How Will Technology Trends Shape the Future of the Insurance Industry? | Though there is no denying that new technologies are dominating almost every industry, for them to be the most productive, they need to be accompanied by innovative ideas. Only then can modern technology thrive and be accessible to everyone. The insurance sector is no exception. Over the years, it has adopted new technologies, which has resulted in changes in the demand side, i.e. the behavior of customers has changed and they now look for other solutions. On the supply side, on the other hand, competitiveness has also increased, which means insurance companies simply have to implement new business models. While it’s difficult to predict exactly every development in the industry, we can safely assume that the following technology trends will shape the future of the insurance industry.
Predictive analytics
Predicting future customer behavior is vital in every industry. Those companies that make correct predictions and prepare well for future changes will be able to gain profit. When it comes to insurance companies, they use predictive analytics to anticipate possible future customer behavior through data collection. This process is also crucial when it comes to identifying fraud risks, triage claims, anticipating trends, detecting customers at risk of cancellation, predicting prices, etc.
Artificial intelligence
Artificial intelligence (AI) has been steadily increasing its importance for businesses, which became quite obvious with the onset of the pandemic in 2020, when the process of digitalization in insurance companies accelerated significantly. That’s why it logical to expect that even much more emphasis will be placed on digital technologies in the near future. AI is closely related to the trend of physical robotics. Though you might not associate 3D printing with the insurance industry, the fact is that we’ll soon see 3D printed buildings everywhere, which will have a strong impact on risk assessment and, subsequently, the whole package of future comprehensive insurance. Also, we can expect an increase in the number of vehicles with autonomous features and carriers will need to understand how the increasing presence of robotics in everyday life and across industries will change risk pools.
Cybersecurity and blockchain technology
With the increased reliance of every company on the Internet due to the pandemic, we noticed that digital security has become an even greater issue. With so many people working remotely, communicating and accessing services, it’s important that security in the insurance sector is on a higher level. Also, blockchain is certain to be one of the industry’s great allies in cybersecurity, because insurance providers will be able to use this technology to create smart contracts, which are automatically executed. This means that insurance providers will be able to track claims and update conditions. Some recent reports claim that blockchain offers a huge opportunity for insurance companies for damages, which could lead to the transformation of business transactions and information exchange, as well as the elimination of costly layers of overhead. We could say that potential benefits also include elimination of the need to manually re-enter data.
Automation and machine learning
It is expected that machine learning will both improve claim processing and automate it, since this technology makes it possible for digital files to be analyzed by programmed algorithms, which means that the speed and accuracy of processing will be boosted. The insurance sector will see the application of automation and machine learning extended to include claims, policy administration, and risk assessment.
Internet of Things (IoT)
While we’re on the subject of data and the advantages of good data management, we should mention the concept of the Internet of Things (IoT). Namely, since most consumers are willing to share more information in exchange for savings on their insurance policies, the IoT will need to automate that data sharing. Companies should not miss the chance to improve their revenue and accuracy that are brought about by the IoT.
Data ecosystems and open source
Data will definitely become more important, which means that open-source protocols will need to emerge to make sure that data can be shared and used across industries. This means that insurance companies will need to manage modern software platforms, implement upgrades and present compelling products to their clients.
Social networks and data mining
Everyone’s using social media platforms, both privately and professionally. This environment has become so attractive, that all companies are using them to connect and stay in touch with customers. Needless to say, insurance companies are among them, especially since social media are places where creativity can be expressed without having to spend a lot of money and where great engagement can be achieved. Also, data mining of social media is improving risk assessment for insurance companies, boosting fraud detection and enabling the delivery of a completely new user experience (UX).
Chatbots
Automated response systems are present on websites in all sectors. Their role is primarily to perform customer service tasks. It is estimated that by 2025 as much as 95% of all customer interactions will be driven by chatbots. Since we’re talking about very near future, it’s high time insurance companies introduced these virtual assistants into their platforms. These tools are a combination of AI and machine learning, allowing them to interact with customers in the most human way possible. This means employees’ time will be saved, which translates into a lot of money being saved.
Mobile applications
Another technology trend that has become omnipresent with the advancement of digitalization and affected customers’ lifestyles can be used to facilitate access to customer location and important data to easily launch personalized premiums. Mobile apps allow companies to monitor their performance and measure parameters like user engagement, compatibility, data security and conversion, which is why it’s logical to expect them to play an even more important role in the future.
All these trends are reshaping the insurance industry, allowing companies to focus on the customer and improve pricing. Only those insurance companies that stay at the forefront of changes will be able to meet the ever changing needs and demands on the market.
