04 Nov Digital Trends and Disruption in the Insurance Sector
Insurance is the fourth most disrupted industry and the one susceptible to the most disruptions in the coming years, an Accenture survey has stated.
Much of the transformations are a result of the growing adoption of mobile technology, AI, ML, cloud and data technologies.
These technologies have redefined how insurance products and applications for services like FNOL, fraud detection, underwriting and risk management are distributed.
And these new digital trends in insurance have given rise to a tide of technology-driven insurance companies – also known as Insurtechs.
Insurtechs are fast-moving, digitally enabled enterprises that are identifying and capitalizing on the weakness of traditional insurers in fields like auto insurance, P&C insurance, health insurance, life and home insurance with highly valuable offerings for customers.
As a result, the entire industry is re–examining its solutions and delivery models that are weak and exploring opportunities for innovation with disruptive new technologies.
While the disruptions initially focused on transforming how business services are delivered, now it aims to transform the entire business model works.
Therefore, insurance companies must stay on top of upcoming digital trends in insurance and employ them in their business to meet the future needs of their customers.
Trends transforming the insurance industry
- Digital processes and operations: Digital technology has disrupted process delivery models in the insurance sector. Processes like RPA have reduced the cost of the claims journey by as much as 30%, a Mckinsey study stated. However, this was not a case a while ago.
Though automated processes drove for several years, it was costly to implement, which made realizing benefits slow. But now, innovative solutions in insurance, built on AI, ML, Cloud and RPA provide a low-cost, high returns mechanism when deployed efficiently. The development of cognitive and AI patterns also has improved insurtechs’ abilities to deal with complex commercial claims.
Nuvento’s is a deeply experienced insurance consulting solution provider that helps insurance organizations get up to speed with their tech adoption.
Our insurtech consulting services follow a pragmatic approach that helps you adopt digital tech into your enterprise, helping your organization be ready to meet your customers’ demands.
We have frameworks built for insurance enterprises to quickly adopt digital capabilities into their everyday processes, which helps organization see faster time-to-market.
- Customer engagement: Success in insurance involves an advice-driven approach enhanced with digital platforms to cater to evolving consumer expectations.
Digital engagements include insurance delivery through chatbots, online customer journeys via digital channels, as well as policy administration and claims through self-service portals or apps.
Nuvento’s insurtech solutions are built with a focus on letting you help your customers achieve their end goal – be it a chatbot that gives quick answers to their queries, self-service portals or applications that let users access their claim information, file an FNOL, get a claim without depending on a third person or an agent.
- Digital data management: Improvements in AI, ML, big data and data management have enabled insurers to leverage data and provide coverage in comprehensive ways never thought of before.
Innovative trends like home sensors, telematics and drone surveys have blown up the opportunities of getting critical data to help insurtechs provide more personalized solutions and take better decisions in underwriting, pricing, claims adjustments and more.
Digital data management services by Nuvento helps insurers drive digital transformations in their offerings with AI, BI, cloud and data technologies.
What are the technological trends disrupting the insurance sector?
A report by IBA suggests that there are broadly seven disruptive technology trends that are changing how business is done in the insurance sector.
Infrastructure and productivity: Legacy infrastructure slows down innovation in insurance and is a hurdle in succeeding in a digital-first world.
Going digital is not an event, it is a process and to achieve digital innovation in insurance, insurers must invest in modern infrastructure that aligns with their offerings and goals.
This includes technologically advanced ways of not just functioning and processing, but also computation and storage.
Technologies that enable online sales: Leveraging the most modern technology to target their right customers, pinpoint the ideal user and analyze consumption is another trend insurers are following. To succeed, insurers must get their customer data aligned.
Data analytics: Analytics is an extremely critical capability that allows insurers to gain deep insights on customer behavior and helps to know more about customers’ needs and preferences.
IoT: Analyzing data from devices fitted with sensors can help insurers to understand user behavior.
Distributed ledger technology: By storing data on distributed ledgers, insurers can greatly improve the time taken for processing.
Machine learning: Insurers can use machine learning to manage claims processes, price products and shape underwriting.
Virtual reality: Virtual realitycan use three-dimensional imaging to ascertain how a particular incident happened by reconstructing the environment in which it happened – a room or building – to absolute precision.
Customer journey – traditional insurance vs insurtech
So, what does a customer journey look like with digitally transformed offerings?
To start off, with technologically advanced solutions, claims filing processes would become a lot easier. Compared with a customer waiting on hold over a phone call to report a claim, a mobile application would make reporting a lot easier and faster.
Instead of having to pen down a long and painful notice of loss, an app would ensure quick and easy collection of details with simple Q&As, photo upload and sensors.
Communication will be convenient. Not only will updates be shared as and when they happen with chatbots or updates on the app, it will keep the customer informed on the progress of the request in real time. This makes the process so more much easier when compared with the traditional models of calling to follow up.
Payments would be made directly to the bank account and triggered automatically on completion of formalities as compared to manual triggering and cheques.
How can insurers avoid being blindsided by disruption in insurance
Insurers are adopting emerging technologies to digitally transform their services and drive themselves forward in the digital world. However, insurers must be farsighted and strategic about the technologies they adopt and consult with experts on the best approach to going digital. While it is essential to stay in the competition and keep an eye out to see what competitors are doing, businesses need to carefully analyze their insurance digital transformation strategies to ensure they are not blindsided by the disruption in insurtech. To do this, insurtech businesses must adopt agile, long-term technology investments, personalization and customization of services, based on a strong and agile technology foundation.
Regulations and insurtech
The exponential growth of computing power has been opened up sophisticated forms of data collection and analysis, including data mining, statistical modeling, and machine learning. These evolving data collection techniques have made it increasingly challenging for insurance regulators to evaluate rating plans that incorporate complex predictive models. To address this issue, insurance regulators are considering various methods of field testing such technologies in a controlled environment. Several US states have indicated they believe their insurance laws contain sufficient flexibility to permit the issuance of regulatory variances and waivers (e.g., no-action letters) to insurtech firms seeking to test new products without fear of regulatory action and have encouraged firms to talk to them.
The future of insurtech
This said, the future of innovation in insurtech is intertwined with regulations. Any new or innovative change in the insurtech sector would require regulatory approval, therefore insurers and regulators must work together to determine a way of working. Obtaining regulatory buy-in at an early stage is often critical for ensuring a relatively fast and painless regulatory approval process. This can also significantly improve a company’s speed to market. However, regulators should be ready and willing to have a dialogue with the industry on the future of insurance regulation, and companies looking to disrupt the insurance industry should consider taking them up on their offer.