As the world addresses the fallout from the pandemic, insurers risk putting cost cutting first, with product innovation, customer service and growth second. But it no longer needs to be this way. Tim Hardcastle, CEO of Instanda, writes
We are seeing the biggest challenge to the world’s health and economic survival as a result of the Covid-19 pandemic; the effects of which will be felt for many years to come.
Understandably, many insurance companies are now revising their budgets and reviewing the impact of Covid-19 on their claims, capital requirements and solvency. This is resulting in cost cutting initiatives ranging from company-wide pay reduction of 20% by some of the largest players in the industry to cancelling office rental agreements. In this climate pausing investments in innovation, new products, solutions and markets seems to make sense.
However, managers are also asking themselves; as we start to emerge from the worst stages of the pandemic how can we meet the changing market demands out there.
Cost reductions programs are in flight and clearly have been an important first step but product innovation, customer service and growth can and should only be briefly paused.
Why? Because we now live in an age where it is entirely possible to enable all of the above at the same time; to fundamentally change your business model, e.g. improve customer and broker service, offer more relevant propositions and to deliver changes to current propositions all with ‘in year’ ROI. Time and complexity are the gatekeepers of traditional change project hell and many have travelled there! How is this possible? Industry leaders have already taken steps down this path to a world where new possibilities of meaningful change at speed are accessible through the use of agile technology.
As the industry is catching on, there’s a groundswell of activity and demand for no code digital solutions where business in partnership with internal IT teams are in full control.
No code: An enabler of revenue growth
Digital transformation is arguably more important now than ever. If there’s anything that this pandemic has shown us, it’s that traditional business models and systems are placing a stranglehold on the sector, just at a time where it needs to be more responsive.
Many businesses will struggle to react as rapidly to the payment holiday entitlements introduced by the new FCA rules. Adapting unwieldly systems to put in manual workarounds to accommodate this new scheme, will undoubtedly add to operational costs. For those who have already embraced agile no code digital platforms, there’s far less disruption. That is what they have been designed for.
Yet many organisations are still uncertain on where to start; How do I do this? How do I bridge that gap between the ways of working and systems I have in place and future-proof the business? Surely this is a huge programme that requires my IT team and commitment of a large budget over many years?
That’s where no code really comes into its own. With rapid product releases, real time market insights, broker and customer self-service, dynamic policy management and dynamic integration, comes increased straight through processing and dramatically reduced policy operating costs. Best in class digital players are achieving processing costs of less than £1 per policy.
Insurance product innovation teams no longer have to wait in the inevitable work queue for developers with specialised skills to help build a product. Knowing the product they wish to create, teams can select the functional components they need from an online library within a no code platform. They simply drag and drop the components into a visual workflow to create their product.
This means products can be brought to market much quicker and at a lower cost.
And with intuitive integration and tooling that accommodates basic CSV outputs through to modern Json restful API’s, digital no code platforms can sit alongside existing systems and old processes, by-passing the costly and slow rip and replace models; think the equivalent of employing an iPhone instead of a Nokia 6810!
Looking to the future
Segments of the scientific community are already predicting a two-year timeframe for fully dealing with Covid-19. Many commentators share the same view that the structural impact will be far reaching. Insurance consumption patterns and needs will change forever. That’s why there’s such an urgency for existing business models to be vastly more efficient and flexible.
Digital transformation in insurance was once plodding along, but now it is jogging and will soon start running harder, particularly as the industry wakes up to the fact that operational efficiencies must be improved without losing market share and market attractiveness.
The possibility for industry change in the wake of Covid-19 is vast: Data and AI based services will afford consumers far greater control; selecting the services they need to improve their own claims records. Digital health services will offer combined flexible solutions in direct response to lifestyle demands with far greater accessibility. Integrated digital advisory solutions will emerge for customers and brokers that combine wealth management, insurance protection, personal lines and health services. More subscription based micro service models will appear that are able to flex their pricing based on usage and consumer lifestyles. The gig economy and contractors will be offered insurance as an extension of combined Group offerings.
Whilst it has been and continues to be, an incredibly difficult time, it is also one that offers great opportunity to rethink the way the industry operates. But the insurance sector needs to move the needle on how it views innovation in technology, and come to realise that it is possible to digitally transform the business model and maintain operational efficiency.