Digital technologies continue to disrupt the “traditional” ways of the global insurance sector. Along with data-driven processes, changing consumer needs are driving innovations across this sector. Here are some eye-opening statistics from 2022:
- 74% of insurance providers are increasing their AI spending
- 72% of insurance companies are investing in cloud computing and storage
- 67% of carriers are investing in data analytics, and 63% in mobile technology
Further, the US- and UK-based insurance companies will be increasing their spending on insurance-related technologies by over 25% between 2022 and 2026.
The COVID-19 pandemic has fundamentally changed consumer needs and behavior. Besides being more risk-aware, insurance consumers expect personalized services from their insurers. Tech-savvy consumers want to interact through multiple digital channels.
But what is preventing insurance companies from responding to changing consumer needs? Let’s discuss.
- Legacy Systems
A Novarica report studied the challenges of modernizing legacy systems in the insurance industry. According to this report, “Legacy systems are fine, as long as insurers are serving legacy customers, with legacy products, with legacy processes, through legacy channels.” This is no longer the case, especially in the post-pandemic world.
Legacy systems are expensive to maintain in the long run. A PwC report found that, on average, insurance companies spend 70% of their IT budget on the maintenance of legacy systems.
With their thin profit margins, insurance companies find it hard to justify investing in a new and modernized system. However, according to McKinsey, legacy modernization can reduce IT costs by around 41%. Modern IT systems are, in fact, suitable for meeting customer expectations in today’s digital age.
- Traditional Tools Cannot Manage Multiple Channels of Interaction
McKinsey outlines that 84% of insurance customers use digital channels during their journey. However, 55% of customers do not buy online insurance.
As more customers embrace digital channels, there is a distinct shift in customer behavior. They expect a consistent brand experience across both online and offline channels. Insurance providers can no longer focus on a single channel to deliver an exceptional customer experience (CX).
Brand engagement is best only when interactions across the following channels are linked and synchronized:
- Insurance agents
- Customer portals
- Mobile apps
- Social media channels
- Customer call centers
However, traditional tools in insurance policy management are inadequate for handling multiple channels of customer interactions.
- Manual Processes
Be it for issuing a new policy or filing an insurance claim, the insurance sector still suffers from slow and inefficient manual processes. For instance, customer information is still collected using PDF forms or on paper. Manual processes have a direct impact on CX. As per a 2021 Qualtrics and ServiceNow survey, 80% of customers had switched brands after a poor CX.
Customers expect a smooth onboarding process with a streamlined verification procedure. As highlighted by Deloitte, “Onboarding and ongoing learning provides the best method for carriers to generate brand loyalty and affinity.” With automation, insurance companies can speed up their customer services and gain more customer insight.
- Data Silos
Most large and established insurance companies have massive data repositories along with analytical capabilities. However, most of these companies face challenges in sharing information between business functions.
Data silos are often created when departments use a different software solution that is not integrated with other departments. Data silos contribute to poor data quality that annually costs the US economy $3.1 trillion.
Data silos cause a host of business problems related to:
- Customer interactions across multiple touchpoints and channels
- Acquiring valuable and actionable customer insights for improved decision-making
- Machine learning models for understanding customer behavior
How can the insurance industry overcome these challenges using ServiceNow FSO? Let’s discuss that next.
How ServiceNow FSO Can Overcome Challenges in the Insurance Industry
With ServiceNow FSO, insurance companies can efficiently deliver exceptional CX by automating manual processes and optimizing the value chain. Here are some of the ways in which ServiceNow FSO is addressing customer-related challenges in the insurance sector:
- Unifying data silos in frontend and backend operations within a single centralized platform
- Delivering a positive CX by automating the insurance claims process and resolving customer issues proactively
- Personalizing customer service using cross-selling and upselling of insurance products
- Unifying the existing legacy system with the latest insurance data model
Listed below are the core capabilities of ServiceNow FSO that can benefit insurance providers:
- Service Operations: With ServiceNow FSO, insurance providers can proactively service their policies and improve customer experience using built-in chatbots. ServiceNow is effective for automating policy servicing processes using playbooks.
- Omnichannel Integration: ServiceNow FSO integrates multiple channels, including telephony systems, social media platforms, and distributors. Customers can easily manage any policy-related changes while on the move by using mobile apps.
- Predictive Intelligence: ServiceNow FSO can leverage machine learning capabilities to direct customer issues, recommend the right solution, and enable guided decisions. Using automation and predictive intelligence, it can automatically assign tasks with its drag-and-drop functionality.
- Customer Lifecycle Operations: With this capability, ServiceNow FSO can streamline customer onboarding and eliminate all complexities. Using centralized information, ServiceNow can verify prospective customers and perform their KYC. Besides smooth onboarding, insurance carriers can leverage the generated customer data (across touchpoints) for any cross-selling and up-selling opportunities.
According to a ServiceNow report, Fortune 500 insurance carriers were able to reduce their operational costs by 20% within a few months of implementing ServiceNow FSO.
As it stands, ServiceNow FSO is driving business performance across multiple insurance applications, including:
- Commercial and personal insurance claims
- Group and individual life insurance policies
- Customer dispute management
In the post-pandemic world, insurance companies are engaging with customers who are more risk-aware and demand personalized services. Therefore, they cannot rely on legacy systems and manual processes.
As a ServiceNow partner, Xceltrait has enabled its insurance customers to leverage the power of ServiceNow FSO to improve their customer engagement. Talk to our specialist today to know more about how our ServiceNow expertise can help your insurance business succeed.