# Digital Transformation is Key to the Future of the Insurance Industry
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-01-16
Category: TECHNOLOGY
Category URL: https://financedigest.com/category/technology
Meta Title: Digital Transformation in the Insurance Industry
Meta Description: Discover how insurance companies can drive disruption, improve customer relationships, and enhance processes through digital transformation. Learn more from
URL: https://financedigest.com/digital-transformation-is-key-to-the-future-of-the-insurance-industryhtml

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By **Paul Bryce**, CCO at [Node4](https://www.node4.co.uk/)

With global spending on insurance IT topping the [$100bn](http://www.actuarialpost.co.uk/article/global-insurance-it-spending-to-reach-$104bn-by-2018-6495.htm) mark, the industry clearly sees technology as a key area of investment. And with an increasing focus on utilising data, the insurance industry is under pressure to focus on digital transformation as a route to drive disruption, improve processes and build stronger customer relationships.

**The digital disruption journey**

![Paul Bryce](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/paul-bryce-450x675-1736838956488-compressed.jpg)

Paul Bryce

By their nature, [digital transformation](https://www.financedigest.com/digital-transformation-for-the-world-of-finance-the-rise-in-collaboration-tools-and-saas-applications.html "Digital transformation for the world of finance: The rise in collaboration tools and SaaS applications ") projects can involve considerable planning. [Key to the process is enhancing the 360-degree view insurers](https://www.financedigest.com/understanding-asia-pacific-insurance-regulation-is-key-to-growth-says-aon.html "Understanding Asia Pacific insurance regulation is key to growth, says Aon") have of their customers derived from data already collected, alongside renewing policies based on previous years of customer experience statistics. This typically involves analysing lifetime customer value, developing more up-selling and cross-selling opportunities, [improving customer relationship management systems and using social media platforms to identify emerging trends throughout the customer lifetime journey](https://www.financedigest.com/how-artificial-intelligence-can-help-improvethe-customer-journey-in-insurance.html "How Artificial Intelligence can help improve the customer journey in Insurance").

Making the most efficient use of this plethora of [data sources presents some particular challenges, given that data is collected from thousands of disparate sources and companies are dealing with an unprecedented number of highly complex data sets](https://www.financedigest.com/byd-set-to-be-chinas-top-selling-car-brand-for-nov-tesla-gains-data.html "BYD set to be China’s top-selling car brand for Nov, Tesla gains -data") – both structured and unstructured. From an IT perspective, this complexity demands [insurance companies invest](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide") in greater processing power and storage capacity.In addition,EY predicts that Artificial Intelligence (AI) will move into the mainstream across the insurance industry, alongside the increased use of blockchain platforms to achieve better data quality.

Getting this right can deliver huge benefits, and [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") fully understand that more sources of information allow them to build a deeper understanding of the risks associated with each customer, which in turn, helps build more accurate underwriting and pricing. Digital transformation also allows products to be more personalised and [improves the efficiency of insurance](https://www.financedigest.com/improving-online-visibility-for-insurers.html "IMPROVING ONLINE VISIBILITY FOR INSURERS") application processes. Instead of customers supplying lots of data themselves, insurers can pull details in from other services, not only saving time, but also allowing [brokers to focus more on relationships with customers](https://www.financedigest.com/crypto-broker-genesis-owes-geminis-customers-900-million-ft.html "Crypto broker Genesis owes Gemini’s customers 0 million – FT").

Despite these compelling opportunities, [insurers are still faced with two key](https://www.financedigest.com/as-the-cost-of-living-bites-tackling-insurance-quote-manipulation-is-key.html "As the cost of living bites, tackling insurance quote manipulation is key") questions – what should they do with the data they collect, and what’s the best way to store it?

**[Data protection](https://www.financedigest.com/modern-data-protection-how-organisations-can-protect-against-cyber-attacks.html "Modern Data Protection: How organisations can protect against cyber attacks") priorities**

When it comes to storing and protecting data, there are a multitude of options that are appropriate for the [insurance industry](https://www.financedigest.com/improving-risk-management-in-the-insurance-industry.html "Improving risk management in the insurance industry"). These include hosting [data in the cloud](https://www.financedigest.com/normalizing-advanced-cloud-data-security-with-normalyze-from-amer-deeba-and-ravi-ithal.html "Normalizing Advanced Cloud Data Security with Normalyze from Amer Deeba and Ravi Ithal"), data centres, or a mix of both. All of these solutions can play an important role, but according to [Deloitte](https://www2.deloitte.com/us/en/pages/financial-services/articles/insurance-industry-outlook.html), cloud computing should be high on insurers’ agendas in moving forward. Its research indicated that insurance CIOs, who are under pressure to deliver [transformational digital](https://www.financedigest.com/world-class-finance-digital-transformation-and-analytics-based-decision-making-among-key-imperatives-for-creating-finance-agility.html "World-Class Finance: Digital Transformation and Analytics-Based Decision Making Among Key Imperatives for Creating Finance Agility") capabilities, are looking to develop applications on the cloud as a faster alternative to on-premise deployments.

Similarly, emerging technologies such as advanced analytics, telematics monitoring via the Internet of Things (IoT), and cognitive applications [demand infrastructure that is both quickly](https://www.financedigest.com/eu-demands-quick-fix-from-u-s-of-green-subsidy-law.html "EU demands quick fix from U.S. of green subsidy law") scalable and flexible, given the amount of data being generated and the processing power needed to leverage it.

As a result,hybrid solutions that can be specifically tailored to combine IT infrastructure options that fit specific [business requirements offer a powerful case for investment](https://www.financedigest.com/more-businesses-investing-in-assets-like-virtual-credit-cards.html "More Businesses Investing In Assets Like Virtual Credit Cards"). Developing a strategy that applies the most appropriate cloud and on-premise technologies to store, sort and protect the large volumes of customer data produced daily,and make it easily accessible and usable for the business, can help put [insurers on the right road to achieve digital](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!") transformation.

**Why** [insurers should welcome disruption](https://www.financedigest.com/the-road-to-digital-disruption-in-motor-insurance.html "The road to digital disruption in Motor Insurance")

Disrupters in the insurance [market have turned the current industry](https://www.financedigest.com/cbd-gummies-market-current-scenario-and-industry-growth-forecast-with-major-key-players-data-2030.html "CBD Gummies Market| Current Scenario and Industry Growth Forecast with Major Key Players data 2030") on its head. In practical terms, businesses that focus on quick claims management and complete transparency, in order to understand customers pain points and deliver an intuitive service,are taking business from [traditional providers](https://www.financedigest.com/digital-banking-traditional-banks-vs-fintech-providers.html "Digital banking: Traditional banks vs. fintech providers").

In contrast to many market incumbents, who have protracted claims processes and risk compliance procedures that leave customers with little idea of what their [policies cover,innovative insurers](https://www.financedigest.com/what-type-of-life-insurance-policy-is-right-for-me.html "What Type of Life Insurance Policy Is Right For Me?") recognise that customer satisfaction is driven by tailor-made packages. These, in turn, are enabled by solutions like cloud analytics and [machine learning](https://www.financedigest.com/transforming-insurance-through-artificial-intelligence-and-machine-learning.html "Transforming Insurance Through Artificial Intelligence and Machine Learning").

The use of [Artificial Intelligence in the insurance](https://www.financedigest.com/how-artificial-intelligence-is-simplifying-sanctions-screening-for-insurers.html "How Artificial Intelligence is Simplifying Sanctions Screening for Insurers") industry is gaining significant momentum, with AI-powered chatbots now dealing with claims at remarkable speed. One extreme example of this is a claim that was settled in [just three seconds](https://www.lemonade.com/blog/lemonade-sets-new-world-record/). The process included “cross-referencing policy details, running 18 anti-fraud algorithms and transferring the settlement into the policyholder’s [bank](https://www.financedigest.com/lebanese-bank-closes-over-30-british-held-accounts-after-uk-ruling-depositors-group.html "Lebanese bank closes over 30 British-held accounts after UK ruling-depositors’ group") account”. While this illustrates the exception rather than the rule in terms of claim handling, it gives a strong indication of where [innovation is heading](https://www.financedigest.com/the-head-and-face-aesthetic-procedure-market-to-have-growth-devised-on-innovation.html "The Head And Face Aesthetic Procedure Market to have growth devised on innovation").

The bottom line is savvy customers are looking for superior levels of customisation, security, [business intelligence](https://www.financedigest.com/social-business-intelligence-market-to-reach-a-valuation-of-us29-bn.html "Social Business Intelligence Market to reach a valuation of US Bn") and service, and the insurance industry must respond. Insurance companies need to embark on their digital transformation journey to ensure they stay ahead of the game;embracing innovation while ensuring customer data stays protected.


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