The insurance industry is gradually shifting to a digital model of operation as a new generation of consumers demands an innovative approach. The main problems insurance is facing are demanding customers, tough market conditions, and competitors taking a fresh approach to work.
In this case, insurance companies with history and new players in the market find themselves in the same situation. Either way, the development of a quality digital infrastructure becomes a necessity. However, if every problem is perceived as a challenge, any related company can take one of the leading positions in the market.
The industry is changing dramatically around the world. The demand for the services of insurance companies is steadily growing, which means there is a need to attract more high-potential specialists. Here are the key changes in the insurance industry:
Quite often, traditional insurance companies successfully partner with InsurTech firms. Such startups provide ready-to-use digital solutions that help transform classic products into digital policies and plans.
There’s also no escaping the active use of digital technology:
The second important component of solving major problems in the insurance industry is human intellectual capital. Without a team of talented employees, it is impossible to effectively apply innovation. It is the number of employees with extensive experience that directly affects the number of regular customers and, therefore, the level of profitability.
Digital technology is improving the quality of the infrastructure compared to traditional, analog methods of operation. This includes the maximum personalization of products and the creation of all-in-one offers.
Technological trends and the active use of digital infrastructure can fundamentally change the structure of insurance itself. For example, in the automobile industry, AI-based technologies are essential for accurate assessment of this or that situation.
It is software for unmanned cars that makes this possible. With its help, any insurance company will be able to gather the most complete information on the situation around the vehicle prior to an insured event and, consequently, prevent possible risks.
Insurance products become as client-oriented as possible. Instead of creating a line of universal products, innovative companies in the industry are offering their customers personalized “on-demand” offers. Each such product must be as unique as possible, i.e., designed based on an analysis of customer behavior.
The cost of a personalized policy is formed by insurance company employees based on a risk analysis for each client. This is the future of marketing in the insurance industry, which is based on an emphasis on quality service rather than increasing sales.
The main tool here is hyper-personalization. Such an approach provides many benefits, as follows:
Digital personalization of insurance products is an opportunity to generate a unique offer as quickly as possible without intermediaries. This includes the use of so-called flexible insurance product options, e.g., microinsurance or peer-to-peer insurance. Also, “wrapped” products, which are able to flexibly adjust to the needs of a particular client, are used to adapt to the specific needs of each customer.
In order to offer your customers products that accurately reflect their demands, you need to analyze the needs of your target audience. Predictive analytics is used for this purpose. Its main task is to analyze possible insurance risks.
Other capabilities of such analytics are:
Thus, insurance companies can collect and analyze data on every customer, including information collected using IoT technology. The result is an increase in the level of engagement and, therefore, the profitability of the insurance company.
An automated system for processing insurance policy applications is one of the quality service components. Ready-made online platforms and API apps are used for this purpose. Such digital tools can be quickly “embedded” in the IT infrastructure.
To quickly process apps from clients, automated underwriting is effectively used. It involves the comprehensive collection of data from several sources and its further analysis.
This way, the insurance company can accurately determine the level of possible risks before issuing an insurance policy:
Ready-made digital automation solutions contain components such as RPA technology, as well as AI and ML elements. The use of intelligent automation provides excellent results.
There are many digital tools that can be used in the industry to automate all processes:
All of this is included in the advanced capabilities of data-driven and rule-based automation.
The second important component of the successful work of insurance companies in the new reality is human intellectual capital. That is employees with high potential who are able to successfully bring innovations into the work of an insurance company.
The use of intellectual capital by company employees implies:
There are three basic types of intellectual capital:
For example, if employees of an insurance company have created a digital infrastructure via InsurTech, the experience of using it is intellectual capital.
The list of InsurTech technologies includes various digital technologies that simplify the work of insurance companies. The list of such tools includes machine learning elements and cybersecurity apps.
Digital tools are effectively used by insurance companies not only to process big data and analytics but build the architecture of internal organizational processes.
Data digitization functions in the insurance industry are as follows:
Another important advantage of digitization is quick and easy access to data.
AI-based technologies are actively used in the insurance industry to create a digital infrastructure. They can be used in all areas of insurance, including:
Also, software solutions and various apps with built-in ML elements are effectively used for such purposes.
Blockchain technology is actively used to provide the best possible customer service and reliable protection of user and corporate data. In the insurance industry, blockchain performs the following functions:
Blockchain can also be effectively applied to process automation. This includes the ability to create and clear all transactions without the manual intervention of employees.
Thus, blockchain-based insurance is an effective methodology for creating new products and offers based on customer trust.
The insurance industry is changing dramatically, primarily due to the development of digital infrastructure. To maintain the trust of existing customers and attract new ones, as an insurance company owner, you must constantly analyze market trends.
A list of major trends in the insurance industry includes the personalization of insurance products, the application of predictive analytics, and the automated processing of large amounts of data.
In addition to the development of digital infrastructure, the use of human intellectual capital is crucial. This is a combination of experience, knowledge, technical skills, and other competencies of employees, which are of great value to the company.