In 2019, we will see many of the 2018 technology trends continue but with an added focus on business transformation and value.
In 2019, we will see continued investments in insurtechs and fintechs, as more companies realize the value of technologies that enable the delivery of next-generation digital experience, especially in the area of customer engagement. Consumers’ demands are driving the need for better self-service capabilities, mobile capabilities and engagement tools.
As with John Hancock’s use of Vitality and with SE2’s investment in Life.io, we’ve seen the creation of next-generation customer engagement platforms that leverage wearables and other social and industry data to get unique insights into prospects’ and policyholders’ lives. That allows these companies to offer better needs-based, more personalized products. As insurers are able to access higher-quality data, there will be more experimenting with analytical models and algorithms to transform the underwriting, sales and marketing paradigms. Additionally, the ability to access consumer data in real time will continue to drive innovation in the insurance industry.
Companies like Human API and Clareto are bridging the gap between heath information exchanges, healthcare providers and life insurance carriers, enabling them to fine-tune underwriting, claims and other business processes. Helping consumers live a better life and have a holistic approach to manage both their mortality and income risks is the way to go rather than sell point solutions with aggressive sales tactics.
See also: 3 Insurtech Trends Accelerating in 2019
Artificial Intelligence/Machine Learning
While there continues to be excitement and conversation around artificial intelligence and machine learning, the fact of the matter is that the insurance industry as a whole continues to struggle with adoption. Issues around data governance still need to be solved, data rationalization is not complete and data quality continues to remain a major challenge for insurers.
Looking ahead in 2019, there will be more work in this area as insurers make progress in putting into place the foundational elements needed to create a strong data paradigm that will enable AI and ML adoption as well as generate real business value. There will be progress made in creating and enhancing data repositories, data lakes and other foundational infrastructure technologies. This year will see a refocus on AI and ML — especially in conversational AI — that will enable insurers to streamline and augment the work of their own employees and distribution network, ultimately providing a superior experience to policyholders.
Driven by customers’ market needs, digital transformation continues to remain a key priority in 2019. Many insurers remain constrained by the complexity of their back-end systems, resulting in very real concerns around agility, value and delivering the right consumer experience. Consumers are demanding more simplified products, as well as a growing preference for bundled products with the overlap of income and mortality risk. Without a nimble, flexible architecture in place, many insurers struggle with launching products fast enough to capture new customers with these preferences and gain market share.
The year 2019 will see an increase in insurers looking to create effective and efficient direct-to-consumer distribution channels or other digital distribution channels to reach the vastly underserved middle market and millennial customer segments. Additionally, there will be increased pressure by the market for lower pricing, leading insurers to create cost efficiencies through digitization of back-end processes, increasing usage of RPA (robotic process automation), STP (straight-through processing) and digitized operations processes throughout the entire lifecycle of the policy.
There is not only a price play but a consistency and a quality play that our industry struggles with, as well. At SE2, we call this moving from a “high touch” to “low touch with hugs” operating model.
End-to-End Platform Modernization
Driven by the need to reduce or eliminate outdated legacy technologies and address business and technology architecture complexity, an end-to-end platform modernization focus will be a very high priority for life and annuity insurers this year. Insurance carriers are realizing that the investments they’ve made in front-end digital capabilities are not giving them adequate return on investment without a fully digitized, modern and simplified back-end system. These delay the time it takes to launch products and hamper the ability to streamline business models. With a digital, open architecture platform, insurers can easily integrate systems and plug in APIs to extend their capabilities.
See also: 8 Key Insurtech Trends for 2019
Overall, 2019 should be yet another interesting year for our industry and SE2, as we see billions of dollars of innovation spending led by tech giants like Google, Amazon and Microsoft, and the L&A industry finally beginning to reposition itself.