Digital transformation is trending in all industries, and even traditional sectors like insurance are no exception. It is impossible to keep pace with competitors and customer expectations unless you adopt the latest technology. According to the latest report, technology spending in the American insurance sector is expected to witness a 25% growth between 2022 and 2026.
While most providers embraced software solutions in 2020 to stay resilient, the decision paid off handsome returns. Many have decided to stick with innovation for the long haul. The trend gets only bigger in post-pandemic times, with established players and young startups adopting software tools to enhance their offerings and services.
This article explains the impact of advanced insurance software systems on the industry. Knowing how they can transform your business can give you the confidence to embark on a transformative journey with digitization.
Better Customer Experience
The American insurance industry is among the largest in the world, with high premium revenue and excellent growth prospects. But it also makes the industry more competitive as many players join it to reap the rewards.
While most companies offer comparable products, customer experience can be the key differentiator. A Forbes article states that insurance customer acquisition costs nine times more than retention. Raising the bar in service is the only way to keep policyholders happy and retain them.
Adopting insurance software systems can help you deliver a top-notch customer experience. For example, you can empower them with a flexible digitized self-service platform, enabling them to manage their portfolio. Better customer experience reduces churn and increases loyalty in the long run. Both help your business thrive and sustain in a competitive market.
Enhanced Productivity and Efficiency
Productivity and efficiency are the cornerstones of organizational success. According to pre-pandemic research, productivity was not a priority for insurance companies. The pandemic compounded the issue as businesses had to shut down physical offices and switch to remote work to stay operational.
Fortunately, the situation was a blessing in disguise for insurance companies, with the adoption of software systems driving the increase in productivity and efficiency. Software tools have replaced repetitive tasks and documentation, reducing the workload of employees. They can now focus on productive and critical tasks and deliver the highest levels of performance.
Running an insurance company is inherently expensive, and additional costs add to the burden. Rising inflation and flat interest rates are the key challenges for the American insurance sector. Further, in 2023, the industry is facing IFRS 17 costs, estimated at $15-$20 billion. These factors have led to a massive rise in operational costs for insurance companies.
VRC Insurance Systems notes that the only way to address the challenges is by implementing measures to reduce costs as much as possible. Software systems streamline and modernize processes and eliminate the possibility of human errors. They also reduce the cost and time relating to manual processing. Together, these factors can help players realize potential savings.
Fast and Improved Decision-Making
Outdated legacy systems often fail to offer data and insights, causing delays and errors in decision-making. Such delays can affect business agility and customer experiences. Modernizing the core system with an insurance software tool is the ideal solution.
These tools provide data and insights to help insurers make agile moves to keep pace with customer expectations and market trends. Agility and customer-centricity can prevent the loss of market share in the long run.
Improved Risk Management and Fraud Detection
Digital transformation with insurance software can help providers to streamline risk management processes. With these tools offering valuable data and insights into risks, insurers are in a better place to identify, assess, monitor, and manage them. Besides risk management, these solutions can also cover areas like internal audits and regulatory compliance.
Additionally, insurers can rely on technology to detect and prevent fraud. For instance, they can leverage data analytics to identify patterns in claims data and detect anomalies indicating potential fraud. Identity verification technologies such as biometrics can prevent unauthorized users from accessing insurance products and services.
Insurance software can transform the existing processes of an insurance company for the better. However, that’s only the tip of the iceberg because technology can help insurance providers in several more ways.
The data and insights generated by the tool can provide ideas for new products and services to expand the portfolio and add new revenue opportunities for the business. Companies can better understand client needs and tailor products accordingly. Going the extra mile with customer-centricity can drive long-term growth and give a competitive advantage to a provider.