Why innovation is at the heart of the insurance industry’s evolution

The pace of IT change today is moving faster than ever before, and the insurance sector realises it needs to adapt with this to respond to business, consumer and compliance demands. But taking that first step can be a daunting prospect.

In the last few years, technology has impacted hugely upon the way claims are processed and policies assessed. Most recently, wearable technology and the connected car have been identified as trends that are set to have a significant impact on the industry and offer a way for insurers to create an even more personalised and customer-centric service.

Even tech giants such as Google have identified the insurance sector as one to watch, with the company recently partnering with 13 insurers to provide comparative shopping for automotive coverage.

>See also: How will wearable technology change the insurance industry?

Technology now allows insurers to move from the traditional broker scenario towards a direct-to-market approach – cutting out the middleman and going straight to the customer.

The analysis and value of big data gleaned through customer interactions has become more important than ever, as insurers look to maximise efficiencies and gain that competitive edge, whilst keeping customers happy.

A great example of an insurer using customer data to their advantage came during the floods last year, which devastated more than 5,000 homes and businesses in the UK.

Aviva harnessed consumers data to proactively organise and deliver sandbags to homes that were at risk of flooding in order to reduce the damage caused by floods – in turn, this will have hopefully minimised the insurance claims that were made.

Following this example of the impact data can have upon the insurance sector, technology is no longer a nice to have but a differentiator. Whatever upgrade approach is taken – be it extending existing systems or a full transformation project – the same core best practice guidelines apply, to ensure the technology is ultimately meeting the business need.

Complete transformation vs. system update

By having a grasp on current IT systems and the demands placed on them now and in the future, insurers can assess whether a complete transformation is required or if an existing system can simply be updated.

It also gives insurers the opportunity to assess the efficiency of business processes and update if necessary. Failure to understand this could result in gaps being uncovered during the implementation and testing stage, causing lengthy and costly delays.

The retail industry provides a perfect example for the insurance industry to follow. Over recent years the desire to digitise the retail industry has put pressures on IT departments. It has meant retailers have had to review the capability of their legacy systems, and also integrate new technology that facilitates the in demand omnichannel experience.

To assist with this rapid technological change and the potentially damaging effects of a software glitch, quality assurance (QA) has had to be a priority and this must be the same for the insurance industry today.

To overcome the complexities of an upgrade or IT overhaul and ensure reasonable ROI, legacy transformation projects need to adopt a risk-based testing approach.

>See also: Innovation at a premium: what the insurance sector can learn from digital retailers

Business priorities identified earlier in the process need to be the primary drivers for testing, with skilled, quality assessment teams needed to ensure effective implementation.

In order to update legacy systems and mitigate the risks, a stringent quality regime needs to be at the heart of the process. Senior management must work closely with the IT team to instill confidence in the change that needs to take place and deliver a glitch-free solution.

Technology will continue to evolve, so it is important that insurers keep up and adopt robust procedures to deal with not only the IT change today, but also in the future. It is essential that quality assurance is at the heart of any digital transformation project, and the earlier it is started the better. With this in place the industry will be ready and well placed to take advantage of the next big change to come its way.


Sourced from Cindy Truyens, SQS

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...