The role of digitalisation in insurance
By Tommy Nangombe |
As technological progress and new sources of data constantly change our economy and society, they are on the verge of radically changing the insurance industry.
From pure protection against risks, increasingly, insurance means assuming a proactive attitude anticipating and preventing them.
The current digital revolution does not only alter the type of risk the insurer covers, but it is also gradually changing how they carry out underwriting, distribution, and claims management.
This, in turn, has redrawn the rules for insurers in terms of customer engagement, risk management, and smooth functioning. There was considerable change brought in by the use of digital technologies, efficiency, personalisation, and innovation that swept across the industry.
Changes resulting from digitalisation that can be felt more are linked with superior customer experience. From exhaustive paperwork to physical meetings of insurance policy buyers, today online platforms offer unparalleled convenience to research, compare, and buy policies.
Mobile applications further made this easier, whereby customers could manage their policies, track their claims, and get assistance on their smartphones. It also makes it very easy for chatbots and AI to handle inquiries from customers, simplify claims, and allow personalised policy recommendations in view of specific data.
Other very important areas of change are data analytics and personalisation. With so much information at hand, big data analytics gives an insurer, for the first time, granular insight into market trends, risk profiles, and customer behaviour.
Thus, this capability enables precision pricing and the extraction of new opportunities.
Digitalisation gives an insurer the capability to craft very personalised insurance solutions, tailoring policies and coverage options to individual needs and thereby improving customer satisfaction and relevance.
Another huge step taken has been in the automation of claims processing. Handling a claim manually has resulted in delay and errors. Digital tools, in contrast, have quickened the operations and made them fast and accurate.
Advanced algorithms, with machine learning, help in finding out and preventing fraud cases from happening, hence reserving resources effectively, and, consequently, the speed of genuine case processing increases.
The other area developed through digitalisation is risk management.
New technologies, such as telematics and the Internet of Things, provide real-time data insights in how best the insurers can price and manage risks. For example, in-vehicle telematics devices allow insurers to offer a usage-based policy based on driving habits. In the field of operational efficiency, however, this has turned out to be a real game-changer.
Robotic Process Automation automates routine tasks that include data entry and policy administration, while cloud computing offers scalable and cost-efficient ways of storing all the data. In turn, this shift frees staff for more complex work and lowers operational expenses.
Digitalisation also supports regulatory compliance through the ability of insurers to maintain comprehensive, easily accessible digital records.
Advanced compliance is also achieved through the use of improved reporting technologies that ensure precision and speed in reporting, hence ensuring that standards set within the industry are met.
The introduction of new business models through digitalisation has dramatically changed how business and operations are conducted for insurance companies.
Innovations and solutions should always be customer-oriented, dynamic, innovative, and sensitive to customer needs since these features continue to emerge within the industry.
– Tommy Nangombe is the Broker Consultant, Broker Distribution, at Old Mutual Namibia.
