Most industries today are undergoing a transformative shift, and the insurance industry is not immune to it. It is driven by several factors, from increasing pressure from new entrants and competing organizations to skyrocketing consumer expectations for personalized services and digital experiences. These challenges have compelled insurers to step up their game to achieve better customer experience (CX).
Amidst the dynamic market conditions, insurers have a unique opportunity not just to survive but to thrive. The key lies in delivering personalized customer experiences, enhancing operational efficiencies, and establishing long-term competitive differentiation. However, this journey is not without its hurdles, including legacy IT systems, change resistance, data issues, and ever-evolving regulations. Overcoming these challenges is crucial for the insurance industry’s digital transformation journey.
Embracing AI technologies can help revolutionize the way insurers operate, providing new avenues for growth and innovation. The potential of connectivity, automation, and AI to drive disruptive change in the insurance industry is not just significant; it is immense.
Challenges of digital transformation in insurance
EdgeVerve commissioned Forrester Consulting to conduct a custom study with 104 business and IT decision-makers from insurance firms to understand the effectiveness of digital transformation initiatives and the adoption of platform-based strategies.
The study found that 53% said that their organization’s transformation efforts have not been very successful in achieving desired business outcomes. The top challenges of digital transformation that insurance firms need to address are change resistance, organizational silos, and unreceptive company culture.
Challenges that impede digital transformation efforts:
If left unaddressed, transformation roadblocks can pose significant risks to insurers’ competitiveness and operations. However, digital leaders in insurance firms that harness AI technologies effectively are better poised to generate efficiencies and deliver customer outcomes at scale.
Driving disruptive change in the insurance industry with AI
Connectivity, automation, and AI are transforming the business landscape of insurance at scale. Global insurance firms are ramping up AI investments to achieve desired business goals. According to the study, 35% of insurance respondents said they invested a minimum US$10 million in AI in the past year, a clear testament to the rapid pace at which insurers are seizing AI opportunities.
The study also highlighted that 72% of surveyed decision-makers consider leveraging emerging technologies such as AI and the Internet of Things (IoT) to be a top priority in creating customer and business value.
Though many have invested in AI, they face challenges in operationalizing AI models at scale and are unable to identify where AI applies to their business. Insurers are still wrapping their heads around AI implementation and challenges in scaling AI usage, from an inability to operationalize AI models at scale to lacking well-curated and quality data to train AI systems. It’s thus crucial to address these issues to leverage the full potential of AI.
Here are a few benefits of adopting AI:
Digital transformation use cases for insurers
According to the custom study, 87% percent of surveyed decision-makers from insurance firms ranked CX as a top business priority. Insurance firms today are pivoting to a more customer-focused model, utilizing AI technologies to streamline operations, improve backend processes, and enhance customer experience.
Here are a few digital transformations use cases that drive CX, operational visibility, and efficiency.
Propelling digital transformation in insurance with a platform-based strategy
The growing role of technology is reshaping the insurance landscape. The goal is not just to fuel profitability but to remain relevant and survive in this rapidly changing environment. This is feasible by adopting a platform-centric approach that offers adaptability and flexibility.
A platform-based strategy is not just a solution, but a powerful tool that can empower insurers to address many of the challenges they face in executing digital initiatives. It can guide them on their digital transformation journey, and more importantly, it allows firms to leverage strategy, processes, and people to improve connectivity and realize customer and business outcomes. A platform-based strategy has the potential to propel insurers’ connectivity, digital, and AI journey, creating unique and unparalleled business value.