Digital Transformation Strategy in Insurance

It's time to accept that the decision to undertake insurance transformation has already been made, with or without our participation. Insurers who waited too long would be overtaken by market realities. The pandemic forced the rapid digitization of sales and after-sales processes, including the launch of remote services and customer self-service. The recession weakened profits, so insurance companies need to look for optimization and efficiency wherever possible.

To add even more pressure, legislators are requiring concrete action. Many companies are struggling with issues such as supporting a number of disparate systems and the flood of unstructured data. The good news is that we can tackle the problem of outdated legacy systems.

Vendor or internal IT?

This is the first question that most insurers ask when faced with digital transformation. The second often is what exactly entails the term "transformation", and its scope. The primary goal should be to build a compatible environment that ensures competitiveness and flexibility, ready for implementing changes further ahead. That is what true business transformation means.

The need to replace the archaic systems requires a comprehensive digital transformation strategy. As an experienced digital transformation company, we know that adding more plugs or overlays is a half-measure that only postpones the inevitable. While many of our digital transformation processes started with such overlays, the ROI analyses show that this approach simply isn’t sustainable in the long term. Limiting efforts to ad hoc improvements is a waste of time and money; it does not solve any key problems, often even multiplies them, leading to an increasing system complexity and integration issues.

Why is it worth it with an IT vendor?

Of course, many insurers hesitate to cooperate with external IT vendors on digital transformation solutions, often preferring to leverage their in-house IT resources. Sometimes, even presenting them with measurable business results achieved through the earlier implementation does not persuade them. There are, however, well-documented digital transformation projects realized by the largest insurance players, done in partnership with external vendors, and not solely by their own R&D teams.

Why? First, these insurers recognize their industry expertise and accept vendors such as Comarch as specialists in digital transformation projects. Witnessing tangible benefits for themselves, they appreciate the way we operate. We optimize insurance processes, saving time and money. New ideas land on our product development roadmaps, hand in hand with the latest technologies like Angular 2+. When discussing cloud adoption, we are able to show the available range of varieties and possibilities of adapting the cloud infrastructure through various public clouds such as AWS and Azure.

We emphasize that our solutions allow for further ecosystem expansion and integration with partners. Structured data models and precisely described APIs ensure the correct flow and analysis of data, even in a complicated software architecture, and therefore enable data-driven decision-making. It is also worth recalling here that efficiently and precisely conducted digital transformation management allows insurers to react to various future changes.

Digital transformation process

Clients indicate the real effects of our digital transformation process, such as increased sales, engagement, process efficiency, savings, etc. Further publications are being created, taking on the dimensions of digitalization efficiency, such as the report "The State of Digital in Independent Insurance Agencies" by Liberty Mutual and Safeco Insurance, which showed that highly digital insurance agencies develop on average 70% faster than other agencies.

Our recent digital transformation process reveals that there is still untapped potential in life and health insurance. There’s a rising demand for flexible insurance products that end-customers can build from available modules, e.g., activating and deactivating risk-based components, depending on their evolving needs. In many countries, the pandemic and tragically high mortality have increased insurance awareness. This has directly translated into increased sales, which, in turn, accelerated the business transformation of life and health insurance, in which we are actively involved.

We've developed a specialized expertise in the scope of digital transformation solutions for these business lines. For example, we notice that with each new risk that may arise, customers expect the possibility of composing personalized policies, hence the need to create modular and tailor-made offers. The spread of life and health insurance also necessitates re-segmenting customers, optimizing sales channels, re-evaluating expectations regarding the method of service, including the scope of self-service options.

So far, our experience shows that embarking on a digital transformation project in life and health insurance often begins when the client’s concept is still taking shape. It’s our role to guide clients through creating this concept and planning the implementation project.

First, we have to analyze the existing processes, pinpointing issues like excessive time consumption, costliness, or manual workloads. We also have to understand the client’s current IT landscape. A good grasp of challenges allows us to recommend targeted improvements – which is where our software solutions come in.

An example of such a business transformation project we did for one of our foreign clients was the construction of a platform for selling conceptually complex pension products. The main goal was to automate and optimize the process of collecting savings while maximizing the use of tax reliefs. One of the main achievements in this digital transformation process was reducing the policy amendment process from nearly two weeks to just a 15-minute conversation with the salesperson, limiting the back-office involvement in the process to approximately 5%.

The leaders are proactive toward the transformation

Our clients are able to see the recent global disturbances not as roadblocks, but as catalysts to accelerate their business transformation and gain a competitive edge. Their commitment to digital transformation remained unwavering, even amidst the challenges.

Undoubtedly, the insurance transformation is taking over the whole industry. Time favors those who are proactive in this field. For those still hesitating, consider this: the positive impact of such digital transformation often surpasses all expectations.

Sylwia Frątczak

Product Marketing Manager at Comarch