Digital distribution in the insurance industry
Nowadays, we settle most of our daily affairs online, rarely touching a single paper document. But not so with insurance. Companies in the sector have been slow to join the digital transformation – until it became clear that relying on legacy systems is putting them at a disadvantage.
It’s true that uncertain times increase the demand for insurance policies to protect against all kinds of eventualities. However, these new customers may first look for insurers that they can readily communicate with online. A PwC study found that 41% of existing customers would consider switching away from providers that lack digital capabilities.
Consequently, having a solid digital distribution strategy is crucial if insurers want to maintain and grow their customer base. However, implementing digital distribution channels for insurance products requires complex infrastructure.
Cloud storage is a key part of such an infrastructure: Location-independent access to data is essential for any digital distribution strategy to succeed. However, given the data stored, security must also be guaranteed, especially for customer information. This includes not only digitized paperwork, but also personal information that may be relevant to the policies.
1. Leveraging customer data for individualized products
Most customers are constantly generating vast amounts of data, including fitness and health data. Smart wearables present a particular opportunity. As they monitor many different health parameters, they could facilitate risk assessment for insurance policies.
If insurers can access this data, they can reward customers for a healthy lifestyle and offer them more relevant and individualized plans. In order to appeal to the younger generation, insurance companies must focus more on personalized service packages that precisely meet customers’ needs. Flexible insurance products, where your coverage can be adjusted depending on your individual circumstances, are becoming more attractive for younger customers. Models like “Pay as You Live” (PAYL) make it possible to reward a healthy lifestyle by, for example, granting premium reductions.
Understandably, insurers hesitate to trust third-party providers with sensitive customer data. But insurance companies themselves also have a responsibility to make sure that digitized customer data is stored securely even before it enters the cloud. In an app, for instance, it should not leave the device until the insurer is allowed access to it, which means no transmission to third-party servers.
2. Robotic process automation in underwriting and claim processing
Insurances have been reluctant to digitize underwriting, since poor evaluations create financial risk. Owing to the COVID-19 pandemic and contact restrictions, however, insurance companies have adopted new models.
Robotic process automation in underwriting uses machine learning to automatically gather relevant information, assess risk, and determine an appropriate premium for the customer. Insurers that implement automated underwriting benefit from markedly faster workflows, which cut wait times short and so improve customer satisfaction.
Similarly, automated claims processing can drastically reduce the time insurers spend on individual claims. For this, customers have to be able to upload all required documents directly to the insurer’s cloud storage. All necessary information is then automatically extracted from the documents, provided their quality is sufficient. On the insurer’s side, this requires a properly configured backend, while on the customer’s side, the application should provide a high-quality document scanner.
3. Digital document processing: The basis for automation in the insurance industry
Insurance companies receive torrents of paper documents every day. This makes digitizing document workflows a vital prerequisite for a successful digital transformation. Whether quotes, claims, invoices, or renewals: Every area of an insurance’s daily business involves paper documentation and often still relies on manual data entry. Automation thus has the potential to unlock significant efficiency gains. Streamlining insurance operations also increases customer satisfaction, thanks to shorter wait times.
The first step for any insurer is providing customers with an insurance app that includes a capable and easy-to-use document scanner. Such a tool assists the user with features like blur detection, perspective correction, and auto-cropping to ensure the best scan quality possible.
In the next step, it transforms the image into a searchable PDF file by applying OCR to it. This is a prerequisite for further software-based processing.
The relevant documents are varied, which makes data extraction difficult. Machine learning algorithms help solve this problem: Models can be trained on many different document layouts to quickly identify the required information. They can then extract them as key-value pairs, the perfect format for further processing.
Scanbot’s Document Scanner SDK can be integrated into any iOS or Android app to kickstart your automatic document processing. Its intuitive UI and image enhancing features ensure that your input files are suitable for backend processing. It functions entirely offline for maximum data security, making it compliant with GDPR and CCPA.
If you are interested in implementing document scanning capabilities into your app, feel free to get in touch with our solution experts. They will be glad to help you apply this technology to your use case.