COVID-19 has made paperless insurance a survival issue
While paperless insurance was already the talking point of many articles and whitepapers before the 2020 pandemic, it’s even more of a hot topic now that so many physical processes are under lockdown.
Regardless of social distancing and short term restrictions being placed on face-to-face interactions, insurers still need to continue servicing their customers. On the other hand, consumers need to adopt digital processes and go paperless in order to continue managing their personal affairs.
It makes sense that insurance companies would leverage the increase in digital acceptance to speed up their digital transformation efforts, not least to keep engaging with customers, but going paperless in insurance is survival now.
The term ‘paperless insurance’ can apply to many areas within an insurance organization. It can refer to back-office functions like risk management, or to customer-facing functions like communication. Both are equally important, although it may be said that some are simpler to achieve than others.
Paperless risk management
In an article on the benefits of moving risk management processes to digital, industry platform, Insurance CIO Outlook, points out two clear wins of going paperless:
1. Digital documents are easier to find – for everyone. On the insurer side, having access to fully searchable, indexed documents is infinitely faster than searching for physical documents when servicing a customer. And likewise for the customer – trying to find the applicable excess payment on a particular claim is far easier if they can just search the policy document for the word “excess”.
Also, physical documents are much more likely to be misplaced or lost. Digital documents that are stored securely and backed up appropriately, will be available forever.
2. A second win listed in the article is that automation software can boost digital transformation by removing previously manual processes and replacing them with faster, more efficient automatic processing.
The article cites the examples of improving “the rate of detecting anomalies” and generating “quick alerts when there is a potential risk”.
The shift to paperless communication requires a progressive approach
In our world, achieving paperless insurance means the digitization of all communication processes. This involves providing paperless options across the customer lifecycle, from welcome messages to claims notifications, all the way to policy renewals.
Providing the customer with paperless options for all communication in one big bang approach is not realistic. A better approach is to understand the starting point and then break the deliverables up into manageable projects.
The first step is to identify what channel is used for each communication type and understanding what needs to be done to digitally transform these messages in a way that enhances the experience for the customer.
A great way to do this is to use a digital communication maturity framework to help teams from across the insurance business understand the current state of its digital communication.
It also helps to do a customer journey mapping exercise in which every department who sends the communication to the customer, lists and describes each message that is sent.
Doing this by customer journey type helps to break down what might seem a daunting task.
- Start with identifying all communication that is sent to a prospect while they go through the acquisition journey.
- Then identify each communication that is sent during the onboarding journey.
As you do this for the servicing, maintenance and renewal journeys, you will see how fractured communication can be, if not coordinated.
Now is the time to move paper documents to electronic documents
It’s a given that insurance is a document-heavy business, but it doesn’t have to be a PAPER-heavy one. Any document that is sent to a customer in paper format can be converted to a digital format. Not only is this more efficient, but in the COVID-19 world, everyone wants to avoid touching paper that’s been through the mail system.
Now is the time for insurers to ditch the paperwork, and go digital. In addition to the short to medium term necessity during COVID-19, there are long term benefits to being more digital.
Years ago, IDC predicted that by 2022, 80% of revenue growth will depend on digital offerings and operations. That was BEFORE the 2020 pandemic, which will without a doubt accelerate digital transformation in the insurance sector.
Boosting paperless adoption
Of course, not every customer automatically signs up for digital communication. But, where paperless insurance was a business target before COVID-19, it’s now a survival issue for both the insurer and the customer.
For the customer, being able to continue managing personal affairs, such as doing banking, keeping up insurance policies and paying bills, requires an acceptance that life is going to be more digital from here on. Converting to digital communication is literally the only way to keep up.
Being a regulated industry, insurers are required to deliver certain documentation. Not being able to do so via the mail system is a problem. Which makes providing digital options that much more important.
Also, customers that were previously not that keen on moving off paper onto digital, are most likely receptive to this change now. A side effect of the COVID-19 lockdown is a boost to paperless adoption.
One of our clients, a personal lines insurance company in the US, almost doubled their paperless consent by sending messages about staying safe during COVID-19 and offering digital options.
Paperless billing and payment reminders benefit both the customer and the insurer
When faced with the task of converting paper documents to digital, it can be hard to know where to start. A great place to begin this migration is in the billing-to-payment journey. Documents such as monthly bills and collections notices are prime targets for conversion and can deliver a number of quick wins to both the insurer and the customer.
The bill is perhaps the most regular communication an insurer sends, as it’s one that is not triggered by anything as sporadic as a claim or as infrequent as a policy renewal.
While many insurers provide a billing portal, an online process requiring a username and password might be a step too far when there is no consistent communication. And more often than not, the policy is a grudge purchase.
Moving a paper bill onto a familiar digital channel, like email, might be a less stressful change for the customer, one that lets them get on with making a payment through a simple payment process from within the attached bill.
Email communication can be used in a way that helps both parties. For example, providing information around payment and easier ways for customers to pay during this difficult time (breaking down payments into smaller amounts, for example).
As part of the migration, the tone of the communication can be softened to be more of a prompt than a demand. With everything else that’s going on, the customer could have difficulty paying a lump sum or legitimately forgotten to pay their insurance bill and would appreciate the information and reminder.
Save costs, but also consider the customer experience
Moving to paperless insurance should achieve a quick ROI and an ongoing cost-saving for the insurer (although this is probably not the main focus for insurers right now.)
While this is a welcome outcome during this difficult economic time, it should not be at the expense of the customer experience. Cheap is not always better.
Fortunately, improving the CX through a digital option is not hard. What was a flat, unnavigable policy document on paper, transforms into a fully indexed, easy to navigate document on digital. A paper bill that gets paid by check, becomes an interactive, digital bill that gets paid by the click of a mouse.
In short, never before has there been more motivation to move from physical processes to digital ones. Both the insurer and the customer should be doing whatever it takes to achieve the goal of paperless insurance.