May 2, 2021
10 Steps How to Switch from Old to Innovative Solutions
Insurance companies have recognized the need for innovations and technology in the industry. In fact, Gartner’s research discovered that almost two-thirds of the world’s largest insurance firms have now made investments in insurance technology startups. What is more, in 2019, insurance companies spent about $225 billion on IT, with this number being a bit lower during 2020 due to the pandemic.
However, matters are more complicated when it comes to digital integration in their own companies. In effect, the insurance industry’s most pressing issue today is due to the existing legacy software companies have. According to McKinsey, legacy software and technology are obstacles to digitalization for nine out of ten insurance firms. As a result, the industry must drastically alter its market growth strategies. It’s evident that the goal to make insurance competitive again relies heavily on organizational innovation today.
The insurance market is changing dramatically, and forward-thinking insurers shouldn’t just watch it happen. Instead, they have to take steps and invest in ways that can help them become more consumer-oriented, boost efficiency, and streamline operations.
Insurance executives of the future must be prepared for the introduction of blockchain and big data, as well as the growing complexities of cybersecurity. Here are some tips on how to switch from old to innovative solutions and transform your legacy software into a customer-centric one:
It all starts with the human capital
Preparing your team is crucial to executing a successful digital transformation that is never really going to end. As insurance companies are considered to be with a more traditional setup, they need to change this and become more agile and flexible. To evolve their approach, insurers must first consider the interests and desires of the people at the center of the digital initiative.
To put it simply, insurers have to adopt a more startup-like mindset and culture. They need to transform into a more dynamic environment that follows trends and responds to them quickly. They must make an effort to understand and inquire what their potential clients, partners, staff, and leaders want and expect from the digital transformation from the start. To achieve this, they need a lot of information, which leads us to the next point.
Leverage big data
Insurers are investing heavily in big data and optimization approaches in order to enhance almost every aspect of their operations. The Internet of Things (IoT), robotics, social platforms, smartphones, and wearable devices have significantly increased the amount of data that insurers can use across the business process.
However, to leverage data effectively, they have to identify ways to collect and handle data that will provide the most valuable insights. What is more, they need to incorporate organizational changes that will make them more data-driven.
Internal and external data can assist insurers in determining where new initiatives can provide the most benefit. To develop a process of differentiation and marketing, as well as identify their value proposition and priorities, insurers can use external digital analysis, empathy mapping, digital market analysis, and other techniques.
Identify new channels
With the challenge of new competitors, new products created by the Internet of Things, and changing consumer behavior and preferences, digital strategies must be implemented quickly to avoid falling behind and losing customers. Technological advances and business models provide more avenues for creativity. Changing the way your clients engage with the current product gives you the ability to have a positive service for them while also eliminating discomfort.
For example, a specialist insurance firm that decided to introduce a new model allowing them to remove third parties and sell directly to the consumer is one organization that is bringing their current offerings into a different channel.
Deciding to use new channels, however, causes the need for a long-term strategy. This plan should consider trends and try to predict how customers and markets will behave in the near future. So, having both long-term vision and short-term goals are crucial to a successful implementation of insurance technology.
Explore new target markets
Focusing on emerging demographics will help you to use insurance technology to reshape an old commodity into something new. As the young population is the one that understands technology most widely, you might want to target Millennials or Gen-Zers. As stats say that young Americans are most likely to lack health coverage, you might find a good business opportunity in this field. However, many companies are already targeting this segment with insurance technology, so you should beware of your competitors.
Insurers may be able to sell products and services that cater to the diverse demands of different client segments. When credit is low, for example, millennial consumers may choose to spend more of their discretionary income on services that help them buy new homes or vehicles. And catering to a millennial demographic necessitates the use of the internet and smart devices. The goal is to find and prioritize consumer populations that provide untapped market opportunities so that current products can be repurposed for a new audience.
Because of the constant availability of technologies and data-driven processes, cybersecurity must be constructive and strategic rather than passive and protective. Just like all other industries, insurance technology is also prone to cyber threats. The number of cyberattacks is growing every year, so you have to take extra precautionary measures to protect your data.
However, a lack of resources and expertise can lead to poor choices. That’s why you should partner up with a more experienced company to guide you through setting up your security system.
Find a reliable partner
Many insurance providers now have the resources needed to create more innovative options, such as large delivery networks, vendor partnerships, and offerings that can be utilized for different client markets or delivered across new platforms. Most of these assets are underutilized in terms of providing consumers with relevant value propositions outside the traditional collection of insurance policies. To maximize the use of your existing assets and resources, find a reliable partner with an experienced team within the insurance segment who can help you deliver an outstanding customer experience.