Q&A: Age of the next-generation digital insurer


Alex ZuckermanTo what extent has the insurance industry evolved in recent years?

The insurance industry has been embracing digital transformation in varying degrees for a number of years. We’ve seen alternative business models beginning to emerge and a blurring of the lines between the traditional segmentation of insurers, brokers and managing general agents. The move towards digital self-service has been partly driven by a desire to improve customer service, provide insurance customers with an experience they are used to getting from other industries and partly to take advantage of the opportunities to reduce operating costs. Meanwhile, the traditional industry players have been disrupted by innovative startups, such as Lemonade, Next Insurance and Root, that leverage technology and digitalisation as the key differentiator for the new insurance era.

What do customers now expect when purchasing insurance?

They expect the insurer to know who they are, to be able to make changes themselves and do it all online. We are witnessing early adopters in various markets, for example in the Nordics, whereas other countries are still very policy oriented and reliant on cheques and faxes. Some of our customers stretch and challenge us because their customers do the same to them. In Denmark, for instance, when you want to buy a new policy with a new company, they will send the whole transition to the old company, which will cancel your policy, retrieve the data and pass it to the new insurer. There is no paperwork and it’s an entirely seamless experience for the customer. That is what people increasingly expect. We believe this will become a standard approach for more traditional markets in the near future.

How has the coronavirus pandemic impacted the industry?

It has accelerated those customer expectations, but also fortunately the shift many insurers are making towards delivering that experience. In the early stages of the pandemic, government lockdowns put a lot of pressure on insurers because they had not planned on employees being confined at home unable to process claims nor run IT systems (since the majority are on-prem solutions). This created an urgent need to embrace digitalisation, but also exposed flaws with those relying heavily on legacy systems. Some companies have struggled with what to do while others have shown real leadership and spotted this fantastic opportunity. In fact, a client of ours has just developed a full digital proposition for motor insurance in just ten months, most of which was built remotely during lockdown. It can be done, and it is being done out there now. Frankly, we see enough forward-looking companies wanting to take the opportunity. On the other hand, those that seek to just hunker down and ride it out are not going to be in very good shape at all by the time this pandemic finally comes to an end.

What does it mean to be a next-generation digital insurer?

It means you embrace agile and open digital systems, on the cloud, to provide a seamless customer-centric experience. If a customer wants a quote for car insurance, for example, they just go online and type in their car registration number and social security number. The automation then gets to work, pulling enough information from the various registries to give an instant quote. That’s a much better customer experience than the painful experience everybody’s had of answering a whole load of questions, information the company should already have, to get a quote. This needs to come to an end.

How can insurers go about delivering a more customer-centric experience?

The right technology infrastructure needs to be in place to achieve these sorts of enhanced experiences for customers. To provide a true customer-centric experience, insurance companies need to pay attention to the following:

  • Provide a frictionless omni-channel approach that can interact with customers across any device at any time
  • Offer a personalised approach, where business processes are smartly tailored to the specific characteristics of a specific customer, together with self-service capabilities
  • Use application programming interface (API) technology to streamline connectivity between the different components across the value chain and facilitate data enrichment and usage of external data sources
  • Build an ecosystem that allows leveraging new and innovative technologies as part of the overall architecture
  • Use advanced analytics to drive customer journey and engagement based on data key performance indicators

Another important parameter is the ability of the core insurance systems to provide the necessary data and integration in a granular and effective manner that fits into the new landscape. This requires cloud-based systems for efficiency alongside APIs, which are seen by many as the ‘new gold’. Many insurers that have embarked on benefiting from the opportunities digitalisation provides have seen the old legacy mainframes just don’t provide that gold. Cloud is vital and not just for its powerful applications and automation, or even cost-savings, but also for the data. Insurers are, naturally, wary of data breaches, so cloud provides crucial security too. Sapiens is cloud agnostic, but Microsoft Azure and Amazon Web Services, for example, are among the biggest investors in cybersecurity.

We partner with forward-looking insurers as they seek to provide a more customer-centric service

How is Sapiens enabling the transition to next-generation digital insurers?

We partner with forward-looking insurers as they seek to provide a more customer-centric service, supporting them with a digital ecosystem to take advantage of the most powerful technologies. We provide a comprehensive insurance digital platform, including a smart core system, a data and analytics proposition, and a digital proposition, all delivered in the cloud. That enables insurers to take the necessary steps to succeed at their own pace, with our help. However, we also need input and understanding from the insurance industry to be able to connect the technology. It’s one thing to be there when the lights go off in the datacentre, but you also need to be there when the lights come back on. That’s what our customers value. It’s more about mentality, mindset and approach. We encourage all our customers to take a minimum viable product approach to deliver value quickly without compromising on strategic direction. Insurers are being squeezed out of certain areas, both by disruptive startups and cross-industry entrances, such as Tesla, providing insurance and it’s crucial therefore that they are innovating and improving their offerings. We partner with them on that journey to a bold new world of insurance.

For more information please visit sapiens.com