5G is motivating insurers towards greater digitalisation and that’s no bad thing; greater connectivity to smartphones means more opportunities for insurers and brokers alike;
Michael Kimmig, Insurance Director, ISG EMEA takes a look.
As the rollout of 5G continues to pick up speed, we’ll see increased adoption of technologies that support its use in the insurance sector. In addition, 5G will enable insurers to increase their digitisation efforts as they seek to create the most efficient and effective business possible.
One of the biggest benefits of 5G is the significant boost of speed when using mobile and connected devices. As 5G is rolled out, insurers will introduce services and plans that make the most of the technology – things like instant quotes will become more commonplace as insurers compete to provide the best customer experience possible.
Those who are less keen to embrace 5G and connected technology will start to find themselves losing out to more agile competitors – especially new entrants into the industry. We can be sure that 5G will push an increasing number of insurers towards digitalisation and away from legacy systems and processes.
How the insurance industry will benefit from 5G
Some insurers seem to see increased 5G as a threat, but the technology brings tremendous benefits to the sector and its customers.
1. Greater risk prevention
Risk prevention services will improve with the introduction of 5G as we’ll see insurers using the internet of things (IoT) to reduce claims by preventing incidents from occurring. We’ll see customer experience improve as a result.
For example, insurers could use connected devices to warn farmers, homeowners and drivers about severe weather such as torrential rain or hail. 5G will allow a significant increase in the number of measurement points and the ability to send more personalised messages to customers, and as a result, we’ll see people get these alerts much faster, possibly allowing them time to do things like move their vehicles (or themselves) to safety. And as bandwidth increases, insurers will be able to inform everyone affected simultaneously.
2. Real-time claims processing
Of course, it’s impossible to eliminate all claims, but we’ll see a significant improvement in the claims process with the introduction of 5G.
Using the improved network capability, insurance companies will be able to access image data in real-time from the drones they use. Currently, drone users have to wait for the drone to land before manually transferring data for processing or uploading, but with 5G, data transmission can become fully automated with data capture and analysis happening in real-time.
It’s great for customers, who won’t have to deal with insurance adjustors and claims administrators , and it helps insurers by simplifying the claims handling process – reducing costs and speeding up response times. Claim managers will be free to focus on where they can add the most value to both the customer and their employer (investigating queries and inconsistencies, for example).
The in-depth data collected by automated processes will help insurers get a more complete picture of the risk landscape, let them forecast potential risks with more accuracy and, potentially, make more attractive offers to customers.
3. Delivering an excellent customer experience
Many insurers are lagging when it comes to customer care. One reason is the lack of touchpoints between the insurer and its customer.
With customer experience focused on renewals and claims, there’s not only a large span of time with little or no contact, but the contact that does happen can be negative (such as customers feeling they need to get their renewal quotes lowered or having too much back and forth during a claims process when the customer needs that money to buy a replacement item, for example).
With the introduction of 5G, not only will the claims and renewals processes be less onerous and fairer, but also insurers can create many more opportunities to communicate with their customers in a way that’s rewarding for the individual.
The personalised alerts and recommendations made possible with 5G, combined with the convenience of mobile insurance, enables insurers to steadily enhance their relationships with customers. It could even help generate additional revenue through increased customer loyalty.
The 5G rollout will separate those insurers that understand the importance of a flexible approach to insurance, and those that are unwilling (or feel unable) to make the changes needed. While 5G will be a huge benefit to many insurers, it will also give a significant boost to the platform economy.
We’ll see an increase in new insurers designed from the ground up to operate in an increasingly connected world. Traditional insurers will need to meet this challenge to remain an appealing option to customers.