Technology
What You Should Know About InsurTech Trends
The insurance industry constantly faces numerous challenges. From disruptive technological innovations to rising customer demands to political and regulatory issues, underwriters must deal with problems and compete with market rivals. In this case, the winners are those who can distinguish emerging trends and maximize their benefits.
Utilizing modern software apps can mainly boost the company’s growth. Insurtech systems help in different ways, e.g., by automating policy life cycle stages, gathering core data in one place, and managing customer relations. You want to know the most recent development/usage trends to implement the most valuable applications.
The guide uses insights from leading analytical firms like KPMG, PWC, and EY, as well as our own studies.
1. AI and Machine Learning
Let’s begin with relatively simple tech stuff. Sure, AI has been a buzzword for the last ten years or so. Many industries are trying to adopt this technology, and we actively use artificial chatbots, consultants, and prediction systems. Insurtech developers also introduce AI-driven solutions in two key directions:
- Analytical software. Utilizes machine learning to make accurate market predictions and help underwriters unveil upcoming customer needs.
- Robotic process automation (RPA). Handles daily stuff like notifications, task tracking, reports, and simple user interaction.
As the first approach requires significant resources and knowledge, developing actual AI insurance platforms may take a while. Routine automation tools are already included in many insurance packages.
2. Fully Automated Systems
Continuing the idea of RPA, experts from KPMG say that this trend can go much further. Starting with regular processes, it will spread to other aspects. As a result, future insurance platforms will have every chance to function seamlessly without manual control. From the first advertisement to policy renewal, the customer journey will be based on machine interactions. Self-service platforms will also rise.
3. Higher Attention to Cybersecurity
EY researchers state that 76% of surveyed companies have increased their security budgets after facing a severe breach. Over 2/3 of modern businesses faced a successful attack or, at least, an attempt. According to the same report, cybercriminals aim to get a customer and financial info, which insurance enterprises collect; hence, they are perfect targets.
Undoubtedly, cybersecurity measures will rise during the following years. Experts suggest focusing on proactive strategies to prevent the tiniest possibility of a breach. Protecting the company beforehand is more effective than returning stolen data or money. New technologies like blockchain or AI can boost security, too.
4. IoT and Wearables
The accumulation of different data leads to more possibilities and more responsibilities. Insurance groups should look at the Internet of Things and wearable devices to remain competitive. Here are the most critical insights on them:
- IoT devices at homes. Smart bulbs, cameras, sensors, and locks help when you need a complete vision on the property. By sharing this data with P&C agencies, owners can get better offers based on their current needs.
- Health tracking wearables. Innovative fitness bracelets and smartwatches are unique. They count calories, check your sleep quality, monitor heart rate, and can even detect diseases. Info from these gadgets is indispensable for H&L insurers.
Combined, these two markets can provide a vast amount of valuable data about each client. Thus, underwriters will deliver more personalized policies. Simultaneously, customers will get their personal info at their fingertips thanks to new privacy standards.
5. Middleware Solutions
One of the biggest obstacles for insurers is the dependence on legacy systems. A lot of them were developed in the 2000s or even earlier. Of course, they can barely meet the new market conditions and customer wishes.
Companies cooperate with dedicated developers to switch to new insurance systems. However, replacing an outdated platform with tons of sensitive data is not easy. Thus, programmers utilize middleware that leaves ongoing business processes undisrupted, provides for smooth data migration, and simplifies access to information. Efficient middleware means 50% of the whole system’s success, so developers should pay attention to this layer.
6. New Era in Automotive Insurance
Talking about exact market sections, we can’t miss the tendencies in auto insurance. Today, agencies tend to move from protecting individuals to insuring the vehicles. Honestly, the direction of this trend is pretty unclear. The most likely consequences are as follows:
- Separate insurance ecosystems launched by manufacturers and/or dealers.
- New regulations and rules for insured driverless cars and their passengers.
- Flexible policies that allow a driver to enable and disable vehicle insurance.
7. Outsourcing
Despite the slightly lower market size of outsourced services in 2018 compared to 2017 ($85.6 billion vs. $88.9 billion), enterprises require external employees. Insurance agencies delegate modern software development, re-engineering, data migration, updating, tech maintenance, etc. By outsourcing these tasks, underwriters can focus on customer satisfaction.
Top-rated destinations include regions with relatively low living costs, such as Eastern Europe or Southeast Asia. For instance, Ukraine’s software development teams are well-known thanks to their high professionalism and low rates. Indian or Filipino workers’ labor maybe even cheaper, but it’s important to remember the time and cultural differences. For insurance products, devs must understand the target audience.
8. Real Customer-Centricity
The idea of the highest customer value isn’t new. The catch is that almost all insurance teams didn’t clearly realize how it works, so we didn’t see groundbreaking results. Now, the situation begins to change. Earlier, the primary focus of the relationship was policy renewals and claims payment, but today, insurers enable more interactive approaches.
For example, the market experiences more on-demand offerings. This means customers aren’t bound to the benefits, as they can insure health or property only when needed. Going on vacation? Turn on the policy for your camera and order personal travel insurance. Later, you can toggle them off to avoid unnecessary spending.
Moreover, this centricity refers to overall convenience. The enabling/disabling benefits are now possible via different channels: desktop, mobile, in-person, etc. Modern insurtech systems move towards the new interaction model in which clients will get more and more control over their benefits and data.
9. Shift to Acceptance
Finally, the world starts accepting new things. PWC studies show that underwriters are less concerned about innovations. Here are some numbers (percent of respondents that are frightened by each point):
- Concerns about tech progress speed: 51% in 2018 and 31% in 2019.
- Worries about new customer behavior: 31% in 2018 and 21% in 2019.
- Concerns about new market players: 22% in 2018 and 10% in 2019.
It’s probably the most important trend for all parties. Insurance teams are more likely to implement innovations, so insurtech builders can deliver new platforms to more partners. Clients will benefit from this state, as they can access more convenient tools for self-management in terms of benefits and policies.
Conclusions
The world’s changing. Insurers must introduce new stuff to retain their clients and attract new ones. Business owners can choose the best direction for their teams by understanding modern trends emerging in the insurance sector. When it’s not guaranteed that each new technology will succeed, innovative software shows excellent results as it boosts customer happiness and improves business processes. Keep an eye on the trends to know where to move your enterprise.
