Insurtech continues to be an emerging market and one investors are pouring money into, based on both its impact and potential. Across the first three quarters of 2020 there were 274 insurtech deals globally totalling $5.1B. These companies are on a mission to inject innovation and advanced technology into an industry ripe for a change from its traditional ways of doing business. Technology has been deployed into every stage of the insurance lifecycle. From getting quotes to filing claims, technology such as artificial intelligence (AI) is changing the way insurance carriers, brokers, companies, and consumers do business. This blog will look into some of the ways insurance companies are using technology to add value for their customers and distribution partners, and explore some of the ways technology is set to reshape the insurance industry in 2021.
The following questions will be explored to see how technology will continue to change a conservative industry for the better:
How Do Insurance Companies Use Technology?
The insurance industry had lagged behind other service industries like retail when it came to embracing the most recent technological revolution. But this is changing as business and technology leaders are embracing how innovative technologies can transform their products, services, and internal operational efficiency. Technology is also being leveraged heavily to improve the customer experience (CX) for an industry where the buyer comes to the table not always by choice, with insurance often being required versus otherwise desired. A few ways insurance carriers are embracing technology include:
- Predictive Analytics – More insurers are leveraging the evolution of computing power to better serve customers through increased automation and greater precision in product pricing. Aggregating and analyzing internally and externally available data allows carriers to better predict loss outcomes, to be proactive rather than reactive when it comes to triaging claim complexity, identify fraud indicators, recognizing emerging trends, and strengthening risk selection.
- Telematics – Increased availability and adoption of telematics can offer a win-win for customers and their insurance carrier. Policyholders gain transparency into how their driving behaviors affect their risk, and in turn they can directly influence their premium. The carrier has increased confidence that they are charging the right amount, to be both competitive and profitable. And the carrier gains invaluable data to incorporate into their predictive analytics. As insurance companies create incentives for safer driving practices, they are also having a larger positive impact on society.
- Artificial Intelligence (AI) – Many industries are embracing the power AI delivers to improve internal processes and the overall customer experience. Healthcare, e-commerce, and banking have all integrated AI solutions to help transform how they do business. The insurance industry is also embracing AI to transform workflows within underwriting, policy administration, loss prevention, billing, payments, claims, marketing and even fraud detection. To show how important AI is to the insurance industry, Accenture reported that 81% of surveyed insurers acknowledge that technology has become an inseparable part of the human experience. This means insurers must prioritize offering digital experiences that meet if not exceed their customers’ expectations of both automation and empathy.
How is Technology Helping the Insurance Industry?
Advanced technology is helping the insurance industry in all areas of the business, from marketing to claims. Modern solutions provide carriers with more modular replacements of their legacy core systems. Newer systems not only enable the current customer experience, workflow and product demands. They offer carriers faster speed to market and the ability to layer in capabilities over time. Partnerships are on the rise, giving insurance companies more “plug and play” options to introduce new functionality. Digital outreach is an enhancement that gives insurance companies the ability to initiate meaningful customer interactions throughout the year, to establish a differentiating relationship versus simply having an annual transactional connection. Lowering costs and improving customer satisfaction are two of the main ways technology is helping the insurance industry. Below are a few benefits technology can provides to help insurance carriers in 2021 and beyond:
- Product & Service Innovation - Both insurtechs and experienced core system providers, sometimes through partnerships, are enabling carriers to bring new insurance products to market. Speed to value is increasing and the expense is lessening through technology designed for agile delivery, low/no-code frameworks and SaaS options.
- Lowering Operating Expense – Offering customers, claimants, and members digital self-service options reduces the inbound and outbound interactions otherwise handled by employees. Taking maximum advantage of the data a carrier accumulates daily can be used to continuously improve the accuracy of machine learning and expand successful process automation. No-code platforms enable automation design to move closer to the actual business user, reducing the cost and time of hand-offs to more constrained IT talent. Expense reduction can give carriers greater pricing flexibility, to avoid losing business solely based on price.
- Customer Experience – Businesses know that customer experience matters and as the expression goes, there are no second chances to create a great first impression. More and more people of all ages are becoming digital natives, even those who a year ago may have been digital-tolerant or even digital-adverse. With that evolution, the expectation that service providers offer the customer the choice on how to engage is shifting from differentiator to commodity. Technology like SMS texting, next-generation chatbots and mobile browser interfaces are providing modern communication options to customers. And they are building two-way connections that insurance carriers can utilize for meaningful conversations with their customers throughout the year, not just when a bill is due or a claim is filed.
- Fraud Prevention – Insurance fraud is big business, and hurts everyone as the costs chip away at household budgets and company profits. It is not a victimless crime - the FBI estimates that the total cost of insurance fraud (not including health insurance) exceeds $40 billion annually and costs the average U.S. family between $400 and $700 per year. Technology coupled with data can enable insurance companies to detect the warning signs of potential fraud earlier and earlier in the life of a claim. And when multiple carriers’ Special Investigation Units compare and share their insights, the power of the many is realized.
In What Ways is Technology Set to Reshape the Insurance Industry in 2021?
With the technological disruption of the insurance industry well underway, it is time to look forward to seeing what the future holds. As the industry continues to embrace innovation, here are a few hot technology trends to watch out for in 2021:
- Automation Platforms - Automating the full insurance customer experience and internal processes cannot be solved by a single technology. Robotics Process Automation (RPA), Artificial Intelligence (AI) and Machine Learning (ML) are complimentary but not interchangeable. RPA automates repeatable, predictable tasks without interpretation. It can help process claims 75% faster by easily collecting data from various sources without the need for human touch and improves data quality. AI simulates the human ability to understand each unique interaction and respond appropriately, as we experience with (effective) chatbots. ML (a subset of AI) automates processes based on learning from data - and it gets more accurate over time as it has access to more data to learn more. Carriers can use ML offer tailored product offerings and optimized pricing without requiring the human expertise of an underwriter. Carriers who understand their full span of automation needs will avoid the disappointment of discovering that one-size automation solution does not fill all.
- SaaS + Cloud – As insurance carriers replace or modernize their legacy core systems, they need to journey through the build, buy, or lease decision, along with taking a fresh look at their hosting strategy. Many legacy core systems still in use were created by carriers when there were few vendor options to consider purchasing, and those available couldn’t stretch to meet the carrier’s functional needs without significant customization. Today the core system options are many, with extensive capabilities including configuration plus an ever-growing inventory of vetted partner component solutions available. And the core providers that offer Software as a Service (SaaS) give insurance companies the benefits of cloud computing to lower costs, improve agility, and deliver new business services. According to IBM, cloud computing offers insurers the ability to scale existing IT services such as storage and computing power to keep processing times low while optimizing service levels. And the cloud is not only an option when introducing a net-new core system. Some carriers are evaluating their entire application portfolio for cloud migration opportunities, regardless of a system’s age or origin. Even partial cloud migrations can offer a positive return on investment.
- Blockchain – Claims fraud is not just a multi-billion dollar insurance industry problem, it’s a societal issue. As carriers look for better ways to predict fraud through AI, blockchain could be another part of their fraud-fighting solution. Blockchain creates a digital ledger that is visible by all in the transaction chain, bringing fraud activity out of the shadows and into the open. Blockchain also has the power to revolutionize claims processes, making them three times faster and fives times less expensive. Using shared ledgers plus smart contracts that turn paper insurance policies into programmable code, claim payments can be automated creating more efficiency and accuracy. Digital ledgers can help automate legacy processes, eliminating hours of paperwork. The risk of human error is reduced since all forms and data are safely stored along the blockchain. This security and transparency is appealing to insurance carriers who process sensitive data frequently every day.
What are the Most Interesting Innovations in the Insurance Industry?
It is an exciting time for technology in the insurance industry. Perhaps the most interesting innovation is how the participants are changing. Carriers are embracing insurtech more than ever with more insurers investing in, acquiring or partnering with startups to help innovate their current business models. Digital-first companies like Uber, Tesla, and Amazon have expanded into the insurance space. Car manufacturers are partnering with insurance companies for their dealerships to become points of sale. Insurers are looking to improve the customer experience, lower costs, and more accurately assess and price risks in an increasingly diverse and competitive marketplace. With these goals in focus, technology will be an essential and strategic partner to help achieve insurance carriers’ goals for this year and for many more years to come.
See How Ushur Has Been at the Forefront of Technology in the Insurance Industry
Ushur’s technology is helping take insurance into 2021 and further. With services like the Invisible App which allows insurers to create a dynamic customer engagement with no coding experience needed, the future is here for improving and automating the insurance customer experience. Ushur also has solutions that assist with claims triaging, call deflection and email processing automation, lowering costs while giving customers the attention they demand in today’s changing market. Our no-code platforms allow automation workflow development by business analysts, freeing up IT groups to work on complex technical projects while increasing speed of rollout of new business solutions. These are just a few ways Ushur is leading the insurance industry into the new digital age, one that benefits both insurers and their customers alike.
Ushur is on a mission to transform how insurance carriers do business. From process automation to claims optimization, our easy-to-use platforms are the perfect match for any insurer whether in the P&C or LA&H space. The future is happening right before our eyes in the insurance industry, it is no time for insurers to sit back, it is time to act. Click here to request a demo today!