In this article, we will break down exactly how digital transformation applies to the insurance sector, benefits and challenges faced by the industry as a whole, as well as what we can expect for the future.

An industry-wide shift

The insurance industry has faced tremendous changes not only in the last few years, but also in the last decade or so. Historically low rates in the past 12 years have meant riskier investments for insurance companies, and firms were further put to the test by an increase in claims in 2020-2021 due to the coronavirus pandemic. Beyond that, customer expectations are shifting at the rate of digital–and service providers are expected to keep up.

According to a recent study, 43 percent of customers would leave their current provider if it became difficult to obtain support or service (Accenture, 2017). Digital transformation can help insurers meet new customer expectations and needs by enhancing product development and offering channels, such as digital-first experiences and 24/7 support. Additionally, digital capabilities can aid in meeting operational goals such as fraud prevention and assist Integrated Risk Management (IRM) initiatives.

What is digital transformation, anyway?

In essence, digital transformation is the process of using technology to create new–or improve existing–business processes, products, or services. This can be done through the use of new technologies, such as Artificial Intelligence (AI), big data, the Internet of Things (IoT), and robotics.