How Technology Is Changing the Insurance Industry
Plenty of accelerating technological trends are poised to transform the landscape of insurance. Risk will migrate from drivers to the artificial intelligence (AI) and software that underpins self-driving cars in auto insurance. Satellites, drones, and real-time data sets will offer insurers with unprecedented visibility into the risk surrounding facilities, allowing them to make more accurate decisions. After natural disasters, claims processing will be automated, infinitely scalable, and lightning-fast. The life insurance industry will introduce “wrapped” products to the market that seamlessly adjust coverage based on their customers’ changing demands. Leaders will have to let go of entrenched perceptions and business paradigms in order to embrace new ways to create and distribute products that will be radically different in many situations.
Technological Trends Shaping the Future of Insurance
The advent of key technological trends that are affecting practically every industry has occurred in the last several years. Products and services are being reshaped by a slew of technological developments and upheavals.
As AI becomes more ubiquitous and algorithm creation becomes commoditized, carriers will be able to re-engineer core operations to be more predictive in nature substantially. As core operations become AI-enabled, distribution, underwriting, claims, and service disrupt distributions resulting in a “human in the loop” paradigm that boosts efficiency and allows for higher-quality client touchpoints. Carriers haven’t properly realized the potential of their data assets, such as claim history and distribution relationships. Leading carriers and ecosystem players will use AI to produce goods and services based on data and analytics, in relation to reengineering core processes.
Insurers worldwide have significant technology debt, with many key procedures slowed down by substantial on-premise legacy technologies. As the cloud evolves, insurers will be able to launch new products more quickly and provide better customer service by rapidly shifting their critical operations to the cloud. The cloud will also be crucial for delivering the type of computing power required to comprehend and utilize the large data sets completely.
Future of Connectivity
Insurers have begun to use telematics to evolve the core auto product in many markets. IoT adoption could usher to a comparable restructuring of products in the life, health, property, and commercial lines. Customers may provide a more accurate view of their requirements, and insurers can better understand risk by increasing the frequency and specificity of data shared through IoT devices, both at the moment of purchase and on an ongoing basis. As 5G is becoming prevalent, this data may be shared with decreased latency, allowing insurers to give real-time services to their customers.
Next-level Process Automation and Virtualization
Insurers have consistently invested in robotic process automation to help automate processes, particularly in back-office operations, but emerging technologies will allow carriers to fundamentally rethink products and services. Industrial IoT, for example, can enable real-time monitoring of equipment to allow for predictive maintenance before claims occur. Digital twins, as well as 3D and 4D printing, have the potential to revolutionize the claims process for all types of physical damage.
Insurers handle sensitive consumer data across lines, and as goods and services evolve, customers will be required to share even more of this data with carriers. New technology will enable carriers to manage risk better and make use of complicated customer data, which is an essential step toward transitioning to a “predict and prevent” insurance model in which data is shared more often between parties and insurers playing a more successful role in claims prevention. As blockchain technology becomes more extensively adopted, it will aid carriers in better managing customer data in a secure and uniform manner, and simplifying current difficulties like identity management and verification. Carriers will be able to build resilient networks that protect against cyber intrusions using zero-trust security and similar approaches.
The technological trends discussed in this article will reshape the industry from top to bottom, presenting key opportunities and, in some cases, existential threats to conventional players. These shifts are already taking place, so insurers need to act quickly to build a more ambitious vision for how technology might help their organizations thrive.