The current wave and evolution of emerging technologies such as Artificial Intelligence (AI), deep learning and neural networks, have the potential to drive fundamental change in the way that customers interact with service providers.
The next stage of evolution in the insurance space is expected to be a shift away from the current “detect and repair” approach to one of “predict and prevent”, and this is also likely to transform every other area of the industry in the process.
Numerous factors are currently shaping and accelerating the pace of this change. The most important is the use of these technologies to improve decision-making and productivity, reduce costs and optimise the user experience – which continues to be the Achilles’ heel for many enterprises and organisations.
Amid this wave of transformation, “insuretech” (insurance technology) has fast become one of the most widely used buzzwords in the financial services industry.
This is thanks to upcoming insuretech companies that are proving to be more creative, ambitious and tech-savvy than their traditional counterparts, and have the potential to alter the way insurance companies cover risk.
Catalyst for digital transformation
As a result, established insurers are being compelled to consider partnering with or acquiring insuretech start-ups to strengthen their customer relationships, tap into their technology and build scalable networks.
Insuretechs are increasingly serving as a catalyst and driving force for the digital transformation of the insurance industry.
This is particularly apparent in the area of customer relationships and Customer Experience (CX). Insuretech is fundamentally changing how insurers operate as they seek to accelerate and embrace a new era of customer-centric services – based on the observed behaviour of customers. The question remains how the traditional insurance industry will respond to these changes.
Insuretech companies are effectively harnessing deep learning capable AI to help agents manage their responsibilities faster and discover the right mix of policies to complete an individual’s coverage.
In addition, hyper-automation technology is a combination of machine learning (ML), AI and robotic process automation that is proving popular with swiftly-scaling insuretech start-ups that are differentiating themselves in the market through fast services, mobile technology, low running costs and better customer service.
Changing risk assessments
The field of robotics has witnessed some exciting achievements of late and this innovation wave will continue to change how humans interact with the world around them. For example, by 2025, 3D-printed buildings are expected to become common, so insurance companies will have to consider how this development changes risk assessments.
Other examples include programable autonomous drones, autonomous farming equipment and surgical robots that will become commercially viable in the next decade.
By the 2030s, we also expect a much larger number of standard vehicles with autonomous features, such as self-driving capabilities.
Thus, insurers must recognise how the increased presence of robotics in everyday life and across various industries is likely to transform risk pools, change customer expectations and enable new products and channels. The increased personalisation of these technologies will also give insurance companies access to models that are constantly learning and adapting to the world around them, which will enable the advent of new product categories and engagement techniques.
To remain relevant, established insurance companies must focus on how insuretech redefines customer-centricity in the industry, as modern customers are fundamentally different from previous generations. Not only did their needs, knowledge and expectations expand over the past decade, but the blending of technology with everyday life has created a new kind of consumer – the “digital native”.
Customers driving disruption
Considering their focus on instant gratification and demand for endless choice, these customers are the real disruptive force within the insurance industry, meaning that consistent changes are now omnipresent.
For companies to maintain a good CX requires rapid research to understand the changing dynamics, new pain points and expectations, as well as the leveraging of agile innovations to address them. Organisations that manage to master this approach will add value for the customer in high priority areas.
In terms of incorporating insuretechs into their service offerings, traditional insurers can combine the advantage of disruptive new changes in technology, especially in the field of customer engagement, with the benefits associated with their established reputations, networks and customer reach.
Traditional insurers will have to reconsider their ICT investments in the context of customer needs, knowledge and expectations that have expanded significantly in the age of immediacy, where constant change is an overwhelming choice and customer loyalty is no longer a given.
The insurance industry is rapidly shifting from being product-led to being service-led to deliver a holistic CX, with the future of insurance being a blend of talent, technology and business models.
Ultimately, how well insurers resolve the synthesis challenge may be the biggest success factor for the insurance industry in the decade ahead.