sThe coronavirus pandemic has induced several structural changes across sectors around the globe and insurance industry is no exception. The sudden outbreak has called for several tech-driven transformations for staying agile and running. Underlining the trends that will shape the insurance sector in 2021, Suman Reddy, Managing Director, Pega India talks about how technology will change the course of action.
1. Insurers without agile tech will not be winning any prizes in 2021
The sudden and unprecedented shock of the COVID-19 pandemic highlighted how important it is for organisations to be nimble and responsive to change. The crisis forced organisations to face up to the need to be prepared for the worst and able to adapt to changing circumstances quickly and easily. Nevertheless, those that think the last time something like COVID-19 is going to happen are sorely mistaken, as SARS, swine flu, and a host of other pandemics have proven disruption can occur more than once. Insurers that were not able to cope when coronavirus initially hit may have remediated for the short term, but it is not good enough to say, “If the same thing happens again, we will be ready”. Insurers are waking up to the fact that they need technology that can pivot fast to react to all kinds of scenarios they have not yet even considered.
Spending money on “point-in-time” systems which solely address today’s business problems, without consideration of what may come tomorrow, without warning, is the strategy of insurers who will not survive much beyond 2021.
2. Out with the old, in with the new – system of processes, not record, become core
Policy and claims administration systems, have been considered the prime systems in insurance for many years. The pandemic was a wake-up call, causing insurers to realise that recognising such monolithic systems as the most important core systems is no longer correct. Instead, insurers have established that they need to put systems of processes first. Back office admin, accounting and compliance are all critical functions, but they will not affect the combined ratio, nor satisfy customer needs.
In 2021, insurance IT teams will restructure their business architecture by implementing a ‘centre out’ approach. This means having the back office focusing on policy and the front office on customer relationship management, with both connected via a central intelligent hub. This hub or central “brain” will ensure that customers receive a consistent, outstanding experience every time they interact with their insurer, irrespective of the channel of communication they use. In 2021, the days of selling standard, pre-packaged products to large segments, including people that might not need all of the cover, will be numbered. More insurance companies will digitally transform, making system of processes core, and benefiting from greater satisfaction, loyalty and sales. Customers will get what they want, when and how they want it.
3. COVID-19 forces insurers to be customer-centric and digital-first
When the first COVID-19 lockdown hit, organisations had to quickly pivot away from in-person customer interaction and towards digital channels, and at that point, they realised just how reliant they were on human beings. The key question on everyone’s minds was, “How do I do everything I possibly can digitally, and only ever use employee capacity when absolutely necessary?’
Currently, insurers are not in the position in which they need to be – industry-wide, there is still a reliance on staff to serve customers via contact centres for all types of requests from simple to complex. Numerous companies haven’t built the automated omnichannel communications required to reduce reliance on staff, decrease customer call wait times, cut costs and respond better to customer needs. This is despite many customers preferring to use online services to solve their queries over waiting in call queues and despite Pegasystems’ Digital Transformation & COVID-19 2020 research which found the most effective communication channels during the pandemic were mobile apps, messaging platforms & chatbots. Some major UK insurance brands still do not have these capabilities at all. Next year, Covid-19 will continue to drive home the importance of becoming customer-centric and digital-first. If companies don’t have the technology to help self-service customers digitally for their basic needs, intelligently automate the remaining work in contact centres and allow staff to work flexibly from home, operations will be severely disrupted.
4. Distributed workforce: insurance workers cement blended work style
With intangible policies rather than physical items being the products of insurance, organisations have already proven they can work successfully with a distributed workforce. However, as a relationships-based industry, there is still an appetite for face-to-face meetings to build rapport with colleagues, partners and clients. Therefore, in 2021, there will be a clear establishment of a blended work set-up in which part of the workforce is working remotely and part is working from the office. There will also be greater emphasis on flexi-working and good work/life balance, prompted by how COVID-19 resulted in a different tempo of life. Insurance companies will focus on both ensuring remote workers have the tools they need to work from home as well as keeping offices sanitised and socially distant for those choosing, or required to go in. They will also invest in technology systems that ensure staff are all working in full harmony no matter where they are based or when they are working.
5. Data and analytics move the needle from reactive to proactive insurance
COVID-19 caused organisations to re-assess how they do business and confront areas for improvement head-on in 2020, but 2021 is the year they will see those improvements through. Insurers will invest in new technology such as dynamically capturing real-time IoT data, to generate and leverage invaluable analytics and insights instantaneously that will drive thousands of decisions and actions every minute. Just as this has transformed other industries in recent years, this digital disruption is changing the nature of what it means to be insured. Traditionally, insurers have been around to help customers after they have encountered problems, but new technology will allow insurers to use data to predict what might happen to customers to actively help them avoid problems beforehand. Maturing the business model from “claims payers” to “partners in protection” means insurers can move from delivering simple reactionary tactics to proactive ones, and become a more trusted partner to their clients, so that they will want to stay loyal for years.
Views expressed in this article are the personal opinion of Suman Reddy, MD, Pega India.