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Digital transformation revolutionized the way we approach our daily lives. Many businesses have embraced the many possibilities digital transformation brings. P&C insurance digital transformation is a particularly unique case due to the industry's highly regulated nature.
According to a survey conducted in 2022 by Publicis Sapient on 250 policyholders from the US and Canada, 36% reported that they switched to providers with a better digital experience. Most noticeably, investment in insurtechs skyrocketed from $500 million in Q2 2014 to about $5 billion in Q2 2021. There are a lot of opportunities for tech-enabled insurance services.
P&C insurance - the more easily accessible sliver of the industry - is the field with a pronounced focus, according to a report from McKinsey.
Source: McKinsey
For now, there is no clear playbook as to how to navigate this exciting territory for insurance companies. Coupled with the ever-rising customer expectations, the demand for personalization, and the disruption of AI technologies, insurance companies are up for a challenge.
In this article, we’ll explore how P&C insurance companies should approach digital transformation, the most prominent trends, strategies, and best practices for digital transformation in insurance, and discover the key to unlock the digital transformation for your company.
Benefits Of Digital Transformation For P&C Insurance Companies
1. Enhanced CX
Although the previous generations still account for the majority of insurance companies’ customer base, Millennials and Gen Z is expressing more interest in insurance products. To remain relevant in the future, insurance companies must be proactive to this shift in customer expectations.
For one, digitalization increases the number of touchpoints for customers. Instead of having fragmented communication/service channels, insurance companies should integrate their services under 1 single workflow, bringing information consistency. In a survey by Capo, there exists a strong interest in an application giving visibility over all financial and insurance products.
Lemonade is a digital-only P&C insurance company with a web and mobile platform that successfully improved Customer Experience through many innovative digital features. The backbone of their product includes car insurance recommendations based on driving habits and AI/ML-driven claim reviews. The company also uses Lokalise, a cloud-based localization and translation management system to break the language barrier, bringing the services to users in other countries. These differentiators put Lemonade among the digital transformation pioneers of the P&C insurance landscape.
2. Improved Operational Efficiency
P&C insurance is a great industry for automation due to the highly standardized, rule-based processes in place. Automation helps insurers process claims faster, reduce the time it takes to issue policies, reduce operation cost, mitigate human-error risks, and improve compliance through consistent process execution.
To truly improve operational efficiency, a holistic approach is necessary. It is about reimagining the entire business operation and seamlessly combining the front, middle, and back offices through various cutting-edge technologies such as automation, API(s), data insights, and connected devices.
The inclusion of online support features such as chatbots enables businesses to offer convenient and personalized assistance to busy customers, while freeing up the workload for insurance teams, allowing them to allocate resources in truly critical tasks.
3. Better Risk Management
Even the risk landscape in the insurance industry is changing. Digital transformation provides a range of opportunities for risk functions in the insurance industry. Insurers can now identify, measure, monitor, and manage risks more efficiently while reducing costs.
For example, leveraging data and analytical approaches such as big data and AI, insurers can better understand risks such as mortality and lapse risk. Cross-industry collaboration and the use of new data sources can help predict and monitor emerging non-financial risks, such as political risks.
Modular systems and automation tools can streamline risk modeling, data collection, and documentation processes by breaking down the process into smaller, more manageable pieces. This allows each component to be automated and optimized separately.
4. New Revenue Streams
Digital transformation can provide P&C insurance companies with significant opportunities to expand their business and generate new sources of revenue. For instance, insurers can leverage their expertise and data to offer value-added services such as risk consulting or cybersecurity to their customers.
5 P&C Insurance Digital Transformation Strategies
1. Adoption of low-code tools
Low-code test automation tools have captured great interest from SMB and Enterprises alike thanks to their easy-to-use, cost-saving nature, great agility, easy maintenance, and improved capabilities for collaboration. These tools enable teams to get results faster for lower resources expended.
Low-code development and testing tool vendors know that they are driving the digital transformation wave, so they always make sure that their tools can fit seamlessly into the vast integration ecosystem of its field. To transform digitally is not just to adopt 1 tool, but an entire ecosystem.
In the P&C insurance industry particularly, low-code tools enable insurers to build, test, and deploy new applications and processes faster, accelerating time-to-market. This is a competitive advantage, but in the near future it surely will become a default, when the importance of speed and agility in insurance is more recognized, and there is no remaining room for traditional way of doing business.
2. API economy
APIs allow for seamless integration between different systems, making it easier for insurers to access and share data across various departments and with external partners. This, in turn, enables insurers to more quickly develop, test, and launch new products, as well as more efficiently handle claims and underwriting processes.
Of course, the increasing use of APIs also presents new challenges to overcome. The system must be able to handle multiple data sources and ensure data quality and security. Insurance companies should adopt rigorous API testing to ensure that APIs function correctly, communicate with other systems as intended, and maintain the required levels of performance and security.
3. Customer Self-service
Customer self-service is a key trend in digital transformation for the insurance industry where customers can perform tasks and access information on their own, without having to interact with a representative of the insurance company.
With the advent of digital technologies, insurance companies are now providing customers with digital self-service channels such as websites, mobile apps and chatbots.
This trend is being driven by several factors. First, customers are increasingly tech-savvy and comfortable with digital technologies, which means they expect to be able to interact with companies in a similar way. Second, self-service channels allow companies to interact with customers whenever they want at lower resources. Third, self-service channels automate routine tasks and free up staff’s time to focus on more complex issues.
Customer self-service can take many forms in the insurance industry. For example, customers can use digital channels to get quotes, compare coverage options, and purchase policies. They can also use these channels to manage their policies, such as updating their contact information or making changes to their coverage. And in the event of a claim, customers can use self-service channels to file a claim, track its status, and communicate with claims adjusters.
4. Continuous Testing and Comprehensive Quality Assurance
All of these strategies must go hand-in-hand with comprehensive quality assurance. Digital transformation initiatives are closely tied to customer experience. Customers expect round-the-clock, seamless, fast, and reliable interactions with digital systems, and any issues with these systems can lead to dissatisfaction, loss of trust, and ultimately, loss of business.
Comprehensive QA and continuous testing confirms that digital systems are performing optimally and delivering the intended customer experience. In continuous testing, tests are executed automatically by schedule, and testing activities are integrated into the development process. This ensures that the insurance software receives a high test coverage for its features.
Moreover, digital transformation initiatives also often involve complex technologies and processes that can be difficult to implement and manage. Without adequate assurance measures in place, there is a risk of errors, bugs, and other issues that can impact the user experience, hinder productivity, and even result in legal or compliance issues.
5. Identify areas of opportunity for automation
Automation is the backbone of digital transformation for insurance companies. For P&C insurance companies specifically, automation is critical to meet the demand for digitalized customer experience.
For customer-facing processes, automation reduces friction. Instead of allocating resources to serve the never-ending stream of customers, established insurance companies chose to invest into automation solutions for their claims processing, underwriting, or policy administration functions. It reduces wait time, while still providing tailored customer experiences thanks to the rise of AI-powered chatbot recently.
Read more: Katalon AI-powered testing platform
Automation also unlocks data-driven decision making. The wealth of customer data generated from the interactions with automated systems can bring invaluable insights to your business. Companies can leverage this to further tailor the insurance experience for their customers. A deep understanding of your customers is also a competitive advantage.
After that, to maintain the quality of insurance applications at a stable level, companies need to invest in automation testing. Automating your insurance application testing means not having to invest too much into building your QA team while still achieve high test coverage (i.e. having a comprehensive understanding of your entire insurance application’s quality.
How Katalon Platform Prepares P&C Insurance Companies For Digital Transformation
SAGA is a leading insurance company based in the UK that successfully embraced digital transformation thanks to Katalon Platform. What makes SAGA stand out is its focus on quality. With a business model revolving around insurance desktop/mobile apps and websites, SAGA must employ rigorous and continuous testing.
The challenge rises when SAGA scales and the in-house testing team is unable to keep up with the demand - if they don’t adopt automation. Automation testing becomes a necessity, and they need more than just an automation testing tool. They need a solution that allows them to create tests, maintain, execute, and manage tests for all of their insurance channels, with strong collaboration capabilities.
Upon adopting Katalon, they have managed to do just that, while tripled their testing productivity.
The Katalon Platform is a modern, comprehensive software quality management platform developed by Katalon, Inc. The platform is built on top of the open-source automation frameworks Selenium and Appium. Katalon Platform allows automation teams to efficiently create, maintain, manage, and improve test scripts for web, API, mobile, and desktop applications, all in one place, without coding.
Katalon Platform supports insurance companies through the digital transformation process by providing them the comprehensive quality assurance solution they need. Thanks to Katalon’s user-friendly interface and extensive pre-built test frameworks, testers can quickly create automated test scripts for their insurance software.
These test scripts can be executed cross-platform, ensuring that your insurance digital systems work perfectly fine across a wide range of platforms, devices, and operating systems. This translates to an opportunity for omnichannel insurance experience for your customers.
Katalon supports both functional testing and UI testing, so you can also validate your app’s visual quality along with its functionality. Third-party integrations and external systems can also be tested thanks to Katalon’s support for API testing. Katalon integrates seamlessly with your existing CI/CD system, ensuring immediate bug identification and troubleshooting.
