Library: Cognizant – The Work Ahead in Insurance, Vying For Digital Supremacy
May 2021 featured report:
This research undertaken among 4,000 global executives, including from insurance, is focused on the digital future of business. The authors say that 2020 will be remembered not only for COVID-19 but the fact that: “For insurers, it was when risk became more the rule than the exception.” This is because going shopping, meeting friends for dinner, or even going to work suddenly attracted risk in a way they had never been considered to before.
Getting used to the new normal
Insurers were forced to accept a new reality in which they had to be agile and able to respond to any event – even unprecedented ones. This should be whether related to the pandemic, climate change, cyber threats or national security.
This need for agile working and processes forced them to reappraise the way they worked and focus on eliminating processing times and simplifying how they deal with customers.
Many insurers have been transforming their organisations – or at least claiming to – into digital businesses. After 2020, there is simply no excuse.
The Cognizant research is based on interviews with 4,000 global executives across many different sectors, including 285 from insurance. Among this group, five key themes emerged:
- Thriving insurance requires data mastery
- Traditional insurers are in a digital arms race
- Intelligent machines will reduce the claim cycle from days to seconds
- Work and jobs are transforming at a rapid pace
- ‘Decisioning’ skills have moved to centre stage.
What you’re probably wondering now is: What exactly is ‘decisioning’? Well, in simple language, it means that the level of information that surrounds us now already makes it difficult for us to process with human minds. Decisions must be made quickly and insurers must determine how to balance algorithms and automation with the human insights and judgments of their employees.
Almost all (91%) of the respondents identified a deep and sustained change in the industry between now and 2023. This is higher than any other sector approached in the rest of the survey.
This acknowledges that data is going to be the single most important factor for insurers to harness change and deliver success in their businesses.
Dealing with diverse levels of data, hyperconnectivity between insurers and machines, ie the role of the internet of things (IoT), and automation and analytics are going to be the key challenges in the next few years. These were not only identified, but singled out as having a “strong impact” by 49%, 46% and 45% of respondents respectively.
Security and privacy and digital regulation were not far behind at 44% and are likely to be as important to the successful digital transformation of an incumbent business.
There is a need for a change in data mindset. Instead of looking back at behavioural data, insurers will have to look at building algorithms to interpret current behaviour data. This is why data mastery lies at the core and why APIs are absolutely essential to seamlessly connect all parts of the business.
There are some interesting findings about the perceived pace of change. Just under one third (32%) of insurance executives believe they’re ahead of their competitors in terms of digital capabilities. Almost double that (60%) anticipate being ahead of their competitors by 2023.
Given that no more than half can be above average, there would appear to be a good deal of wishful thinking going on.
Get with the programme
Even if they’re not ahead of their peers and competitors, being on top of the challenge is absolutely essential. The survey found that the levels of revenue flowing through digital channels will increase by more than 50%, jumping from 10% in 2021 to 16% in 2023. This is why APIs are so important in order to create seamless processes, deliver greater efficiencies and allow faster product innovation.
And while this is happening, customers who are increasingly digital first won’t demonstrate loyalty unless their needs are met. Loyalty is just another app download away.
The report says that it is not only consumers who want integrated products, but business clients also want modular services and bundled products, not only because they will interact, but because it will be more convenient.
This need for integrated products will require partnerships, say the authors. This ecosystem world must be driven by zero touch processes that enable risk modelling and scale, operate across disparate systems and have algorithms that can mine data, deliver meaningful analysis and thereby assist insurers in building new products.
The rise of the machines
Machines are going to continue to take over more tasks within insurance. Meanwhile, the shift towards zero touch is going to increase exponentially. Respondents say that claims processing will go from 16% today to 58% in 2023. Underwriting and risk assessment will experience more than a five fold increase in the widespread or good levels of augmentation, reaching 49% in 2023 against only 9% today.
Both underwriting and claims handling can be streamlined to detect fraud and make smarter decisions while minimising unnecessary human interaction, which can lead to inaccuracies and bias.
According to the report, the pace of industry disruption is going to get faster and this is good news for good, old fashioned, human capital, or staff. Talent will be in short supply on a global basis as requirements change and jobs become more specialised.
A place for people skills
The heavy reliance on technology means the greatest disruption in the near future could be a lack of relevant skills for the vast number of big data specialists, data visualisation experts, data integrators, process automation experts, security analysts, robotics engineers, blockchain specialists, machine learning engineers, and many more.
Employees will need to be up skilled, because there are certain things that machines won’t be able to achieve.
The report identified 10 key decision making skills that would be moderately and significantly more important 2023 than they are today (see image 6).
The time to act is now
Most important are decision making, analytical and communication, alongside sales, strategic thinking and customer care. But insurers need to act now.
They must build robust API-driven strategies and reorganise for speed and agility.
They must reflow work across the business and give their teams a fresh perspective, and rethink jobs into tasks and roles.
Digital is an essential part of the successful insurer of the future. Those who want to stay relevant must continuously modernise their decision making frameworks and ensure the best decisions are reached and at speed.
For more, see the full report.
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