The Digital Transformation of Insurance
It’s a Good Time to Be in Insurance – and 2016 Is Looking Even Better
January 05, 2016
Today, the insurance industry is healthy and strong, with high levels of organic revenue growth and rising profit margins across the independent agency and brokerage channel. According to Swiss Re, M&A activity continues to trend upwards in terms of both the number of acquisitions and the average price paid per agency or brokerage.
As we start a new year, it’s important to keep in mind how much the insurance industry has evolved since it first began. From the first policy to protect shipments at sea to coverages for new risks like cyber security that were unimaginable in years past, insurance has always been a critical component in human progress. It has allowed people to follow their dreams and take risks. No one would purchase a house or build a new industrial complex with the underlying notion they could lose it all.
As our opening video shown at this year’s Applied Net conference illustrates, the business of insurance is important work to inspire us all, and I am proud to be a part of it.
We’ve seen how insurance has adapted over the years, but what’s next? With organic growth and acquisitions higher than ever, now is the time for your agency or brokerage to fully embrace digital technology to take advantage of every business opportunity in a market primed for profitability.
Why go digital?
- Your clients expect it
Today’s insurance consumer is fundamentally changing business and customer service models. Consumers are more mobile than ever. Media and news are now consumed on-the-go, and personal and business transactions via mobile apps are part of everyday life. The demand for 24/7 access to information is requiring nearly every industry to re-evaluate how they operate to meet these new customer expectations – and the insurance industry is not immune. This change has not been lost on insurance organizations. In fact, in a recent survey conducted at this year’s Applied Net conference, agents and brokers ranked changing customer demand as the main catalyst to increasing their technology investments.
Agencies and brokerages should also consider that the next generation of tech-savvy insurance consumers will also be the next wave of insurance employees. They bring a new set of expectations to the workplace as insurance professionals from the baby boomer generation begin to retire.
Delivering a digital customer experience has become table stakes for the next-generation trusted advisor. The insurance experience of yesterday is no longer sufficient for the demands of today and expectations of tomorrow.
- Your business requires it
The increased pace of business to keep up with consumer demand can make staff feel like there are never enough hours in the day to get everything done. Digital technology simplifies processes and eliminates manual tasks. In the Applied Net 2015 survey, when asked which technology most improves productivity, respondents strongly indicated that standardized workflows and agency-insurer interface are seen as the greatest source of efficiency gains.
Advanced software such as Applied Epic delivers pre-built, best practice workflows to streamline processes and reduce time spent on duplicate tasks. Additionally, end-to-end transactions between your business and insurers need to happen within the management system for optimal productivity and efficient business operations. For agents using IVANS Download, employees benefit from an average time savings of up to two hours per employee per day.
The Makings of a Digital Agency or Brokerage
Digital transformation reflects the transition of taking manual, paper-filled processes to digitally automated workflows powered by software and the Internet. A digital agency or brokerage is one that has undergone a digital transformation to drive growth and profitability across its lines of business. It experiences many digital, paperless interactions and transactions per day with insurers, insureds and amongst staff.
A digital agency or brokerage is built on 5 pillars:
- A single agency or brokerage management system to serve as the operational foundation. Your system should be able to manage every type of business from personal lines, commercial lines, benefits and risk management and should connect all of your staff within your agency or brokerage including CSRS, producers, accountants and principals. Consider this: 50% of the insurance industry’s workforce will retire in the next decade.1 Can new staff be efficiently trained on your agency management system?
- Big data evaluates ways to mine and analyze the rich transactional data in management systems. There is an abundant amount of data in your management system but do you have the technology to quickly gain insights? Data analytics uses advanced technologies to analyze vast amounts of data and produce analytic insights in visual representations much more rapidly than traditional tabular reports. Consider this: Companies that use data analytics are 5x more likely to make faster decisions than their peers.2
- Insurer connectivity creates a digital connection between your management system and your chosen insurer partners. It’s important that agencies and brokerages have access to the best products and the best insurers to meet the risk needs of each client, and connectivity allows just that. Consider this: 69% of survey respondents found the availability of automated insurer interface to be very important when selecting insurers to do business with.3
- Mobility gives agents and brokerages the ability to interact with prospects, clients and employees in the field via insurance-specific mobile apps and client portals. Think about how easy it is to obtain information when you have your smartphone or tablet at a time of need. Consider this: 76% of millennial survey respondents believe access to information via a mobile app is important.4
- The Cloud allows your staff anywhere, anytime access as well as fulsome security and data backup. Hosting your software in the cloud leads to increased flexibility, security and business agility. Consider this: Today, 77% of organizations cite agility as the primary reason of moving to the cloud.5 Whether scaling up via organic growth or M&A or scaling down to be sold, the cloud allows your business that flexibility.
Step into the Digital Age
With today’s customers expecting more and increasing competition redefining the insurance industry, digital technology simplifies and amplifies current processes. It expands communication channels – to clients and insurer partners. It mobilizes your staff from their desk to the field. Digital elevates your role as a trusted advisor, making you present at all moments of opportunity – anywhere, anytime.
As each year goes by, we strive to be better and do more for our customers. Business as usual is no longer enough. The strategy? Your foundation has to be more advanced, your communication channels open, and your business mobilized. Growth-minded agencies and brokerages have a great opportunity ahead.
Welcome to the digital future of insurance.
Stay tuned for more insights on how to become a digital agency and move your business into the 21st century.
What goals do you have for your business in 2016? What were your greatest accomplishments in 2015? Comment below.
Reid French, Chief Executive Officer at Applied Systems, is responsible for the company’s overall business strategy and operational execution. He also plays a prominent role in developing and fostering relationships throughout the Applied community. French came to Applied in 2011, after serving as chief operating officer at Intergraph Corporation, a global company at the forefront of geospatial and computer-aided design software. Before Intergraph, French was chief operating officer in North America for Solution 6 Group Ltd., Australia’s largest software company. Early in his career, he was a strategic planner for the Walt Disney Company, and he managed investment banking transactions in the technology sector for Robinson-Humphrey.
1 U.S. Census, Next Four Decades
2 Bain & Company. The who, why and how of big data. 2013.
3 IVANS Agent Connectivity Survey. 2015.
4 Applied Systems Millennial Preferences Survey. 2014.
5 Integra. Upward Mobility – Moving IT Business to the Cloud. 2014.