A digital transformation can cause changes, inevitably producing benefits and disadvantages, especially for those in the industry. This term refers to the continuous introduction of new technology in the insurance sector, including machine learning, artificial intelligence, and data management tools.
Digital Transformation: The Ups and Downs
You might wonder — do the perks of digital transformation outweigh the downsides to digital transformation?
Pro: Better Customer Experience
Customers are the crux of any operation and critical in the insurance sector. Thanks to the many technologies introduced by the digital revolution, customers are receiving better service than before. It is primarily due to customers’ increased ability to manage their accounts, policies, and claims through an online platform. These options aren’t just empowering clients and free up precious time an insurance company could otherwise spend on assisting.
Con: Greater Cyber Liability
As more information moves onto digital platforms, an increase in cyber threats has appeared, too. Criminals want to access sensitive information or launch attacks such as ransomware; unfortunately, incidents like these are rising. Cybersecurity insurance can minimize the potential losses resulting from such a breach, but prevention is the best path of action. Thus, insurance companies should install firewalls, credential verification systems, and other safety features to minimize infiltration risk. It could save a company millions, and more importantly, it helps to keep customers safe.
Pro: Less Insurance Fraud
Another significant benefit of digital transformation is the potential to fight insurance fraud. According to the Insurance Information Institute, this possibility has not yet come to fruition — and insurers have not yet reported a significant reduction in fraud — but technologies such as social network analysis and predictive modeling stand to change that. These tools can automatically identify clients who may be at high risk of perpetrating fraud based on indicators found in other client profiles. If this technology becomes successful, it could cut down on millions of dollars in losses.
Con: Impersonalized Underwriting
Before the digital transformation, insurers mainly wrote policies individually based on each client’s needs, but those days are long gone. Automated underwriting technology has primarily eliminated the personal element from the job. It affects most insurance policies.
It is acceptable for policies like auto insurance that don’t require an in-depth analysis of the liabilities a client may face. Still, the impersonalization may eventually have consequences for other types of coverage. Humans should still handle more complex policies and those with high value.
About Brooks, Todd & McNeil
Since 1839, the independent agents at Brooks, Todd & McNeil have been pleased to offer our community the best and most affordable policies from a variety of providers. Our dedicated facilitators are ready to put their 75 years of combined experience to work on your claims. To learn more about our products and services, contact us today at (800) 448-4567.