The current insurance industry is ripe for innovation, considering it still runs on a traditional model. Problems such as lack of personalization, low employee efficiency, fraud, and high operational costs persist for providers. Fortunately, things seem to get better with more and more insurance companies switching to software solutions.
Statistics show that the average rate of technology adoption among independent insurance agencies in the US is only 44%. That means more than half of the providers are still running on legacy models, depriving the industry of the benefits of innovation.
Awareness can be a game-changer when it comes to driving an industry-wide transformation with the adoption of technology. Many agencies fail to reap the benefits of insurance software because they hardly know what these benefits are. Once they dig deep, they will be more than ready to embrace the trend.
Here are some ways insurance software can streamline the core processes of insurance agencies and transform the industry as a whole.
Claims Management
Claims management is the biggest challenge for the industry, with cost, complexity, and delays being the reasons to worry. A new report from Accenture states that the next five years may witness up to $170 billion of insurance premiums being at risk due to poor claims experiences. Customers have good reasons to switch to another provider if the current one lags in this area.
Agencies should learn more about how insurance software is better than traditional claims management processes. It eliminates the need to manually review each claim to decide the compensation and remit it after an extended time. Additionally, it can automate certain processes and eliminate the risks of fraud and errors.
VRC Insurance Systems emphasizes the impact of policy administration solutions on overall customer experience. Quick claims result in customer satisfaction, leading to loyalty and retention for providers in the long run.
Underwriting
The Accenture report also states that process inefficiencies in underwriting could potentially cost the insurance industry $160 billion by 2027. A robust underwriting process is the cornerstone of insurance operations. Falling short of efficiency with them can lead to severe problems.
The underwriting process sounds simple, from reviewing individual profiles to assessing their risks and providing them with an optimal insurance package. It also entails giving them key information such as their monthly premium and the compensation they may be entitled to. Although it seems quite straightforward, the calculations can be overwhelming.
Modern insurance software can ease the process by mining and gathering data automatically. It can even analyze data to check whether to extend a policy to a potential client and what fair price to offer to match their risk level.
Risk Mitigation
Research suggests that American insurance companies face accelerating risks from the climate crisis. Many regulators believe that climate change will likely have a high impact on underwriting assumptions and coverage availability. Besides natural disasters, large-scale accidents and widespread claims can be significant challenges for providers.
Insurance software solutions can gather, analyze, and summarize information and provide insights for effective risk mitigation. Besides predicting climate-related risks, these solutions can minimize fraud by analyzing the historical activities of potential clients and assessing their claim types.
Contract Execution
Insurance companies deal with contract execution complexities in several ways. The sheer number of contracts can be overwhelming because there’s one for everything, from approving a new customer to paying out claims, implementing a different tier, and closing expired policies. The endless contracts translate into loads of documentation.
With insurance software, providers can switch to paperless contracts that eliminate documentation. Moreover, self-service portals can help customers handle their contracts and reduce the burden on insurance employees. It translates into better control and satisfaction for customers and higher efficiency levels for providers.
Key Takeaways
Insurance software can simplify and streamline these critical processes for agencies. The impact runs much deeper because process transformation sets the pace for modernization.
Here are some ways it can enhance the performance and profitability of insurance companies:
- Enhanced customer experience with a better understanding of their needs, personalized services, and more involvement in selecting their coverage
- Higher levels of process efficiency with quick access to information and less focus on repetitive tasks
- Lower operational costs with automation, time-savings, and elimination of human errors from processes
- Data-driven decision-making for delivering more personalized, reliable, and consistent coverage to customers
The benefits of insurance software extend inside out, from improving internal efficiencies to delivering value to customers. Therefore, insurance companies have a valid reason to adopt innovative software systems, regardless of their cost.
