than the maneuverable sailboat, despite its much greater power. And: Due to its more precise data, the sailboat may not even run into the danger of a storm.
It will remain exciting to see who wins the race in the future: the steamship or the sailboat. The way data and technology are handled will be decisive. Only those who make their internal processes more efficient and at the same time meet the needs of their customers will be able to assert themselves in the markets of the future.
That is why Inmediate is here. And we are innovating insurance by means of using blockchain and artificial intelligence. We help to make insurance more refined, cheaper and flexible for both insurers and millennial customers, providing total peace of mind.