Stephen Hawking famously said: “Intelligence is the ability to adapt to change.” There’s no denying that we are in a time of change — and uncertainty. The global pandemic has forced insurers to look at their processes and take steps to protect their business.
In light of COVID-19, it’s a great time to consider changes that improve the chances of not just surviving, but thriving in 2021 and beyond. The insurance industry is in a prime position to fast-track innovative ideas that will help meet clients’ expectations, particularly through digital solutions.
From basic customer interaction to underwriting and claims management, almost all processes in the insurance industry can be enhanced with digitization. For starters, the concept of document digitization — the transformation of traditional paper documents into a digital, accessible and processable state — is where I’d like to zero in.
Unleashing trapped data to enable personalization
As customer preference of digital documents over paper continues to build, it’s important to recognize that document digitization can go a long way in improving the customer experience.
And, it’s not as if this historically paper-based industry hasn’t seen the writing on the wall. According to an Accenture – Oxford Economics study, in five years, insurers expect customers will buy most of their insurance through online and mobile apps.
As a result of the pandemic, it’s critical that insurers recognize they have a duty to offer more value to customers through personalized offerings and correspondence. Leveraging qualified data can lead to this kind of segmented communication that can only help drive engagement and customer loyalty.
Once digitized, both inbound and outbound documents — e.g., applications, correspondence, quotes, policies, proposals, payments, and claims forms — are ripe for analysis and analytics using otherwise “trapped” data that can ultimately be leveraged to improve the customer experience.
Improving security and compliance (at a lower cost)
Digitized documents won’t take up expensive office space. Instead, they are safely maintained behind invisible walls with heavy security measures in place. Access to these documents is carefully defined and monitored, and they are less vulnerable to natural disasters than paper documents.
According to a report by Oracle, a well-designed digitization program can deliver up to 65% in cost reduction, reduce turnaround time on key insurance processes by 90%, and improve conversion rates by more than 20%.
And think about totaling expenditures related to paper processes. Ink, printers (and their maintenance), storage, supplies, and shredding — it adds up quickly. A paper-free workflow frees up funds that can be used otherwise.
Again, swapping out paper documents for digitized documents enables more productive workflows for insurance agencies and brokers, improving overall efficiency by providing:
- On-demand access to information for both brokers and clients
- Simultaneous access to documents for collaborative purposes
- The ability to update forms instantly to ensure that all team members are aligned
- Enhanced appeal, consistency, and accuracy in customer communications
Additionally, proper digitization will reduce incidences of regulatory compliance errors, specifically for:
- Data Protection and Privacy Regulations: GDPR (General Data Protection Regulation), CCPA (California Consumer Privacy Act of 2018), and Insurance Conduct of Business (UK)
- Accessibility Regulations like ADA (Americans with Disabilities Act), UK Equality Act, EU Codes [source]
Disrupting a previously staid industry
According to research from McKinsey, “46% of financial services executives feel cultural or behavioral change is the biggest challenge they face in pursuing their digital strategies.” They are not, of course, being asked to abandon the traits that have made them successful, but to renew their heritage with innovative ways of thinking and working.
We’re seeing insurers face a similar endeavor.
COVID-19 has forced many insurers to reassess their use of email for policy documents and other digital means for premium payments, policy renewal, claims settlement, and more. And while the pandemic has accelerated the planning and adoption of a number of digital initiatives, we continue to encounter some insurer reluctance.
As with any significant organizational change, successful digital transformation of any type requires:
- Backing from company leadership and key stakeholders
- Investment tied to clear outcomes
- Starting small, and the ability to then scale up
- A team of specialists to implement digital success
See those as challenges? Sure. But the benefits of digitizing your documents are hard to ignore — i.e., activating untapped data, improved compliance, reduced overhead, and even improved eco-friendliness. And the discussion around it should become more a matter of when rather than if.
It’s still too early to assess the long-term impact of COVID-19 on the insurance sector. That said, the road ahead inevitably demands significant innovation.
Tom Ferber is the Vice President of Business Development for Business Communication Solutions (BCS) at RRD.