With the whole lockdown, the personal touch, the biggest element in insurance is taken out of the equation. Most insurance enterprises have moved to the digital platforms for their transactions. The biggest challenge for insurers is how to create a sustainable working system that will offer the best customer experience while ensuring regulations are adhered to and processes are streamlined better. With such a drastic shift comes a few threats. Cybercrime, disruptive technology/systems, changing interest rates and pricing/profit are some of the risks that insurers have been facing, according to a survey done by Willis Towers Watson survey.
The top 5 threats for insurers are,
1. Cyber crimes/risk
Cybercrime has been a concern for the insurance industry forever. Even though with the digital transformation in place, most companies have adopted new technologies, including Automation, AI, RPA and other such features, the direct threat posed by cybercrimes, insurers also need to deal with losses born by policyholders.
In order to address this threat, insurance leaders need to:
- Assess the company’s cyber risk capability [look at the overall industry’s maturity and the cost involved]
- Identify and implement necessary cyber governance regulations across processes.
- Play out scenarios or situations when a cyber crime might happen and develop measures to curb any breaches.
2. Risk transfer
Risk transfer, the two words every insurer dreads, for it poses a bigger threat than every other. While insurance companies strive hard to offer their customers products and services that meet their demands, risk transfer is an element they have playing in the back of their minds constantly. It occurs when :
- Customers are not satisfied with the product they have bought.
- There is a sudden change in the amount or details at the time of renewal
- Claims handling is a cumbersome and tedious process
- Customer is expected to do manual payments
- Overall expectations of the customer remain unmatched.
Now more than ever the chances of risk transfer are quite high. And therefore it is a good time for companies to:
- Change their operation strategies
- Create multi-access features within the digital platforms to enable customers to reach out anytime from anywhere
- Have a good automated system in place to solve queries instantly
3. Political risks
Unlike the rest of the world, in Australia, the insurance industry looks at political risk as quite a threat. Considering the whole political scenario, the Royal Commission and the ASIC, APRA regulators involved in decision making, it is crucial that insurers stay on top of things ensuring nothing falls through the crack. All these have an impact on the life insurance policyholders and so insurers need to:
- Identify issues from the past and work at rectifying them.
- Ensure all corrections made are incorporated into business processes
- Strengthen the risk management functions
- Update customer engagement strategies
4. Strategy based risks
The ability to deliver set strategies is very crucial for the insurers in Australia. This specifically revolves around the “Digitalization” element. This will transform the entire insurance business- policy purchase, claims management and customer experience from path to purchase.
Insurers need to:
- Ensure they are equipped with knowledge across products and processes
- Value proposition needs to be in place and followed diligently
- Work towards gaining an edge over competition
5. Emerging uncertainties/risks
With the whole world working towards creating plans and strategies to function in the new normal, there are quite a few risks that are unknown. The one thing that insurance companies can do to fight these is to have an easy deployable platform in place that will help them harness the full power of AI, and IOT, including big data. This will help insurers gain insight to make better-informed decisions. At the same time, they can ensure customer engagement levels keep rising.
One of the other areas that could prove difficult for the insurer is working with data from connected wearables and automobiles. Technology and evolving customer demands is something that the insurance companies will have to bear in mind at all times. It would be good to explore the Neutrinos Low code development platform and digital insurance sales distribution suite to change the face of business.
If keen on knowing more, do reach out. We would be happy to walk you through our solutions.