‘Digital natives can be the driving force behind the biggest transformation in insurance’
Sam Vickerman, Practice Director for Insurance & Retail at Grayce reflects on how digital natives can drive change and transformation in Insurance
Most traditional insurance companies have a large unexploited gap of Gen Z and Millennial talent, missing out on a huge opportunity to transform their legacy systems and business models. ‘Digital natives’ is a term used to describe Millennials and Gen Z workers who have grown up immersed in technology since birth. It’s argued that the brains of digital natives are wired differently to ‘digital immigrants’ (those who have adapted to the new world as adults), due to vastly different kinds of early learning experiences. In the workplace, this translates to differing communication and information-gathering styles. A 2021 report by Forrester stated that these workers prefer greater mobility, tech autonomy and software diversity compared to their older counterparts. Insurance firms should find ways to tap into this talent pool more widely if they’re to digitalise their operations and compete with emerging start-ups in the sector. Gen Z and Millennials can act as digital champions for their organisations, helping them to embed the latest technologies into their operations. The importance of introducing new digital initiatives within traditional insurance companies has increased following COVID-19, with customer demand for digitalised products and services on the rise. In response to rapidly changing digital trends, insurance companies should aim to attract and retain millennial talent.
How can insurance companies benefit from digital improvements?
Insurtech start-ups are beginning to emerge, which are focused on developing software specifically for the insurance industry. Investing in digital innovation has the power to transform the insurance sector and put traditional insurance companies in a much better position to compete with the emerging start-ups and new entrants. If insurers can get digital adoption right, they will benefit from cost reduction, better communication with their customers via the channels of choice and more accurate risk assessment. In a recent study, Deloitte found that 80% of respondents believe the insurance industry is moving fast enough to keep up with technological advancement. The same study found that 95% expect the use of advanced analytics to increase over the next three years. Insurance companies will need to ensure that their workforce can support this uptick in technology adoption.
Here are a handful of technologies that could drive widespread transformation of the industry.
- Highly personalised services through IoT and social media – In a revolutionised digital model that is beneficial to both the insurer and the customer, social media and endpoint devices can provide more personal insights into the individual. Wearables, for instance, provide deep insights into a person’s physical health, measuring factors such as blood pressure, temperate and number of steps per day. The business gets a more accurate risk assessment, and the customer gets a more tailored policy that suits their needs. This model is growing in popularity, with a recent study by Accenture finding that more than three-quarters of consumers are willing to share their personal data in exchange for more personalised insurance offers and cheaper coverage.
- Digitising paper records – If files are digitised, analysed and stored in the cloud, documents can be automatically reviewed, helping to reduce inconsistent information or errors.
- Internal workflow automation with RPA and Machine Learning – Robotic Process Automation (RPA) can help address repetitive work, including a preliminary assessment of each claim, data entry and payments. In turn, this results in more efficient decision making, reduced call times to customer service teams and far greater accuracy of data entry. Automation also enables firms to free up employee’s time to focus on more creative, value-add work with their clients.
- Automated resolutions through AI-powered chatbots – Customer service agents spend thousands of hours on the phone, often supporting clients with simple requests. Chatbots can help automate many of these conversations, using AI to filter through the chats and route priority customers that require urgent attention through to human service agents. This can drastically cut costs in customer support and sales.
- Blockchain implementation – according to PWC, blockchain implementation could cut costs by $5-10bn for reinsurers worldwide. Key benefits include reducing verification and validation time, eliminating errors and minimising reputational risks. Blockchain enables all required parties to be connected by smart contracts, meaning reinsurers don’t have to interact with the insurer to get access to the client’s data.
How can insurance companies attract ‘digital natives’?
To experience the benefits of digitalisation listed above, insurance firms must find ways to tap into this millennial, ‘digital native’ talent pool and employ those individuals that show curiosity and willingness to continuously learn. Digital transformation opportunities in the insurance sector will create a challenging working environment for millennials, whilst increasing job satisfaction and innovation to the benefit of the insurer. According to Deloitte, 4% of millennials want to work in insurance and by offering great digital initiatives to work on, and giving these ambitious ‘digital natives’ license to research and embed new technologies, more and more millennials will be drawn to work in the insurance sector.