5 InsurTech Trends for 2023

For 2023, we believe that InsurTech will be used to supplement the rising concerns of inflation, arrested economic development, and heavily burdened pension schemes by catering to customers with greater attention to detail. 

# Digitally Enabled CX 

Insurance models in the present context have become bloated and complicated to the point where customers feel alienated. Customer needs are also converging across a wide range of areas: health, retirement, and investment management, to name a few. Simplifying the existing delivery model is key, and one such model that is likely to emerge is that of being a ‘distribution specialist’.

These firms are predominantly client-centric and extremely capital-light as they do not take on balance sheet risks. These firms will invest heavily in client-facing technology, and those that curate a delectable insurance discovery and delivery experience will have a huge leg-up over their peers. These developments are in line with Gartner’s predictions for the InsurTech industry, where digitally enabled CX is listed as a key success factor for InsurTech in the coming years.

# InsurTech native Telematics

Analysts and experts alike have been citing usage-based insurance programs as the next big thing in the world of insurance for nearly two years now. But how effective can usage-based programs be if they rely entirely on the customer to predict their decisions and make purchases accordingly? 

This is where telematics systems come in. As cars become increasingly ‘smart’, it will become easier and cheaper to integrate telematics into the insurance plan to implement a real-time ‘pay as you go’ plan. Telematics will be crucial for developing markets in Asia as societies become increasingly digitized and people start to get comfortable with the idea of insuring themselves and their vehicles separately. 

# Algorithmic Risk Assessments

Research has shown that with the application of machine learning models to the risk assessment strategies employed by risk analysts, Insurance companies can decrease the time taken to evaluate customer profiles by allowing faster servicing and thereby leading to greater customer loyalty and satisfaction. This will allow companies to process claims swiftly and accurately, thereby allowing risk assessment professionals to focus on refining their models.

Some firms have already demonstrated success by incorporating AI into their workflows. Lemonade, an insurance company that is ‘digital first’ has seen massive success by using AI to facilitate claims, quotes, and personalizing prices and interactions with individual customers.

# Broadening capabilities in the Metaverse

With over $25Bn dollars having been invested into it by Facebook alone, Metaverse is here to stay for the long run. And for Insurers, the possibilities offered by metaverse are hard to ignore. This means they finally have a tool to combine the efficiencies of AI-powered chatbots, with the warmth of face-to-face interactions. Internal training, conducting sales pitches, and using NFTs to verify personal documents are some of the most highly anticipated use cases.

Max Life insurance, a leading Indian insurance player has already started to think about how best to use the metaverse to boost employee engagement and morale.

# Disruptors will strive to stay afloat

Much of what made new-age insurers attractive to customers was the way they structured themselves (tech-first, expedited claims, etc.) that were antithetical to running an insurance business at scale. Kimberly Harris-Ferrante of Gartner predicts that the coming year will see a lot of new Insurtechs pivot to more traditional operating models, with the successful ones being acquired and the others being forced to shut shop.

Some have already closed down, such as GoBear (Asia Pacific) citing increasing regulatory and compliance pressures as the primary reason. Other examples include Kinsu (from Latin America) and Coverly for small businesses.

Conclusion: 

2023 is likely to see the beginning of the final stretch of digital transformation in the insurance industry as many have already caught on to the basics that are required to run a robust digitally-enabled sales and servicing operation. Conservatism will go hand-in-hand with novel, disruptive technologies as incumbents will lap up all existing software capabilities to bolster direct distribution, simpler delivery mechanisms, and a narrower focus on servicing the customer. Expect greater use of APIs, hybrid cloud architectures, and ‘headless tech’ in the coming year.