The COVID-19 pandemic has changed our lifestyle, work culture, and the business world. It hasreplacedthe daily interaction with virtual dealings and catalyzed the technology adaptation among different sectors. Digitalization has paved the way to the promised land.
The insurance sector also experienced the Midas Touch digitalization. Advanced insurance technology has played the role of a catalyst in the growth of the industry. The insurers who adapted to intelligent insurance achieved leverage in acquiring more customers during the pandemic.
The industry, which spent the last two years coping with the pandemic and its aftermath, is getting back on track. Many transformations and insurance solutions put on hold earlier have been adopted and are setting their trends.
Insurance Technology Trends Bringing the Change
- Automated Processes
Artificial intelligence (AI) and machine learning (ML) have accelerated the adoption and expansion of applications used in the insurance sector. Insurers around the globe are gradually ditching traditional underwriting with automated underwriting. The in-person evaluations were replaced by streamlining information gathering and reducing the human touchpoints. Insurers are using AI and robotic process automation for the process. The tools are also helping to assess the risk and determine the coverage areas and the premium amounts based on data. The use of insurance technology not only makes the whole process quick but is also cost-effective.
According to LIMRA’s 2020 survey, about a quarter of the United States (U.S.) insurers have expanded their automated underwriting. The same trend was prevailing in Canada. Another survey has found that automation in underwriting has reduced the wait times for 74% of the insurance companies, 59% experienced a reduction in the policy cost, and 37% observed a boost in their sales. Automated claims processes have also relieved the insurance companies and the policyholders. The claims are now processed faster, reducing the wait times significantly. Policyholders love toendorse a frictionless claims process. According to EY, 87% of decisions by the customers regarding the continuation of the service depend on the claim experience. According to McKinsey, automation has replaced more than half of the traditional claims activities. Deloitte’s study predicts that 65% of insurance leaders are anticipated to expand robotic process automation to boost efficiency and lower the overall time and cost to serve the policyholders by the end of 2022.
Servion Global Solutions has predicted that chatbots will lead 95% of all customer conversations. Using AI and ML, providers are available to help the users in their time of need. The discussions are seamless and help the insurers save money. A bot can quickly provide details about a policy application or claim processes to the customers, which earlier required human interaction.
According to McKinsey, 90% of life insurance agents’ sales communications and 70% of their customers’ conversations happened face-to-face in January 2020. However, in May 2020, the data dropped to 5%.However, many customers are not comfortable with the idea of voice-assisted business. Thus, insurers must have well-balanced insurance solutions between digital and non-digital channels.
- Intelligent Fraud Detection
Insurers are increasingly using ML to help detect fraud. It allows insurers to detect and prevent fraudulent claims promptly. It uses large data sets and makes predictions based on algorithms. It makes the process faster by processing the data quickly. ML identifies loopholes that are difficult to determine with the human eyes and uses data analytics applications to detect new strategies.
- Cloud Computing
A surge in businesses and digitalization has created massive data and has accelerated the need for cloud adoption. According to Novarica, 75% of insurers plan to expand their use of cloud computing in the coming years. In the traditional approaches to data management, the data sources were limited, and data collection was easy. Over the years, the data ecosystem has evolved, and its volume has increased exponentially. Cloud helps insurers extract data spread across the system, store, and analyze the data as needed. It further supports the service providers in managing claims, policy underwriting, marketing, and sales.
- Embedded Insurance
The embedded insurance market is expected to acquire$3 trillion by 2023. Embedded insurance is an event-triggered coverage offered to the customers ingrained with the purchase of third-party products. For example, many products sold on platforms like IKEA and Amazon are integrated with coverage offers. It helps insurers reach customers on a large scale, increase their revenue, and enhance their products in the future. Customers prefer insurance technology as it covers their commodity at the right time with the right policy.
The Way Forward
Improving agility, providing better service, and enhancing the customer experience have become a top priority. AI, ML, and digital solutions have certainly changed the landscape. But that doesn’t mean every insurance provider must invest heavily in acquiring the technologies and related support. Many insurance solutions provide tailored services, manage applications, and provide operational solutions as per the insurer’s needs. Investing in well-curated solutions is always a profitable, fast, and smart way to serve the customers and gain a competitive edge in the market.