In the rapidly evolving business environment, the pressure to reform, innovate and improve is inevitable for all businesses. Mass digitization in every industry has fiercely changed customer expectations, and no industry, even a traditional and anchored one like insurance, can afford to stand still concerning innovations.
Adding to this, energy transition, urbanization, and digitization have brought in far-irreversible impacts on how we function and are making the playing field increasingly complex and diverse in a short period of time. How is the insurance industry absorbing these changes?
Here’s looking at some of the critical trends in insurtech we foresee will continue to affect the territory in 2022:
- Digitization and Automation
The COVID-19 pandemic bought digitization into the limelight of the insurance industry. However, this is a trend that is here to stay. During the pandemic, online policy purchase, verification of documents, telemedicine, etc., were the need of the hour from a safety, accessibility, and effectiveness standpoint. What began as desperate coping mechanisms during unprecedented times translated into a race to digitize for customer satisfaction.We believe that automation will give way to enable personalized products based on user requirements, offer micro insurances catering to their need and budgetary constraints, and other real-time solutions that will continue to revolutionize the insurance technology.
- AI and Machine Learning
The touchless claim process powered by Artificial Intelligence (AI) is one of the trends in insurtech that is gaining popularity among companies and customers alike. Soon, we may see this grow into the industry standard. The large amounts of data insurers process through ML can help underwrite with better precision and apply it to future models.With technology taking over the whole claim process, businesses can now develop products catered to individual needs, significantly cut down claim timelines, etc.; experts can dedicate their skills to complicated cases. Not only will these churn out an excellent customer experience, but they also allow businesses to grow cost-effectively.
- Usage-based models
Hyper-personalization is one of the most sought-after features customers look for during insurance purchases. An insurance business that can offer tailored insurance covers for the lowest price is in it for the win.While insurance is often regarded as a one-size-fits-all solution, this is far from the truth. For example, maternity care packages, cervical/vaginal/ovarian cancer, etc., are some of the add-ons women look for in their medical insurance. Segregating users and providing insurance packages specific to their requirements is more vital now than ever.
- Legacy to Cloud-based storage
The insurance industry is often known to lag when it comes to adopting cutting-edge technologies. However, with technology making phenomenal headway in every sector, insurers realize that cloud technology is long overdue.The upgrade will enable quick delivery of new, personalized insurance products and experiences, placing cloud-first firms in a better setting to work flawlessly. This is all thanks to the vast storage and immense mining capacities of cloud computing. Legacy brokers or Distributors do not need to plan for hardware or software infrastructure capacity. Release and deployments are almost immediately available and highly reduce GTM.
Millennials are often seen to question the ways of the world, and not many are fans of the unbending architecture of the insurance industry. When insurance is built on microservices architecture, it presents the flexibility of scaling up and down without incurring additional costs. The user-friendliness of this approach is also sure to facilitate seamless delivery of insurance.Micro-insurances are no longer just insurtech trends. They make insurance more accessible and cost-effective to the mass. Insurance companies using advanced technologies to collect and analyze data to provide better customer-centric premium plans have a better chance at standing the test of time.
- Alternate payment methods
As our financial ecosystems evolve, the need for payment mechanisms to leverage solutions like Cryptocurrency is growing. This growth in technologies that enable alternate payment methods has led smaller players in the insurtech industry to implement instant payment methods that were unseen until recently.While the global cryptocurrency market is still a long way ahead, blockchain will continue to pave the way for new opportunities to impact the insurance industry.
- Internet of Things
Many insurance customers do not entertain that the traditional insurance claim process has stayed the same for decades. From the paperwork during insurance purchase to document submission and claim, the weeks lost in processing time aren’t the way forward anymore.IoT enables users to make data-driven decisions and efficiently wade through the claims process via hand-held devices. While typical insurance covers Standard Fire, Special Perils are ideal for IoT-based sensors and ML-based alarms. Connected devices like biometric and environmental sensors help reduce failures and accidents, making risk calculation and adjusting policies more accessible than ever.
While the insurance industry had a transformation already underway, the unprecedented changes the pandemic bought have accelerated the speed by leaps and bounds. Customers are not willing to return to the methods of the bygone era after having seen the recent developments. This has resulted in the industry integrating new-age insurance technology in their offerings to stay relevant.