From AI to blockchain, here are some technological challenges the insurance sector is going to face in the next months. Key words? Flexibility, speed and customer experience
The insurance field is constantly evolving, and the pressures of the Covid-19 crisis are certain to accelerate that evolution. But crises can inspire new business models and foster new perspectives, which makes this the ideal time to identify the innovations the industry needs to adopt in order to avoid falling behind in the future. So what are the most crucial areas to focus on in 2020?
One vital factor is digitization and the adoption of digital strategies: finding ways to allow savings, boost efficiency and increase customer satisfaction are increasingly important, and this may require interventions which are more radical than simply superimposing digital processes onto existing ways of working, meaning that Insurtech – which uses advances in technology to make the current insurance model more efficient – is increasingly essential. That insurtech funding in the United states has increased by 60% from US$1.46 billion to $2.44 billion and tripled in Asia from $140 million to $506 million shows just how essential.
Another crucial trend is the use of artificial intelligence and machine learning. AI has the potential to revolutionise the insurance business by making processes more efficient, multiplying opportunities for data collection and helping companies achieve automation and more finely-tuned levels of personalisation. A Juniper Research study predicted that premiums written by AI could rocket from $1.3 billion in 2019 to $20.0 billion in 2024. Companies which are slow to adopt AI may find themselves struggling to keep up.
Also important is the adoption of blockchain technology. By ensuring that information is shared, protected and easily verified, blockchains can reduce administration costs, rapidly verify consumer data and insurance history and facilitate increased transparency and improved workflow governance.
Putting the customer at the heart of everything is vital: data collection allows insurers to better understand and respond to consumer needs and to deal with them as individuals rather than as customer segments. Usage-based insurance policies can use customer data to tailor charges to user needs and behaviours. And as the Internet of Things becomes increasingly a part of daily life, tailored offerings based on data collected from wearables, telematics and smart homes will allow ever more accurate risk assessments, allowing products to be priced more competitively and benefitting both customers and insurers.
But successfully getting to grips with all these issues means keeping up with developments in technology, and that means employing and retaining talented, technically skilled staff. Even though insurance is a high-growth multi-trillion dollar industry, it’s often still perceived as old-fashioned and stuffy, with graduates gravitating to fields like consulting, finance and technology which they see as more exciting.
In a Universum survey, business students rated insurance as between the 14th and 18th most attractive industries to work in, while it didn’t even appear in engineering/IT students’ top 20.
To combat this, insurers need to enact strategies to make themselves attractive to IT talent. This might take the form of companies undertaking partnerships with insurtech companies, for example, allowing them to position themselves as dynamic, connected, and potentially disruptive and to leverage the prospect of working in innovative technologies to attract a diverse talent pool and create an agile digital company culture. Since the pandemic struck, social distancing has underlined the importance of answering the needs of increasingly digital customers. An effective use of advanced technologies allows the development of new value propositions and ways of strengthening customer relationships, both of which are key to ensuring that the industry remains relevant to clients and attractive to investors. Insurance in 2020 means flexibility, speed and keeping the customer central, and it will be the companies who step up their game now who will be best placed to provide the insurance of tomorrow.