Embracing Digital Transformation: The 5 Biggest Challenges for Insurers

Written by: Sharmila Wijeyakumar

Executives expect technology to improve their competitiveness and customer loyalty while cutting costs and boosting growth. But to achieve a successful digital agenda, there are several hurdles insurers need to surpass including these top five digital transformation challenges:

1. Grow Business Through Agent 1st Experiences

According to a survey from Ernst & Young, “40% of consumers decide to continue insurer relationships based on the quality of the experience”, which sets clear expectations for Insurers to deliver seamless omnichannel experiences across mobile, web, chatbot, voice and call centers. Unfortunately, agents and brokers also have poor digital experiences in spite of their crucial role in the insurance business.  In fact, the 2018 J.D. Power U.S. Independent Insurance Agent Satisfaction Study states,” Among agents, overall satisfaction with insurers is just 696 (on a 1,000-point scale) for personal lines and 686 for commercial lines, which are among the lowest scores for business-to-business relationships in J.D. Power satisfaction studies.”

In a competitive market such as insurance, where the performance of agents and brokers is critical for acquiring new customers and keeping existing ones, executives also need to prioritize the experiences of their teams. Easy-to-use and friendly portals must be at the top of their agendas. To be great experiences, insurers need to utilize design thinking using an agent 1st approach to ensure adoption. 

2. Speed Time-to-Market 

Insurtech has shaken up the insurance business by taking advantage of data analysis and new technology like GPS car tracking, or activity trackers on wearables, Insurtech has transformed the market with new solutions and better experiences and, even though startup activity has slowed, Insurtech continues to play a major role in shaping the industry. The biggest challenge for traditional insurers is to align their years of experience—something Insurtech companies lack—with new ways of engaging customers, policyholders, agents, and partners. And, of course, do it all with speed, agility, and the right time to market. In times like these insurance companies need to lean into the demands for digital acuity and accelerate the transformation train or risk being left behind.

3. Deliver Seamless Experiences Across Countries

Many insurance carriers operate across multiple jurisdictions requiring seamless experiences yet different regulatory rules force insurers to adapt their policies and procedures to be compliant everywhere. As regulations get tighter and tighter, the challenge for insurance companies that operate in a multitude of countries is to be able to customize and adapt their business and user experiences quickly to comply with the different federal or state policies. Products like Veriday’s Digital Agent and Liferay are well suited to offer seamless solutions to deliver multilingual options and jurisdiction driven compliance engines. 

4. Ensure a Connected Digital Ecosystem

As competition continues to increase, many larger insurers are growing their business and services offerings by plugging other companies into their ecosystem. For example, Pay-As-You-Go insurance is an auto insurance program that adjusts rates based on the number of miles you drive. As a result, they’re able to broaden their market to new customers, diversifying their product and services portfolio, but it also makes their business a lot more complex. Insurers must integrate different components of their ecosystem seamlessly, ensuring a smooth experience for customers, brokers, agents, and partners.

5. Maintain Legacy Systems and Address the Increasing Backlog

As we mentioned, innovation is essential for insurers to stay competitive, however, there are frustrations resulting from market responses.  Innovation is often hampered at many companies, especially mature ones, that still trust their business to complex, disjointed legacy systems that consume not only financial but also human resources. It appears that insurers are not prioritizing digital investments as their backlog continues to grow. According to the State of Application Development, Insurance Industry Report, 65 percent of IT professionals said they have an app dev backlog, and for 10 percent of these respondents, the backlog was over 10 apps. Only 32 percent said their app dev backlog had improved in the last year. In addition, according to the same report, development skills are hard to find: 65 percent of organizations have hired web or mobile developers in the past year. Eighty percent of respondents described app dev talent as scarce, with hiring taking longer and costing more. Partnering with Veriday means you can reduce the backlog and increase agility since your bench can shrink or grow to meet these backlogs and you always have just the right resource when you need it to help you innovate and keep your insurance company on the winning side of digital transformation. 

Related: Protecting Yourself Through Transition With Long-Term Care Insurance