Digital transformation strategy for the insurance industry: development and implementation plan  

The insurance industry has experienced many changes in recent years. It is evident that the sector will become digital because of ever-changing customer needs. Disruption is about almost all lines of the insurance business. Each insurance product will likely be bought via digital channels like a mobile app, web portal, or chatbot. For example, people find it easier to choose auto insurance through their mobile phones than going to the physical office.  

The importance of creating a digital transformation strategy and the values it can bring is obvious: more customers buying insurance products and services by digital means, fewer people calling a call center, lower operational costs, more satisfied consumers, etc. Therefore, most insurers understand the importance of digital transformation and see how it can change their business. At the same time, executives are considering risks, the long transformation process, and other pressing issues like regulatory compliance that seem more crucial now. So, to step on this long and complicated path, CEOs and other executives should know how to appropriately develop a digital transformation strategy. 

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Digital transformation trends in insurance

Before proceeding to the guide, let’s see what digital transformation in the insurance industry is and which of the most important innovations accompany digitalization today. So, the digital transformation in insurance suggests a combination of organizational, cultural, and operational changes through integrating digital processes, technologies, and expertise.  

Speaking about the insurance digital transformation trends, we can highlight the following: big data, artificial intelligence, the Internet of Things, and cloud computing. Each technology can be successfully applied in the insurance sector and bring certain benefits. 

• Big data. Insurance companies implement big data to process all structured and unstructured data sources and flows effectively. It allows them to gain more accurate risk pricing and personalized customer experience.  
• Artificial intelligence. AI is mainly applied in customer segmentation and management, underwriting, fraud detection, and customer support. Artificial intelligence is used to build chatbots and digital assistants. This technology allows insurance carriers to improve the quality of customer experience, increase efficiency, optimize costs, speed up service processes, and more.
• Internet of Things. IoT technology is adopted mostly in the following processes: risk assessment, new product implementation, cross-selling, and fraud prevention. By implementing IoT, insurance organizations can accumulate information more accurately, conduct research on customer behavior, and get real-time information about claims. 
• Cloud computing. Embracing cloud transformation allows for better operational efficiency, saved costs on development and configuration of software and hardware, and reduced costs on legacy system maintenance, which all results in improved collaboration, the possibility of self-service capabilities implementation, and increased revenue.  

Benefits of digital transformation in insurance

The use of new technologies is a significant competitive advantage and opportunity to enter a new market or conquer more targeted customers for insurers. Here’s a list of the most vivid benefits of embracing the change: 

• Improved customer experience 
• Enhances operational efficiency 
• Possibility to collect valuable data and make data-driven decisions 
• Increased customer loyalty and higher brand awareness 
• Increased revenue 
• Becoming paper-less and branchless 
• Decreased workload on call centers 

To gain these advantages, insurance companies rely on high-tech vendors experienced in creating digital transformation strategies, considering the current maturity of IT and readiness to change inside the organization.  

Six steps to digital transformation

This guide will teach you the essentials of developing a digital transformation strategy. The guidance looks like a set of digital transformation steps you should take to ensure success at the end of this exciting journey.  

Step 1. Assess the current state of your business and IT

Assessing just the IT systems and technologies your insurance company has is not enough. Your first step in adopting digital transformation is obtaining a helicopter view of your business. The top priority is understanding how your customers’ journey relates to business processes.  

Before defining the goal of the transformation project, you should identify all the pain points and inefficiencies your employees and customers face. For example, you can see that your clients complain about the long time they are waiting for an answer to their question from the call center consultant. That worsens the client’s attitude to the company and reduces overall customer loyalty. 

To identify all the pain points, customer and employee interviews should be conducted. Such an activity is a part of the discovery phase we do. Usually, CX researchers are responsible for the interviews. They speak with real insurance consumers and identify their challenges while communicating with the company. So, you can see what difficulties your customers experience now. Understanding these problems, you will be ready to search for the right ways to solve them.  

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Step 2. Define the goals of digital transformation

While exploring how well your processes are aligned with user experience, you will better envision the desired outcomes.  After the discovery phase, you will be able to set objectives for digital transformation clearly. Among the most vivid examples of digital transformation goals are increasing revenue, entering new markets faster, improving employee productivity, and enhancing customer engagement.  

Step 3. Engage all stakeholders whom it may concern

Key stakeholders should be involved in the process. Communicate the benefits of digital transformation to them. For example, suppose you explain that cutting the time it takes to submit a claim from 60 minutes to 30 minutes can improve customer loyalty. In that case, the stakeholders will more eagerly participate in the project, share their knowledge, and discuss the opportunities.  

Building a cross-functional team is also instrumental in engaging executives to do digital transformation. People from different departments should come together to work towards a common goal and project. In the insurance company, these may be the Sales and Marketing Department and the Customer Support departments, for instance. They can share what should be done to improve the efficiency of the sales process on both sides: the customers and the insurers.  

Step 4. Conduct a technology audit

Evaluating current technology infrastructure for an insurance company may become daunting if it lacks in-house IT specialists. Thus, finding a reliable digital transformation partner is essential. They will help you identify gaps and opportunities for improvement as well as recommend the right technology for bridging those gaps.  

For example, one of our clients, the insurance company UNIQA, contacted us to inspect to understand why most customers don’t use their mobile app. We had to do a business analysis and explore the root causes. We also had to conduct a comprehensive technology audit as the company has many software products to integrate a mobile app.  

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Discovery phase for the insurance company  

An experienced software vendor will also prioritize all the initiatives and work to be done. After the audit, you will get a Work Breakdown Structure (the document which describes how the work will be divided into smaller parts), recommendations on resource allocation (team composition or, simply put, people required to design, develop, test, and implement the software), and cost estimation.  

Step 5. Develop an implementation plan

Defining a roadmap for the digital transformation journey is also the responsibility of your trusted software vendor. They know and apply the best practices to establish milestones and timelines as well as assign responsibilities and roles. Professional tech specialists will select the right designers, developers, and test engineers to complete your project.  

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Step 6. Implement and monitor progress

Usually, executing the plan is done in a phased approach. Today, software development companies and digital transformation accelerators use the Agile approach. It allows for iterative development—Agile teams work in short iterations or sprints that typically last 1-4 weeks. Each iteration involves a complete cycle of planning, designing, coding, testing, and delivering a working software component.  

Other important aspects of this step include monitoring progress achieved using tracking key performance indicators and regular reviews.  

Examples of insurance businesses that have successfully embraced digital transformation

DICEUS guides insurance companies from legacy operations to digital transformation. We focus on identifying customer challenges and defining the best ways to tackle those with technologies. In most cases, digitization means shifting from traditional cumbersome workflows to simplified automated underwriting, product development, claim management, etc. To demonstrate our expertise, please check the following examples of our work and some valuable insights: 

• Mobile app development for UNIQA 
• BenefitNet claim management solution 
• BriteCore’s P&C insurance core platform 
• Vitaminise solutions for insurance 
• Interviews with industry leaders  

Insurance companies on a digital transformation path will surely meet challenges. We at DICEUS will gladly guide you through this exciting journey by applying our expertise. Our top talents will help you discover the issues, find the solutions, and choose the right technology stack for the project. Contact us for a free consultation and a digital transformation roadmap. 

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