Let’s accept it – the world is going through terrific changes at a significant speed, and to stay alive and thrive in the market, industries need to mold themselves according to evolving technologies and customer needs.
As for the insurance industry, its relevance will perhaps never go out-of-date. Human life is surrounded by risks, and unforeseen losses and insurance companies have a big role to play in assuaging the losses.
However, with the competitive nature of the market, companies need to stay open to new trends and challenges. Companies also have to keep in mind its new generation of consumers, aka millennials and Gen Z, who are more accustomed to personalized services and are heavily dependent on technology – thereby creating a very demanding but loyal base of consumers.
We can’t ignore the fact that a recession is brewing in the future, and insurance companies need to understand the nuanced requirements of individuals and firms to equip themselves well. Insurance companies need to tailor their services for the digital era and figure out ways of product differentiation while minimizing costs. From 2017 to 2018, insurance companies saw a net increase of 66.3% in their profit rates. A significant part of this growth can perhaps be attributed to modified legacy systems, adoption of latest technologies, partnerships with InsurTech companies, automation, etc.
Here are five promising tech trends that the insurance industry needs to keep an eye on –
Digital and Omnichannel Strategies
The insurance industry relies heavily on customer satisfaction and word of mouth. To guarantee customer satisfaction and warrant their loyalty, companies need to ensure a smooth customer experience. They need to focus on value innovation, user experience, and also faster time-to-market. The new generation of customers believe in well-informed decision-making, demands smoother communication through various methods like web, mobile, and social media, and personalization of services according to their varying lifestyle and choices. To incorporate these changes, companies have to modernize their legacy systems and leverage the power of modern technologies to provide a smooth, omnichannel digital experience.
IoT
Gartner predicts that the number of connected devices could reach 20.4 billion by 2020!
Experts believe that the Internet of Things will dramatically transform several industries in the coming years, the insurance industry is no exception. IoT technology can help insurers reduce costs and increase their revenue generation opportunities by enabling more personalized, targeted customer interactions, data monetization, increased efficiency, and analytics-driven fraud detection.
Big Data and Analytics
Big data and data analytics has been a game-changer for the insurance industry.
Leveraging Big Data analysis, insurers have started viewing customers as individuals with nuanced needs and behavior, and not merely as a part of the statistics. This, in turn, generates increased revenue.
Machine learning
ML, a part of Artificial Intelligence (AI), offers tremendous benefits to the insurance industry.
Machine learning can help companies decrease the degree of human supervision required. It facilitates predictive learning from data and patterns and helps insurance companies in predictive pricing and underwriting. Predictive pricing aided with machine learning helps determine the policy price for a potential buyer with the least amount of risk involved. Underwriting operations, powered machine learning, helps in faster customer onboarding and quicker claim processing through automation of manual and repetitive tasks.
Blockchain
The insurance industry is known to be a highly competitive and at the same time, highly regulated industry. Multiple parties and multiple stakeholders are involved in every transaction. Blockchain, with its ability to share data in real-time and digitally track the data, is set to disrupt the insurance industry.
Blockchain’s shared ledger technology can help insurers curb frauds, make claims more reliable, and introduce greater visibility and transparency into their claim management process. By automating data collection and processing, it can help in fast-tracking the claim processing and enhancing customer satisfaction while dramatically reducing the costs. Especially in case of health insurance, Blockchain can facilitate secure and transparent exchange of medical records across different organizations and help in reducing claim denials.
While these technologies are bringing in the much-needed transformation in the insurance industry, the ever-increasing array of connected devices and data exchange are also increasing the risk of cyberattacks. It is important for insurance companies to ensure that they handle the user data through proactive and tactical security measures, and not through reactionary defense measures. Cybersecurity plans have to be put into place from the very beginning of the process of digitization, along with regular updating as a matter of priority.
Through every new trend that we have examined, it is clear that a customer-centric outlook and a will to make changes to your company based on trustworthy research and analysis of data is a must for proper integration of these changes. While incorporating these trends is necessary for adapting to a changing world, it is, however, a matter of time that will allow these changes to take effect seamlessly and effectively. Partner with a trusted technology expert who can guide you on the pros and cons of adopting such new trends for your company.