Why Is The Insurance Industry Having A Tough Time With Digital Transformation?
In an environment where transactions are still predominantly made on paper, going digital has proven to be not for the faint of heart.
Concerns about the insurance sector’s preparations for moving from paper to digital, and indeed its willingness for it, have been raised frequently over the past few years. The pressures of sluggish economic growth and low-interest rates have squeezed profits, but the primary concern for the industry has become its ability to go digital. After all, insurers are used to dealing with the rise and fall of interest rates. Digital transformation, on the other hand, is a new challenge.
Pick any large insurance company, and you’ll most likely find they have miles of paper storage — all of which has to be kept on file for decades, often in remote locations to lessen storage costs. All of these archives need to be secured against natural disasters and criminal activity, and can only be accessed by authorized personnel. And all of this comes at a price — one that inevitably reduces margins.
One of the main issues the sector is facing is that, while small fintech firms are proposing innovative products that leverage the new Internet of things (IoT) technologies, traditional players are struggling to bridge the gap between paper and digital transactions.
The paper struggle is not easy to overcome for insurance companies either. For example, some countries’ laws dictate that paperwork for a life insurance contract has to be kept for 10 years once the contract expires. And in the event of a car accident, information about the accident has to be collected in a standardized document that is filled in by hand, complete with a carbon copy that’s near-impossible to scan or machine-read.
Is it worth digitizing for all paper archives? Certainly not, given the vast majority of the archived documents will be destroyed without ever being consulted again, and the cost of digitising, indexing and digitally storing those documents would be phenomenal.
And, is it possible to go completely paperless? Certainly not, given some documents still legally need to be in paper format (although this varies from country to country) and some documents, like carbon copies, cannot be digitized. So, what’s the solution?
A viable option is to create a bridge between these two worlds, where paper and digital documents can co-exist effectively and efficiently. Smart document capture solutions, for example, could leverage existing multifunction printer infrastructures to scan, verify, extract, index and route the information from paper documents, merging it seamlessly with the company’s digital data infrastructure. This could mean that many typical processes can be made much more efficient. Employees often spend a great deal of time manually processing paperwork for claims and then having to correct the errors associated with keying in data. But, by using smart capture, employees can scan and digitize paper applications from the point of origination — an agent’s office or another remote location, for example. Thus, processing that paperwork is made easier with fewer manual steps and less searching for the right information.
By creating a bridge between both worlds, paper and digital can coexist and business processes can become more consistent. And, as a result, insurance companies can stay customer-focused, providing an enhanced, efficient service that brings the old and new together harmoniously.