Insurance companies face myriad challenges in 2022, many of which can be solved with insurtech.
This is according to Louw Hopley, CEO of Root, who echoes McKinsey study’s view that younger, digitally savvy market segments, in particular, consider insurance companies and products as interchangeable commodities, as long as their personal needs are met.
If insurers want to tap into this market, they should take time to work out exactly what their customers want before launching into a flurry of bespoke coding and development, or simply buying any system off the shelf.
“Several traditional insurance companies have already benefited from deploying insurtech,” Hopley says, “but the best insurtech solutions are the result of businesses thinking about their customers’ needs, more than about throwing huge budgets at a technology problem.”
He shares three ways in which insurtech helps to overcome perennial pain points in insurance businesses.
Keep in touch with customers
Insurers are finding it increasingly difficult to reach their customers via their call centres, particularly after the advent of technologies that help consumers identify who is phoning them. Millennials and Gen Zs also prefer to interact via apps or online, rather than in person. This means that traditional outbound call centres are no longer the effective sales channels for new products they once were.
“However, if your customers are already using an app, it’s usually pretty easy to add a useful product to that app through an insurtech platform that helps you to develop, deploy and manage it,” Hopley says.
“This means you can offer insurance products to clients at the point where it is most relevant to them, such as in the shopping app they’re already using. You could, for instance, partner with a retailer to add cellphone insurance at the point of purchase,” he comments.
Cut down on paperwork to simplify compliance
Insurers need to continuously show regulators that they (or their distribution partners) are writing sound insurance policies and treating customers fairly, by submitting reports that meet specific standards.
Yet compiling compliance reports can be particularly tricky when data is provided manually, contains missing fields or when data standards are inconsistent. Manual processes are also notoriously tricky to audit, prone to human error and vulnerable to being mislaid, lost or damaged. As a result, compliance reporting is a major challenge for many insurers.
Hopley believes reducing physical paperwork (and manual spreadsheets) is one of the easiest ways to make compliance reporting faster and more accurate.
“A modern system that handles the end-to-end policy lifecycle consistently, leverages modern data validation protocols, keeps a complete audit trail of all activities and has the tooling to extract clean and consistent data, dramatically reduces compliance costs and improves general business oversight and control,” Hopley says.
New platforms for growth
Leveraging existing investments is common sense for businesses. They’ve already invested heavily in offices, technology and other business infrastructure, so naturally want to get the most out of these investments.
But what if that existing infrastructure investment is trapping the business in the past, stifling its ability to compete and deliver competitive customer experiences? Unfortunately, this is rapidly becoming the case with antiquated insurance technology, which is less and less fit for a world where the convenience and personalisation afforded by modern technology is increasingly demanded by consumers.
Hopley says it is becoming essential for insurers to take the leap and adopt platforms that will help them deliver the customer experiences today’s consumers are demanding.
“What is needed is flexible, modern infrastructure that allows product teams to focus on delivering the right product through the right channel at the right time. Insurers want to adopt agile development methodologies and rapidly deploy, test and iterate to ensure they quickly get to products that fit customer needs. However, they’re being held back by older ways of developing software that tend to take months, yielding less-than-ideal products because older platforms cannot support the rapid feedback loops required,” he says.
Bonus point: customer self-service
Finally, Hopley believes insurtech can also solve one of the biggest tests of any insurer: how it manages customer service, and particularly the claims process.
Modern insurtech enables more customer self-service, which reduces costs (by reducing how many seats you need in your call centre). It also increases client satisfaction and retention by resolving their service needs more quickly. This results in improved profitability, by lowering operating costs, and increases revenue through lower churn and better advocacy.
“Insurtech can simplify customer service processes, particularly claims. It makes it so much easier for customers if they can give first notice of a claim via an app, submit the claim documents and quotes for replacements through the same app, update banking details for the payout on the same interface, and give feedback about the process directly,” he concludes. “The right insurtech system allows any insurance brand to compete on the cutting edge of self-service customer experiences.”