Insurance
Insurtech: How Technology Is Transforming the Insurance Industry
The insurance industry has evolved significantly over the past decade or so. However, insurance service providers now have to meet new challenges, the toughest being meeting the ever-changing customer demands. Insurance customers today have multiple options and will not hesitate to change their insurance provider if they do not get the experience they desire.
Digital transformation in insurance helps address these challenges and provides a great experience to customers. In fact, the insurance industry is under tremendous pressure to adopt a digital-first approach to remain competitive.
What is digital transformation in insurance?
Digital transformation in insurance refers to leveraging technologies like robotic process automation (RPA), artificial intelligence (AI), data analytics, blockchain, etc., to enhance business processes, services and products. Digital transformation boosts efficiency and productivity, and fosters innovation and agility.
Building blocks of digital transformation in insurance
Insurance service providers can digitise their services based on the following building blocks.
Digital strategy: The organisation needs to build a roadmap for seamless digital transformation. A digital strategy requires a holistic approach to digital transformation, and that involves changing mindsets, training staff, restructuring, etc.
Cloud computing: Cloud computing enables insurance service providers to implement their digital strategy by providing the required framework and facilitating seamless collaboration. Cloud computing also provides flexibility and scalability to the business.
Robotics: RPA technology builds a digital workforce by taking over routine tasks from humans. It streamlines processes and boosts productivity. It also relieves humans from low-skill tasks.
Hyperautomation: In this approach, AI is integrated into automation to make it more intelligent. AI can collect and analyse large volumes of structured and unstructured data to provide insights that help to create personalised experiences that delight customers. Machine learning (ML) technology makes forecasts that help service providers respond to change promptly.
Big data analytics: Data is at the core of digital transformation. Data analytics provides valuable insights about customers that help tailor marketing strategies to meet customer demands.
Blockchain: Blockchain technology facilitates the creation of smart contracts, enhances risk assessment, offers better pricing and new products.
Managing cyber risks: Since the insurance sector works with sensitive data, a robust cybersecurity system is required. The service providers need to ensure that they have strategy, design and the required architectural framework to protect business assets and brands.
Insurance service providers need to be aware of the changes in their environment and trends in the sector to innovate and provide the best products/services to their clients.
Insurance industry trends for 2024
Innovative products
Insurers need to reassess their pricing, products and operations and make the necessary changes to thrive in a highly competitive marketplace.
Based on customer demands, insurers have started offering new products like on-demand insurance for gig workers, usage-based products and behaviour-based pricing, to name a few. Insurers are also enhancing the value-added services they provide their clients. In yet another innovative move, insurance service providers are partnering with lenders to offer home loans and refinancing options.
Cultural shift
The insurance sector is also experiencing a cultural shift where insurers are playing a role in risk prevention alongside risk mitigation.
Talent constraints
The insurance sector today faces a dearth of skilled talent. Besides, it has to cope with the challenges posed by shifting worker demographics. As per the US Bureau of Labour Statistics (BLS), 50% of the current insurance workforce will retire in the next 15 years. This will leave over 400,000 vacancies. Limited knowledge and lack of experience among candidates in areas like underwriting and claims processing will prove to be a huge challenge.
The insurance sector can look at automation tools to support their employees.
New distribution channels
Digital technologies in the insurance sector have introduced new distribution channels such as, digital, user-friendly processes in the personal policy market, insurance policies being offered at the point of sale, etc. Such distribution channels help insurers meet their customers where they are and enhance customer experience.
However, one of the most important distribution channels is the agent/broker channel. Therefore, it is imperative for insurance companies to build strategic partnerships with new partners/agents.
AI and data analytics
AI and data analytics have made an emphatic presence in the insurance industry and are expected to continue to remain a vital part of the sector. AI has the power to uncover risks, unlock efficiencies, and maximise the value of their contracts. Teams can leverage AI to extract and comprehend the terms of agreements, search and analyse their stack of agreements, and create/co-author new agreements.
Mitigating security and regulatory risks
As the insurance sector adopts digital transformation, it becomes vulnerable to fraud and data breaches. Hence, insurers must ensure that they have effective processes to monitor suspicious activity and administer strong user access controls. They must also ensure compliance with all data security laws and best practices.
Final takeaway
Trends indicate that insurers need to thrive in a dynamic environment that has to face changes on many fronts. Digital transformation in insurance is the way ahead because it not only makes processes agile, but also helps to offer a great customer experience.
How can Infosys BPM help?
Infosys offers insurance BPO services wherein customers can outsource the management of insurance workflows to us. We leverage the latest digital technologies to provide customised services to our clients. Our customer-centric services ensure a great customer experience.
