The digitalization of the insurance industry: Change is about to happen, but how?
A new, fully web-based and cloud oriented solution can enable smaller, ambitious companies to grow tremendously and surpass the current market leaders.
The digitalization of the insurance industry has been stalled for a long time. Amongst all the reasons, one of the most obvious ones is technology. Currently, the most widely spread software solutions for insurance companies are not only based on old technologies, but also on outdated philosophies and models. So what are the possible ways to start the digitalization in an insurance company?
In a series of three articles we are discussing three approaches to start the digitalization in an insurance company. The idea is to show various ways to start the transition, suitable for the needs of different insurance companies.
Transfer everything to an entirely new, fully web-based and cloud-oriented solution
The ability to address dynamically changing market demands, create new products quickly and in a flexible way and provide a much better customer service, including through all new digital channels, can be reached by transferring the company’s operations to an entirely new, fully web-based and cloud-oriented solution.
Suitable for which companies?
A very large insurance company is hardly able to make this type of transfer from their existing complex, expensive infrastructure to a totally new solution. Leave aside what a big project this would be, it is more than anything else a huge, strategic decision. Most insurance companies from that size simply don’t have mechanisms in place to make such a decision in one step, because it would have multiple consequences on all levels in the company and involve a lot of stakeholders.
Still, this approach brings amazing benefits, such as an incomparable efficiency, huge cost savings, process optimizations and higher customer satisfaction. Fortunately for them, small to mid-sized or new insurance companies can make the decision to take advantage of the new technologies and the fact that they are able to carry out such a project. BCG and Morgan Stanley estimate in their published blue paper “Insurance and Technology. Evolution and Revolution in a Digital World” (exh.6, p.4) that new, digital born insurance companies can experience a cost reduction (of claims and non claims expenses) of up to 21% due to automation, digital and online sales, as well as the incorporation of big data for pricing and fraud detection purposes. Transferring their entire operations on a new, fully web-based and cloud oriented solution can enable smaller, ambitious companies to grow tremendously and surpass the current market leaders while their big competitors are still wondering how to enter the digital era.