The Digital Age of Insurance
| Reid French, CEO, Applied Systems | Feb 5 2019
This article originally ran in the October 2018 print issue of Connections, “The Innovation Issue.”
Technology is rapidly changing the world around us, creating new opportunities to better connect with each other. From this enhanced connectivity, new customer expectations have impacted the way we do business. Digital transformation has taken over almost every industry — including insurance — to satisfy the anytime, anywhere service expectations of today’s customer.
In the "Digital Age of Insurance," those businesses that digitally transform stand to gain a significant competitive advantage in being able to serve today’s insurance consumer. In fact, according to research by McKinsey & Company, agencies that digitally transform their businesses stand to gain satisfied customers, lower operating costs and higher growth.
Before we dive deeper into opportunities provided by the digital age of insurance, it is important to understand what it means to be a digital agency. At Applied Systems, a "digital agency" is defined by three core characteristics:
- Digital automation within a brokerage to streamline operations and drive efficiency
- Digital connectivity to insureds to drive an enhanced customer experience
- Digital connectivity to carriers to drive efficient policy interaction
Leveraging digital technology will enable your business to achieve these three aspects of the digital agency. Now that we have defined the digital agency, we must answer the question of “why?” Why will these three characteristics of the digital agency drive value to my business?
There are five key areas of business value from the digital age of insurance.
The first, and arguably the most critical, value point for any business is growth. A study from Capgemini Consulting and MIT titled "The Digital Advantage: How Digital Leaders Outperform Their Peers in Every Industry" stated that digitally transformed businesses realize significant economic benefits including:
- 9 percent higher revenue generation
- 26 percent increase in profitability
- 12 percent increase in market valuation
Applied’s Annual Digital Agency Survey supports this study with surveyed digital agencies citing an average of 156 percent higher revenue per employee than nondigital agencies. When agents are focused on selling and servicing customers rather than performing manual, administrative tasks, they deliver a better customer experience, driving increased retention and business growth.
The purpose of digital technology is to make a process faster or easier, increasing the efficiency of the business. In the case of the independent insurance agency, digital technology enables the business to increase efficiency through automation and connectivity to insureds and insurers.
For example, a foundational management system enables an agency to manage their entire business — across all roles and all lines of business — within a single application. This is critical for efficiency. In fact, according to the American Psychological Association, switching between multiple, disparate systems can reduce staff productivity by as much as 30 percent. Housing all data and processes within a single system enables the agency to standardize workflows and leverage a single view of the customer, creating ease of doing business and better customer service.
In fact, Applied’s 2018 Customer Satisfaction survey reported that agencies averaged a productivity increase of 17.8 percent by leveraging Applied software. Applied’s Digital Agency software is an integrated solution that connects the agent to each phase of the insurance lifecycle, eliminating the need for rekeying information between multiple, disparate applications.
Consumers today have so many options to fulfill their needs. As a result, agencies must focus on the demands of the customer to provide a premier customer experience. In fact, according to a survey by Deloitte, organizations that prioritize customer experience generate 60 percent higher profits than their competitors. As consumers become increasingly digital, agencies must adopt the technology to satisfy these demands.
For instance, today’s consumer expects an omnichannel delivery model — one in which they can interact with their service provider through whichever channel they choose, whether it be in person, by phone, online or through a mobile app. J.D. Power recently completed a survey that indicated the three most desired, low-impact insurance transactions that individuals wanted to handle digitally — all of which are easily transacted with an online customer self-service portal or customerfacing mobile app through Applied’s Digital Agency solution. They were:
- Verifying payment receipts
- The ability to make payments
- Getting proof of insurance
The role of the independent insurance agent is to provide advice to customers. Your customers need you. According to the Big "I," nearly 40 percent of respondents admitted that they had never done any research prior to purchasing an insurance policy. In order to provide the best advice possible for your customers, agencies must have the technology that supports solid advice. The agency of the future — a true digital agency — is emerging as a proactive risk advisor, leveraging technology to support the advice they provide to their customer.
Connectivity to insurers is critical to provide the best advice to your customers. Insurer connectivity enables access to markets otherwise unknown by searching insurers, MGAs and wholesalers with an appetite for a specific risk — all with a simple, automated solution that is integrated in the agency management system.
Customer trust is vital for all businesses, but absolutely essential in the world of insurance. Without trust, insurance simply does not work as an industry because insurance products are essentially based on a future promise. A recent ACT survey of small business owners indicated that trustworthiness was the most important factor in the selection of their insurance agent. Agencies must not only show that they are trustworthy at the forefront, they must continue to demonstrate trustworthiness.
Applied’s Digital Agency solution eliminates physical risks, such as sensitive information being left out on display, or digital risks, such as cyber risks and business continuity concerns. Leveraging technology, such as the cloud, provides enhanced security, operations recovery and anytime, anywhere access during any disruptive event. Realizing that trust is essential for agencies, Applied works to continually improve on data security and privacy for the benefit of our industry.
The ability for an agency to seamlessly connect its staff with its insurers and insureds is the future of our industry. It’s the path to value for your business and your customers. Being a digital agency provides your organization more time to focus on advice, selling and servicing. The "Digital Age of Insurance" is about enabling you to better safeguard and protect what matters most in your customers’ lives.
Tags: Technology , Insurance , Applied Systems , Automation , Digital Agency , Connections Magazine