23-Jan-2018

How

It is next to impossible to find an industry that technology has not penetrated. Especially with the insurance industry, gone are the days of making appointments with the insurance agents, negotiating in person on the price, or making frequent trips to pay your premiums. With digitization, the click of a few buttons brings everything to your fingertips through downloading an app or logging in to a website. Transacting online has become the norm today for most people.  The Insurance sector, in particular, has benefited from this dramatic shift to digitization in incredible ways and it will only continue to increase as mentioned by Mark Breading (SMA). This amalgamation of insurance and technology is what we call Insurtech.  As Deborah Smallwood, an Insurance Industry Expert in her recent blog mentioned, “Becoming a digital insurer is essential to maintaining a competitive edge and shifting the focus toward the customer-we continue to see more value-in-use products and more incentive-based products.”

Insurtech has defined and transformed the way customers are purchasing insurance. Cloud-based platforms, automation, Artificial Intelligence (AI) and mobile-specific innovations are destined to change the stage for insurance industries. A few of the many ways Insurtech has changed the insurance landscape include:

Connecting the Ecosystem

Insurance companies have become adept at harnessing technology to connect customers and insurers.  Beginning with obtaining a quote to purchasing the policy, everything can be done online without ever having to interact with an agent.  With fitness tracking devices to track people and telematics devices to track vehicles, insurance has become extremely personalized and is being tailored to individual needs. This in turn improves cost efficiency for both the customer and the insurer in many ways.

According to PWC (2016), 90 percent of insurers share the fear of losing part of their business to Insurtechs. The main reasons are pressure on margins and the emergence of innovation drivers such as new customer needs and deeper risk insights.

Meeting Customer Needs

With customers embracing technology at lightning fast speeds, digitization provides the potential for higher customer demands and expectations when it comes to buying insurance.  Based on data analysis, services can be created based on predicated future trends. Every stage of a purchase experience is made seamless and convenient for a higher customer satisfaction rate. Problem areas are quickly identified and solutions are provided almost instantly.

According to the Genesys Global Survey, bad customer service costs organizations $338.5 billion globally per year in lost business.

Competitive Pricing

One of the major benefits of digitization include cost advantage to both the customer and the insurer.  With diminishing geographical barriers and options to explore, customers can benefit from markets that offer lower prices than what they can find locally.  When insurers offer competitive prices, the savings are transferred to the customer and keeps them coming back.

Transforming operations

Operational transformation is occurring rapidly within the insurance industry. From advertising to customer acquisition and underwriting, to claims processing, the entire cycle is changing constantly. This enables a flawless customer experience from front-end to back-end processes increasing customer satisfaction and expectation.

An analysis by Bain and Google shows that a prototypical P&C insurer could increase its revenues by up to 28% within five years, reduce claims payouts by as much 19% and cut policy administration costs by as much as 72% through digitization.

Access and Security

Having the ability to access data and information instantly has its own benefits.  But convenience also comes with some challenges.  It is for this reason, adding a layer of security is of utmost importance in this day of frequent data breaches and identity thefts. Insurtech companies have surpassed this obstacle in many ways and are constantly adapting new technology to keep abreast. When you trust the right company, you can be rest assured you are in safe hands with your data and documents.

With the fundamental paradigm shift in customer expectations, adapting to digital transformation is no longer an option but an imperative for organizations. It is not an exaggeration to say that digitization is here to stay and it’s time to get on board.

Sridevi Talluri

Sridevi Talluri

Contributing Writer/Editor at InsuredMine
Sridevi has been with InsuredMine since its launch and writes about InsuredMine on several platforms including social media, blogs, and web. She strongly believes development of content is the beginning of all communication. She holds a graduate degree in biological sciences from an Indian university.
Sridevi Talluri

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