It’s easy to wonder if the challenges the insurance industry faces in 2023 outweigh the opportunities.
Economic headwinds, new competitors, regulatory demands, and the lingering effects of COVID-19—it all adds up to one of the most difficult environments in recent memory. Nonetheless, I encourage insurers to see this as a time for optimism. Companies that have invested in strong digital foundations are weathering the storm and are in a good position to capitalize on new opportunities.
In my conversations with customers, the number one theme I hear for 2023 is that insurers need to do more with less: more innovation with less time, more agility with less money, and faster processes with less risk.
These goals (and more) are attainable, but the right digital strategy is critical. Looking forward, I see five priorities that every insurer should keep in mind:
1. Leverage the cloud to digitize the business. Customers expect seamless omnichannel experiences as they engage with you on the web, via their smartphones, or with agents. Partners (agents, brokers, and affinity) want stronger integrations with you to create comprehensive views of their customers (who are ultimately yours) and to align your business strategy with theirs. The best way to meet these types of new demands is to tap into the benefits of the cloud. The good news is that most companies are well into their digital transformation journeys. Insurers like AIA invested in large-scale infrastructure modernization and are now not only reaping major benefits in cost savings, sustainability, and customer experiences but are positioned to do more with less as they create new digital capabilities and harness the power of AI.
2. Deliver efficiency with AI. Competition in the insurance sector has intensified as industry leaders keep raising the bar on the customer experience with innovative digital solutions. And, of course, insurtechs are upending traditional industry practices with a digital-first mindset to deliver entirely new products and services that customers often love. To not just survive but thrive, insurers need to differentiate their products and services, without breaking the bank. This is where AI can help. AI and data analytics can improve efficiency and customer satisfaction by automating and streamlining processes such as underwriting and claims. And it can help create differentiated solutions that speed service delivery and impact. To cite just one example, Progressive is using AI-powered chatbots to save USD10 million every year as their bots answer up to 200,000 queries each month with personalized, intelligent, text-based responses. The potential of AI is astonishing, and Microsoft is committed to delivering on its promise in ways that are both impactful and responsible.
3. Innovate with a cloud developer platform. One of the most important requirements of digitally transforming core insurance systems is to bring new solutions and services to market in better and faster ways. This is another area where AI is delivering amazing benefits. AI is redefining the very idea of an application and changing the way people build software. For example, with GitHub Copilot, AI is employed to turn natural language into coding suggestions and entire functions—in real-time, directly from the editor. Copilot draws context from the code a developer writes to offer recommendations for completing lines and even suggesting entire functions. Just as with the rise of compilers and interpreters, AI-assisted coding is poised to fundamentally change the nature of software development, giving developers a new tool to write better code, more easily. Developers using GitHub Copilot see a 55 percent productivity boost when working on real-world projects and tasks.1 And, as Gjensidige, Norway’s largest insurance company has seen, a modern “DevSecOps” environment also puts security front-and-center, without impeding developer velocity.
4. Reenergize your workforce. It’s not only customers and partners who want digital experiences. Your employees expect them too. After all, when they’re not at work they’re customers themselves, and they know what a great digital experience is when they see it. For employees to thrive and build commitment to the business, they must be empowered and energized to do meaningful work. That’s what Microsoft 365, Microsoft Teams, and Microsoft Viva are all about, as Nationwide experienced when they built a hybrid work environment for their global workforce of 25,000 associates, and saw improvements in collaboration, flexibility, and employee wellness. Microsoft 365 delivers a cloud-first experience that makes work better for the new normal of today’s digitally connected, broadly-distributed workforce. Microsoft Teams provides an enterprise-scale platform for meetings, calls, chats, collaboration tools, and more. And Microsoft Viva connects the company from the frontline worker to the CEO with a complete system for delivering actionable insights and feedback, aligning organizational goals, and enabling the learning of new skills so that everyone can work together to achieve great business outcomes.
5. Protect everything, everyone, everywhere. Last, but not least, is security. This is a top priority for every insurer, as both the pace and sophistication of cyberattacks continue to accelerate. Many chief information officers (CIOs) and chief information security officers (CISOs) can attest to the cost and complexity of effective protection, especially as the company digitally modernizes. The more connected your business gets, the faster a bad actor can move laterally through the enterprise and wreak havoc. The more agile operations become, the more your security teams struggle to manage risk. Your objective should be to ensure that new solutions are built with security at the core, not as an add-on. For example, when Zurich Insurance implemented a new suite of bookings and productivity solutions built on Microsoft technology, they also realized enhanced security and better compliance with regard to General Data Protection Regulation (GDPR) requirements. Security is baked into Microsoft offerings. And our enterprise solutions for identity and access, endpoint management, blocking incidents, and delivering security analytics and threat intelligence are all key to helping you protect your business.
New technology will drive innovation across your value chain
As you move through 2023, don’t moderate your digital strategy due to uncertainty. Instead, view the unprecedented array of new technology options as a stabilizing force that can help you create product and service differentiation. In a competitive marketplace, you can drive new efficiencies across your value chain, especially in areas like automated underwriting and touchless claims. And sentiment analysis and data insight technology can help your employees win with customers and help you manage talent amid shortages. Finally, the right technology will help you create value for your customers by simplifying and digitizing their experiences with you, in ways that become progressively better.
Learn more about how Microsoft can help you differentiate your business today and build the digital insurer of tomorrow.
Empowering intelligent insurance
Reduce cost of operations, support new business models, and enhance integration with partners to accelerate services to meet customer expectations.
1GitHub, Research: quantifying GitHub Copilot’s impact on developer productivity and happiness, The GitHub Blog, September 7, 2022.