Why Digital Transformation Matters to Insurance
In my last insurance blog, I talked about How Your Insurance Agency Can Keep Up in a Digital World. However, not everyone is ready to make those changes and if that’s you then don’t click away because it’s time to at least start thinking about moving forward. So, if you are an independent agent or agency owner resistant to our digital world or stuck in the past, then keep reading because this post is for you.
There are many reasons to be hesitant to change, I mean you are in insurance, it’s in your bones. The whole nature of your industry is to help eliminate and/or stop the spread of risks, so it’s not often that you take risks…like getting rid of your legacy system and upgrading to all new equipment (Don’t worry if you’re not ready for that, digital transformation is more than just getting rid of legacy equipment.). Or maybe you’re thinking about the cost and what value a new computer will bring to your agency. There’s a handful of reasons as to why you may think digital transformation doesn’t matter in insurance. Hopefully, by the end of this blog, I can at least get you out of a complacent mindset and get you thinking about making decisions to move forward.
You might also like: Why Insurance Lags Behind Other Industries With the Integration of New Tech
Why Digital Transformation Matters to Insurance
Attracting Customers
Digital transformation is important for many reasons; number one being your customers. Without them, your agency wouldn’t be able to operate. But what happens when new customers aren’t rolling in? Those referrals will only get you so far. It’s time to take it to the next level, this is where your website, social presence, and content come into play. First off, customers need to be able to find your agency, online and on social platforms. If they can’t find your agency online, you’re practically nonexistent. 88% of consumers do their research online before making a purchase decision. Without a website and active social profiles, that only leaves 12% of consumers left to potentially become a customer.
Even though you have a website it needs to meet consumer expectations.
Does the website have an updated and easy-to-use interface?
How fast do the pages load? (Hopefully, within 3 seconds, otherwise users will click away!)
Can users request more information? Apply for a quote? Chat with a rep or bot?
The easier the process is for consumers to become clients, the more clients you will attract. People want convenience, so it’s your job to provide that to them.
Digital transformation isn’t just necessary for attracting new customers, but to retain the ones you have also. If your competitor is providing clients with a better and more convenient online experience what would make someone stick with you (Assuming the price is the same.)? Clients should be able to upload photos for claims on an app, easily check their claim status, update or review policy information from their mobile phone, and pay their bill. Digital transformation may not matter to you, but it does to your current and future clients.
Attracting & Retaining Talent
As of 2025, it is estimated that millennials will make up 75% of the workforce. With the talent gap in the industry, it is imperative to start attracting people to insurance. A study from the Griffith Insurance Education Foundation stated that the average insurance professional is 45 years old and only 5% of students within the millennial generation said they were “very interested” in working in insurance. With that being said, The Bureau of Labor Statistics anticipates over 200,00 new jobs within the industry by 2022, only two years away. As the majority of insurance professionals are towards the end of their careers, there needs to be a change.
Millennials and younger generations grew up with technology being a main component in their daily lives. From always having the latest smartphone, laptop, tablet, smartwatch, you name it there’s probably an IoT version of it. So, they aren’t going to change now. Coming into work they expect to be working with newer hardware, software, and systems. Your employees are what make your agency successful. By setting them up for success it will come full circle.
“80% of millennials say workplace technology will influence their job decision. ”
Targeting More Profitbale Customers
The most effective insurers will use technology to their advantage. By diving into your analytics to target more profitable customers and minimize acquisition and service unit costs. Through the use of analytics and data you can build models of your ideal customers based on risk tolerance, demographics, etc. This enables you to clearly define your ideal customer, making it easier to convey messages that will resonate with them. Here’s what that acquisition journey looks like in the digital world.
You can also think about Usage-based insurance (UBI). According to EY, its benefits include a 40% reduction in claims and policy admin cost, more effective policy pricing, and lower acquisition costs.
Customer-Centric vs. Product-Centric
Currently, the insurance industry is heavily product-centric. Meaning, products are sold by agents and business is done transaction-oriented. However, today, we live in a customer-needs driven world. If insurers can shift towards customer-centricity by offering subscription models based on the way people really live and the way businesses really operate, insurers will better understand their customers and respond to their expectations. The focus should be on becoming a trusted advisor to your insureds and providing product awareness and customer education. With that being said, insurance can be very confusing and overwhelming, so consumers want clarity and transparency; not 10-page application and policy documents with hard-to-understand wording or fine print.
Not only does understanding your customer better service them, but you as well. Really knowing and understanding your client will help you cross-sell more effectively, build a better relationship with your client, in turn, they become a long-lasting client for your agency.
Read more on: Why Digital Transformation is Vital for the Insurance Industry
Automation, Decreased Costs, and Increased Productivity
Lastly, insurance agencies can benefit from digital transformation through automation, decreased costs, and increased productivity. By constantly gathering and analyzing data, you can speed up processes. For example: if you can assess risk in 5 questions, but you are asking 10 questions, then why not shorten your process? Not to mention all that an AMS can do for a lot of your tedious, time-consuming back end tasks.
Another factor to consider when using outdated technology are productivity levels. This can have a huge impact on the amount of work getting done efficiently and effectively. Just think of all the time spent on loading screens, pop-ups, and computer freezes. Not only is it very frustrating, but a huge waste of time. Microsoft estimates that SMBs using old PCs lose seven calendar days per year, just imagine what you could do with an extra week every year.
Aside from crashing computers, a decrease in productivity could be from a lack of clear computer organization and storage. Without proper search and organization programs, your employees will spend more time searching for files or locating information. Using updated technology makes it simpler to store and find files, as well as streamline their workflow.
Productivity levels rise when it is easier for employees to collaborate and communicate with others effectively. New systems allow for faster execution of tasks and the ability to communicate with others instantly. Employees will be able to securely edit documents at the same time, even remotely. Having accessibility to work on files outside the office allows for more time on other tasks in the office.
Now on to cost. Since older systems have a much higher failure rate, this causes higher I.T. expenses for recovery and data restoration. Older technology is also much less energy efficient and requires more power than newer tech. Therefore, you can expect a higher electric bill. With an MSP, the financial burden of a large capital investment will be taken off your shoulders as the cost of hardware and technology refreshes are included in the service. In turn, your employees will be more satisfied at work resulting in a lower turnover rate. So, you’ll be able to spend less money and resources on recruitment and training.
In conclusion, outdated tech decreases productivity, decreases employee satisfaction, and in turn decreases employee retention. Nothing about that sounds good for business.
How An MSP Can Help
If you’ve made it this far, I hope that you are at least thinking about making some changes to move forward. Digital transformation shouldn't be scary, and it doesn’t have to be if you have a plan in place and the right people on your side.
Earlier I mentioned cost as a reason for insurers being hesitant to digital transformation. This is the case when paying for upfront costs yourself, but by partnering with an MSP it doesn’t have to be. With an MSP, like Omega Computer Services, your agency can get a full technology refresh every three years included in your flat-rate monthly fee. You don’t even have to worry about installing anything! There isn’t a more affordable and easier solution that that.
Learn more on how an MSP can help your agency with new technology here.
