Leveraging digital twins to transform insurance operations

Digital twins can deliver improvement recommendations and best practices to help insurers drive enhanced business outcomes from their insurance operations.

The concept of digital twins can be defined as “a virtual representation of real-world entities and processes synchronized at a specified frequency and fidelity.”

What is perhaps less obvious are the potential benefits digital twins can bring to the information processing domains of finance, HR, and supply chain management, where they can be used to avoid bottlenecks through problem prediction, increasing efficiency, and reducing downtime.

Digital twins aim to bridge the “physical-digital” gap to improve performance and sustainability, establishing a closed-loop approach to unlock value through bringing synergies across data, technologies, and business processes. Digital twins not only provide visibility into how dynamic, real-world systems are performing, but can also predict how they will perform in different scenarios.

Digital twins can augment insurance processing

Insurers are investing in digital twin technologies to shift from being reactive to proactive and improve decision-making. Implementing digital twins can improve business areas including underwriting, claims processing, risk management, finance and accounting, and customer service functions.

• 40% of companies have an ongoing comprehensive digital twin program across the whole value chain, according to Gartner
• 47% of organizations are considering strategic partnerships for digital twin initiatives, according to Capgemini Research Institute
• 38% of organizations are willing to work with new/existing partners towards digital twin implementation, according to the same Capgemini report
• The digital twin market will reach $183 billion of revenue by 2031, according to Gartner.

Adding value to insurance operations

In the insurance industry, digital twins could help insurers to increase process efficiency and operational effectiveness in areas that include:

• Analyzing claims assessment and compensation lead times under different operating conditions to check for possible non-compliance with regulations
• Simulating damage conditions and reproducing loss events for claims, enabling more accurate loss estimation and fraud detection
• Identifying strengths and weaknesses, including capacity limitations, bottlenecks, critical point of failure, and interdependencies
• Providing data and insights to support decision-making
• Measuring the impact of potential changes prior to implementation in a live environment
• Highlighting opportunities for continuous improvement
• Creating and testing alternative flows and outcomes to decide how to deliver optimum value
• Measuring real change outcomes with continuous business mining
• Monitoring return on investment.

Opportunities to drive business outcomes for insurance

Leveraging digital twins can help insurers identify and implement improvement recommendations and best practices that deliver enhanced business outcomes from their insurance operations. This not only includes transformation roadmap design, but opportunities to improve visibility, efficiency, and working capital.

Whether it’s streamlining the underwriting process, reshaping claims processing, enhancing customer service, and improving regulatory compliance, integrating digital twins into insurance can drive increased efficiency, personalization and customer engagement, boosting the value insurers deliver to their customers.

To learn more about how Capgemini can help your insurance company leverage digital twins for data-driven transformation and continuous innovation across your insurance operations, contact: bhaskar.amit@capgemini.com or aneta.szporak@capgemini.com.