To stay competitive, Insurance companies must constantly innovate to improve their services to better serve their clients better.
A driving force behind such changes are growing consumer expectations of service industries like insurance. To achieve this, carriers need to create a strong digital foundation and flexible platform that integrate easily with legacy systems, digitalize manual processes, and automate reporting and tasks that free-up resources. Providing exceptional servicing and stress-free claims process helps insurance retain clients, and manage regulatory requirements.
Insurance tech companies are witnessing the impact of technological innovations in other industries that impact customer expectations, like self-service, automation, a blend of online and human interaction, blockchain, data security and compliance, Internet of Things (IoT), analytics, and machine learning/artificial intelligence.
The impact of innovation on the service industry makes it necessary for insurance to focus on digital transformation required to retain clients and create higher profits, above all value.
Therefore, you should utilize the power of cutting-edge insurance technologies to create better user experiences, acquire new customers and broaden business opportunities.
What is Insurance Tech?
The term “insurance tech” or “insurtech” for short, describes technological advancements developed and implemented to improve the effectiveness of the insurance sector.
It helps insurance companies explore options outside more conventional methods to beat the legacy system (outdated technology).
According to Grand View Research, the global insurance tech market was valued at $3.85 billion in 2021 and is expected to grow at a compound annual growth rate of 51.7% from 2022 to 2030.
Additionally, customers can access their insurance requirements today via smart device which makes means carriers need offer anywhere, any time, any device accessibility for beneficiaries, policyholders and employees.
Here are some practical applications of Insurtech.
1. Phone Apps
Smart phones provide the convenience of instant access to all the services whenever a user needs them.
By 2025, it is estimated that the market for mobile apps is expected to generate around 613 billion dollars.
Moreover, the benefits of implementing effective, user-friendly insurance mobile apps throughout the client value chain are striking.
Impact of Innovation on Insuretech
The dominant technologies in insurance’s digital transformation are easily noticeable by looking at trends, forecasts, and research.
An insurance company will lag if clients do not get easy-to-use digital services. It is vital to transform the insurance experience for clients and service providers.
Here are some notable innovations that have been transforming Insuretech.
2. Automation
Automation tools are utilized to avoid manual human intervention when technological tools can carry out a process independently.
According to McKinsey’s study on digital disruption in insurance, automation can cut the cost of a claims journey by as much as 30%.
It offers a pathway for insurers to automate their businesses and increase efficiency and profitability.
Insurers who fail to adopt automation will become irrelevant in today’s digital world and will be replaced by providers with better technology-based and consumer-focused models.
Here is how automation can help different parts of Insurtech.
- Claim processing: Implementing an automated workflow can accelerate claim-related operations.
- Policy management: Assist in the transformation of other document-intensive processes, such as the handling of loss run reports, analysis of the statement of value reports, explaining the evidence of insurability to customers, and other processes.
- Regulatory compliance: Every day, thousands of alerts are generated by screening systems, the majority of which are false positives. Automating their review lowers the number of false positives a person must manually handle.
- Underwriting: Another impending change in the insurance sector will increase accuracy and speed through automated underwriting. It involves gathering and analyzing data from various sources to identify and reduce the risks related to the chosen policy.
3. Internet of Things (IoT) and Analytics
Insurance technology is undergoing tremendous digital change. Customers expect immediate and automated results in today’s technology-aware climate.
By 2025, it is predicted that 30.9 billion Internet of Things (IoT) connected devices will be installed globally, which is a significant increase from the 13.8 billion units anticipated in 2021.
The Internet of Things continues to grow, with more wearable and smart sensors than ever. Similarly, the Insurtech industry is projected to be the first to benefit from the development of IoT.
It will enable continuous data collection and sharing across systems, resulting in a faster and more efficient claims process, the elimination of data duplications, and reducing client grievances.
Insurance companies can improve rate determination, reduce risk, and even prevent losses.
By using data from IoT devices, such as wearable technology, insurance companies can
- Captures customer’s information and analyzes data
- Identify risks in specific profiles
- Optimize the price
- Find out what new risks arise
- Detect and reduce fraudGenerate insights
Moreover, insurance companies can provide a better overall customer experience, such as tailored premiums, personalized service, and faster compensation.
4.Artificial Intelligence/Machine Learning
Artificial Intelligence and machine learning can have a lasting impact throughout the industry.
A Deloitte Digital report stated that more than 35.6 million people in the U.S. have voice-activated AI assistants.
In fact, implementing AI could save $390 billion in costs across insurer’s front, middle and back offices by 2030.
Like every other field, the insurance industry uses AI to streamline operations, automate claim processes, engage with the audience through chatbots effectively and facilitate sales.
The machine learning algorithms help underwriters to gauge risk with more information that allows them to offer better and tailored premium pricing. With the emergence of powerful digital underwriting tools, insurers have the ability to provide underwriting determinations quickly to avoid loosing prospects to competitors.
Moreover, AI in the insurance industry is streamlining the process of connecting applicants with carriers, making the process more efficient.
Consumers always look for personalized experiences.Infact, 87% of surveyed insurers are already seeing their companies invest $5 million or more in AI technology each year.
Here are examples of how AI/ Machine Learning can help Insurers stay competitive:
- Claim processing: This process uses artificial intelligence to report the claim, capture damage, audit the system, and communicate with the customer. It allows clients to file claims without having to deal with bureaucracy.
- Risk modeling: Insurers had to craft policies based on rudimentary data about the policyholder, but with machine learning, algorithms can now create personalized risk profiles.
- Underwriting: Insurance companies can outsource their underwriting to computers, allowing them to focus on improved customer service or offering special features for loyal policyholders.
- Lower cost and save time: AI can help automate the labor-intensive process, leading to lower costs and saved time.
- Detecting fraud: Using machine learning highlights suspicious claims from large datasets, improving its data pool.
5.Blockchain
Blockchain is conquering more and more industries. The insurance sector can effectively use its potential and vast possibilities.
Due to its connection with cryptocurrency, blockchain technology is often linked with the financial sector.
According to research, the global market for blockchain in insurance is expected to rise from $64.5 million in 2018 to $1.39 billion by 2023.
In fact, it has transformed the entire modus operandi of insurance technology companies.
Many issues associated with insurance policies can be solved with their use, including obtaining client consent or approval and working together to invest money in shared infrastructures and resources.
It even has significantly impacted fraudulent scenarios in the insurance industry.
For instance, due to blockchain’s immutability feature, moving insurance claims onto a ledger shared among insurance companies makes them unchangeable, which can eventually lower fraud.
Moreover, blockchain makes coordination between insurers much simpler. Insurers can quickly determine whether a specific claim has been paid when they have access to the same shared blockchain ledger. They use the same historical claim data to spot suspicious behavior promptly.
Here are some exciting benefits of implementing blockchain for Insuretech.
- Trustworthiness: It ensures that transactions are secure, authenticated, and verifiable, guaranteeing customer privacy.
- Fraud detection and risk prevention: Blockchain technology can help eradicate fraud in the insurance sector by transferring insurance claims onto an unchangeable ledger.
- Claims processing: Blockchain makes it easy to collect and analyze data in real time, which could significantly speed up processing claims and payouts.
- Enhances efficiency: Because so many processes are manual and time-consuming, blockchain can streamline paperwork and reconciliation for insurance contracts.
- Data Safety: Because blockchain distributes consent, this information is protected from unwanted or illegal adjustment and tampering, making it safer than any previous technology.
Moreover, blockchain can be distributed widely without duplication, enabling greater transparency and better workflow governance.
Why Invest in Innovating Insurtech Industry?
Insurance tech is not just about new products and services. The businesses will continue to use emerging technologies and data to enhance their internal operating models.
As a result, they will be able to market new products and services more quickly and provide better sales and support.
Some of the advantages of investing in insurance technology are listed below.
1.Better Customer Experience
In the past, insured parties had to deal with salespersons driven by earning commission, not getting individuals what was best for them.
There used to be a large volume of paperwork, and the entire process could take weeks and even months.
Today, Insurance tech has made this work more manageable and is becoming more accessible.
Insurance companies can develop more personalized products and improve customer retention by understanding their customers through data analytics.
Customers can choose their insurance, comprehend their needs, and receive personalized service.
2.Promotes Efficiency
Not long ago, improving efficiency in the insurance industry was nearly impossible, and for years, not much had changed in how business was conducted.
Fortunately, the recent insurance tech boom has shifted the way and insurance practices. Insurance tech is helping create greater efficiency.
For instance, while claims processing, an insurtech tool that aids in underwriting decisions can reduce the time clients wait while insurers evaluate risk.
Moreover, using insurtech tools like drones linked with software to assess properties and analyze claims-related documents can be done in less time, promoting efficiency.
Furthermore, in the upcoming years, this usage is undoubtedly going to increase.
3.Improves Flexibility
Modern insurance tech offerings are more likely to have flexible, customized, short-term, or transferrable plans.
Without waiting for business hours or an available representative, numerous insurance tech companies enable users to easily access the information they require without being constrained by procedures.
Instead of being required to lock into long-term agreements, insurance tech is more likely to give individuals specific coverage for a particular need over a specific duration.
Since the claim management process is about analyzing unstructured and disparate data, automating analysis will accelerate and streamline your claims management process.
It speeds up the process so you can more quickly process claims and provides the flexibility to send documents securely through multiple channels to keep customers happy.
4.Reduces Operating Costs
Did you know around one million jobs are expected to be automated over the next few years?
By avoiding duplicate business operations, insurance tech saves insurance companies money.
Traditional insurance companies relied on face-to-face interaction that necessitated manual labor.
Now, insurance tech companies can operate remotely with staff engaging with customers worldwide, reducing the number of employees needed for simple claim tasks.
This often involves paperwork and can completely be transferred to automated digital processes.
Moreover, data-driven decision-making can assist claims adjusters in making better payout decisions. As a result, more correct decisions will be made faster and effortlessly, reducing operating costs.
Thus, the revenue will grow, and the customers will be happy to get additional value from the company and feel appreciated.
5.Decrease Fraud
Insurance tech can also help insurers to detect and prevent fraud.
By leveraging data, analytics, trend analysis, and machine learning, insurance tech companies may be able to detect fraudulent activities if inconsistencies in data arise.
For instance, the use of biometrics and other identity verification technologies can help to ensure that only genuine customers can access insurance products and services.
In addition, big data may also discover potential loopholes that insurers can seek to close to avoid misuse.
Conclusion
Despite being more traditional and slow-moving than some other industries, the insurance sector will continue to evolve with digital transformation, ultimately changing how business is done.
Though some may feel the insurance industry will lose a personal touch, insurance tech strives to offer lower, more custom, more flexible coverage. It will continue to play a pivotal role in business.
Besides, companies need to be aware of the challenges and opportunities within this space, which are abundant.
For more info, get in touch with Benekiva, an innovative tech company striving to provide insurers with the claim management system services needed to smooth traditional processes and make them more consumers friendly.
