With 2020 upon us, we take a look at three insurance tech trends we expect to shape the market in the year ahead, and how you can best respond.
The first known insurance contract was written up in Genoa, Italy in 1347. And yet, looking back at the these past few years, you’d be forgiven for thinking the market had just hit adolescence.
Insurance isn’t the only industry forced to change in response to rapid digital change, but as three new tech trends demonstrate, it is undergoing a profound transformation.
And while Deloitte finds that 80% of EMEA insurers feel the industry is keeping pace with technological advancement, not everyone shares their enthusiasm. A study by The Digital Insurer found that UK insurers lag behind the US, Asia and Africa in terms of taking advantage of digital insurance developments.
We believe there’s still a lot to do if insurers hope to move with the times – and data management will play a critical role.
In this blog, we’ll explore three tech trends we expect to impact the insurance industry this year, and how a smarter approach to data can help you respond.
Trend #1: Customers will continue to be the biggest disruptors
Customer loyalty has never been less guaranteed. According to Pitney Bowes research, 20% of customers tend to leave an insurance provider after only a year. And with banks and retailers leading the charge with personalised app-based experiences and on-demand services, insurers must learn to make smarter use of their data to deliver customer-centric insurance.
In 2020, we anticipate many insurers will turn to artificial intelligence (AI) and automation to help deliver faster, more personalised service. This includes automating laborious back-end processes to free people to focus on delivering more personalised, one-to-one service.
AI bots are also helping insurers get to the root of customer queries without expecting customers to pick up the phone or repeat themselves to multiple service agents. What’s more, insurers are using AI to improve their data processing capabilities, reducing the time it takes to accurately process claims and deliver prompt payment to customers.
Altogether, this helps insurers deliver the kind of innovative customer experiences that surprise, delight, and encourage brand loyalty.
Trend #2: Insurers will move further away from traditional models
As customer lifestyles and expectations continue to revolve more around immediate, connected, and personalised services, the growth of traditional policy-based insurance has all but ceased.
In response, insurers are moving towards a more service-based approach, with Deloitte finding that 61% of insurers expect to generate more than 30% of their business from service-based offerings by 2023.
Changing customer behaviour is a leading contributor to this trend, as are emerging risks such as extreme weather and cybercrime. By analysing data pooled from many sources, including IoT-connected sensors, environmental data and customer activity, insurers can innovate new service models that respond to emerging threats and customer needs.
These models include:
- Personalised models: By using data collected at the touchpoint, the insurance product will change in real-time to reflect the customer’s environment and behaviour
- Embedded models: Instead of a one-off peripheral payment, insurance is embedded in the overall cost of using a product – be it leased or purchased outright
- Parametric models: Through proactive monitoring, insurers can trigger automatic pay-out to customers when a pre-defined event takes place – for example, a flight delay
Trend #3: Blockchain will help insurers detect and prevent fraud
Did you know that a staggering 1,300 cases of insurance fraud are exposed every day, with each case totalling an average of £12,000?
Insurance fraud is a daily headache for insurers worldwide, and thanks to the persistence of policies being processed on error-prone paper contracts, thousands of people are happy to try their hand at scoring an illegitimate pay-out.
In 2020, we anticipate many insurers – including those who have long abandoned paper-based processes – will use blockchain to help reduce risk and foil fraudsters. In fact, more than 38 insurers and reinsurers are already following a blockchain security initiative called B3i.
By using advanced cryptographic techniques, insurers can create a secure information ledger that eliminates all opportunities for unauthorised data modification. What’s more, it can be distributed among multiple companies, merchants, suppliers, and banks for secure collaboration – leaving a clear, irrefutable audit trail behind it.
Consolidating data across providers also gives a clearer view of how fraudsters are cheating the system, helping insurers identify common patterns of fraudulent behaviour. From here, insurers can eliminate instances of double-booking, establish contract ownership, and reduce premium diversion.
How can you respond in 2020?
To join the customer-centric insurers leading the industry through digital transformation, insurers need access to an accurate, up-to-date single source of truth for all relevant data.
This means being able to pool and analyse data from many sources, including relevant IoT devices like in-car telematics or wearable health trackers, as well as internal ERP systems, social media channels and third-party data providers.
In our new whitepaper, Data: The Key to Transformation for UK Insurers, you’ll take a closer look at the UK insurance market today, and how a modern analytics platform can help you turn today and tomorrows challenges into powerful new opportunities for growth.