The development of technology has been rapid and exponential. Every industry around the globe has been witnessing advancement for the better. Starting with the IT sector to the commercial and retail business, every aspect of the world is wrapped with technology.
Even the insurance sector is no exception to adopting the trends in technology and development. Though the rate of transformation and adoption of technology has been rather slow compared to other sectors, it’s no secret that the implementation of such intelligence has enabled massive profit-making scopes.
But there is a reason behind this slow progress. According to a report made on the Board of Innovation, only 2% of the young alumni consider embracing the insurance sector as a career option. Hence, there is a clear lack of skills that insurance companies must develop and implement newer innovations in the process.
Why Is Technology an Indispensable Addition in the Insurance Sector?
The insurance sector is a great indication of the economic condition of any country. The infrastructure adopted by such companies in developed countries is very different than that seen in developing nations. However, the perception of the people about this sector has been a huge contributing point.
This can be proved by the massive 60% increase in the Insurtech funding in the last three years in the United States. The growth has been from USD 1.46 billion to USD 2.44 billion. However, this growth percentage, though impressive, is far less than that of Asia, where the growth has been over 300%, from USD 140 million to USD 506 million. This report was made by CB Insights.
As a result, though the insurance sector in the United States is much bigger than Asia, the availability of the force that could ride on the development of technology makes the difference. This is what the latest trends and technology can do to shape the insurance sector in 2020 and the coming years.
Technology and Trends Around the Insurance Sector
The insurance sector has already adopted quite a lot of technically advanced mediums in its infrastructure. Digitization has become an integral part of the process, and the list does not end there. It has become a lot simpler for both the insurer and insured to function, starting from getting quotes to managing the coverage.
Here are some of the top developments in technology and trends that are shaping up the insurance sector.
Digitization
Digitization is the first and foremost trend in the insurance sector that needs to be talked about. Gone are the days when quotations were acquired physically, documentations were just paperwork, and updates were given through postal services. The digitization has ensured quick and hassle-free processing in almost every sector, not only in the insurance sector.
Every insurance entity functions through a website and a mobile application to manage almost all of the customer relations. This has made it more convenient for the consumers to buy new insurance schemes, pay premiums, get reminders on upcoming payment schedules, etc. Even the documentation process has shifted online, and a new insurance scheme could be available in just a few clicks.
Without a doubt, this has led the insurance companies to increase their turnover by several folds, thereby ensuring and attracting more investors.
Artificial Intelligence
Without a doubt, artificial intelligence (AI) has been the biggest development across every sector. This technology has even brought about huge advancements with its prowess. Being able to provide consumers with personalized features has enhanced the user experience.
AI has made it possible to offer personalized quotations based on the information provided by the users. Besides just this, internal functioning has also become simpler and automated. Faster data processing, documentation, and underwriting analysis have become easier to handle.
The overall process has become extremely efficient, thanks to the cutting-edge technology involved.
Machine Learning
Machine learning (ML) and AI go hand-in-hand. The trend of machine learning through technological developments has the potential to boost the insurance sector to a great extent.
Machine learning is a part of artificial intelligence but is more dedicated to analyzing and processing data. The analysis is based on the data available for it to process and make predictions without human supervision. And needless to say, it is much more accurate than humans.
ML is a great weapon to improve and automate the quotation management and claim process. This technology takes the data analysis parameters from the insurer’s cloud and processes the information provided by the users to make the most accurate prediction on the quotation.
Predictive Analysis
Predictive analysis is a part of machine learning that helps predict customers’ behavior. Though this process can be done physically, the adoption of artificial intelligence and machine learning has ensured the predictions are more accurate and do not put the company in losses.
Some of the most vital parameters that predictive analysis works in are listed below.
- Pricing, based on the risk
- Risk of cancellation, based on past records
- Risk of fraud or insolvency, based on financial credibility
- Anticipating consumers’ trends and behavior
Data From Social Media
Social media is the most vital platform for brands in terms of marketing and advertisements. Keeping the same in mind, social media also plays an integral role in shaping trends in the insurance sector. Strategizing and implementing marketing tactics is incomplete if we don’t execute them on social media.
Reaching out to a wider audience is best done through social media, be it branding or managing reputation. So, these platforms also play a huge role in insurance companies setting their ORM (online reputation management) right. A lot of companies, much like Kroodle, a Dutch insurance entity, interacts with its customers entirely via social media. This is one great way to reach out to consumers and prospective customers quickly and easily.
Plus, the insurer even leverages the customers’ data on its big data servers as they need to log in to the application via their social media account to access all the services.
Internet of Things
IoT is a wide concept in the field of overlapping digitization and artificial intelligence with various other technologies. IoT works similar to machine learning but is more efficient in processing the data from consumers to determine rates to mitigate the chances of future losses.
Most consumers do not mind providing more personal information while availing insurance if it could save them money on the premium. The lifestyle of the consumers and the data from various IoT devices around them, like smart wearables, can offer a lot of data for better processing of quotations.
One appropriate example of smart wearables impacting the insurance sector lies in the fitness tracking technology. The insurance industry would depend largely on the data acquired from the wearable devices to track the health and mortality expectation of the users to come up with quicker and more lucrative schemes upon application.
Chatbots
The technology surrounding chatbots has taken the entire commercial sector into its grip. Not only the insurance sector but automotive, finance, IT, media, etc., all have geared up their customer interaction method.
Gone are the days of IVR, which was not flexible at all, and though virtual human assistance was flexible, the efficiency and cost-effectiveness went for a toss. But with chatbots being a powerful weapon behind converting prospective customers into sales, the insurance company has benefited greatly.
In fact, chatbots are the first point of contact whenever you visit the website or open the mobile application of any particular insurer.
Telematics
Telematics is a kind of machine learning, but it is focused on determining the customers' premium amount based on their automotive habits. To put things in perspective, smart technologies used in cars can give a lot of information about any consumer’s driving habits. This further helps the insurer to gather information, like location, data on speed, and chances of accidents to reflect them in the policy quotation.
Quite interestingly enough, telematics can also have various benefits for the consumers:
- Inculcating safe driving habits
- Have a lower cost on the premium
- Lower the risk factor
Blockchain
Blockchain is still a very under-utilized part of technology. In the insurance sector, this technology opens up the idea of creating digital ledgers that cannot be changed or altered.
According to popular reports, by implementing Blockchain technology, insurance companies have managed to bring their admin cost down, especially when it comes to reviewing claims and checking all the payments made by the third-party. Apart from this, since Blockchain is a great way to protect against fraud, it can be distributed without the risk of duplication. This also increases transparency.
Two popular insurance platforms/companies that have implemented the Blockchain technology are Teambrella and Lemonade.
Importance of Technology in the Insurance Sector
The growth in technology and changes in the trends have helped the insurance sector gain a lot of traction in the modern-day. Private insurance companies have adopted the changing trend to reap out more lucrative business.
Here are some valuable insights into the use of technology in the insurance sector.
They Ensure Better Reach
With the changing trends in the insurance sector, the companies have managed to reach out to more people with branding. Social media, for sure, is the strongest medium to reach out to even remote areas where physical promotion might not be feasible financially.
Plus, the strong penetration level of social media has also helped various private insurance companies reach out to people who could be prospective customers.
Promote Cost-Saving Techniques
The implementation of various technologies results in cost-effectiveness, thereby boosting the RoI of the company. These technologies automate several processes and ease off the extra workforce requirement that might be needed to overlook the operations.
The technology implementations that might help in cost reduction are Blockchain, Machine learning, and chatbots. These might be slightly expensive to adopt and set up at first. However, in the longer run, these implementations can make the sector more lucrative.
Enable Quicker Conversion
With the implementation of technology and the latest trends, the insurance sector has shaped up to be very quick and proactive. Consumers no longer have to wait for physical verification and documentation before starting the insurance tenure. Instead, with the help of digitization, the time taken to convert a lead into a sale has reduced significantly.
This helps the companies to pick more customers in a shorter period of time.
Accuracy
With the help of machine learning, artificial intelligence, and data analysis, insurance companies have managed to become more accurate in their quotations. Risk management and analyzing the same before closing a sale has become more authentic, thanks to the efficiency and error-free analysis from machine learning.
Use of Insurance Agency Software
The use of Insurance Agency Software has been the biggest turning point in the insurance sector so far. It increases efficiency and improves precision in insurance work.
Commonly the top Insurance Management System solutions come with features such as billing and invoicing, claims management, policy management, insurance rating, document management, customer management, and many more. You should select the software that meets your requirements after browsing through the features of each. There are the best free Insurance Agency Software options also available for you to try!
Finishing Up!
The development of technology has touched all the sectors in the commercial industry on a global scale. If you thought chatbots are more suitable for the retail sector, consider checking up on some major insurance companies around the world; you will realize how convenient they are for customers in the insurance sector.
Moreover, with on-point accuracy, such companies can bring their risk factor down to a great extent. Machine learning and data analysis are some of the implementations that can help the companies boost their customer interaction while promoting their methodologies and strategies.
And yes, automation is one of the primary facets that have boosted the conversion of leads. Automation makes it very convenient for the customers to get their queries addressed and get things done conveniently and faster.
Digitization is a blessing in the insurance sector. Both new as well as established insurance companies can reach out and pitch to a larger audience with the help of the digital platform. Having a website makes the company virtually accessible from anywhere around the world. And needless to say, social media is a great way to manage branding and online reputation.
Software solutions have helped every sector of the industry become more efficient; insurance is no exception. Have you tried the best Insurance Agency Software such as Sibro, InsureEdge, HawkSoft CMS, Agency Matrix, NowCerts, etc.? Don’t forget to post a review!
