11 Apr technology and disruption in the insurance sector
What is insurtech and what are its top trends?
The insurance sector too has been facing major disruption, with its core offerings being radically transformed as a result of digital transformation. The growth of mobile technology has redefined how insurance processes are undertaken by presenting new means of distributing insurance products and claims applications for services like underwriting, risk management and product distribution. These digital transformations in insurance have given rise to a new tide of technology-driven insurance companies – also known as Insurtechs. InsurTechs trends are changing the length and breadth of how insurance services function. While it 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.
Trends transforming the insurance industry Digital processes and operations: Processes have taken on an entirely different dimension with digital technology by unlocking a multitude of avenues and possibilities. Processes like RPA, have reduced cost of claims journey by as much as 30%, a study by McKinsey has stated. However, this was not a case a while ago. Though automated processes drove efficiencies for several years, its high cost of implementation and system risk made reaping its benefits slow. Now, however, RPA technology provides a low-cost, high returns mechanism when deployed efficiently.
Though it initially created an impact on high-volume transactions such as personal claims, the development of cognitive and AI patterns have equipped it to deal with complex commercial claims as well. Customer engagement: Life insurance success stories of tomorrow will revolve around organizations that adopt an advice-driven approach enhanced with digital engagements to cater to evolving consumer expectations. Digital engagements include business through digital marketing, online customer journeys and digital underwriting, as well as policy administration and claims through self-service.
Digital data management: Improvements in AI and IoT have uncovered new markets and opportunities. Innovations such as home sensors, telematics and drone surveys have the ability to produce critical data to help businesses provide more personalized solutions and take better decisions in underwriting, pricing and claims adjustments. Digital data flows will also help businesses manage customers individually, rather than as a group.
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: Digital innovation needs modern infrastructure. This includes technologically advanced ways of not just functioning and processing, but also computation and storage.
- Technologies for online sales: Insurers are leveraging the most modern technology to target their right customers, pinpoint the ideal user andanalyzeconsumption.
- Data analytics: Analytics allows users to gain deep insights on userbehavior, that helps insurers gain insights into customer needs and preferences. IoT: Analyzing data from 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 usethree-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 these technological advancements?
To start off, 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. There’d be superior convenience with regard to communication. Not only will updates be shared as and when they happen, but the customer will also be fully in the loop of claims redressal as compared to a traditional model 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.
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