Top 5 Trends in the Insurtech Industry
The new age insurance technology or insurtech industry is being governed by a number of innovative trends. These include next generation technologies like Artificial Intelligence, Predictive Analysis, Telematics, etc. But what are the top five trends which will define this industry in 2021 and going ahead? Let us take a look:
1. Next-Gen Models and Tailor-made Solutions
Nowadays, customers know exactly what they want, and there is no one-size-fits-all solution when it comes to insurtech. As countries increasingly turn towards digitization post-pandemic, it is expected that on-demand, usage-based and ‘all-in-one’ insurtech products will gain prominence. Personalised and tailor-made insurance covers will become the norm, increasing flexibility and making micro and peer-to-peer insurance coverage a possibility in the days ahead. Next generational models will help mitigate redundancies and unnecessary expenditure. Ecosystem intermediaries, who end up raising distribution costs significantly, will become obsolete when digital models become commonplace. Novel models will also enhance customer experience by harnessing Application Programming Interfaces (APIs). APIs are known for enabling insights-driven offerings as these programmes integrate data from multiple sources and offer deeper understanding of customer behaviours.
2. Quicker Claim Settlements via AI & Automation
Across industries, Robotic Process Automation or RPA and Artificial Intelligence (AI) have begun taking centre stage when it comes to reducing human effort and enabling efficient procedures. Insurtech is no different. These technologies will power newer data channels, improved data processing capabilities, and enhancements in AI algorithms. In addition to reducing the burden on human resources, AI can also eliminate unnecessary paperwork along with using behavioural economics capabilities to mitigate fraud. Overall, RPA and AI adoption is expected to lead to reduced time, effort, and costs for insurance companies. This will, in turn, significantly improve customer experience and retention. RPA will also make bots mainstream, across front and back-office set-ups, thus automating policy servicing and claims management. This will lead to quicker and more personalised customer service.
3. Advanced Analytics
With personalised covers on the rise, insurance premiums are set to become highly customised and the entire process will be enabled by innovations like Internet of Things, mobile-enabled InsurTech apps, and wearables. Connected smart device ecosystems will help insurers access real-time and accurate data on the potential loss exposure of individual customers, making timely and highly personalised interventions possible. Leveraging data set relationships will help insurers gain insights and create deeper granularity in individual risk profiles. This is expected to safeguard service providers from potential risk exposures. Advanced analytics will also segment users, needs and model behaviours dynamically, making it easier to identify exceptions, tweak policy prices, enhance business strategies, and identify and target potential growth opportunities.
4. InsurTech Collaborations and Acquisitions
With technology becoming the driving force behind segments, including insurance, there is significant possibility of traditional insurance companies and service providers collaborating with and even acquiring new age insurtech start-ups. There has been tremendous growth in scope of insurtech firms active in segments like auto, home ownership, and cyber insurance and this will prove as a catalyst for possible collaborations and acquisitions. The fact that the growing millennial population looks for technologically forward services also acts as a stimulant for such scenarios. This trend is likely to result in a win-win situation for all players, with traditional insurance providers harnessing faster results and optimal outcomes and insurtech companies receiving access to a larger and pre-existing customer base.
5. Blockchain to become Mainstream
New age insurance models require companies to process massive quantities of customer data in real-time. This means that there is a strong need for simple and secure data transfer systems across companies and their stakeholders. In this scenario, blockchain technology offers companies secure data management options across multiple interfaces and stakeholders, without any loss of integrity. Blockchain can reduce operational costs by streamlining everything from claims processing, identity management, underwriting, fraud management and reliable data availability. The technology also offers access to Decentralized Autonomous Organizations (DAOs) and smart contracts when it comes to optimal policy management.
With technology front-lining the evolution of insurance companies, these are the top five trends which are expected to make a difference in the short term. The focus should now be on understanding how to best leverage them to tap into the huge opportunity lying dormant in the insurtech business.