The way insurance companies create and deliver value has evolved dramatically, and the global pandemic has further hastened that process. In order to fulfill the changing needs of today’s customers, insurers have been challenged to rethink their operations both internally and externally. Insurers have a unique opportunity to actively change the industry for the better. This occurs against the backdrop of a world in search of a new form of leadership.
Using technology to accelerate their reforms in order to fulfill the demands of a crisis-stricken world, major insurers have spurred the rise of a new and different future — one based on technology. This entails shifting from a reactive risk indemnification approach to proactive risk mitigation and looking at innovative products and services that will revolutionize the way they interact with their customers.
Competition in the sector is also changing — now it’s all about the architecture. Increased investment in data, artificial intelligence, and digital twin technologies is ushering in a new era of business and intelligence.
Technological advances like natural language processing, process automation, and low-code platforms are democratizing technology and putting tremendous capabilities in the hands of people across the industry.
One way technology is changing insurance is through predictive analytics. Numerous insurers employ predictive analytics to collect a range of data in order to better understand and predict client behavior. But 2021 brought us new ways of increasing accuracy. Insurance providers will be able to leverage predictive analytics for the following purposes:
- Risk selection and pricing
- Customer risk identification and cancellation prevention
- Detecting potential fraud
- Evaluating and triaging claims
- Predicting trends
According to surveys, insurers improved their loss ratios by up to 9% and boosted their bonuses by up to 53% after implementing these new models, compared to the market average of 18% over the same time period.
Automation & Machine Learning
According to Forbes, claims processing will be improved and automated thanks to machine learning. Through the use of this technology, programed algorithms can evaluate digital files more quickly and accurately. In the insurance industry, it can be used for claims, policy management, and risk assessment.
Insurance is all about risk, and the industry deals with a lot of data, a lot of people, a lot of different situations that require insurance, and a lot of different aspects that go into resolving claims.
Machine learning allows a computer system to make predictions and decisions using patterns in data without needing to be explicitly programmed to know what those patterns are. Instead, it makes use of a large amount of structured and semi-structured data to produce accurate results.
By combining Big Data with machine learning and artificial intelligence, insurance providers can develop new products to better suit customer expectations.
The inclusion of artificial intelligence (AI) for businesses and homes has been slowly gaining traction, and the impetus of the pandemic in 2020 has hastened the process of digitalization in insurance companies. Despite the fact that few organizations have made significant investments, they will lay a strong emphasis on digital technology in the coming years.
According to a report issued by GlobalData in April 2021, AI platform revenues in the insurance industry will grow by 23% to $3.4 billion between 2019 and 2024.
Robotics is a trend that has evolved in tandem with Artificial Intelligence, and McKinsey predicts that 3D printing will fundamentally change manufacturing and commercial insurance. There will be a significant shift in risk assessments due to the widespread use of 3D-printed buildings by 2025. By 2030, a substantially higher percentage of standard vehicles will include autonomous features. Carrier’s risk pools will evolve as automation becomes more prevalent in daily life and across businesses.
Cybersecurity & Blockchain Technology
Remote work and the proliferation of internet-based services have changed how people communicate both with each other and with businesses making it critical for the insurance business to focus on cybersecurity.
In this regard, blockchain will prove to be a powerful ally as insurance providers will be able to utilize this technology to establish smart contracts that are automatically processed, allowing them to track claims and adjust policy terms.
According to a recent PwC analysis, insurance companies stand to gain $5 billion from the use of blockchain. This could lead to the transformation of commercial transactions and information exchange, as well as the removal of unnecessary layers of administrative overhead devoted to the process of verification.
Digitalization has resulted in mobile applications becoming yet another popular technology trend, making them indispensable to clients and their everyday activities. Mobile apps also make it easier for insurance providers to gain access to customer information that allows them to better customize their offers.
Companies can use them to track their performance by monitoring metrics such as user engagement, data security, compatibility, and conversion. This is why apps will be so significant, as they will serve as the point of contact for both sides in any transaction.
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