Incumbent insurers must adapt their operating models, products and core processes to a new reality. All executives need an understanding of technological impacts and should ensure that their organizations are poised to unlock the potential.
The traditional insurance business model has demonstrated remarkable resilience, but insurers must strive to exceed the evolving expectations of customers.
They want simplicity, like one-click shopping. They demand 24-hour accessibility and swift delivery. They expect unambiguous yet pertinent information about product features -- pricing being a pivotal consideration. Moreover, their needs extend beyond mere convenience. They need innovative, tailored services fit for the digital age.
Top Tech Trends Transforming the Insurance Sector
1. Robotic process automation (RPA) for back-office operations
RPA enhances both customer experience and operational efficiency, bridging the gap between legacy insurance systems. RPA platforms execute actions at the precise mouse and keyboard levels. Further integration with lower-level systems occurs through application programming interfaces (APIs). When constructing workflows with RPA for end-to-end automation, insurers can use API connectors.
RPA solutions are ideal for a distributed workforce, offering the ability to:
- Transfer data from one application to another by copying and pasting.
- Open emails, gather the data and transfer it into a core system.
- Create month-end profitability reports by calculating data.
- Integrate with components such as workflow automation and rules engines, to entirely automate processes.
- Enhance bot capabilities using add-ons of artificial intelligence (AI).
2. Transforming claims and underwriting with AI
Typically, underwriting involves routine administrative tasks such as data entry, email correspondence management and document editing. These time-intensive procedures have conditioned clients to anticipate slow turnarounds and minimal communication – fostering an increased desire for transparency.
AI's capacity to automate routine underwriting tasks has enabled underwriters to allocate more time to high-priority assignments. They can tailor policies for unique scenarios and foster robust customer relationships.
The lack of a central clearinghouse in the industry—a body scrutinizing loss runs, or claims losses often analyzed by insurers to gauge future risk—poses a significant challenge. Insurers that generate quotes have to sift through numerous PDFs and extract loss and claim amounts before inputting this data into another system for quote generation.
AI simplifies this cumbersome process by enabling insurers to automatically extract these fields from underwriting applications and process most of the application information that comes their way.
See also: 5 AI Trends You Can't Ignore in 2024
3. Predictive insurance analytics
Among the AI applications available for solving business problems in the insurance industry, predictive analytics stands out as supremely versatile. Predictive analytics provide a dual-purpose solution – enhancing customer experience and mitigating the temporal and financial burdens of claims handling while eliminating fraud.
Insurance companies amalgamate external data, such as credit history, medical records and driving records, with their proprietary data stores to garner a more profound understanding of claimants and injured parties. Insurers employ predictive analytics and other AI technologies to enhance risk model accuracy through the automated adjustment of data models, which conserves significant time and effort for actuaries.
4. Omnichannel customer experience
Insurance interactions have long relied on face-to-face or phone call interactions. However, in light of technological advancement and shifting customer expectations, insurance companies have acknowledged the imperative to evolve their digital service delivery, and omnichannel e-commerce has emerged as a potent force.
Omnichannel insurance hinges on delivering a satisfying experience across numerous touchpoints, whether it's an online policy purchase initiation, support solicitation via a mobile app or an in-person visit to seek assistance at a physical office. This approach guarantees that all customer information—preferences and historical data included—is immediately accessible by the insurance provider.
Imagine stepping into an insurance office and conversing with an agent attuned to your needs. Subsequently, you stumble on a bespoke policy recommendation in your email. Seamlessly—wherever you may be—the threads of your insurance experience remain connected.
5. Internet of Things (IoT) and telematics
In the coming years, the Internet of Things (IoT) promises to revolutionize our world. As of 2010, global ownership for networked devices stood at 12.5 billion; the number is expected to exceed 50 billion by 2025.
Customers can transfer massive data volumes to their insurance providers or third parties—this happens either for real-time analysis or automation of reactions/services—already reshaping traditional business and operating models across multiple sectors.
Insurers predominantly employ IoT capabilities to enhance customer interactions and expedite underwriting, as well as claims processing. However, these is a surge in novel, attractive IoT-based services and business models. Digital networking via the IoT might develop into a strategic component specifically tailored for insurers.
See also: Cybersecurity Turns Attention to IoT
6. Low- and no-code development
Simply put, low/no-code software represents any software that sidesteps the need for intricate coding. Both developers and non-developers can create applications using a simple drag-and-drop interface.
KPMG discovered that 7% of insurance companies lack the IT capacity to incorporate digital solutions into their businesses. Additionally, 39% of companies grapple with implementing digital solutions.
Using low/no-code development, insurance companies have the ability to:
- Significantly reduce the sunk costs of their IT investments.
- Adapt rapidly to the dynamic environment and embrace change with agility.
- Aim to eradicate the detrimental impacts of skills differentials within their employee pool to enhance operational efficiency.
7. API-based insurance
Insurers' digital experience only satisfies 15% of their customers. To remain competitive, insurance companies must accelerate their digital transformation and adopt new technologies like APIs. A lack of digital capabilities might prompt over 40% of consumers to consider changing their insurance provider.
Why does the insurance industry, despite operating across a broad spectrum of businesses and potentially reaping numerous advantages from APIs, still need to integrate them at this stage?
The likely answer resides deep within the persistent stagnation at insurance organizations. It is only now, perhaps out of sheer necessity, that integration and APIs are capturing the attention of insurance C-suites.
8. Chatbots
Providers of insurance business process outsourcing (BPO) services have been popular for customer service. However, with the advent of chatbot, things changed. This virtual assistant fosters communication between a company and its customers.
An agent initiates the creation of workflows for rule-based insurance chatbots. These bots can commence conversations, provide support and handle requests by pre-established rules. Particularly when addressing standard user questions, the bot adheres to a path charted out by its creator.
While rule-based chatbots can resolve simple issues, they do not provide you with all the opportunities that AI chatbots can offer after training.
See also: The Rise of AI: a Double-Edged Sword
9. Self-service insurance portals
Sometimes, engaging with an insurance agent about a policy, acquiring crucial documents or updating account information can prove hectic, so providers enable customers to manage their policies online.
The provision yields manifold advantages for both customers and insurers.
10. Embedded insurance
Because acquiring one-off insurance policies can be cumbersome, embedding non-insurance products with a policy presents an excellent solution.
Embedded insurance is an innovative approach that facilitates insurers' entry into untapped markets and expands their reach. Established businesses can leverage the trend to penetrate developing markets more effectively.
Navigating the Future: Adapting to Next-Gen Technologies
Embracing agile and open digital systems on the cloud and providing a seamless customer-centric experience is what it means to be a next-generation digital insurer, but insurers must adapt their core insurance systems to fit into this new landscape.
