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INSURTECH – Inspiring People and Offering Opportunities

While InsurTech offers benefits via process efficiencies, cost reductions, or radical changes to the customer, it was under the late adoption category when compared to other financial industry sectors, as per a report from Deloitte.

Figuring the current state of InsurTech, it is found by Accenture that InsurTech deals in the USA are still the highest with $1.24bn worth of deals. However, the number of insurtech deals in Europe grew 118%, while the value of deals in 2017 was $679m, 385% more than in 2016. Another report highlights that the UK is Europe’s largest insurtech hub, with 41 deals in 2017.

On the other hand, Insurtech in India is picking up the pace via its integration with modern technologies like Artificial Intelligence[AI], Machine Learning [ML]and the Internet of Things [ IoT].

So what were the factors that inspired Insurance companies to handshake with the advanced technologies? Or what were the dimensions in insurtech that encouraged people? Let’s have a look –
OPPORTUNITIES’ THAT INSPIRES INSURTECH

INNOVATION TO HELP MULTI-LAYERED STRUCTURE

Insurance is a multi-layer process, be it vehicle insurance that involves the owner, insurance firm and the vehicle seller or health insurance that requires patient, hospital and the insurance firm. The story could get a bit more complicated when coverage is provided via an employer, adding another layer of interaction.
Could disintermediation of the layers make it easy for customers to avail insurance? Well, yes a robust platform strategy is all you need. Just, for example, you may be approaching a corporate client to sell your health insurance policy; if some of the employees are using a type of health tracker device, it would be better to have a base of standard APIs and interface where all interface could connect and communicate.
Or picking another example, when your vehicle meets an accident, your smartphone could record and upload the photos on the integrated platform offered by the insurance firm and claim processing could be pushed.

MATCHING THE NEED FOR CUSTOMERS

The internet generation is keen to buy things in untraditional ways, while earlier government job was the norm, millennials are eager to own their business. To serve such a customer base, insurtech has been on their toes and offering customized insurance policies that may last for a trip or even for hours commonly known as Microinsurance. The ability to turn on and off your insurance policy is another creative way that has inspired people to buy insurance.

REVOLUTION TO CUSTOMIZE PRICING

Gone are the days when a full traditional policy was the norm and customers had no other option but to buy it. The customer is now attracted to innovative pricing models offered by insurtech firms. While the customer is planning his vacation via air, insurtech based on the data gathered could provide a customized 2-day or 5-day insurance cover. Or how about accessing the assets at home and providing insurance against burglary for your vacation time? Well, these revolutionary pricing model are helping insurtech to catch customer behaviour and allowing them to make fast claim processing via different tools.

IMPROVEMENTS WITH TECHNOLOGY

Integration with technologies like Blockchain, AI, and IoTs is helping people to avail enhanced services and operational development. While combination with Blockchain will help in building a higher level of trust, it also has the potential to offer new products. Pairing with IoTs would assist in gathering data and avoiding fraud claims. On the other hand, AI could help in automation of the age-old processes and documentation thereby streamlining the procedures.

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Retention playbook for Insurance firms in the backdrop of financial crises

4 minutes read

Belonging to one of the oldest industries in the world, Insurance companies have weathered multiple calamities over the years and have proven themselves to be resilient entities that can truly stand the test of time. Today, however, the industry faces some of its toughest trials yet. Technology has fundamentally changed what it means to be an insurer and the cumulative effects of the pandemic coupled with a weak global economic output have impacted the industry in ways both good and bad.

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Source: Deloitte Services LP Economic Analysis

For instance, the U.S market recorded a sharp dip in GDP in the wake of the pandemic and it was expected that the economy would bounce back bringing with it a resurgent demand for all products (including insurance) across the board. It must be noted that the outlook toward insurance products changed as a result of the pandemic. Life insurance products were no longer an afterthought, although profitability in this segment declined over the years. Property-and-Casualty (P&C) insurance, especially motor insurance, continued to be a strong driver, while health insurance proved to be the fastest-growing segment with robust demand from different geographies

Simultaneously, the insurance industry finds itself on the cusp of an industry-wide shift as technology is starting to play a greater role in core operations. In particular, technologies such as AI, AR, and VR are being deployed extensively to retain customers amidst this technological and economic upheaval.

Double down on digital

For insurance firms, IT budgets were almost exclusively dedicated to maintaining legacy systems, but with the rise of InsurTech, it is imperative that firms start dedicating more of their budgets towards developing advanced capabilities such as predictive analytics, AI-driven offerings, etc. Insurance has long been an industry that makes extensive use of complex statistical and mathematical models to guide pricing and product development strategies. By incorporating the latest technological advances with the rich data they have accumulated over the years, insurance firms are poised to emerge stronger and more competitive than ever.

Using AI to curate a bespoke customer experience

Insurance has always been a low-margin affair and success in the business is primarily a function of selling the right products to the right people and reducing churn as much as possible. This is particularly important as customer retention is normally conceived as an afterthought in most industries, as evidenced in the following chart.

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        Source: econconusltancy.com

AI-powered tools (even with narrow capabilities) can do wonders for the insurance industry at large. When architected in the right manner, they can be used to automate a bulk of the standardized and automated processes that insurance companies have. AI can be used to automate and accelerate claims, assess homeowner policies via drones, and facilitate richer customer experiences through sophisticated chatbots. Such advances have a domino effect of increasing CSAT scores, boosting retention rates, reducing CACs, and ultimately improving profitability by as much as 95%.

Crafting immersive products through AR/VR

Customer retention is largely a function of how good a product is, and how effective it is in solving the customers’ pain points. In the face of increasing commodification, insurance companies that go the extra mile to make the buying process more immersive and engaging can gain a definite edge over competitors.

Globally, companies are flocking to implement AR/VR into their customer engagement strategies as it allows them to better several aspects of the customer journey in one fell swoop. Relationship building, product visualization, and highly personalized products are some of the benefits that AR/VR confers to its wielders.  

By honoring the customer sentiments of today and applying a slick AR/VR-powered veneer over its existing product layer, insurance companies can cater to a younger audience (Gen Z) by educating them about insurance products and tailoring digital delivery experiences. This could pay off in the long run by building a large customer base that could be retained and served for a much longer period.

The way forward

The Insurance industry is undergoing a shift of tectonic proportions as an older generation makes way for a new and younger one that has little to no perceptions about the industry. By investing in next-generation technologies such as AR/VR, firms can build new products to capture this new market and catapult themselves to leadership positions simply by way of keeping up with the times.

We have already seen how AR is a potential game-changer for the insurance industry. It is only a matter of time before it becomes commonplace.

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