Top Five Challenges Life Insurers Are Facing in 2022
Journal
Established life insurers currently face the biggest challenge of their reign keeping pace with today’s rate of technological change. Increasingly, better informed customer bases combined with more data than ever before, legacy systems and heightened regulatory scrutiny make transitioning to more innovative, value-driven systems highly challenging.
The challenge is so great, insurers are upping the ante by building dedicated innovation business units and one could argue the situation calls for ‘mastermind’ expertise to get right. With so many competing priorities, there are five key things insurers are working hard to transform in the immediate future.
1. DATA QUALITY
In a post-Productivity Commission and post-Royal Commission world, it is imperative data is accurate, consistent, complete and fit-for-purpose especially where there has been more than one legacy administration system.
Data quality must be seen not only as a proactive activity but a preventative and offensive strategy to maximise overall outcomes for the policy holder such as radical transparency to rebuild trust by the insurer when managing reserves and structuring insurance premiums.
Dedicated data quality management software like Investigate DQ is essential to ensure organisation-wide data quality in real-time. Software is more economical, timely and reliable than manual or semi-manual data quality methods.
Data quality must be forecasted in the organisation’s balance sheet.
2. SYSTEMS CONSOLIDATION
With mergers, acquisitions and data migrations to new or consolidated systems it is imperative for insurers to maintain, upgrade and rationalise legacy systems.
To confidently establish the single source of truth. The cost of ownership, integration costs and skilled resources cannot be maintained long term.
Migrations can cause data integrity issues for an insurer, when considering the importance placed on accurate data for calculations, claims, underwriting, reinsurance etc.
Mergers and acquisitions can be challenging when data collected can be very different from company to company, leaving some databases with gaps in data which may not align with data governance strategies. This can lead to additional work and resources to identify these accounts and fill these gaps
3. BOTS, AI AND HUMAN WORKFORCE
With the emergence of self-learning technologies such as AI, we are seeing a divergence from traditional roles being held by the human workforce towards a hybrid function.
Our skilled human workforce will be managing meaningful and skilled work alongside a digital automated workforce that can carry out less strategic functions like answering questions that come through time and time again.
Getting bots to do what they are supposed to do is a challenge. Ideally, bots will increasingly replace call-centre environments and skilled personnel can be removed from tactical administration tasks towards more strategic activities.
Straight-through-processing and enhancing the digital workforce for routine administrative tasks will enable personnel to work (with or without human intervention) on more complex, intricate work in which human interaction is not purpose driven work.
4. CUSTOMER / POLICY HOLDER EXPERIENCE
Following the royal commission, Commissioner Haynes re-emphasised six critical principles organisations should be applying. In Hayne's final report: The Fundamental Importance of Leadership, Governance and Culture, he presents the challenge to uphold six critical principles:
Obey the law.
Do not mislead or deceive.
Act fairly.
Provide services that are fit for purpose.
Deliver services with reasonable care and skill.
When acting for another, act in the best interests of that other.
Best interest includes multiple touch points to connect and communicate with members, customers and third-party providers. Moving away from an adversarial model of insurance to a much more stakeholder management function.
Customer care frameworks are becoming more prevalent and a pivotal piece of the member experience in helping to add that personal touch to resolve escalated matters. Working towards implementing omni-channel communication methods to create multiple touch point options for members and policy holders to communicate with insurance organisations to resolve inquiries more efficiently.
The balancing act of offshoring call centre functions to enable greater coverage and availability to members/policy holder’s vs industry and product subject matter expertise.
5. PROCESS IMPROVEMENTS
A great deal of change to process is inherent with the four challenges presented above adding yet another layer of complexity to ensuring change is successful. Insurers might benefit from process improvement and change management experts like QMV to assist with the planning and embedding of new or adjusted processes across the organisation, for example:
Identifying and correcting bottlenecks.
Automating as many systems as possible.
Performing regular relevant assessments of process.
Documentation of process improvements.
Training and onboarding.
CAN YOU AFFORD NOT TO CHANGE?
Keeping pace with today’s rate of technological change is complicated, expensive and time-consuming. But the cost we place on the business by not implementing necessary change is far greater.
Taking a chance and rolling along like before is no longer an option. Transformational change to this scale is the biggest challenge insurers have faced in their history. It is similar in magnitude to the grand-scale change achieved across telecommunications, postal services and the music and video industries. Change can be as simple as first addressing the data quality across your existing systems. Create that single source of truth and build from there.
