The insurance industry faces pressure to improve profitability. Traditionally, data was used for product pricing, but now insurers need data to optimize operations and customer experience. The pandemic accelerated digital transformation, requiring a shift towards innovation. To optimize processes, insurers should prioritize customer experience and leverage new AI tools.
Earlier this week, Skan hosted a fireside chat on "The future of Insurance Process Optimization". The conversation was led by Skan's CEO Avinash Misra, and featured two senior leaders with experience on both the product and operations sides of the insurance business:
-
- Ted Reed, Former Product Executive at Unum
- David Fernandez, Vice President of Claims Operations at Point32Health (former Vice President at Liberty Mutual)
- Avinash Misra, CEO and Co-Founder, Skan
The discussion touched upon the accelerating digital landscape in insurance, how data is informing every aspect of insurance, and how in the modern competitive landscape, it is not enough to focus only on efficiency anymore.
You can watch the full video below, or read on to see our top 4 takeaways from this energizing conversation.
Watch the full video
Below are Skan's top four insights from the "Future of Process Optimization in Insurance" fireside chat
In the insurance business, success is increasing your profit by a 'penny on the dollar'
In the insurance industry, profit margins are often between 10% and 4%, and in some cases even lower. The opportunities for improving profits are at the margins - if you can reduce overpayments or improve operations by just a small fraction, it can have a significant impact.
While insurers have invested heavily in data on the product and pricing side, they have not made the same investment on the operations side
Insurers have historically invested in data on the pricing and underwriting side of their business. However, they have not made that same investment in their operational data, where the service and value is actually being delivered. One of the top challenges facing insurers that are looking at improving profit margins is finding actionable data that provides insights into how value is being delivered and how the those internal processes can be improved.
Digital transformation has drastically accelerated over the past 18 months in insurance, but the bigger shift is the innovation mindset
Every aspect and business unit of the insurance business has become more digitized over the past 18 months, from new digital tools, to remote work scenarios. However, this evolution has also come with a mindset shift towards innovation. Decision making systems needed to evolve quickly, and decisions that used to take 6 months or a year are now getting made in days. The future winners in the insurance industry will be those that continue with this innovative mindset, taking an incremental 'test-and-learn' approach to new technology and tools.
To optimize your processes, start with making it easier for the customer and work backwards
Operational efficiency improvements should not come at the expense of customer experience. Because the largest part of the insurance cost structure is customer payments, even an equivalent trade off between efficiency and customer experience can result in a net-negative impact. Instead, leading insurers are starting by making it easier for the customer and working backwards to redesign their processes, aided by emerging AI tools and technology.
