High time to move forward with digitisation

The most recent annual Insurance Digital Maturity Study produced by ACORD found that ‘Among the 200 largest worldwide insurers, fewer than 25% have truly digitised the value chain, while more than 10% are not appreciably leveraging digital technologies within their current business processes. Further, more than half of the insurers in the study are still exploring how digitisation can be applied against their business model.’

In comparison with other sectors like banking, where digitisation has already gone much further and cloud-based technology is commonplace, big-ticket P&C insurance can appear dangerously behind the curve. As the ACORD study cited above uncontroversially concludes, ‘a rapidly evolving insurance ecosystem, paired with the disruption of a global pandemic, has led to a more urgent need than ever for insurers to modernise.’

The Lloyd’s market is currently pursuing a digitisation agenda with radically renewed determination through the Future at Lloyd’s and Blueprint 2 initiatives. Getting the entire market to commit to adopting a common set of data standards and then, as Lloyd’s transformation director Bob James recently described it, ‘moving that common set of data through digital pipes so that it can pass electronically from one party to the other without having to have paper handed off’ presents undoubted challenges. But there seems to be an increasingly widely shared acceptance in the market now that kicking those challenges down the road is no longer a viable option.

Cynics might argue that multiple attempts to modernise the London insurance market have been proposed before – only to founder on the rocks of collective inertia and reluctance to commit. But, as Tony Ducker, director of operations at AXIS Capital Holdings, observed at the recent TINtech 2022 conference in October, the case for committing the necessary investment feels much more persuasive this time.

‘The team makes all the difference,’ he noted, adding that he sees the people currently working on digital transformation at Lloyd’s as ‘a very strong team’ who have proven far more effective in pursuing the intensive engagement across all sections of the market required to drive change forward. ‘The context has changed too,’ Toby Ducker added, endorsing the view that ‘the London market is at risk of being left behind.’

Claims departments can benefit from digitisation as much – if not more – as any other participants in the market. The very high calibre of many of the individuals working on claims in the London market too often risks being compromised, diluted, or held back by the antiquated nature of much of the technology infrastructure many insurers still rely on.

Legacy mainframe systems still predominate, with on-premise still very much the rule and cloud-based the exception. Data too often remains distributed across multiple systems with little or no ability to talk to one another – or to a broad range of external systems – without manual intervention. Such ways of working are not just inefficient and limiting – they ultimately pose a fundamental threat to insurers’ ability to stay in the game.

Fully developed, API-enabled claims management systems are now available that are capable of bringing all the information claims managers and handlers need together in a single place, massively empowering them to leverage their human expertise to manage claims more intelligently and efficiently – and ultimately deliver a far higher standard of customer service. The more claims processes rely on manual intervention, the greater the scope for the kind of human error that can lead to regulatory non-compliance, fraud, financial miscalculation, or customer dissatisfaction.

Moving onto a fully digital footing provides greater scope for automation and machine learning, and for leveraging the power of AI. Straight-through processing of claims enables claims departments to automate those activities where human intervention adds least value and free skilled claims professionals to focus their attention where their expertise can make a real difference. Given the intense competition for high-calibre staff in the P&C insurance space, it makes no sense at all for highly skilled individuals to be spending their time on low-complexity, low-value tasks.

Of course, the shape of things to come in the world of insurance technology is only gradually becoming clear. Even as projects like the Future at Lloyd’s and a global convergence on common data standards move forward at pace, many uncertainties remain. But the case for standing back and looking on looks distinctly shaky now. If not actively committing investment to digitisation immediately, insurers should at least be mapping out a rapidly actionable investment strategy as a matter of urgency.

Before committing that innovation, insurers need to be confident of properly understanding their options and where their investment should be focused to maximise the benefit and minimise the risk. At DOCOsoft we collaborate closely with our insurance customers to ensure they derive maximum value from a targeted investment in appropriate technology solutions. Our mission is to fully assimilate our client’s challenges, opportunities, working practices and business models to help them maximise efficiency and profitability, and gain a real competitive edge by providing outstanding customer service. If that’s something you would like to achieve within your own organisation, it’s high time we talked!