The insurance industry has been undergoing major changes in recent years. Not only does it have to keep up with the technological advancement but it also has to adapt to the changing needs of the clients and provide them with relevant offers. With that being said, insurers have to keep an eye on the latest technology trends in order to retain clients and remain competitive in the ever-changing world of fintech. Below, we discuss the major tech trends that will most likely contribute to reshaping the insurance industry in 2022 and further on.
Personalized insurance
One of the key and most important trends that insurers should focus on is personalized insurance. However, some industry professionals confuse it with customer segmentation but these two approaches are not the same at all. In the case of segmentation, a company sorts out a group of customers and then tries forecasting what might be the best offer for them. But if we talk about personalization, that means using one’s personal data to understand the exact needs of a person and offer a corresponding solution.
In its recent interview with Uwe Stuhldreier, an executive at HUK24, McKinsey discussed the importance of a customer-centric approach in the insurance industry. And if you need numbers to back up this statement, approximately 77% of customers would agree to exchange their personal data for a personalized insurance offer.
So what does personalized insurance mean? According to Stuhldreier, it implies the implementation of AI-powered personalization engines. Such engines provide clients with immediate response, analyze their data and online behavior in order to provide relevant offers, and speed up the application approval process by analyzing it in real-time.
While for some companies, the implementation of such engines is still a long way to go, they can already start with implementing ML-based solutions or AI-powered chatbots. By making one step at a time toward personalization, insurance companies can stay afloat and remain competitive against tech innovators and tech startups within the fintech area.
Predictive analytics
Predictive analytics is another tech trend that’s here to stay if we talk about insurance. Based on machine learning technology, predictive analytics basically allows users to predict things, like customer behavior or the possible demand for a product. So what does it have to do with insurance?
Due to the availability of massive volumes of data, insurers can now use it to their benefit and eliminate guesswork from all their processes. Instead of trying to draw predictions on the possible risks, insurers can simply feed the available data to an ML model and it will deliver accurate results. The benefits that predictive analytics brings to the insurance industry include:
- Fraud detection and mitigation: ML models are able to identify fraudulent behavior and report it;
- Risk mitigation: predictive analytics can point out potential risks and justify them with relevant data;
- Understanding of customers’ behavior: by analyzing the behavior and needs of the clients, insurers can provide them with more relevant offers;
- Better customer experience: by analyzing possible complaints and weak areas, insurers can provide better customer service and support.
Probably the biggest benefit of predictive analytics in terms of insurance is the mitigation of risks and the ability to timely identify them. Even the smallest risk can lead to massive consequences in terms of financial losses so insurers should consider incorporating machine learning in their processes in the nearest future.
Mobile-centric approach
We’ve already stated that the insurance industry has remained quite conservative for a long period of time – but as technology advances, so does the industry. New business models make insurance options clearer, more structured, and more personalized with the help of digitization. In this way, users are not intimidated by insurance-related processes anymore since they became more user-friendly and clear.
One of the best ways for insurance companies to adopt digitization without going too far is by getting a mobile application. For a long time, customers have been dissatisfied with how long or complex the process of getting insurance is. If we get back to the McKinsey interview, its main message was to facilitate the finance-related processes for customers and make them more user-friendly. And what can be more user-friendly than an intuitive and feature-rich mobile application?
A good example is a banking app that allows you to fill in an insurance form in a few clicks, with no need to go to a physical office. In this way, a customer saves their time and can receive immediate feedback from a built-in bot which contributes to a better user experience.
Internet of things (IoT)
The usage of smart devices creates new opportunities for insurers to integrate collected data into their services. Since there are many objects and technologies – from wearable health monitors and smart homes to connected cars and automated manufacturing centers – there are also many possible cases where the collected data can be used in the insurance industry.
One of the biggest use cases for IoT in insurance is risk detection and risk assessment. With access to IoT devices and collected data, insurers will be able to offer more specific solutions to their customers beforehand. An example would be analyzing information like the temperature of a car’s engine or the density of traffic jams, predicting possible risks and offering a corresponding solution.
If left IoT unchallenged, insurance companies can become less profitable in the long term. A thorough data analysis provides insurers with information about their customers, including statistics on the state of their houses, cars, or health. This information helps understand when it’s the best time to offer insurance services and what exact services to offer. For example, if an insurance company receives information that the client’s vehicle condition is concerning, they may offer a corresponding insurance package.
Cloud-based insurance
More and more industries are now moving to the cloud and insurance is no exception. Cloud computing helps insurance companies speed up the implementation of projects and overall take better care of their processes. As well, a transfer to the cloud allows insurance companies to create a robust and secure ecosystem, keep everything in one place, and speed up service delivery.
By being cloud-based, an insurance company can test new technologies before using them. In addition, a cloud typically provides a number of valuable features such as automatic creation of charts, financial planning, ML-based fraud analysis, and many more. However, it is important to remember that a company should consider all possible risks related to data security and network availability before beginning to plan a shift to the cloud.
Robotic Process Automation
The biggest RPA advantage is automation and it’s something the insurance industry can greatly benefit from. The deployment of RPA in insurance can:
- Speed up the implementation of business processes;
- Increase customer satisfaction (think about chatbots);
- Collect the data;
- Perform background checks.
Needless to say, automation greatly contributes to better accuracy and productivity. By deploying software bots, employees will be able to concentrate their efforts on strategic tasks and dedicate their time to engaging work with more value-added activities.
Final word
As insurance quickly adopts the latest technological advancements, it’s safe to assume that this industry, overall, becomes much more customer-centric and data-focused. However, with great power comes great responsibility: insurance companies need to have their guards up and closely monitor the security of their software. Otherwise, even the tiniest vulnerability may lead to massive financial losses which, in turn, will have a tremendous impact both on clients and the company.
