Insurance in the face of digital disruption
The Times of India
December 17, 2022
The insurance landscape is changing rapidly, thanks to digital transformation. The pandemic has accelerated the need for insurers to re-evaluate their strategies and digitize to remain competitive. Most insurers are investing significantly in digital technologies such as AI, data analytics, and chatbots to broaden their consumer base. Considering the fast-changing expectations of customers with the growing demand for digital channels such as online portals and mobile apps, it’s imperative to reimagine traditional business and operating models.
With an increased shift towards more tailored products and services, organizations need to go digital by revitalizing existing operations, processes, and ways of working. Whether it’s focusing on digital data collection, algorithmic risk assessment, or predictive analytics, the possibilities of digital transformation in insurance are innumerable. So, what are the key areas influencing the insurance industry’s current and future market growth? Let’s take a look.
- Use of data and analytics: The volume of data available is increasing exponentially, thanks to the growth of the internet of things (IoT) and the popularity of wearable devices. This data is a goldmine for insurance companies, as it can be used to improve risk assessment and pricing. By harnessing the power of data and analytics, insurers can gain insights into customer behavior, identify risks, and develop personalized products.
- Artificial intelligence (AI): AI is increasingly being used to automate repetitive tasks, freeing staff to focus on higher-value work. AI can help insurers assess risks, minimize human error in the application process, and detect fraud, enabling insurers to sell plans more suited to each customer. Whether it’s identifying customers at risk of cancellation, anticipating trends, claims processing, compliance, damage analysis, or risk mitigation, AI has incredible potential across the entire insurance value chain.
- Blockchain: As a distributed database that is secure, transparent, and cost-effective, blockchain can revolutionize the insurance industry by making it easier to share data and track transactions. Security is improved because each transaction is encrypted and stored on a decentralized network, allowing insurance companies to track claims and prevent fraud easily. Blockchain technology also enables “Peer-to-Peer” (P2P) insurance and faster claim processing by automating tasks such as verifying customer identity, checking policy details, and making payments.
- Customer centricity: Insurers must shift their focus from products to customers as today’s consumers want to interact with their insurer on a real-time basis. Understanding the needs of their customers and developing products that meet these requirements is a no-brainer. Insurers that focus on data-driven business models and manage data assets and analytical models for distribution, underwriting, pricing, and claims services with the consumers in mind will be winners in the long run.
- Omni-channel presence: Customers now expect to be able to reach insurers 24/7, and they expect a seamless experience across all channels – online, mobile, social media, etc. Insurers must have an omnichannel presence to provide a consistent experience to their customers. The use of multiple platforms to make a single purchase is now the norm, and insurers must innovate to cater to this need. An omnichannel presence enables insurance companies to attract and retain digital-savvy customers, maintain competitiveness, and facilitate growth.
Digital transformation in the insurance sector has been slower than in other industries. This is primarily due to the complex nature of insurance products and the regulatory environment. The gap between digitally enabled insurers and those who are not is steadily increasing – it’s no longer a question of whether to replace a legacy system: it’s about how. By embracing digital, insurers will become more customer-centric, agile, and resilient.
About the Author
Anuradha Balasubramanian, General Manager Insurance and Fintech business at Accolite Digital.
This article was originally published in the Times of India.