Insurance product innovation requires integrated systems
Gary Sandham, Insurance Industry Sales Executive: SAP Africa.
Insurance companies that rely on outdated legacy systems are at the mercy of the market as fast-moving tech-driven upstarts challenge their traditional supremacy and scale. In today’s market, time is everything: the ability to respond quickly and accurately to a customer request or need is what sets you apart from your competitors. In fact, the new generation of consumers – the so-called Millennial’s – are uncompromising to slow responses that those born outside the smartphone era are used to.
Brand loyalty and relevance is dictated by customer experience and exceeding expectations. These consumers demand instant resolution to queries, and will quickly abandon businesses who don’t meet their high expectations. In fact, analysts predict that 40% of today’s Fortune 100 companies won’t be in business in 10 years’ time, as the Millennials make their influence (and impatience) felt on the business world.
The risk of not modernising
Traditional insurance companies operate under a mountain of Legacy systems and processes, because, in the past, these systems met the demands of the day, the market has shifted too dramatically for this to continue. The modern insurer needs to understand the customer like never before irrespective of the choice of customer engagement channels, Brokers, aggregators, online or direct the customer experience must be seamless, consistent and relevant.
Older systems place processes and departments in siloes, with little integration between different sets of often the same or similar data. In the fast-paced modern business environment where instantaneous decision-making based on accurate data is a prerequisite, insurers are placed at risk as they:
1) Cannot respond immediately to customer complaints or claims as each set of customer data is stuck in a departmental silo, unable to give the claims , complaint, or enquiry processor a single comprehensive view of the customer and all interactions across channels ;
2) Become bloated with inefficiency, with each process forced to be repeated as data moves from one silo to the next before an accurate decision or proposition can be made; and
3) Are unable to quickly respond to meet market or regulatory requirements and expectations.
Modern integrated systems remove these limitations by simplifying and consolidating data to give every department and process instant access to accurate, up-to-date data - in real time.
Most importantly, it enables the insurer to move closer to a ‘segment of one’ – the holy grail of personalised customer-centric insurance product and service delivery.
In a ‘segment of one’, insurers use real-time customer data to give personalised service that is based on an individual customer’s data from both internal and external sources.
The need for innovation
Insurers need to prioritise innovation and digitisation to mitigate the business risk posed by threats from increasingly unexpected places. Agile start-ups specialising in delivering niche insurance products built on modern tech pose a real threat, as each new entrant eats away at the larger traditional insurers’ market share and product.
More alarmingly, industry boundaries are becoming blurred across retail, Telco and other sectors increasingly offering insurance protection products as value-add to their customers. Car manufacturers offering car insurance on sales of new models; telecoms companies offering life insurance; construction companies offering building insurance on new developments – all of these challenge traditional insurers’ market share and relevance.
Focus on the customer
There is no advantage to your business in prioritising things that don’t give a competitive edge. The smooth running and integration of back-office operations should be a given. By industrialising and simplifying their back-office infrastructure, insurance companies free themselves up to innovate in the areas that create value for the business in retaining and winning customers.
Without these modern technologies in place, insurance companies are forced to allocate precious resources to wasteful processes while missing out on opportunities to deliver personalised solutions to individual customers. It is time for insurance companies to adapt to the stringent demands of the modern business environment – or they risk losing huge amounts of market share to smarter, faster and more agile newcomers.
