In an era marked by rapid technological advancements, insurance companies are compelled to embrace digital transformation as a fundamental driver of growth and competitiveness. As insurers navigate the complex terrain of digitalization, the foundation of their success lies in the robustness and reliability of their underlying technological infrastructure. It is this infrastructure that serves as the bedrock for insurers to achieve long-term growth, drive technological innovation, ensure elastic scalability, and attain peak operational efficiency. In this blog, we delve deeper into the pivotal role of infrastructure management in prioritizing and facilitating a triumphant technology transformation for insurers.
The digital revolution has reshaped the insurance industry, presenting both unparalleled opportunities and daunting challenges. Insurers are under immense pressure to adapt to changing customer expectations, meet regulatory demands, and contend with new disruptive market entrants. To navigate these challenges effectively, insurers must capitalize on the transformative potential of technology, leveraging it to enhance their core business functions, streamline operations, and deliver superior customer experiences.
However, the realization of a successful digital transformation journey hinges on the presence of a strong and resilient technological infrastructure. Infrastructure management becomes the linchpin that connects all the disparate elements of an insurer’s digital ecosystem, enabling them to integrate new technologies seamlessly, optimize existing processes, and unlock the full potential of their digital initiatives.
How to Prioritize Infrastructure Optimization to Achieve Digital Transformation in Insurance?
Here is a deeper look into how insurers can prioritize infrastructure optimization to facilitate a successful technology transformation.
1. Make a Case for Infrastructure Modernization
The digital transformation in the insurance industry will require a procedural and operational overhaul that is bound to impact all stakeholders. As such, you need to first obtain buy-in from the stakeholders. It not only ensures that they agree with the proposed changes stemming from infrastructure optimization but will also embrace them when the time comes. Similarly, insurers should also consider their outdated technology, high costs, and inadequate performance. With an infrastructure that is less than ideal from a cost and capability perspective, most are concerned that they are not meeting the evolving business requirements of the digital age.
Since insurance is such a data-intensive industry, this optimization journey would naturally commence with data centralization. Storing, handling, and organizing data at a unified hub will enable faster decision-making, smoother business operations, richer customer experiences, and lower costs. It will also trigger the digital transformation of insurance across the value chain. So, start by documenting and presenting the anticipated benefits of technology and digital transformation in the insurance industry.
2. Migrate Your IT Infrastructure to the Cloud
Once the stage is set to undertake digital transformation in insurance, it is time to upgrade the underlying tech stack. One can argue that the technology and digital transformation in the insurance industry can heavily benefit from bespoke, on-premise solutions. However, they present hosting, security, data backup, and maintenance challenges that imminently result in obsolescence and disruption if not monitored actively.
Against this background, migrating to the cloud appears to be a more viable and reliable solution. With secured cloud technologies, insurance companies can rest their trust in reputed vendors for cloud-based software development and maintenance services. Plus, insurers can have the solutions configured to meet their specific requirements. At the same time, it lends a high degree of scalability and flexibility as insurers can implement overnight changes simply by upgrading their plans or picking out relevant add-on services or modules to cater to customer requirements and keep up with accelerated change.
Overall, there are three possible approaches that can be considered while you add cloud technology to your current tech stack:
- Re-platforming Lift and shift the entire infrastructure into the cloud. This will require you to maintain a deep knowledge of managing your applications at the infrastructure level. Managing your non-cloud applications in a new cloud environment is a complex change and will require new skills.
- Cloud innovation Re-develop all or parts of non-cloud applications to take advantage of cloud tool concepts. Here, you are handing over control of the base infrastructure layer to the cloud provider while you focus on managing the new tools. Or you can choose to move to a platform-as-a-service and use the cloud provider’s toolkit. Either way, you’re handing over varying degrees of control to a third party.
- SaaS solution This is a radical change from both an IT and business perspective, requiring you to move off your existing systems to software as a service (SaaS). You are giving up all IT control of your infrastructure to the vendor, and your IT team must manage that relationship.
3. Incorporate New Technologies to Meet New Needs
Scalability, flexibility, and modularity are the key characteristics of modern-day insurance infrastructure. Cloud or InsureTech vendors now offer a variety of add-on products and services that leverage cutting-edge technology to enhance the usability and applicability of their offerings.
For instance, the data-heavy nature of insurance has popularized the use of Big Data and Big Data Analytics to draw meaningful and actionable insights from high volumes of data. Some of it even spills over into the realms of predictive analytics to make insurance proactive rather than its traditional reactive nature. Similarly, technologies like Artificial Intelligence (AI) or Machine Learning (ML) have equipped insurers in identifying patterns that could point toward risk or risky behaviors. Insurance companies are also turning to connected technologies such as smart devices and wearables and telematics as a part of the Internet of Things (IoT) networks to improve service deliverability and quality.
Such technological infusion of digitally transformed solutions optimizes and enhances the value proposition of the existing processes and standards so that insurance companies can make the best use of resources.
Innovate Today to Secure Your Tomorrow
4. Introduce Automation to Inject Efficiency into Processes
The ongoing digital transformation trends also offer a push for automation and Hyperautomation, especially since it comes in the wake of the digital disruption in insurance. Digitally mature insurance companies find themselves at a vantage point where the introduction of automated workflows is fairly easy as much of the groundwork has already been done by standardizing and democratizing data.
As such, an insurer looking to automate the policy management process can do it easily as all the policy-related data would not be available in a centralized location. Policyholders can access information by entering their policy number into the database. Alternatively, the insurance company can issue batch notifications and reminders for renewals when a policy is about to expire, and so on. At later points, such frameworks can even plug in automated tools to facilitate faster claims settlement where everything, from adjusting claims to payments can be automated using AI/ML solutions.
Automation in insurance can take various forms. All it requires is designing a workflow that can utilize the necessary inputs, frameworks, and resources to realize it.
5. Bolster the Cybersecurity Measures
Implementing robust cybersecurity measures is crucial in today’s digital landscape to protect businesses from evolving cyber threats. While routine security checks are important, employee training is equally essential. Employees, unintentionally, can become a significant cybersecurity risk by falling victim to phishing emails or engaging in unsafe online practices. To mitigate this risk, organizations should invest in regular cybersecurity awareness training, empowering employees to recognize and respond to potential threats. Additionally, the rise of Bring Your Own Device (BYOD) policies introduces new security challenges. Establishing a comprehensive BYOD policy with stringent security protocols, such as strong passwords and device encryption, is vital to safeguarding the network and sensitive data. By implementing these measures, insurers can enhance their cybersecurity posture, minimize vulnerabilities, and ensure the protection of valuable assets.
6. Acquire a Customer-Centric Approach
The digital transformation of the insurance industry has managed to make the policyholder the focus of all major initiatives. The end user or customers are no longer left as an afterthought but are treated as the source of defining trends. As a result, insurers are developing a customer-first mindset, which is also reflected in the InsureTech infrastructure.
For instance, we are witnessing a thrust in self-servicing portals where policyholders exercise absolute control, whether it is in choosing the right policy or renewing it. Along the same lines, there is a meteoric interest in conversational AI tools like chatbots to engage with and empower leads, prospects, and customers throughout the purchase and post-purchase journey.
Self-servicing and self-management is not the only customer-led demand that is shaping the industry. There is an uptick in data security and privacy concerns, which goes beyond regulatory compliance. As such, insurers can leverage technology to beef up security and add value to the under-the-hood infrastructure.
7. Outsource IT Support to a Managed Service Provider
A number of businesses that undertake digital transformation in the insurance industry fall behind in the maintenance and upgradation of their IT infrastructure, either due to lack of time or in-house resources. To bridge this gap, a popular solution is to partner with a Managed Service Provider (MSP). An MSP assumes responsibility for managing and delivering a defined set of IT services to your company, offering a cost-effective approach to outsourcing certain IT functions.
The key benefits of employing an MSP include:
- Time savings Free up your internal team from IT tasks, allowing them to focus on core business activities.
- Predictable IT budgeting Gain clarity on costs through contractual agreements, ensuring stable financial planning.
- Enhanced productivity Minimize disruptions and IT-related issues, enabling employees to work efficiently.
- Robust cybersecurity Leverage expert support to protect your data and receive ongoing training for your staff.
- Peace of mind Rest assured that your critical systems are monitored and managed by capable hands.
Laying a solid foundation for insurance technology transformation and optimization requires comprehensive analysis and strategizing. Obtaining buy-in from stakeholders, migrating to the cloud, embedding new and upcoming technologies, automating processes, and gaining a customer-focused mindset can catalyze growth, innovation, and agility for long-term success. Once this is set in place, insurers can embark on a quest to meet the ever changing customer requirements and industry trends!
Case in Focus
A multinational, multi-million insurance provider faced issues due to disconnected legacy systems that hindered customer service and support. We helped counter this problem with a unified CX platform that not only introduced consistency in the customer experience but also reduced the cost of maintaining the legacy systems. This technology infrastructure optimization helped the insurance provider save as much as $2 million while also consolidating the brand reputation. Delve deeper into the specifics by exploring this case study.