In the advent of continuous technology advancements, aided by changing market demand and innovations (in terms of business models, inflation, and operating structure) the insurance industry is facing many macro challenges. These factors are driving insurers to innovate new products, distribution model, risk management, underwriting and pricing, delivering superior customer experience, enable distribution channels, reduce cost of claims, and meet the regulatory and compliance deadlines.
At this inflexion point, insurers have realized that they have no other way but to leverage technology to drive innovation to be relevant, profitable, and resilient. Can we say technology in insurance industry is the driving force behind innovation? Let us see an example of how this has been silently happening and in future which technologies are going further driven the way insurers do business, operate, and sell. Following is a representative list of how technology is changing the insurance industry:
- IOT in insurance based on usage
- Data and analytics on parametric insurance solutions
- Digitalization on new distribution model and direct 2 consumers
- Application of robotic process automation in redefining the insurance processes
- Imagery, drones, IOT, OCR on risk and claims data intake
- Smart fitness on life and health policy pricing
- Auto-notification alerts on proactive communication reducing lapse
- API integrations on payments and external communications with reinsurers and service providers
- Machine learning, predictive analytics on fraud detection, and what if analysis
- Cloud distribution platform on collaboration between brokers, agents, and underwriters
Let us see the representative list of how future technologies are going to drive insurers to innovate further?
- Immersive technology (MR – Mixed Reality) on all interactions across stakeholders – brokers, agents, employees, underwriters, and customers, etc.,
- Block-chain (with Web 3.0) on risk management, underwriting, pricing, and claims adjudication
- Embedded insurance on product manufacturing and pricing
- Prescriptive analytics on claims, underwriting, client selection, risk assessment and underwriting
- No code programming on distribution and business decision analytics by business users
- Autonomous cars on products and pricing, risk management
- Data marketplace on distribution and consumer behavior pattern for improving selling
- Hyper automation of business and operation processes to reduce significant cost
- Generative AI on pricing models and risk assessment
- Genetic engineering technology on pricing and human expectancy predictions
There are many other technologies that are going to change the way insurers innovate their ways of working, product development, distribution, and pricing, etc. But the most important question is whether the insurers’ are ready for this change from their traditional ways, like:
- People and culture – Are insurers upskilling and training the employees, brokers, agents, distributors, service providers irrespective of their positions? Do they have inclusive and collaborative culture built-in for the change?
- Processes – Are insurers ready to embed agility across various functions?
- Technologies – Do insurers have the right set of technology and tools and tech strategies to support the great transformation? Are the technologies scalable and competent to adjust to future needs?
- Tech Partners – Are insurers ready to change their traditional resource augmenting IT vendors with IT partners like HCLTech, with innovative culture to get maximum business value?
- Investments – Do insurers have enough capital to invest in promoting innovative ideas, PoVs, use cases and proof-of-concepts?
Answers to the above questions will determine whether insurers are ready for the technology transformation race.
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