With the help of technology, the insurance industry is becoming more and more modern. This is true for almost every industry in the world. According to Reuters, insurance technology start-ups raised $10.5 billion last year.
Regardless of size, insurance companies are looking to digitally transform their business and use solutions that allow them to keep up with changing customer needs and industry regulations.
A report from Accenture says that insurance companies will be using more technology in 2021:
Insurance technology, or “insurtech,” is already a big part of the business for both insureds and insurers, so it would be fair to say that it is already essential to both sides. But what is “insurtech,” and what does it do for us? It’s called insurtech when technology is used to improve the efficiency of the business, customer service, and regulatory practices in the insurance industry and how these things work.
As a whole, industry experts say that the global insurance market will change a lot in the next ten years:
- Social: Customers are getting more and more critical. Today’s customers have even more high expectations from businesses than they did in the past is not a secret at all. These new demands have pushed companies worldwide to switch from cold-blooded marketing to more customer satisfaction. Consider what clients want and provide it quickly. Customer satisfaction and retention are becoming more critical to businesses. This new way of thinking comes with better services and products so that companies can do better work.
- Technological: Insurers must consider using AI and machine learning to solve business problems across the insurance value chain.
- Environmental: Unfortunately, climate-related disasters have increased over the last few years. The development of more sophisticated risk models has made it easier to deal with these large-scale disasters. Also, major European insurance groups see sustainability goals as their own strategic goals, and they follow the Responsible Investment and Sustainable Insurance guidelines. When the most significant insurance and reinsurance companies decided to stop insuring coal-fired power plants and mines because of the danger they posed to people, they decided to stop insuring those places.
The widespread use of smartphones and tablets and cloud computing allows people to access the Internet. There is also a lot of data that can be gathered and analyzed thanks to the rapid growth of computing power and storage space and the growing number of sensors and devices that can be connected to the Internet.
All of these technological changes have helped the insurance industry become more digital. Surf through the most important technological trends that will shape this field in 2022.
Regardless of what kind of business you work in, how can you improve your products and services? People will tell you what they think through customer feedback for sure One way to get feedback is to use wearable technology, like fitness bracelets, smartwatches, and smartphones that track how much exercise a person does.
Data has always been important in the insurance field, and modern technology makes it possible to look at customer data. This way, insurers can use data from fitness bracelets to look at them and make sure there aren’t any risks. Yes or no? That’s the question. Will clients be willing to move their data?
In this case, it makes sense to give them significant discounts or special terms to get them excited. For example, the British insurance company Vitality offers customers a 40% discount on data access if they use Withings devices. If you’re a regular customer, you can get points and use them to earn free coffee or movie tickets.
A 160-year-old insurance company in the US went even further. John Hancock was the first company to do this. The company has made it a requirement for everyone who buys health insurance to give the company access to their physical activity data through Amazon Halo. The John Hancock Vitality program, which the company says “can save you money and gives you tools and resources to live a longer, healthier life,” can be used by people who buy life insurance.
Health data is essential for both employers and the people who work for them. VHI (Voluntary Health Insurance) is an example of this. If social packages for staff include VHI, then employees will be more likely to wear fitness bracelets. This practice helps the team track how active and healthy they are. Companies, where it’s normal to take care of employees’ health don’t get sick as often as companies where it’s not. This way, businesses can make their employees more loyal and save money on health insurance.
Insurers have used AI and machine learning to make customer service and claims easier for their customers already. When insurers use artificial intelligence to make decisions about payments, they can cut out the human element and make them quickly.
Even a small change in how insurance is done can save time and money. So, insurance companies use artificial intelligence to process customer requests and figure out how much insurance costs more quickly. AI can also speed up claims turnaround times and change how we underwrite things. Companies like Hypatos and Automation Hero help insurance companies automate their work and go paperless.
Personalized experiences also play a role in how well you do. As we said earlier, when people buy insurance, they expect insurers to give them a unique experience. Artificial intelligence tools can look at customer data and provide each person with an exceptional experience based on their behavior or habits. On the other hand, AI-powered chatbots improve communication and cut down on wait times.
Machine learning techniques can make a huge difference in how insurers do their job regarding claims processing. Technology is known for making customer service better. In the same way that algorithms speed things up and eliminate human error, they also speed things up and eliminate human error.
The technology is also a great way to start a recommendation engine. When this engine goes through the list of customers, it can figure out which people have too much or not enough insurance and give them the right policy at the right time. Finally, machine learning-based predictive models provide insurance companies with information about how much different claims will cost.
Another trend that insurers are paying attention to is our predictive analytics, which helps them better understand and predict how customers will act. People who use predictive analytics can help with fraud, underwriting, pricing, and figuring out which customers are likely to cancel their plans. A survey by Willis Towers Watson says that life insurers who use predictive analytics saw a 67% cut in costs and a 60% increase in sales.
Perhaps underwriting is where predictive analytics and AI are used the most. Last year at least 40% of life insurers used AI-based and automated underwriting. They also planned to do so in 2022. A great time-saver is that the technology makes it possible to make changes to data models without doing them one by one. This isn’t all: Better data models lead to more accurate predictions about a customer’s risk profile. However, AI looks “below the surface” at emails, geolocation, and social media data.
There isn’t a list of technological trends that don’t have blockchain. When the COVID-19 pandemic comes around again, insurers need to be able to deal with competitive challenges and boost online sales, which is even more critical. A distributed ledger will make finding and fighting fraud easier, sharing data with trusted third parties, and keeping confidential information safe.
In addition, the blockchain will help cut costs and make insurance payments easier. The PwC report says that blockchain solutions could cut costs by up to 25%, saving the industry $5–10 billion.
Cloud technology is taking over the world’s businesses. The cloud is an essential part of the infrastructure of many insurance companies as they grow, and this trend will get more significant in the next few years, too. A survey by Sollers Consulting says that 8 out of 10 insurance companies will use the technology by 2031.
As technology gets better, all the people in the insurance market will have the same advantages and chances. It will, however, be up to those who take advantage of these changes first. It’s an excellent time to be an entrepreneur because new businesses are coming up.