Digital disruption is challenging today's insurance market with digital change impacting core aspects of business functionality and, to a high degree, the digital escalation of customer service.
This is no small challenge.
According to the insights shared in Making digital strategy a reality in insurance by McKinsey & Company, Property and Casualty (P&C) insurance is deviating as digital transformation is giving rise to new consumer behaviors and technological innovations poised to disrupt traditional business models.
As new innovations grow commonplace, such as robotic process automation, insurers equipped to evolve rapidly enough to keep up with changing technologies and practices will gain big market value. Unfortunately, those without the capacity to embrace change will invariably flounder.
Which disruptions are impacting insurers the most?
There are several areas targeted by digital transformation in the insurance market at this time - products, marketing, pricing, distribution, not to mention, as illustrated in the McKinsey insight, components ranging from transforming claims processing to using advanced analytics to analyze customer data and behaviors. Consumers want personalized, self-directed interactions with companies that know their habits, behaviors and lifestyles. What's more, today's policyholders prefer these interactions to be as automated and online as possible, with a rise in preference of no human interaction...you can thank the millennials.
Good news, all these disruptions are being driven and enabled by digital advances. That's not a bad thing!
The disruptions challenging insurance market today are ushering in new levels of operational efficiency and productivity. There will be cost savings as digital technologies absorb more operational tasks. Policyholders will be pacified, even pleased, with the increased automation and online access to more personalized policy options. Customer service and enrollment functions will see new levels of 'big data' power as critical customer analytics drives operational performance.
While some industry leaders remain cautious regarding the difficulty of digitally transforming their business, the risk presented by opting to 'ride out' the digital disruption era is far greater. With the right strategy, technologies and talent, insurers can build digital roadmaps designed to support a transformative vision strong enough to take on today's disruptions and position operations for the next big thing.