The speed at which technology changes can either elicit great excitement or a total sense of fear. The external pressures to keep up with the latest advances in AI and automation alone could lead business and IT leaders to be in a constant state of re-evaluating their business and digital strategies.
Adopting new technologies can look different across the industry landscape for insurance organizations. Whether you’re an early-eager adopter or a cautious late-arriver to the party, there are challenges along the way. Understanding these common challenges and exploring ways digital technologies can help you address them is key to advancing your digital transformation – at any pace.
A closer look at the current state
Today, insurance organizations are leveraging technology in ways that were impossible even just a few years ago. Beyond modernizing policy and claims administration systems, carriers are making use of new sources of data and advanced uses of data analytics applications.
In some practical ways, companies are adopting AI and data to improve business process workflows and ease of doing business for agents by pre-qualifying leads and quotes, eliminating duplicate data entry, straight-thru-processing for billing, policy issuing, endorsement processing, bordereaux transactions, and customer support (i.e., chatbots).
On the carrier side, AI and data sources are incorporated into product design, pricing, automated underwriting decisions, forecasting, and enhanced analytics. Enhanced data also allows companies to create more sophisticated models for underwriting, pricing, finance, and claims. Large carriers are sitting on a gold mine of historical data. They are making more effective use of it by performing a range of experiments, testing assumptions, and modifying key data attributes across the entire value chain.
New challenges can lead to great opportunities
For insurance enterprises, adopting new technology impacts front- and back-end users. As with any change, challenges often arise as your workforce and customers become accustomed to new ways of working and interacting with the business. Let’s explore a few of these challenges and examine how emerging digital technologies like automation and AI uncover new opportunities for successful transformation.
The availability of new and varied sources of data
Challenge: New technologies, including agency-level points of sale, underwriting, pricing, and claims solutions, can spur the influx of larger quantities of data resources to an organization. The challenge lies in what to do with that data.
Opportunity: The influx of new data not only helps an organization enable opportunities for advanced analytics, but it also opens the door to:
- Leverage automated decision-making to help with risk assessment, qualifying, underwriting selection, and price tiering.
- Get a better understanding of the nature of a claim to assist the adjuster in creating the policy.
- Assign adjuster resources in the event of a weather catastrophe.
Challenge: Migrating off mainframe systems and making data accessible via the cloud can be a significant hurdle to overcome. For insurance organizations, the two biggest areas impacted are policy and claims administrative systems. This means carriers are transforming all quoting, policy, product, claims, billing, and customer information from old mainframe legacy systems to new cloud-based systems and applications. Often, the most difficult challenge for projects as large as these is converting the embedded rating from the various legacy systems/components to the new system. Companies may be using their own home-grown or manual rating systems or using a third-party vendor application that may be limited in functionality and no longer supported. Since legacy modernizations take years to complete and are costly investments, organizations strive for ways to mitigate costs or show interim return on investments (ROI).
Opportunity: With automation, carriers can reengineer their business processes to streamline business transaction processing and eliminate duplication of effort. This allows them to focus on enhancing customer experience and increasing straight-through processing. Automation can also improve efficiency on the bottom line.
More specifically for the rating component, externalizing the rating logic into a modern system establishes a single source of truth across multiple lines of business and policy systems that have yet to be modernized. This provides carriers with an immediate ROI lift in their digital transformation journey while increasing their capabilities in the area of insurance product development and the sophistication of their pricing program.
Aging insurance workforce
Challenge: Millions of seasoned executives will soon be leaving the industry, and all the accumulated knowledge/experience needs to be replaced/captured.
Opportunity: Companies are using automation to help replace some of the vital knowledge resulting from the departure of human capital. If the right data is collected and a rules-based algorithm is in place, your systems can make recommendations for decisions based on both historical and real-time event data. Depending on the nature and quality of the data, these automated rules engines can be made as sophisticated and nuanced as necessary.
Embrace the challenges
Companies can gain a competitive edge on the competition by embracing the opportunities that come with adopting new digital technologies and sparking a sense of excitement in their organizations. Having an experienced, trusted partner to help you overcome the challenges along the way can help smooth the path to transformation. CGI has partnered with hundreds of companies to help leverage technology and realize the benefits these new data sources and technologies can bring your company.
Learn more about how we are helping insurers drive value and meet consumer demands with innovative services and solutions.