With the changing scenario in every industry, the urge to embrace speed and accuracy in task completion has become common among all. And the insurance industry is not out of the radar. The rapid growth in insurance policy administration from automatic execution of processes to machine-based management is proof that the sector is adopting massive technological advancements.
Well, in this journey, the insurance industry comes across some common terminologies such as digitisation, digitalisation, and digital transformation, which marks the type of technological advancement adopted. But an indistinct idea regarding these terms leads to some common confusion. However, there is no point in embracing confusion while the differences are pretty clear. So, here is what you need to know about digitisation, digitalisation, and digital transformation in the insurance sector.
The term digitisation refers to the creation of a digital representation of physical attributes or objects.
The process of digitisation makes data more consumable. It is one of the most traditional ways of data transformation that the insurance sector has adopted since the time most insurance companies facilitated online policy purchases.
For example, insurance companies scan the relevant documents of each policyholder to turn them into a digital form and index them to store in enterprise-level DMS. These cloud-stored digitised documents can be easily accessed during the time of policy renewal or claim processing.
As per reports, due to digitisation, the insurance sector of India grew up to 17% in April-May of 2021.
The digitalisation of the insurance sector has been quite a popular practice for over some years now. The term digitisation refers to improving the existing insurance processes without completely transforming them but by enhancing digital technologies and digitised data.
Digitalisation renders more accuracy to the sector. Nowadays, insurance companies have embraced digitalisation to meet their changing customer requirements and sync their business model with the changing trends.
As per various studies and surveys, insurance companies are innovating their services across the globe through digitalisation. They have deployed new-age technologies like AI, IoT, and Blockchain to improve their product marketing and service offerings.
For instance, many insurance companies have adopted OCR systems to enable automated claims processing with enhanced accuracy. Thus, it helps eliminate manual intervention and decreases the chances of error occurrence, adding pace to the workflow.
Digitalization also highlights the use of drones in agricultural insurance to gather farm yield data for easy policy issuance or assess the damage caused for hassle-free claim processing, which further helps in product development and underwriting. At the same time, digitalisation of the insurance sector renders the seamless benefit of claim prevention and enhanced customer support to maximise user experience.
Every industry strives to achieve massive success and growth. And the insurance sector is not an exception to it. Thus, most insurance companies are currently undertaking a massive digital transformation journey to improve their work efficiency, manage potential risks, and leverage their presence in the industry.
Well, digital transformation refers to a business transformation that is enabled by the digitisation of processes, models, and products. The high-end digital technologies work as the building blocks for digital transformation.
Advanced technologies like AI and ML enables seamless transformation to the lookout of the insurance industry. Insurers use AI to personalise and customise user experiences. It helps them access many accurate reports stored in DMS time-efficiently.
Also, using predictive analytics, insurers can quickly meet the high-speed demands of modern customers in issue resolving, claims processing, etc. This particular digital inclusion in the insurance sector helps in easy risk prediction, fraud claim detection, and policy management, which renders ease to the workflow and operation of insurance companies.
Other technology-driven systems like chatbots enable insurers to interact seamlessly with their consumers, which helps them to keep up with the competitive marketplace.
Thus, due to these 3 technological advancements, the insurance industry has witnessed massive improvement and innovation for the past few years. The multiple challenges present in this sector, like delay in workflow, lack of documentation, inaccuracy in manually collected data, have urged insurers to adopt digital systems.
Even though digitisation, digitalisation, and digital transformation are interrelated, it is better to have a clear idea about them to implement the right one at the right time in your business and leverage growth.