As the digitalisation of insurance continues to accelerate, insurers must keep pace by using technology to add value and create a more customer-centric experience. Here, Lorenz Graff, CEO and co-founder of bsurance, explores the defining trends insurers should take stock of when looking to remain one step ahead in 2022:
As we look to the year ahead, it would seem that things are certainly on the up for the insurance market. According to a recent Deloitte report, even against the backdrop of potential new Covid-19 variants, a third of insurers expect revenues to be ‘significantly better’ in 2022 with the demand for insurance expected to keep rising worldwide.
But unlocking this opportunity will require change. Consumers – conditioned by the likes of Amazon and Apple – will no longer accept the standard. More than ever they want digital, self-service platforms, relevant, personalised solutions and faster turnarounds. In this vein, it becomes more important for insurers to use the impetus of digitalisation to rethink their operations in order to deliver more choice, better service and lower prices.
But with so many new and emerging insurance trends and technologies, where to begin?
Life Insurance: A Rebirth
Life insurance was once seen as a slow-moving category involving tiresome form-filling and standard premiums which left little scope for innovation. But the reality is that this model will no longer cut it. Against the digital backdrop, consumers of all ages are pressing for solutions which go beyond ‘vanilla’ and suit their changing lifestyle. Alongside this too, banks, asset managers and new market entrants continue to disrupt the risk taking market, making it ever critical for insurance to move with the times.
To achieve this, insurers must use the power of analytics and digital innovation in order to deliver a predictive, personalised life insurance experience to customers.
Already, thanks to the rich intel provided by social media and telematics, insurers are able to build 360-degree views of consumers and use real-time monitoring to track their habits. Add to this the invaluable data provided by fitness and health apps, search engines, wearables and other consumer devices and even eventually the virtualisation of medical appointments, and it becomes possible for insurers to paint a more accurate picture and predict premiums.
This revolution has already begun where customers can now receive extra discounts for following a healthy lifestyle via their healthcare provider’s app as recorded by their smart device, or those that demonstrate they are fitter than the ‘average’ can clock up further cost savings. It’s also evidenced in the shift away from annual premiums, whereby life insurance will be more available on a needs-only basis, in bite-sized chunks and easily activated or deactivated as required.
This digitally-led approach will also transform the insurance process. Hereby, it will no longer be a case of a customer sharing documents for the insurer to verify but rather the opposite – whereby insurers use a customer’s digital footprint to populate the application form, underwrite the policy and eventually issue it, subject to their final approval.
Underlining this too will be the continued transition towards embedded digital insurance solutions as a way for businesses to connect customers to relevant life insurance products designed at the Point of Sale. Eventually, this won’t only be seen in the obvious avenues, such as banks and mortgage lenders, but bundled into travel, health and wellness platforms.
With this personalisation, there is an opportunity for insurers to not only drive profitability but secure capital efficiency by enabling improved accuracies, speeding up time to market and prompting seamless, faster claims management and processes.
Data Driven Product Development
The latest developments in analytics tools will also continue to help insurers to create better new products which meet the specific needs of identified clients or target groups. In this way, by using artificial intelligence (AI) and intelligent process automation insurers will continue to delve much deeper into their customer, their behaviour and needs – often in real time – in order to identify the kinds of products and experiences that they value enough to pay for.
It may be, for example, that an insurer is able to monitor a certain demographic’s behaviour after they have bought an insurance product and find they will typically go on to buy another solution elsewhere. Using the learnings garnered they can then seek to develop a more competitive alternative.
Tracking larger trends, rather than relying solely on your internal data can also be incredibly helpful in informing product development, especially when it comes to noting market gaps.
A data-driven approach can even redesign products too. This is widely seen in the parametric and microinsurance categories where increased intelligence around climate, soil conditions, crop patterns and the like, are helping insurers to develop more tailored, accurate insurance solutions to improve the overall customer experience.
2022 is also likely to see further advancements in how AI and umbrella technologies such as robotic process (RPA), machine learning and predictive analytics reshape the insurance industry. According to McKinsey the widespread use of AI in functions and use cases AI investments could add up to a huge $1.1 trillion in potential annual value for the insurance industry.
Across the board, this will be seen in everything from harnessing the power of AI-based data analytics to curate more tailored, relevant customer experiences amid the growing trend for hyper-personalisation found in the wider retail environment. We will also see the accelerated transition towards online help desks supported with machine learning for a more cost-efficient, autonomous customer service, and certain aspects of claims processing automated for a much quicker turnaround.
Besides helping deliver on the high-speed demand of modern customers, AI will also continue to help insurers to access more accurate reports in a shorter span of time in order to enhance fraud detection and categorisation and conduct more sophisticated analyses.
While the digitalisation of insurance may have once seemed like a far-away concept, the reality is that it is happening in the here and now. In order to keep pace and maintain market share, insurers must take advantage of the latest digital innovations which can help improve their products, create standout and ensure they remain ‘tomorrow ready’ today