Drones and cloud apps and cybercrime, oh my! It’s safe to say that the U.S. insurance industry is at the cusp of significant evolution in the coming year. With new technologies, nimble competitors, and changing customer expectations, insurers are facing mounting pressure to adapt to the digital status quo—or risk falling behind.
Some of the questions insurance companies will be asking themselves this year include:
Based on these questions, it’s clear that insurers should be working to energize their business in three core areas in 2019: cloud computing, cybersecurity, and big data analytics. Why? Because the insurers are increasingly competing on service, not product.
That’s right, the new frontier for insurance is the overall customer experience (CX). Delivering a superior CX requires digital transformation and a customer-centric mindset at every level of your organization.
The first step to take in 2019—if you haven’t already taken it—is to move to the cloud. In fact, most insurers have already begun migrating many workflows and applications to the public cloud to improve the backend of the value chain, reduce IT costs, and relieve administrative burden. All of this is happening in the “back office” and, to be blunt, if you don’t at least leverage a hybrid environment, you’re already falling behind in the technology curve.
Where businesses will begin to differentiate this year is in the “front office.” Cloud computing can add a lot of value to customer-facing processes, from seamless service experiences to the delivery of new digital channels. Cloud computing and managed services enable agents and field reps to collaborate in real time, helping them solve customer problems faster and with greater accuracy. They can also increase the speed and capabilities of hosted apps like your customer and agent portals.
What’s more, migrating to the cloud will help developers create new mobile services. In the cloud, you can create feature-rich applications while using your infrastructure resources at peak efficiency. For instance, Cover, an online-only insurance agency, allows consumers to obtain coverage for individual items by uploading photos to their mobile app. Insurers who leverage the cloud for the front office will lead the industry with a unique portfolio of digital services. And customers will note the difference in experience.
Of course, the primary hurdle in migrating to the cloud is maintaining regulatory compliance and securing customer and company data. Still, public and private clouds have come a long way in just the past few years. Even banks have come to trust the cloud, and are now among the top three U.S. industries contributing to the public cloud services and infrastructure industry, which is anticipated to reach $266 billion by 2021 (Wall Street Journal).
The trick to leveraging the cloud while maintaining strong cybersecurity standards is to be proactive, not reactive. According to a 2017 survey, 49% of insurers discovered “significant” cybersecurity incidents within their organization, and 71% were not confident in their ability to detect a sophisticated attack (EY). Clearly, that needs to change. But how?
One way is to integrate quality assurance (QA) into the entire development lifecycle. As you strengthen your digital presence, you’ll want to ensure the apps and programs that handle customer data are secure. Learn more about our robust QA philosophy that focuses on continuous feedback to programmers and customers, enables concurrent testing of micro-services at the heart of contemporary applications, and creates traceable links among requirements, test cases, and bugs.
More broadly, it’s important to invest now in your IT workforce and implement a security-first strategy when building out your digital capabilities.
Collecting information about customers has never been easier. From drones that assess roof damage after a hurricane to car cams that monitor safe driving practices, insurers are wading through bogs of data. It’s how they’ll use that data that will define their competitive advantage in 2019.
In the back office, insurers are already putting big data to work, using predictive analytics to more accurately assess risk and calculate pricing. The difference this year is greater use of feedback collected from sources like social media, smart devices, and actual customer interactions.
Advanced data insights will also help insurers identify which customers need closer attention than others—for example, predicting when a customer may cancel or lower their coverage.
Finally, advanced analytics can help companies prevent fraud by monitoring social media accounts for fraudulent behavior or tracking the frequency of false claims made by an individual. In fact, the U.S. government recently announced a proposal to begin monitoring of social media accounts of disability benefit recipients. The thinking goes, if someone posts a video of them playing basketball but they’re claiming disability for a back injury, they’re likely committing fraud.
Leading insurance companies will also leverage big data to improve the customer experience. Predictive analytics streamlines processing and assesses risk more accurately, leading to faster response times to customer inquiries and lower premiums. Advanced analytics also empowers organizations to identify new plans and products that customers are likely to be interested in, supporting their bottom line and delivering better coverage to existing customers.
Organizations that lead in CX have customers that are seven times more likely to purchase more from the company, eight times more likely to try other products and services, and 15 times more likely to spread positive word of mouth (Qualtrics). Other industries have seen the writing on the wall and implemented company-wide changes to meet new customer expectations. This will be the year that insurance finally catches up.
To leverage the cloud and big data efficiently, and to protect your systems from cyberattacks and user error, you’ll need a robust IT operation—and, likely, a whole new data strategy. It’s not enough to dip your toes in the water. For insurers who haven’t yet achieved cloud competency, competing in 2019 will require a top-down strategy revamp.