Six out of seven top companies worldwide use a digital ecosystem to offer a network of connected products and partner capabilities. And insurance companies are on the heels of tech giants, such as Amazon, Apple, and Microsoft. Forty-two percent of insurers have already created partial or complete digital business platforms, and 56% are planning and building these capabilities. They are ramping up partnerships and adopting business processing as a service (BPaaS), third-party administration (TPA) services, and innovative technologies to launch their cloud-based digital platforms and partner ecosystems.
However, insurers face challenges migrating from monolithic legacy systems to modern digital platforms, such as choosing the right partnerships, onboarding digital tools, and justifying the return-on-investment (ROI) to key decision-makers. Despite the challenges, a well-executed digital ecosystem outweighs the growing pains; the right partnerships and platforms enable carriers to launch new products quickly, leverage data, reduce operational costs, mitigate risk, and deliver superior customer experiences.
We believe insurers must consider four primary areas as they debate entering the digital ecosystem arena.
1. Digital ecosystems increase agility and business resilience
The waves of the COVID-19 pandemic taught companies the importance of business resilience. Business resilience refers to an organization’s ability to absorb and effectively respond to sudden change. Insurance companies must be more agile in a time of digital acceleration, uncertain geopolitical pressures, and evolving customer demands. Insurers that adopt a digital ecosystem can better adapt to change by automating processes, from daily workflows to customer service features.
In 2021, insurance executives recognized environmental issues as a top priority after witnessing the side effects of global warming and discovering that environmentally friendly products appeal to consumers. Digitization allows an enterprise to prepare for emerging environmental, social, and corporate governance (ESG) expectations. ESG and business resilience go hand in hand; companies that keep up with ESG demands are more resilient in the face of economic change and global issues.
For example, Allianz promotes its Sustainable Solutions portfolio of insurance, asset management and assistance services that offer electric vehicle insurance, water pollution liability and incentive packages for owners of green homes to “ … improve people's lives, make a positive environmental impact or address climate-related concerns.” With the right digital ecosystem, insurers can prepare for the future, monitor ESG-compliance and design product offerings for environmentally conscious policyholders.
2. Digital ecosystems improve employee productivity and satisfaction
Employees can be resistant to change and hesitant to embrace new ways of working. However, a digital ecosystem appeals to insurance teams because of its ability to offload manual tasks, increase productivity, and encourage collaboration. A digital ecosystem gives insurers and their selling agents access to an intelligent agent desktop that can externalize and automate repetitive, manual processes, a feature that frees up time for teams. This benefit reduces brain drain, but it also increases productivity and frees up employees to work on more complex tasks.
According to Automation Can Change the Insurance Industry, “Manual labor can be responsible for many of the mistakes and confusion in this industry, which handles such sensitive customer data. Automation comes to the insurance companies as a lifesaver — an injection of speed and efficiency to modernize workflows, boost productivity and completely revolutionize the user experience.”
For example, suppose an insurer’s robust ecosystem includes an AI software solution with intelligent chatbot technology. This AI-enabled customer service feature allows policyholders to resolve queries quickly and intuitively before escalating to a call center agent. This way, agents can focus on more skilled work while continuing to monitor the customer journey without following a paper trail or recovering a phone conversation.
3. Interconnected ecosystems elevate customer and digital experiences
Digital ecosystems allow insurers to expand their capabilities and do more for their customers. With diversified partnerships, insurers have access to more data reserves and real-time transactions, allowing them to improve capabilities and better service clients. For example, the NTT DATA GIDP platform leveraged its partnerships with best-of-breed solution providers, such as Verisk’s FAST, Salesforce, and SmartComm, to enhance the customer experience of insurers such as F&G.
F&G increased efficiency, rapidly developed new products, converted existing business blocks, and digitized the customer experience through its digital TPA and BPaaS offering. On the back end, an ecosystem connects each touchpoint on the value chain to give customers a wide selection of products and services to have a seamless, hyper-personalized experience on the front end. As a result, costs go down, customer loyalty goes up, and insurers gather more data to fashion more-precise product recommendations.
4. Ecosystems break down data silos and enhance transparency
Interconnected data is the crown jewel of the ecosystem. Insurers using an ecosystem have access to a vast database and AI technology capable of sifting through mass data resources to identify patterns and insights. However, before insurers can truly become a data-driven enterprise, they must eliminate barriers that silo data. An interconnected ecosystem makes this possible by amalgamating data sources into one robust data view.
In one example, insurers use Atidot, a platform that better predicts policyholders’ behavior and increases premium persistency. Atidot is an AI and machine learning insurance tool that consolidates internal and external data to produce dashboards, automated rules engines, and inputs for service differentiation. This data-driven technology offers numerous benefits for TPA and non-TPA clients, such as optimizing acquisition analytics, automating fraud analysis, and determining channel profitability and upsell opportunities. As a result, clients can now turn unstructured or meaningless data into valuable business intelligence to improve their overall strategy, customer experiences, and bottom line.
The evolution of insurance is happening, regardless of your preparedness. A digital ecosystem proves to be insurers' most significant asset in the face of digital acceleration. Insurers with the right partnerships and ecosystem can respond to ESG demands, attract and retain skilled teams, exceed customer expectations, and monetize data to make smarter business decisions. Build a unique digital ecosystem that works for you and your consumers and step into interconnected insurance.
ISG recognizes NTT DATA as a strong leader in Life & Retirement TPA Insurance Services
NTT DATA helps insurers implement a digital platform that leverages various best-of-breed capabilities, including proprietary administrator platforms and cloud-based capabilities, to reap the many advantages of an interconnected ecosystem. ISG named us a leader in its new Life & Retirement TPA Insurance Services report for the U.S. The broad assessment of BPaaS/TPA providers recognized us for stellar support offered across insurance types, including life, annuity, and supplemental. ISG based ratings on these criteria:
- Ability to provide TPA services for life, annuity, and supplemental products that cover a variety of services
- Ability to manage end-to-end processes, demonstrating strong domain expertise
- Technology enablement expertise through a processing platform and digital technologies like automation, cloud, and other applications
- Offers clients industry solutions and builds partnerships
- Follows a strong consulting practice
Learn more about related topics:
- eBook: Interconnected Insurance: Platforms, Partners, and CX
- Blog: Takeaways from ‘How Insurers Can Own the Customer Experience In 2022
- On-Demand Webinar: How Insurers Can Own The Customer Experience In 2022
- Blog: 4 Lessons for Insurers Navigating the New Era of Interconnected Companies
- On-Demand Roundtable: The New Era of Interconnected Companies
- Research Paper: Insurers Shift Their Digital Transformation into High Gear
To share your thoughts, connect with Mercedes on LinkedIn.
Post Date: 2022-06-02