Insurance Innovations: Trends Shaping the Future of Business Protection

Like many other industries, insurance is getting more technology innovations every day, some might even say it's going through a bit of a shake-up. But the change is happening slower than we'd like. One surprising reason is that insurance companies have difficulty finding and keeping good people, even though the insurance business is huge and still growing.

Here's the thing: insurance setups are pretty set in their ways, especially in rich countries. It's a tricky situation. These companies want to update their old systems and do things in new, customer-focused ways. But they're finding it tough to do that without letting go of the old methods that got them to where they are today. It's like walking a tightrope. However, 2023 has proven to be the year of changes and innovations. This article highlights new insurance trends that are going to help the insurance sector in the coming years. 

Personalisation & data

Insurers are making a significant shift by focusing on the consumer's needs. They're analysing data from various sources, including connected cars, fitness monitors, and, yes, toothbrushes! This allows them to understand each customer as an individual rather than a group. For example, usage-based insurance uses consumer data to establish fees based on each person's unique needs and behaviours. Customers have more control over what they pay this way.

Personalisation and smart data use benefit both customers and insurers. It not only makes customers happy, but it also allows businesses to identify risks more correctly and maintain consistent earnings. Now, asking customers to give their location may appear intrusive, but according to a Morgan Stanley and BCG study, customers are fine with it as long as companies are transparent about how they would use that information. It's all about being open and giving customers something in exchange for their data.

Customer Interactions 

Customers now regard their relationships with insurance companies as interconnected events rather than discrete ones. This shift towards digital interaction shows how insurers are improving their consumer relationships. Providing an exceptional experience isn't just a nicety; it's a need for a company's sustainability. Insurance companies must guarantee that every encounter, whether on their website, mobile app, social media platforms, or email campaigns, is good. To genuinely connect with customers across their entire journey, from initial application to cross-selling extra services, insurers must build compelling and personalised experiences at each stage. The insurance sector is on the verge of considerable innovation and technology developments, making these exciting times.

Applied AI

While many insurance companies are experimenting with AI, just a few have fully incorporated its capabilities throughout their whole business. Carriers can rework their basic processes, making them more predictive, as AI becomes more popular and the construction of algorithms becomes regular practice. AI will transform distribution, underwriting, claims processing, and customer service into AI-driven activities. This transformation will implement a "human in the loop" concept, increasing efficiency and enabling more high-quality customer contacts.

Despite these advances, carriers have yet to fully realise the value of their data assets, such as claims history and distribution interactions. Beyond just reengineering core operations, premier carriers and industry ecosystem participants will use AI to create new goods and services based on data-driven insights and analytics. The AI age is more than just refining existing processes; it's about inventing and generating new products that increase overall value for carriers and customers.

Process automation and virtualisation

Insurance businesses have long engaged in robotic process automation to improve operational efficiency, particularly in back-office services. However, the emergence of emerging technologies has the potential to catalyse a more deep reinvention of products and services. Consider the industrial Internet of Things (IoT), which enables real-time equipment monitoring and predictive maintenance to fix issues before they become claims.

Furthermore, cutting-edge technologies such as digital twins and 3D/4D printing can potentially transform the claims experience, particularly in the case of physical damage. Digital twins are virtual duplicates of actual assets that provide a complete and real-time understanding of their state. Meanwhile, 3D and 4D printing have the potential to revolutionise the claims process by allowing for more efficient and exact repairs or replacements. These technological innovations improve operational efficiency and contribute to a smoother and more proactive approach to managing physical damage insurance claims.

Cloud-based trend

The cloud is a game-changing technology that has changed how modern enterprises function. Even though it has existed for over a decade, the financial services industry, particularly insurers, was first hesitant to accept it. However, the obvious benefits of increasing efficiency, prioritising customer demands, and shifting to a data-centric organisation have pushed insurers to embrace cloud computing. According to a Novarica study report, over 90% of insurers use cloud technologies to varied degrees.

Looking ahead to 2024, we see a huge increase in cloud adoption. Aside from the usual advantages of lower operating costs, simplified solution architectures, better processing speeds, and practically limitless scalability, the incorporation of emerging technologies provides yet another compelling incentive to migrate data to the cloud platform. The increasing importance of technologies like artificial intelligence, machine learning, smart data analytics, telematics, and the Internet of Things (IoT) in the insurance sector needs the efficient storage and utilisation of massive datasets. Meeting this need necessitates significant computer power, which the cloud only provides.

Furthermore, the rise of new business models in the insurance sector and the accelerated pace of product innovation cycles need the development of an agile, adaptable, and scalable digital infrastructure. As cloud computing continues to be the key driver and enabler of digitisation and innovation, insurers looking to remain at the forefront of technological improvement and market competitiveness must strategically collaborate with the proper cloud providers.

Real-time reporting and dynamic pricing

Dynamic pricing is a growing concept that benefits insurers significantly. Insurers who prioritise digital techniques create personalised products using telematics and data analytics, allowing them to change insurance costs in real time. Using more complete data improves underwriting precision, and the resulting personalised solutions contribute to higher client happiness and retention.

Consider the following scenario: a policyholder violates the speed limit, increasing their car insurance rate. To acquire a better insurance offer, the policyholder develops safer driving behaviours to minimise their premium. Similarly, a policyholder who uses a fitness tracker might impact their medical coverage premium by increasing their physical activity and eating a healthy diet. Customers seeking coverage suited to their lifestyles may find this method appealing. Dynamic pricing flexibility not only reflects the changing nature of insurance but it also matches customer expectations for personalised and adaptable coverage alternatives.

Digitised core operations

Transforming an insurance company's core operations through digitisation is a groundbreaking shift with significant implications. Beyond helping insurers integrate into broader digital networks, it gradually trims expenses, freeing resources for fresh initiatives and revenue streams. The most profound change, however, is witnessed in the customer journey, even as cost-effectiveness and digital engagement remain crucial.

Moreover, digitisation promotes better collaboration and communication among employees within insurance companies. Through digital tools and platforms, employees seamlessly exchange information, collaborate on projects, and work together in real-time. Ultimately, this streamlined process cultivates a more efficient and successful workplace, benefiting insurers. The myriad advantages of digitisation extend beyond cost-cutting, encompassing improved internal processes, advanced risk management, and elevated customer experiences.

Conclusion

Rapid technological breakthroughs can potentially be game-changers in the insurance industry. While these innovations provide substantial potential for insurers to increase competitiveness, productivity, and efficiency, improve customer digital experiences, and manage risks, they threaten conventional players. To smoothly move into the digital future of insurance, forward-thinking companies must continuously monitor and appraise evolving technologies and trends and their commercial ramifications. Companies who embrace modern insurance technology proactively, invest in solid digital infrastructure, and acquire the requisite digital capabilities will be better positioned to fulfil their goals in this dynamic and revolutionary market.