The global insurance market is continually being pushed towards a digital transformation. There are a number of drivers pushing this change, including, but not limited to, pressure from millennials, ever-changing technology, new market entrants, and changes in consumer behavior. I think we can all agree that the world around us has changed dramatically over the past ten to twenty years.
There are numerous examples, but I think the most obvious one is how we interact with technology. You would be hard pushed to walk down a busy street today and not see a significant percentage of people using their mobile phones. Over twenty years ago, this was not the case – how many times were you in the car, and you had to stop to make a call. And as for email, your email address was a very long number from a company called CompuServe; now I am showing my age!
Cloud-based technology, and particularly mobile technology, offer so much potential in the world today. In Asia and Africa there is a ‘mobile first’ mentality when implementing new technology solutions; In the West, we are not quite there, but the Millennials will take us there!
But what is preventing the digitization of the insurance industry?
Unfortunately, in the business world, there are many roadblocks, both external and internal factors, slowing down technology adoption. I’ll talk about a couple of these in more detail here.
IT Skills Shortage
There is a skills shortage in the global IT sector. We see stories every day about employers, such as Facebook and Google, improving the work environment for their employees to improve employee retention and attraction to apply initially. More and more companies are offering remote working facilities, more vacation days and performance rewards. There is a global war for talent, and it can be extremely tough to attract the strongest candidates.
At ClaimVantage we provide excellent benefit packages and a life/work balance. We have a development team that is very cosmopolitan, with developers from 6 European countries (yes, the UK is still part of Europe), colleagues from India and China, and we have just hired two skilled Salesforce developers from South America.
On the other end of the spectrum, insurance carriers operating on legacy systems are beginning to suffer, as the staff who implemented or developed original legacy claim systems are starting to retire. The knowledge they possess about the current system could potentially be lost if a knowledge transfer is not put in place, which can impede the speed at which a claims transformation can be performed.
New Market Entrants
The evolution of InsurTech is changing the face of the insurance industry. New companies are emerging that begin using the most up-to-date technology available. This can make it more difficult for insurers to stay ahead, and offer their customers the right services on their preferred platform. One of these companies, Oscar, who are in medical insurance say that they are a technology company that happens to be in insurance!
Peer-to-peer insurance schemes are also growing in popularity. Although I think it will be a while before they impact the Life and Health space, it is something to consider. Lemonade is a peer-to-peer property and casualty insurance company set up in New York and Illinois. The offering is solely app based and seems to be doing well in the market. Ten years ago, the idea of this being a viable business model was beyond imaginable.
So, as we can see, the insurance industry has been changing dramatically over the past ten years. When we set up ClaimVantage in 2006, legacy systems were still being implemented, but there was a shift happening where insurers were trying to decide if they wanted to be in the software business. Thankfully, over time many have decided that they would rather be insurance companies.
In 2010, when we reviewed where the market was heading, we decided to take a leap of faith and rebuild the ClaimVantage product suite on the Salesforce Lightning Platform. It is hard to believe that there was so much resistance to the Cloud, but we persisted, and over time when we could show reduced costs and increased speed to market, the transformation finally gathered momentum.
As the industry has continued to transform, that chance has paid off for ClaimVantage, and we continue to innovate. This year, we are investing in analytics and artificial intelligence that we will introduce to the market for claims by the end of 2017.
If you are considering a digital transformation, we urge you to begin those conversations internally sooner rather than later. Look for small iterative wins, get buy-in across the organization, and build on each success. This will generate the right level of energy and enthusiasm to keep the momentum going as you take the business into the 21st century, good luck!