What is the most critical aspect of the insurance industry?

Something that impacts everything from policy issuance and underwriting to claims and distribution is process.

Efficient and effective processes are a necessity for insurers to operate at a high level and deliver high-quality service to customers. Insurers that prioritize “process excellence” are able to cut down on claims processing costs by 50% and increase customer satisfaction by 20%, according to PwC.

Here are 3 areas where process excellence can improve operations.

1.    Underwriting and policy issuance

Insurers ultimately need to accurately assess risk and set premiums to be profitable. By having well-defined and developed processes for underwriting and policy issuance, insurers can make sure that they are accurately assessing risk as well as setting premiums that are both competitive and profitable.

The total number of life insurance policies in the US is around 300 million, according to the National Association of Insurance Commissioners. The total amount of life insurance policies in force today is over $20 trillion.

Best practices for underwriting and policy issuance

Accurate risk assessment: With the adoption and use of data and analytics, companies can better understand and predict risk, as well as the use of actuarial models to forecast future losses. This way, insurers can more accurately assess risk in order to set premiums that are both competitive and profitable.

Personalization: In an increasingly competitive market, insurers are looking for ways to differentiate themselves and offer more effective and relevant customized products. By using data and analytics to personalize policies and pricing, insurers can offer more tailored products that are relevant to the specific needs of each customer.

Transparent pricing: Insurers should be transparent about their pricing practices and provide clear explanations for the premiums that they set. This can include using plain language, offering online tools that let customers generate instant quotes, and be open about any fees that may not be associated with a policy – for example admin fees and cancellation fees. This level of transparency could also be replicated in customer support, with the use of chatbots and live customer service agents.

This can help to build trust with customers and ensure that they understand the factors that are impacting their premiums.

Streamlined processes: It is important for insurers to have streamlined processes in place for underwriting and policy issuance. This involves the use of technology, such as automated underwriting and digital tools, for document submission that helps to streamline the process.

Take automated underwriting, for example. The global market is expected to reach $11 billion by 2028, with yearly growth of 9.5% according to Allied Market Research. It has been implemented to speed up the decision-making process, increase accuracy and consistency, and improve the overall customer experience by reducing the time needed to apply for a loan.

2.    Claims processing

Claims processing is another area where process is crucial in the insurance industry. Insurers that can provide fast and efficient claims service are likely to be viewed more favorably, helping to build customer loyalty. This increasingly involves the use of technology to facilitate and streamline the claims process. It can also involve well-trained claims adjusters who are able to handle claims quickly and effectively.

Best practices for claims processing

Quick response: It is important for insurers to respond to claims promptly so as to provide good service to policyholders. This may mean creating a dedicated claims team to handle claims and provide clear guidance on the process for making a claim.

Fair and transparent: Insurers should be fair and transparent in their handling of claims. This includes making decisions based on the terms of the policy and providing clear explanations for any decisions made.

Efficient process: Claims processing needs to be efficient to minimize the time and hassle for policyholders. This involves using technology such as automated claims processing and digital tools for document submission, so that the process can be streamlined and the customer experience elevated.

Personalization: Insurers are striving to provide personalized service to policyholders during the claims process. An overwhelming majority (85%) of insurance customers are willing to share their personal data if it means getting personalized offers and discounts in return. This can also mean having trained claims adjusters who are able to handle claims and provide helpful support to policyholders online or over the phone.

3.    Distribution of insurance products

Good process is also important in the distribution of insurance products, which can help to better sell and service policies to reach and retain customers. This can involve developing mobile apps and online portals in addition to more traditional channels like agents and brokers.

Best practices for the distribution of insurance products

Personalization: In an increasingly competitive market, insurers are looking for ways to differentiate themselves and offer customized products. By using data and analytics to personalize products and pricing, insurers can offer more tailored solutions that are relevant to the specific needs of each customer.

Use of technology: Technology is a powerful tool for the distribution of insurance products. With a mix of artificial intelligence, chatbots, apps, and other online portals, insurers can provide quicker, more convenient support to their customers.

Training and support: With the growing adoption of technology, it may be easy to under appreciate the importance for insurers to provide training and support to those involved in the distribution of insurance products, such as agents and brokers. This can help to ensure that they are able to effectively sell and service policies and provide good service to customers. It can also include the training of agents and brokers in the use of new technologies.

Compliance: There are a handful of industries where regulation compliance is an absolute priority. The insurance industry is one of them. Insurers need to make sure that they are fully and consistently complying with all relevant laws and regulations related to the distribution of insurance products. This includes licensing requirements and rules around the sale of specific products.

Again, technology is providing the answers to increasingly complex questions around compliance. Organizations need to “tap into the power of advanced analytics and automation so that their people can focus entirely on the activities that most need human judgement,” according to McKinsey research. “Risk and compliance employees should also focus on modernizing the rigid legacy systems and processes that inhibit the cross-checking of data.”

Continuous improvement

The insurance industry is in a state of constant evolution. Insurers need to be proactive to stay competitive and deliver high-quality services to their customers. This requires a focus on continuous improvement, which involves constantly reviewing and improving processes.

One key area of continuous improvement in the insurance industry is technology. Insurers are adopting new technologies to improve efficiency and streamline processes. Artificial intelligence and chatbots are automating customer service while predictive models and data analytics are being implemented to better understand and predict risk.

Another area where continuous improvement is important is in customer service. Insurers need to be responsive to the needs and preferences of their customers and constantly look for ways to improve their service.

Continuous improvement does not just give insurers a competitive advantage. It is a necessity for surviving and thriving in the current insurance landscape.

If you are looking for ways to foster a culture of process excellence, then get in touch with Argano. We have a track record of developing efficient and effective processes so that insurers can operate at higher levels.

Interested in learning more about the technology trends shaping the future of insurance? Check out this industry webinar: From Data to Customer Experience – How Digitization is Shaping the Insurance Industry.