Vietnam’s insurance market continues to witness a race toward digital technology involving well-known brands and newcomers alike.
An in-depth discussion on the issue of Digital Transformation for Insurance businesses, Mr. Vu Viet Hoan – Business Analytics Manager, Smart Solutions Division, GMO-Z.com RUNSYSTEM, shared with Vietnam Economic Magazine.
Interviewer: How do you evaluate the implementation of digital transformation in insurance businesses today?
In the Insurance industry, digital transformation is considered as the change in the culture, organization, and operation of insurance through the support of technology. In the Insurance industry, digital transformation is also an improvement in many service-related areas, including Process automation; Customer experience improvement; Data integration; Improvement in the flexibility of organizations and sales.
In 2020, the impact of the Covid-19 pandemic has caused many difficulties and challenges. In particular, the banking, insurance, and financial sectors were directly affected, significantly impacting the economy. However, the Covid-19 epidemic has also created a driving force to promote new technology applications in the insurance sector (Insurtech) to thrive. It helped accelerate the digital transformation and implementation of innovations and the change of the distribution channels of the market.
The digital transformation of Vietnamese insurance businesses has become active and achieved remarkable results such as Operating and using their websites; website/app applications for business processes; diversifying online insurance product delivery processes; ensuring enhanced online insurance claims settlement processes; digital services, and online customer care. At the same time, Vietnamese insurers have developed and provided digital applications to support insurance agents at branch levels; cooperate with 3rd parties to sell insurance products (digital banks, electronic exchanges, and technology companies).
Recent achievements are only the first step in the development results. Although management, operations, and digitization of business processes management improved by digital technology, the results of the insurance industry have not been satisfied with many necessary technologies that have yet to be applied. Vietnamese insurance businesses need to promote a more substantial and substantive transformation to create more effective development. We should eliminate the shortcomings and limitations, such as the revenue of online insurance channels is still low; financial potential for technology investment is not high; human resources specialized in technology are still weak; Specific regulations supporting the implementation of digital transformation tasks are not specific. In addition, further attention and facilitation from the state and management agencies are also essential to create a substantial shift in the digital transformation process and efforts to strengthen new insurance distribution channels in the industry.
It is essential and imperative to promote the application of digitization in the corporate management process, improve business processes, and at the same time, consolidate the operation of the general agent system, and standardize the quality of the consultants to create positive changes and sustainable development in the insurance industry in the current context.
Interviewer: According to you, what benefits/potential will insurance businesses receive when implementing digital transformation and applying information technology?
Applying digital change in the insurance field will help insurance products increasingly diversify, meeting the insurance participation needs of all organizations and individuals. At the same time, it also creates maximum conditions and benefits customers when participating in insurance.
Digital transformation in the insurance industry creates and establishes a new digital structure. It contributes to helping the industry reduce the cumbersome and slow to synchronize and increase opportunities for sustainable industry development. Insurance businesses can achieve powerful digital transformation and optimize operational efficiency using AI and digital automation. With a reasonable approach and planning, AI technology can bring much value to optimize operations and meet customer needs, leading the market for the insurance industry: “AI improves productivity by 40%; reduces 80% of operating fees; reduces human error by 85; reduces 85% of processing time; Transfers seamless data by 99%”. Besides the support of AI, we must recognize the role of automation by digital technology. Automation can help the insurance industry increase 99% accuracy with information to extract and process submitted documents, reducing transaction processing time and effort by 50%: “If digital technology promotes automation, the insurance industry can make predictions about the accuracy and reliability of documents; handle 15,000 documents per month“.
To help the insurance industry achieve positive results, GMO is also determined to always accompany insurance businesses by investing in building a suite of intelligent automation application solutions such as SmartOCR (Automatic data extraction and processing solution, built on AI technology); SmartRPA (business process automation tool); LogrecoAI (machine learning solution and data-driven AI modeling).
Interviewer: What advice do you have for insurance businesses implementing digital transformation?
First, we must mention the strategy for approaching digital transformation in insurance businesses. At the initial stage of digital transformation, the choice of most companies when building business development directions is to choose digital technology platforms first (“Digital-First”). However, instead of approaching digital transformation in the order of investing in modern technologies and data infrastructure to improve productivity, it is advisable to come in two directions that combine with the more optimal applications, including:
– The first is to take the customer-centricity point of view. Accordingly, customers are the driving force behind the transformation of insurers and transformation efforts to enhance customer experience or create new value propositions that meet new customer expectations.
– The second is not to implement digital transformation at a comprehensive level but to focus resources on critical initiatives to add digital value to the current system or activities. For example, the insurance business only focuses on improving the features of the mobile application to increase the customer experience. Customers can easily use services such as money transfer, application submission, and bill payment…, all on one application. This approach can draw valuable lessons after each project, helping insurers gradually adapt to digital transformation activities before implementing them fully.
In addition, technology applications such as AI, big data, and IoT… help analyze the market and design and offer products that are suitable for the needs of customers; big data helps insurers understand risks, significantly improving pricing capabilities; chatbox, online app, mobile, social platform… help insurance businesses increase their ability to interact with customers, easily accept payment settlement and insurance management on digital media.
Six steps need to be taken by insurance businesses to ensure a successful digital transformation, including:
Step 1: Digital Direction and Strategy: It is necessary for insurance businesses to accurately determine the focus and digital transformation strategy in line with the business strategy.
Step 2: Problem analysis: Insurance businesses must redesign the process based on the customer experience journey to optimize operations. For example, managers must deeply understand and analyze pain points when customers use payment, contract, and customer care services. From there, develop ideas for suitable digital initiatives to solve the problem.
Step 3: Building a digital transformation roadmap: Insurance businesses should build budgets, create effective computational models, and build a Digital Transformation roadmap in line with the goals and budget of the organization.
Step 4: Implementing & Monitoring: Insurance businesses clearly define KPIs to track the results of each digital transformation project and ensure the best use of technology, deploying in the fastest time.
Step 5: Evaluating & Confirming: The evaluation and validation of the results help insurers have more updated information to make appropriate improvements for the project to achieve the expected effect
Step 6: Reporting & Improving: Performance reporting and regular improvement are essential to ensure a successful project, align with implementation status, and sync with other digital transformation projects.