The insurance industry is among those most impacted by the COVID-19 pandemic. Claims are likely to top Ä190 billion in 2021, according to reinsurer Lloyd's of London. However, the pandemic did not fire the starting pistol in challenging insurers to transform, although it has amplified the issue.
You can read more about the challenges specific to this sector in a recent interview with Gijsbert Cox, EMEA Insurance Industry Leader at Appian.
Traditional insurers are racing to catch up to insurtechs
According to the latest Insurtech Global Outlook report, the good progress of so-called insurtechs is becoming a real threat to the traditional insurance sector, which still suffers from a lack of digital modernization. It's a phenomenon that shows no signs of slowing. In 2019 alone, investment in insurtechs reached $6.3 billion, a rise of 58% on the previous two years, with the cloud world absorbing the most technology-related capital.
Generally speaking, insurers have not been able to keep pace with insurtech startups, some of which are owned by big tech companies such as Amazon, Alphabet (Google) or Alibaba, among others. For years, traditional insurers have been hampered by the challenge of integrating legacy systems, which create watertight silos that hinder the flow of information between departments. Despite spending 15% more on IT than other industries, big insurers still lag behind in terms of technological efficiency.
Low-code closes the information gaps suffered by insurers with large legacy systems infrastructures.
The result, in simplified terms, is that they have managed to remain competitive more by force than by skill, i.e. through sheer financial muscle and greater availability of resources. However, the digital transformation that the entire sector is undergoing makes it necessary to banish this type of inefficiency.
Insurers are aware of this. According to Capgemini's Where are banks and insurers on their digital mastery journey? study, only 30% of them feel they have the digital capabilities they need. The broader picture is even less encouraging, with only 27% of respondents saying they have reached digital maturity, and a whopping 56% still in the early stages.
The impact of COVID-19
The arrival of the pandemic has only amplified the problems that were already manifest or latent. Among the major organizational challenges facing insurers, identified in the Deloitte report Coronavirus: Impacts of COVID-19 in the insurance industry, teleworking and the redefinition of the working day stand out.
Beneath these terms that have been so much in use in recent months is the need to establish continuity plans, self-assessments of occupational risks, sick leave or leave for quarantine or family care, etc. All this can be managed manually through automated processes, which not only provide greater agility, but also mean time savings that translate into lower costs. However, to achieve this automation, new developments are needed to overcome the shortcomings of legacy software.
In addition to these needs, amplified in the pandemic, there are other problems endemic to the sector that can also find a solution in low-code, i.e. development platforms that enable the rapid delivery of applications with little or no manual coding, configuration or deployment. In fact, they already play an essential role in areas such as: reducing policy costs, claims management (which has also grown exponentially with the coronavirus), and improving the customer experience (CX).
Case study: Aviva
Aviva, the UK's leading insurer and the sixth largest in the world, has rapidly accelerated digital transformation, overcoming the inefficiencies suffered from the technological puzzle caused by the integration of systems, data and processes of 750 insurance companies absorbed in its 320-year history.
Through Appian hosted in the cloud, Aviva has been able to provide its agents with a global view of each customer, unifying 22 different systems. The results have been swift: not only have operating costs been reduced by 40%, but response times have improved nearly nine-fold, significantly increasing customer engagement.
Forrester: the importance of CX
According to one of Forrester's latest studies on insurer portals, any organization in this sector should ask itself whether it has its entire policy lifecycle digitized. Customers and agents/intermediaries increasingly demand seamless omnichannel experiences, which are impossible to achieve if insurers' back-end systems do not communicate with each other. Therefore, customer-centric applications must be developed to close these information gaps, while adapting interfaces to new mobile environments.
Modernization through low-code makes it possible to achieve this integration, while also automating tasks and processes to provide a transversal view of the customer and to be able to interact seamlessly between customer, intermediary and insurer by email, telephone, video chat or instant messaging. In internal processes, incorporating artificial intelligence (AI) also plays an essential role, making it possible to take full advantage of customer information to improve the user experience, evaluate risk more intelligently, and optimize policy reviews and renewals while identifying cross-selling opportunities.
Low-code is enabling the insurance industry to meet the challenges it faces.
In the same study, Forrester evaluates different providers and names Appian as a leader. They cite Appian as one of the strongest offerings to support digital transformation in the insurance industry through low-code covering all lines of business, and through omnichannel capabilities to improve the customer experience.
Forrester draws special attention to the AI capabilities provided by Appian, which thanks to its low-code technology allows the integration of third-party AI services such as machine-learning and intelligent document processing, among others.
Low-code technology has allowed the insurance sector to respond to the challenges it faces, accelerating digital transformation with little additional code development, and better still: an improved customer experience.
Translated from an original post on DigitalBiz.
