How Can Insurance Companies Pivot To A Digital-First Future With Technology?

The insurance industry has historically been slow to hop aboard emerging tech trends. However, as technology continues to evolve at a rapid pace, the ways in which insurers do business are no longer immune to or insulated from its effects. As customers become more tech-savvy and competition heightens in the industry wherein the scope for differentiation through products is limited, insurers are turning to technology to differentiate their value propositions.

Here are some examples of how insurance technology trends are shaping the core insurance functions and making them future-ready:

According to the US Department of Commerce, insurance claims costs have risen by 10 percent annually since 2010. This trend is due to a number of factors such as an aging population, operational inefficiencies, threats from fraudulent claims, and more. However, insurance technology can mitigate its effects through digital-led claims processing.

The emergence of insurance technology trends such as Hyperautomation has helped insurers streamline their manual processes and make it easier for insurers to lodge, triage, and process claims and for customers to access their policies anytime anywhere. With better claims management technologies and software systems in place, insurers can process claims faster and with higher accuracy than ever before—and provide better customer service along the way!

The utilization of technologies such as RPA, Machine Learning (ML), and Artificial Intelligence (AI) has been helping insurers automate their renewal processes. Insurance companies are now able to shorten the renewal cycle time and make the renewal process seamless which increases customer satisfaction. They are able to invoke event-based automated messages proactively reminding the customer to renew the policies on time. When customers renew their policy, it's important to be sure that they are getting the best possible rates and coverage. All of this can be done automatically for them with data-driven automated renewals. It also ensures that customers do not miss out on any deals, discounts, or promos while making the payment. Plus, policy renewal can take place at any time of day or night! It's convenient for both agents and clients alike because there's no need to remember when the policy is up for renewal (or even if it has been renewed).

Underwriting and pricing are two of the most important aspects of insurance. Underwriting is the process of evaluating an individual's risk, while pricing is how much to charge for a policy. In both cases, technologies such as AI and RPA are eliminating all the guesswork and basing such critical decisions on cold, hard logic driven by data.

Underwriting has traditionally been done by humans in offices who take extensive notes on interviews with potential customers. They would then try to predict what kind of risks they pose based on those interviews. After evaluating the risk and opportunity, they would arrive at an arbitrary number to price the policy.

With AI-powered software tools, underwriters can now quickly evaluate a thousand profiles at once without having to interview each one individually. In parallel, they can work out the pricing at the click of a button! As a result, the underwriting and pricing process is a lot more efficient, streamlined, and accurate. This translates into more time left over for underwriters to focus on other tasks. They can use the time for managing risk models or writing policies that cover certain kinds of risks better than what the others do before approving or denying coverage requests.

Overall, automated insurance underwriting also utilizes technology in tandem with the insurance company’s underwriting guidelines to determine whether or not to accept the risk presented by the client. This, in turn, allows providers to generate a profit from underwriting and enhance customer satisfaction through more personalized policies.

Similarly, the insurers are able to mix analytics-based pricing models with government regulations, market and consumer complexities to use dynamic pricing to remain competitive in the industry. Though technology consumers have also become much more informed and price-savvy, they have much more awareness of new price policies, offers as well as security, mobility, and different types of coverage.

By 2025, over 80 percent of enterprises will adopt a cloud-first strategy, and total expenditures on cloud technologies will surpass $1.5B according to a Gartner study released in November 2021. The cloud is not a choice but a necessity to keep pace with innovation and deliver scalable solutions fast to support business needs. Often dubbed as the future of all industries, the Cloud is also indubitably one of the most mainstream insurance industry trends. And rightly so, considering that insurance has always been data-heavy.

Cloud services allow insurers to keep their data in a single, centralized location. Such a cloud-based storage system makes secured data available anytime and anywhere while establishing a single source of truth. The resulting mobility makes it easier for insurers to store, manage, and organize data, be it related to the customer, policy, or claims. Additionally, cloud platforms allow seamless integration with third-party software applications and platforms so that the same data can be updated or transmitted without any inconsistencies.

Open Insurance, also known as API Insurance, involves the move to a more connected data ecosystem, powered by open and partnership APIs. Large insurers are looking to establish API platforms and share their data and products to, and integrate with, third-party providers such as Insurtechs – providing mutual growth, enabling new business models and revenue streams.

APIs also allow customers and agents/brokers seamless access to information about their policies through smartphone apps or websites or even document management tools. With these tools at their disposal, customers will be able to get instant responses to their queries when they need them most—whether that's while they're shopping around for coverage options or reviewing claims history after an accident occurs! This last-mile connectivity and added transparency could make APIs the key to differentiating your agency from the rest.

The introduction of next-gen technologies has put insurance businesses in a ‘pivot or perish’ situation. With the rising penetration of mobile phones and apps as well as smart wearable devices, the insurance sector is truly witnessing a turning point in how it harnesses technology. The customers are now expecting their insurers to improve their customer journey and are comparing it with how a retail industry company does the same during their shopping experience.

A successful digital transformation journey underpinned by relevant new-age technologies can benefit Property & Casualty (P&C) insurance businesses in a number of ways: addressing legacy system challenges, improving agility, increasing employee productivity, enhancing customer experience, and impacting revenues. As per a survey by propertycasualty360, 74%, 72%, and 67% of insurance companies are likely to increase spending on AI, cloud computing, and data analytics respectively. So, rather than fearing such a change, businesses must brace themselves for an imminent transformation and take steps in advance to ride the wave rather than crash into it. Identify the core processes that can be digitally transformed through insurance technology services and start working your way up through them. Once the results start to materialize, you will notice how all hands on deck would be eager to make such an ambitious goal of tech-centrism a success.