5 Overlooked Areas in Your insurance Business That are Hurting Your Growth
Between the post-COVID-19 pandemic crunch and the economic uncertainty brought about by various geopolitical events, smaller insurance businesses have found themselves increasingly at risk of bankruptcy or being subsumed by larger insurers. Indeed, a surge of mergers and acquisitions has recently hit the insurance industry.
These disruptions have led many insurers to look for novel ways to cut costs and drive revenue. To facilitate this, many payers have recently updated their digital insurance platform. Newer generations of insurance software feature highly advanced cloud computing, artificial intelligence (AI), business intelligence platform and machine learning (ML) capabilities, offering insurers more organizational agility as well as numerous ways to automate procedures such as billing, claims adjudication, and policy delivery.
That being said, having an up-to-date insurance platform does not guarantee survival for insurance companies. To reduce losses and increase profitability in today’s hostile insurance climate, it pays to check on areas of business that have traditionally been overlooked. Here are five often-overlooked areas that insurers need to manage to increase revenues and survive today’s competitive insurance market:
1) Lead Generation
Current trends are forcing insurers to compete in already crowded markets or to pivot to new ones. In either case, updating your lead generation capabilities is going to be essential to survive and thrive in such a climate. One great benefit of updating your digital insurance platform is that it massively reduces the difficulty and risks involved in finding qualified new leads, including those that may be outside your current target market.
New digital platforms often have an open API framework that allows you to integrate them with other solutions, expanding the ways your sales and marketing team can run your lead generation campaign. For instance, you could use the platform to share optimized lead generation forms through the web, allowing your team to quickly get potential policyholders into your sales funnel and into your system. This can dramatically reduce the risks of dropouts and increase the number of clients signing up to be policyholders.
2) Customer Churn/Attrition
Customer churn or attrition is a fact of life for insurance companies, particularly for those that specialize in such products as life insurance. However, as much as possible, customer churn through policy cancellations should be reduced to a minimum. Policy cancellations can happen for several reasons, but they are often brought about by dissatisfaction with a service. Traditionally, not all insurance companies were capable of providing a high standard of service for all policyholders, which meant that it made sense to dedicate limited resources to serving high-value clients.
Fortunately, a properly implemented digital insurance platform should help you create a friendlier, more enjoyable customer experience for all current and potential policyholders. Current generations of insurance software will often include customer-centric features such as powerful AI-powered chatbots that could handle a majority of queries. Additionally, these platforms will also offer extensive self-service capabilities, allowing policyholders to tailor fit their own service.
These features not only prevent customers from undergoing tedious processes for each transaction, but they also save the insurer financial resources that would have been needed to hire a large customer service team. These solutions can also help retain policyholders, ultimately increasing their average lifetime value for the company.
3) Human Error
Human error remains rife in the insurance industry, particularly in data entry. Simple typos or miscommunication over the phone can have serious consequences down the line. Removing as much human input as possible for data transfers and activities such as billing and payments can, therefore, not only save lives and property but also save the time that would have been needed to sort out the inevitable errors. This ultimately reduces an insurer’s risk exposure and prevents potential costs stemming from these mistakes.
The architecture of current insurance software solutions makes it possible for insurance systems to automatically draw data from a variety of sources without the need for manual inputs. Some platforms even use innovations in blockchain technology to help secure insurance data and policies against unauthorized access or changes (explore RareSkills' blockchain bootcamps).
4) Data Visibility
Related to the previous point, insurers can bring down their overheads and opportunity costs by properly implementing a new data management system and migrating their old data sets. Doing so can avoid excessive data siloing, something that has become a serious problem in today’s wave of payer mergers. Data silos are datasets that are only immediately accessible to a specific group. Siloed data often has to be manually converted into a usable form before it could be used elsewhere, creating a serious and potentially costly process bottleneck that isn’t always easy to fix.
Having a good data migration strategy and process to go along with an update to a new system can help reduce silos and the inefficiencies they create. Doing this will often increase revenue by itself due to the time savings earned by avoiding manual data consolidation.
5) Risk Assessment
Poor risk assessment primarily hurts insurers financially in two ways. First, it makes it all too easy for insurance companies to assume the kinds of risk they shouldn’t, increasing the chances of major financial losses. Second, it prevents them from easily finding low-risk policyholders, slowing their expansion into the market and resulting in opportunity costs.
The improved AI and ML capabilities on new systems allow decision-makers at insurance companies to make business choices based on highly accurate forecasts. What’s more, these forecasts can be generated in close to real-time, thanks to the added computing capacity typical of newer systems.
This makes it possible for insurance companies to access new markets, approve only valid claims, and validate policyholder risk with confidence. The information gained from these systems could also be used to help develop, test, and deliver better insurance products faster. The result is better cash flow and organizational resilience, both of which will help the insurer succeed in their chosen market.
Boost Your Insurance Business’s Bottom Line
Tech solutions like insurance software and optimized lead generation forms may take some time and financial resources to set up initially, but fortunately, the results are always worth it in the long term as they address fundamental issues that affect your profitability. Importantly, they also offer a way to elevate customer journeys well beyond what is typically expected of insurance companies.
By paying attention to these overlooked areas, insurers can eventually expect more revenues and savings. More importantly, they may earn engaged and loyal customers, fewer losses due to fraud, and a high resilience to external insurance market events.