Insurance company executives consistently note that the key to winning the future is increased customer engagement and enhanced efficiency. However, it is difficult for an insurer to achieve these two goals using expensive, outdated technology that is difficult and costly to replace.
While administrative systems have become more powerful with advanced functionality such as basic rules engines, they can’t deliver the efficiency and digital access demanded by today’s consumers and insurance companies. Integrated platforms are required to perform many of the functions needed by insurers to survive in this extremely competitive, digital era.
Digital TPAs look beyond the insurance administrative system to provide a digital ecosystem that delivers state-of-the-art functionality with the flexibility to adapt to future trends and technologies. By investing in building out the platform ecosystem to include integrated “plug and play” third-party or proprietary applications in a highly automated environment, Digital TPAs drive efficiencies and increase productivity 3–5 times in terms of policy count handled per processor.
An insurance company must consider a range of factors when choosing a Digital TPA that offers the right platform ecosystem for its business, including:
- Best of breed products—Digital TPAs leverage best-in-class technologies such as RPA and AI to ensure highly efficient processes that provide outstanding service and reduce cost. Several years ago, an insurance company I was working with chose an “all in one” administrative system instead of stacking best of breed products. The IT department convinced the business that avoiding the pain of integration outweighed the advanced functionality provided by utilizing best of breed components. A few years later, the insurer issued an RFP for a new administrative system to replace the “new” system that was already out of date
- Investment in technology—with technology developing at a breakneck speed, the most advanced technology today could be obsolete a year from now. A few years ago, the trend in client communication was mobile apps. Today, customers want omnichannel portal access with advanced communication tools such as chatbots. By consistently investing in and updating its technology stack, a Digital TPA embraces these trends and accommodates new technologies at a fraction of the cost an insurer would need to update its administrative platform.
- Flexibility—no two insurance companies operate in exactly the same way. Each company has its own financial systems, its own digital strategy and its own customer strategy. As such, the services required from an administrative system or TPA vary from company to company. Digital TPAs have the flexibility to incorporate the various parts of its ecosystem to meet the needs of each insurance company. Digital TPAs that leverage a flexible ecosystem approach can respond to new trends by replacing ecosystem components or adding to its stack.
In summary, technological innovation in the insurance industry has been evolving almost exponentially in recent years, and with the advent of automated underwriting, increased process automation and higher levels of customer interaction, the future promises to accelerate the pace of these advancements.
To remain competitive, an insurance company’s administrative system needs to be the anchor for a technology ecosystem that includes innovative digital components. Digital TPAs can provide this ecosystem in a timely and cost effective manner to help insurers navigate their journey to Digital.