Digital cost reduction

It is commonly assumed that companies operate as lean and efficient entities, but this is frequently not the case.

 With increasing focus on cost reduction, we present several digitally oriented strategic cost reduction ideas for those who prefer a do-it yourself approach. It should be noted that a solid foundation is necessary to implement some of these strategies effectively.

Cost reduction remains a significant topic of interest; therefore, here are ten tips for success.

1. Digital claims processing: The increasing use of Artificial Intelligence (AI) and machine learning to automate claims processing (and even large language models (LLMs) for underwriting), reducing manual effort and speeding up service times, which cuts operational costs. 
2. Telematics and Internet of Things (IoT): Implement telematics for motor, and IoT devices in home and health insurance to monitor risks in real-time, allowing for more accurate pricing and risk mitigation. 
3. Cloud computing: Shift processing for core operations to the cloud to reduce IT infrastructure costs and enhance data accessibility and security. 
4. Remote working flexibility: Reduce physical office space and related expenses by promoting a remote work environment, which can also widen the talent pool. This is great for promoting an inclusive workplace; however, the level of productivity becomes a concern for many leaders.  
5. Advanced analytics: Deploy advanced analytics to better assess risks, personalise premiums, and identify fraud, leading to cost-effective operations and improved customer retention. 
   Self-service platforms: Encourage customers to use digital self-service platforms for policy management, claims filing, and information queries, which can significantly lower service costs. 
6. Chatbots and virtual assistants: Use AI-driven chatbots and virtual assistants to handle customer inquiries and claims, reducing the need for extensive customer service teams. This limits human interaction, which most prefer therefore, keep this accessible.
7. Digital marketing: Shift from traditional advertising to digital channels. Utilise targeted ads and social media to lower marketing costs and track return of investment (ROI) more effectively. 
   Partner with Insurtech firms: Collaborate with Insurtech start-ups for innovative solutions that enhance efficiencies and streamline operations without the overhead of developing in-house technologies. 
8. Cybersecurity and fraud investments: While upfront costs are involved, investing in robust cybersecurity measures is crucial to protect digital assets and avoid potential losses from data breaches and claims leakage.

These ideas can help you reduce costs but also improve your service delivery, customer satisfaction, and competitiveness. For more information, please contact Buki Obayiuwana or your usual Crowe contact.