Most insurers know that it’s quite urgent for them to innovate their current systems, especially amidst a great shift to technology-oriented consumption. Moreover, circumstances like the COVID-19 pandemic have made insurance customers think twice as hard about what plans to get and which carrier to choose. A digital transformation will give an insurance business a fighting chance in fulfilling its customers’ modern-day needs. But even if it’s a move that many people within the organization are already anticipating, that doesn’t mean that the process will be 100% smooth and hiccup-free.
There are several challenges that insurers can plan ahead for before they push through with their digital transformation. Below are five important examples, as well as some helpful tips for your company in meeting these challenges head-on.
Internal Resistance to the New Technologies
First is the challenge of onboarding a new life insurance innovation and adjusting the company’s operations and workflow around the system. Some of your personnel may have their doubts about whether investing in a new insurance solution is worth the upfront cost. There may also be staff who are intimidated by technology or scared of the experimentation they’ll need to do on it. Either way, you should expect for this internal resistance to be one of your first major roadblocks in your digital transformation.
To confront this challenge, you must be extra supportive of your staff as they navigate a new learning curve with your new insurance technology. The goal is to get them to be comfortable with insurance innovation and to help them see that technology and modernization are not their enemies—these are tools that can make everyone even better at their jobs. Once they understand how your new tech can enhance the whole insurance experience, from its more rote and mechanical elements to its human ones, you’ll have cleared one of the biggest hurdles in your modernization efforts.
A Faster Pace for Carriers’ Insurance Programs
The widespread usage of new insurance technologies comes with one inevitable expectation: that life will get faster. Insurers will be pressured to oversee quicker and more efficient enrollment processes, as well as faster resolution of issues pertaining to pricing and claims management.
Without a doubt, it will be a challenge for you to get your whole organization to be more agile. But the carriers that can keep up with this fast pace are the ones that are most likely to stay relevant to modern-day consumers. Give your personnel some time to adjust to the pace, and acknowledge your victories as you pursue a greater level of business agility.
A Heavier Reliance on a Data-Centric Approach
Many industries are adopting a data-centric approach to doing business, and the insurance industry is no exception. Insurers are already aware that they’ll need to incorporate new data infrastructure and be more reliant on this than they were before. But there’s a possibility that some people in the organization are intimidated by the prospect of the “numbers game” involved in a data-centric approach, and that they can’t imagine tailoring the insurance process accordingly.
Remember that if you are leading a digital transformation for your company, your goal is to simplify insurance delivery not only for your customers, but for your staff as well. You must be able to break down how your personnel can use data analytics and data-intensive calculations to their advantage. Again, the learning curve may feel steep initially, but the result is greater mastery over the insurance process.
Higher Standards for Regulatory Reporting
Regulatory reporting was never an easy task for insurers, but even amidst a digital transformation it is likely to get harder than before. Regulators for the International Financial Reporting Standard 17 (IFRS 17) and the Long Duration Targeted Improvements (LDTI) standard, for example, may take insurers to task in their compliance.
Knowing that, insurers should prepare to use their new technology in the service of their compliance efforts. Expect for regulatory requirements to evolve in terms of their complexity and stringency, but avoid falling behind and incurring steep penalties as a result. Instead of thinking of compliance as an afterthought to your modernization efforts, ensure that it’s one of your top priorities.
New Paradigms for Keeping Insurance Customers Happy
Last but definitely not the least among these challenges is insurers’ need to adapt to a more demanding and digitally savvy clientele. In the next few years, carriers will welcome a larger population of working millennials and even yuppies from Gen Z. This demographic will be cost-conscious and deliberate in their search for flexible insurance plans, which are unlike the bulky all-in-one plans that seemed like the only choices for their parents and grandparents. At the same time, these customers will look for increased speed, consistency, and personalized service from their insurers.
It will not be easy to keep up with these new expectations for keeping customers happy. But if you are able to develop your toolset in a way that meets these expectations, the rewards will be great. Your brand will be supported by word of mouth, you’ll gain the loyalty of insurance customers across multiple generations, and you’ll secure a reputation among your peers for being both forward-thinking and relevant.
If you’re due to roll out a digital transformation for your insurance business, you’ll definitely be in for a challenging time. But in the best-case scenario, these will be but growing pains for a better future in the insurance industry. Take it a few steps at a time, and support members of the organization in their transition to a more digitalized insurance system.
Isabella Brown is a writer by profession. She has written extensively on the subjects of business and entrepreneurship. Her work has been published across many news and information websites and publications. In her free time, she enjoys baking, traveling, and listening to music.