Almost every industry has been impacted by the current situation, some more so than others. Insurance, aviation, retail, manufacturing and hospitality are among the hardest hit.
Insurance is unique among these in some significant respects. On one hand, an insurer must balance a huge claims load with its stability relative to capital and solvency. On the other hand, the nature of the industry teaches insurers to be prepared for major loss events. Now, insurers must be even more dedicated to delivering value to customers and employees. Establishing and maintaining trust is a big part of that equation. How this value and trust will be earned and delivered depends on each carrier’s current operational and technology readiness.
From an operational perspective, insurers with a diversified portfolio are expected to experience far less of an impact compared to insurers with primary life, health and commercial underwriting portfolios. The lesson here is to diversify if possible.
From a technology perspective, insurers that make investments in the cloud, automation and enhanced security, and engage with agents and customers digitally, will be poised for survival and growth.
Moving to the cloud can improve workplace collaboration, save money, improve agility and time to market, and enhance disaster recovery. Insurers can take advantage of the cloud model to create virtual call centers, which can improve employee satisfaction because workers will no longer have to telecommute. And a seamless customer experience won’t be jeopardized, since insurers will still be able to use software that enhances their interaction with customers, just as in physical call center environments.
Cloud provides a more portable work environment and facilitates the move toward software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS) models. Moving to the cloud also provides the opportunity to modernize legacy data centers.
Another major benefit of moving to a digital environment is that it provides a platform to help insurers increase their ability to perform data-driven underwriting, as well as do data modeling for scenario evaluation.
In a nutshell, transforming to a digital environment makes it possible to digitize the entire customer life cycle — a process that is ripe for automation.
Automation makes good business sense in nearly every industry. But insurance carriers may experience even greater benefits because of the number of opportunities they have for automation. From automated claims to automated underwriting to automated customer service, insurers can simplify many aspects of day-to-day operations with automation and cognitive solutions. As with the move to cloud, automation and cognitive solutions can save money, save time and dramatically enhance operational efficiencies.
Finally, insurers are strongly advised to enhance security practices. The company’s security posture must be consistent end-to-end — from headquarters to employees’ home offices to the cloud and back to headquarters. Virtual security technologies can be highly efficient, particularly for larger, global insurance companies.
If this is not incentive enough, consider that the National Association of Insurance Commissioners (NAIC) adopted the Insurance Data Security Model Law (MDL-668), which seeks to establish data security standards to mitigate the potential damage of a data breach; it applies to insurers, insurance agents and other entities licensed by the state department of insurance in states that adopt it. They must develop, implement and maintain a comprehensive Information Security Program (ISP) to protect their own business information as well as customers’ financial and health information. Far better to be safe than sorry.
At the end of the day, every crisis makes us stronger. The heritage of insurance is all about rising to the challenge of helping people in their time of need. The insurance industry has the opportunity to rise from this crisis far more prepared, far more efficient, and with a far greater potential to have a far more satisfied customer. The key is technological advancement; the time to start is now.