Ways On How Technology Trends Are Helping The Insurance Industry To Innovate This Holiday Season
The holiday season is almost here. And as the most important time of year approaches, there are a lot of advancements that have happened this 2020. One particular thing that has evolved so much this year is the insurance industry, as it is geared more towards technology. Technology trends resonate strongly across the insurance industry of today, which has undergone significant change over the past decade amid evolving consumer expectations, the rise of insurtechs, a global pandemic, and an altered global landscape. How each of these trends will be felt and realized will depend on the type of company, its geography, and its people.
Trend 1: AI will affect professional services
The insurance industry value chain depends on skilled resources to perform various activities effectively. Artificial intelligence (AI) will affect these resources in many unexpected ways and will be felt by every role in the industry — from brokers to underwriters to claims adjusters.
Although the focus in 2020 will be on using AI to complement the manual underwriter, it does raise questions about longer-term job security. In the future, AI-based underwriting that either augments or potentially replaces the human underwriter will increasingly be used by insurance companies to reduce underwriting costs and improve efficiencies in risk management.
Insurance companies will also start to scrutinize how AI might be trained to mitigate bias and ethics violations and meet regulatory requirements. AI will also be used to fight fraud in claims, identify liable third parties as part of the subrogation process, and handle workers’ compensation cases to reduce loss and accelerate a return to work.
The customer experience is key for insurance companies, which will look to AI to automate mundane tasks such as filling out forms and speed up the time it takes to get quotes to customers.
Trend 2: Design thinking shifts from IT services for people to IT services for machines
For years, systems have been built on design-thinking methodologies with humans as the end-users. That is changing, as insurers look to address the talent gap by building systems for machines as end-users.
To illustrate where we see this trend making an impact in 2020, consider an insurer that had insured a wind turbine farm. The insurer will provide enhanced services to the insured to process weather data, local wind conditions, and other aspects that have an impact on wind power generation. The insurer that is providing value-added services to the wind turbine farm builds an IT system to support machine-to-machine communication, as opposed to human interaction (for example, a wind turbine pitch system, which is designed to communicate with the rotor blades). This requires design-thinking approaches that are quite different from approaches meant for human use. This system resides at the edge and in the field and not in a central cloud environment. Providing such services is a new growth area for insurers.
Further in this scenario, the AI algorithms running on machines close to the edge (for example in the control center in a wind farm) are making decisions autonomously. These decisions need to be explainable and auditable, and the actions should be compliant with regulations. Designing these systems will be based on the new approaches and architectures that are expected to make great progress in 2020.
Trend 3: The value of data increases in ecosystems
As part of an information-rich industry, insurance companies are eager to find ways to monetize the data they store. Although AI will help to derive insights, the true value of this data will be realized when used across the industry ecosystem. The data will be shared by using new technologies that keep the data private while allowing analytics processing and other technologies based on zero-knowledge proofs that answer questions for analysis while keeping the data where it is — in insurer systems.
Take fraud in claims as an example. While an insurer could use past claims and other related data from external suppliers to identify fraud, the accuracy and predictive capabilities of AI algorithms will increase only if they are trained on claims data from multiple insurance entities. This is where an ecosystem of insurance entities sharing anonymized data will result in innovative capabilities that benefit the entire industry.
Insurers will also be working with ecosystems of partners beyond the industry, including companies that operate in ride-sharing, utilities, credit cards, real estate, and other areas. Insurers will start providing comprehensive services accessible by an app and designed to improve the end customer experience.
Trend 4: Teams, not superstars, are the high performers
As insurance companies look to accelerate digital transformation initiatives, they will need to create highly productive and agile teams to realize those objectives. Insurers will turn more to IT service providers to help develop an agile and DevOps culture to drive greater collaboration. They will expect these partners to have a deep pool of multitalented individuals across interconnected teams to deliver new products faster. They will also decentralize, resulting in flatter organizations and more empowered teams.
They will also set up governance and relevant metrics to measure these teams, with a focus on business outcomes rather than individual performance.
Cross-selling and upselling contribute to high growth in the insurance industry, and knowing how best to achieve this requires a cross-functional team, rather than individual superstars, with multiple talents including AI, risk assessment, sales, and underwriting.
Trend 5: New wave of business leaders accelerates transformation
The insurance industry has seen the rise of new companies that promote the use of emerging technologies to disrupt the status quo. These upstart companies, referred to as insurtechs, are breeding new leaders who are both business and technology savvy. Increasingly, traditional insurers are bringing in leaders who are accelerating the drive toward digital transformation.
These leaders are having an impact on most insurance business processes across the value chain. They will increasingly bring technologies that improve customer experience, as happened in the consumer space, such as introducing auto-filling forms and proposing progressive life insurance products. They are helping insurance companies manage the risk they underwrite by implementing technologies that allow them to monitor the environment in which the insured properties exist (for example, an insured steam boiler in a factory).
These leaders will push insurers to enter new markets. They will drive transformation across compliance, security, and auditing. They will push companies to embrace and manage change, work with partners to build out ecosystems, and create a progressive environment that encourages teams to learn from successes in other industries.
Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.