Why do many insurance companies fall behind when it comes to digital transformation? What are the roadblocks to insurance digital transformation, and how can they be overcome?
In this article, we delve into these questions, examining the common pitfall and potential digitalization strategies for insurance providers to succeed in digital era and stay competitive.
4 Key Reasons Behind Failed Insurance Digitalization
Despite 85% of insurance providers considering digitalization as their top priority, as revealed by a recent PwC report, a staggering 70% of these companies struggle to become digital due to low IT expertise and ineffective operations.
A closer examination of this scenario reveals 4 underlying factors that act as stumbling blocks to insurance digital transformation:
Misunderstanding of digitalization: One of the primary reasons for the failed digital transformation in the insurance industry is the misunderstanding of what the process entails. Without a clear comprehension of how digital technology examples, such as AI for insurance, can integrate and streamline the existing systems, insurance providers often find their digitalization efforts misdirected.
Lack of a clear digital strategy: Absence of a coherent and robust digital strategy is another critical factor that can derail the digital transformation journey. Without a well-planned roadmap, insurance providers may find themselves entangled in disjointed efforts that result in wasted resources and failed digitalization.
Insufficient technological capabilities: Limited technological resources or skills can pose significant challenges in implementing insurance technology. Companies may possess a vision for a digital future but without the necessary technological capabilities, actualizing this vision can be daunting.
Resistance to change: The inherent resistance to change within the organization can further obstruct digital transformation initiatives. Fear of the unknown, reluctance to shift from the comfort of known systems, or apprehension about job security can all fuel resistance, making the transition to a digital insurer challenging.
Navigating these challenges requires a thoughtful understanding of digitalization, a strategic approach, and the adoption of the right technological tools and solutions.
Choosing The Right Digital Strategy: In-House Development vs. SaaS
Making the right choice between in-house development and SaaS implementation can have a profound impact on the digital transformation for insurance companies. Let’s consider these two strategies in detail.
In-house development
Opting for in-house development as a digital strategy may seem like a desirable approach, given the control and customization it ostensibly offers. However, it comes with a host of challenges that can, in fact, severely hinder the digital transformation process. These include:
High costs: Embarking on in-house development typically involves significant financial investments. Companies on average spend upwards of several million dollars, not just once, but recurrently, as technology evolves. This financial burden is something only big players can bear, leaving smaller insurance firms at a disadvantage.
Time-consuming: The process of developing, testing, and implementing a technological solution is far from rapid. On average, it can take a company about two years to roll out a single tech solution. In today's fast-paced digital age, this time frame often means falling behind the competition.
Constant need for updates and maintenance: Technology is continually evolving. This means in-house solutions require regular updates and maintenance to stay relevant and effective. This ongoing demand not only adds to the initial cost but also to the operational overhead, further escalating the overall expenses of in-house development.
IT talent shortage: To effectively develop and maintain in-house solutions, companies require a team of skilled IT professionals. However, there is a widening gap between the demand for such professionals and their supply. Moreover, the insurance sector often struggles to attract top IT talent, making the task of in-house development all the more challenging.
The inherent disadvantages associated with in-house development call for a shift in strategy. And this is where Software as a Service (SaaS) solutions come into play. By leveraging SaaS, companies can bypass many of the hurdles associated with in-house development, accelerating their journey towards becoming a digital insurer.
SaaS solutions
Software as a Service (SaaS) solutions have become a game-changer in the insurance industry, paving the way for rapid and effective digital transformation. Here's how:
Lower upfront costs: Unlike in-house development, SaaS solutions do not require substantial upfront investments. The financial barrier to entry is significantly reduced, making digital transformation more accessible for smaller insurance firms as well.
Faster implementation: With SaaS solutions, insurance providers can hit the ground running. These platforms are designed to be user-friendly and can be swiftly integrated into the existing system. This means insurance companies can commence their digital transformation journey without the lengthy wait times associated with in-house development.
Scalability: As insurance companies grow and evolve, so do their needs. SaaS platforms are designed with this reality in mind. They offer scalability, allowing insurance providers to adjust their usage based on current requirements. This scalability factor makes SaaS a future-proof solution for the ever-changing landscape of the insurance industry.
Automatic updates: One of the defining features of SaaS solutions is that they are routinely updated by the provider to keep up with the latest technological advancements. This spares insurance companies the continual expenses and operational overhead of maintaining and updating their technology stack.
Adopting SaaS solutions, therefore, offers insurance companies a cost-effective, time-efficient, and future-proof pathway to digital transformation. This strategic shift is what will define the future of the insurance industry, empowering providers to navigate the digital age with confidence and success.
Example of SaaS Solution For Insurance Providers
If you're seeking a solution to digitize your insurance business, it's worth considering what Renova can offer.
Renova is an innovative, AI-powered, no-code platform specifically designed for the insurance industry. To help insurance providers digitalize fast and without huge investments Renova offers two solutions:
1. No-code platform for insurance providers. This platform empowers insurance providers to digitize their operations smoothly and efficiently with AI:
Possibility to add insurance programs in 10 min and invite policyholders
All data is available instantly in the app for policyholders
Service desk collects all messages and requests in one place
Valuable analytics on all operations for effective management
2. White-label end-user app: Renova recognizes the critical role customer experience plays in today's digital era. To address this, it offers a customizable white-label end-user app that insurance providers can brand as their own and offer to their customers, where they can:
Explore the details of an insurance program presented in easy-to-read form
Sign up for services and doctor appointments effortlessly with a few clicks
Stay informed about upcoming visits and appointments
In the digital age, the future of insurance is inevitably tied to such smart solutions, and SaaS platforms are at the forefront of this transformation, making it affordable to any insurer, not only the big players.
Conclusion
The future of the insurance industry is digital. While there are challenges in the path to insurance digitization, the right strategy, especially one that embraces SaaS solutions, can effectively navigate these obstacles. The insurance digital strategy is no longer about keeping up with the competition; it's about survival in a rapidly evolving digital world.
As we step into the future of insurance in a digital world, insurance providers have to rethink their digital transformation strategies. With a robust plan and the right tools, they can surmount the challenges, reap the benefits of digital transformation, and reshape the customer experience.
The next wave of innovation in the insurance industry is here - it's time to ride it!
Book a call with Renova team to get more details on how you can digitalize your insurance business in just ONE WEEK.