The value of agility for insurers
Insurance companies play a vital role in our society by bearing the economic risk of damage while protecting consumers’ assets. However, the industry is not protected from the disruptive trends of the market. Many have tried and failed to adapt to the changing trends in the industry, while new market players have exploited those gaps.
This challenge has caused firms to adopt newer technologies to keep up with the market. However, frequently they’re still unable to keep up when internal implementation processes are slow — indicating a lack of agility within their organizations. Moreover, many insurers end up hurting their profit margins by spending too much on redundant and time-consuming processes that could be cut down through agility and automation.
A recent report found that the top 10% of financial performers are 30% more likely to display agile characteristics. For insurance companies that have yet to adopt agile processes, their competitors who have are guaranteed to outperform them.
So what does agility mean for insurance companies, and how can they incorporate it?
A glaring need for agility in the insurance industry
There are several reasons why the insurance industry needs to adopt agility in its operations. Here are a few benefits of doing so:
Adapt to market trends quickly
If insurance companies continue to rely on paper-based processing systems and manual labor for repetitive tasks, keeping up with the market will be challenging. As consumer demands continue changing in the industry, it’s crucial to understand what works for the business and what no longer does.
Many insurance companies prefer their legacy systems as they believe it’s too much work to constantly experiment with and implement new technologies. However, a lack of adoption can cause multiple issues down the line, including a loss of any competitive advantage.
Incorporating an agile framework can help insurers assess the market quickly and modify their products and services to be in line with the latest consumer demands.
Build a culture of innovation
The traditional model of selling and supporting insurance products is no longer optimal. Customers don’t want to wait for a live person to help them at every step of the process. Instead, they’re looking for customized solutions that encourage a self-serve capability.
The best way for insurers to survive in this new environment is to adopt a culture of agility and innovation. Agility is not just about implementing new technology but also about having the right mindset and culture. It allows organizations to adopt new technologies faster than others and stay ahead.
As technology is already disrupting traditional business models in the insurance industry, agility can be the difference between being a leader and a follower. By championing agility, these companies can create a culture of innovation where disruption is a norm — not a challenge.
Improve alignment between stakeholders
Another reason insurance businesses struggle with adapting to the market is the lack of data-driven and speedy decision-making processes. This is partly due to the need for more alignment between internal teams and bottlenecks in information flow between these teams.
Business leaders might not be ready to take risks as they don’t have the right information in hand, which is why it’s essential to use agile frameworks to foster collaboration. It’s important for insurers to focus on communicating their customer-focused goals and the resulting business transformation to the entire organization. Doing so enables a collaborative effort to assess risks and opportunities in real time.
Create stellar customer experiences
Ultimately, the focus of every insurance company is to provide an excellent customer experience. In the State of the Connected Customer report, 56% of customers wanted their offers personalized, while 62% wanted companies to anticipate their needs in time. In addition, 73% of customers expect companies to understand individual needs and preferences. It’s difficult to achieve such expectations without incorporating agile processes and technologies that can hasten workflows and automate them.
Technologies like AI can help accomplish this by automating repetitive tasks like claims processing, documentation and damage detection. In turn, this frees up time for customer service agents to provide more personalized, “human” support when customers need it.
Understanding the impact of agile processes on insurance businesses
One of the most common reasons insurers hesitate to adopt agility is that they assume it requires an organization-wide overhaul. This is not true. It’s more than possible to take it one step at a time, experiment with any changes, and create a customized agility framework that works for their business.
For example, insurers can automate one business process at a time, such as First Notification of Loss (FNOL), allowing customers to take pictures or videos of their damaged assets and initiate a self-service claims process immediately. Automating this process can help companies assess the extent of damage and process a claim in minutes instead of days or weeks. Essentially, insurers can automate the most critical tasks they need to first — and at their own pace.
The focus is on streamlining internal operations to impact the customer’s experience. As a result, both the business and customers benefit from agility, increasing satisfaction.
Embracing agility and insurtech partnerships is the key to progress
Agility is often thought of as a process that facilitates successful in-house technology development but that’s not the only case. Insurers don’t always need to develop agile processes alone, as they can partner with insurtech companies to quickly develop customized solutions. Insurtechs can deploy solutions much faster and as needed, helping businesses automate exactly what they need. These partnerships help insurers keep costs down and deploy technology quickly while future-proofing their businesses.
It’s not a question of whether or not insurance companies should embrace agile processes, but when. With 68% of customers indicating that the pandemic elevated their expectations of an insurer’s digital capabilities, now is the time to prepare for this rapid digital shift. Customers expect exceptional experiences from their providers, so incorporating agility to offer such experiences is a must. However, it doesn’t mean that companies need to do a complete overhaul of their processes. Instead, they can take one step at a time to experiment and get feedback first, focusing on the impact it creates and making the digital transformation process more manageable.
Julio Pernia Aznar is the CEO of Bdeo, a technology company transforming the insurance and fleet industries and the way they engage with their customers through Visual Intelligence solutions.
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