While technology is disrupting the insurance sector, it is the solution to issues leaders frequently face, changing the future of the insurance business. 

Today’s insurers encounter waves of disruption, getting under immense pressure to provide customers with convenient, speedy services and reduce expenditure. While technology is the prime insurance market disrupter, it is also the solution for problems-facing insurers looking for ways to deliver outstanding services at lower costs. 

However, due to the lack of knowledge regarding correct technology utilization or funds to hire an IT staff, digital transformation often becomes quite difficult, leading to inefficient operations in the digital business era. Considering this situation, many insurance companies and agencies are moving toward outside firms offering reliable insurance business process management solutions. 

For insurance businesses with a sufficient budget and clear vision for technology adoption, insurance can work great wonders, helping them improve service standards, delivery models, speed up processes, leading to enhanced customer satisfaction and retention, all while lowering overhead. 

Digital Disruption in Insurance 

Digital disruption is affecting the insurance market, forcing insurers to revamp their business models across lines. Therefore, let’s discuss how technology can play a crucial role in supporting insurers in obtaining operational excellence and reducing costs. 

1. Chatbots Providing Customer Support, Round the Clock 

Insurance agents spend a lot of their time interacting with customers, helping them make a decision, providing critical information they ask for. Chatbots, smartphone technologies, voice recognition, etc., can now automate an agent’s tedious jobs.  

Chatbots, precisely, can (by offering round-the-clock availability) handle as many customers as a large customer support center could. Thanks to chatbots and similar tools as these help insurers cut costs significantly in sales and customer relationship management. 

2. OCR Simplifying Document Management & Processing 

Any average insurance business collects thousands of documents in paper format, which turns out to be a little costly and is not suitable for the environment. In contrast, documents in digital format are easier to analyze and process. In addition to that, using document management software powered by optical character recognition (OCR) algorithms can help to automate the entire process. 

That way, the software can review documents, eliminate errors/irrelevant information, and process them further. As a result, the staff will need to deal with relevant and correct information only, saving a lot of their time and effort. 

3. Big Data Influencing Coverage Standards 

According to the TransUnion survey, 61% of drivers surveyed said they would be fine with their insurance carrier collecting real-time data like mileage and driving habits if this could reduce their premiums payable. 

There’s no doubt that many customers prefer usage-based coverage. Moreover, due to the shutdowns imposed last year concerning COVID-19’s rising risks, there had a drastic drop in miles driven. Given that, many big auto insurance companies have started offering usage-based coverage options. 

Similarly, property insurers are also using big data to produce highly customized, niche products. For example, companies are analyzing risks specific to ZIP codes rather than covering large provinces or cities. This enables them to determine risks better and underwrite policies in a cost-effective manner. 

4. AI & ML Automating Claims Processing 

Let’s start discussing this point with an example. Suppose a company holding business interruption insurance has been badly affected by a flood. In this case, it would take a lot of workforce and time for its insurance provider to collect and process data in order to make payout decisions. Here, artificial intelligence can come up as a great solution. 

AI and Machine learning algorithms can calculate the damage by examining drone-recorded videos. This reduces the need to delegate human resources, in addition to saving a considerable amount of time and money. 

Another instance to discuss is a damaged vehicle where its owner sends pictures of the damaged areas to the insurer for claims purposes. Here, the insurer can use ML to assess the damage intensity and determine repairs cost, finally paying out an amount that would be best for settlement. 

5. Fraud Detection Software Bringing Insurer’s Losses Down 

Insurance carriers in the US lose around $80 billion each year. This indicates the utter need to adopt fraud detection software. Such cloud and mobile-based software can help agents gather real-time information. They can use this information in hand to determine if a claim is genuine or not.  

As a result, they can efficiently deal with duplicate, inflated claims, fake medical reports, inconsistency in information, internal or employee frauds, and other types of scams. 

Having a solid fraud detection system in place can help insurers compare claim data with their data, helping them identify fraud. This helps to save significant capital that otherwise might have drained to scam. 

6. Online Space Making Product Distribution Easier 

It is no more required for a customer to walk to an insurer’s office; in fact, they need not wait on long-holding calls to enquire about a product. The world wide web has made this possible. Policy seekers can go online and on various platforms to look for insurance products on the market. Compare them, check reviews/testimonials, or find specialized products that meet their unique needs. 

The online space is actually redefining insurance distribution models as customers can get a clearer view of what they should purchase while providers gain more insights into meeting customer demand. Digital platforms help insurers lower distribution costs while bringing in well-targeted, more potential leads. 

7. Data Analytics Generating Highly Valuable Insights Driving Important Decisions 

Many insurance carriers have been using data analytics for years. However, considering today’s competitive business environment, data analytics solutions have become paramount to stay one step ahead of competitors. 

The best thing about data analytics is it isn’t limited to competitive analysis. Today’s insurers are experimenting and implementing analytics in almost every process. From the front office to the back office, from policy issuance to claim settlement. 

For example, analyzing a claim application and its relevant aspects helps insurers payout a satisfactory settlement. Similarly, by using analytical solutions to determine the company’s performance. They can make big decisions to either improve the poor performance or boost it if it is already sound. 

Benefits of insurance in a nutshell: 

• Cost-saving 
• Insights to make informed decisions 
• Better risk assessment 
• Reduced costs for customer acquisition 
• Increased customer retention rates 
• Protection against scams 

How Would the Future of Insurance Look Like? 

By adopting insurance, insurance companies and agencies can achieve customer satisfaction, reduce costs, and accelerate growth pretty smoothly. However, to make this possible, excellent implementation and monitoring of technology is vital. 

The global insurance market value ($2.72 billion in 2020) will likely expand at a compound annual growth rate of 48.8% from 2021 to 2028.  Source As an insurance business owner. You might also have plans in place to deal with the increasingly trending insurtech disrupting the sector at a great level. However, like many others, you might also be facing issues like lack of resources, knowledge, or expertise required to implement technology in the best manner, reaping several possible advantages of insurance. If so, you are at the right place.