The pandemic and our response to it will have a lasting effect on our lives, workplaces, and businesses. Before Covid-19, technological advancements were already disrupting many sectors. However, some sectors, particularly Insurance, were settled with the legacy framework and were reluctant to change. Covid-19 shut the whole world and forced millions of people to stay home, making every business go digital to stay afloat. The insurance industry is not exempt from these changes.
A growing urgency for change in Insurance
The effects of Covid-19 on the insurance industry are countless: Operations streamlined, customer experience revamped, innovative, touch-less tools introduced, claims processed online, among others. Most importantly, the pandemic accelerated the growth of Insurtech, a subset within the insurance sector that works on leveraging new-age technology trends and solutions to improve customer experience, reduce cost across the value chain for insurers, improve communication, and automate operations.
The pandemic has also elevated the demand for health insurance, especially among GenZ and Millennials, giving insurers a chance to rethink their products and delivery process. Insurers are navigating these disruptions by leveraging artificial intelligence, machine learning, the Internet of Things, blockchain, data analytics, and other emerging technologies. Insurtech might as well be the next big thing after Fintech.
The digital disruption in the Insurance sector reversed how policy applications are processed, how insurers deliver products, and how to manage claims. Besides, it will unlock new revenue streams for insurers.
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For years, insurance companies have been resilient without technology. Many traditional companies used a manual process involving interaction with agents, tedious paperwork, and slow delivery and had paper-based communication until two years ago. It did possess logistical challenges, but traditional insurers were largely unchallenged in the market with little to no competition.
Keeping pace with rapidly-shifting consumer patterns
However, rapid digitization has changed consumer behavior. Consumers now expect a seamless digital operation regardless of the product they’re purchasing. In 2020, The demand for Insurance went from “Do I need insurance?” to “I should get insurance for the whole family in this pandemic time.” The ‘panic buying’ of Insurance, led by fear of the pandemic, and the new-age technology led to a steep rise in the demand for Insurance.
Today, the global insurance market has become highly competitive. Insurers are increasingly building new businesses. Insurers are ditching their outdated legacy frameworks and building new businesses with a more customer-centric, digital-first approach to offer products and services that are just a click away.
Insurers are not only required to demonstrate that they are cutting-edge technological marvels but also business leaders. Many InsurTech companies are building frontrunner solutions that are helping insurance carriers get an edge over others in the market.
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While a new business model with a broad customer demographic has unlocked new opportunities, it has also opened gates to attackers looking to erode their advantages. Going digital is a complex process for insurance companies as they have to process confidential consumer data. The need of the hour is digitization with cybersecurity using blockchaintechnology.
Hyper-personalized Experiences and Predictive Insurance
As new technologies disrupt the marketplace, insurance companies must adapt to a technological architecture that evolves quickly. Insurers will have to ensure they’restrategically designing and updating their digital roadmap that connects critical processes. SE2 Digital Engage, for example, leverages APIs from an end-to-end platform, SE2 Aurum®, to enable the connection between the next generation front office and customer engagement solution from Life.io.
Insurers can also explore low code or no-code solutions to accelerate growth. Some companies are also looking at implementing a platform-based digital approach where they can remove outdated technologies without hampering the current system and add new technologies. Further, insurance companies can work across ecosystems with Insurtech startups, Big data companies, and cloud storage providers to develop the best business solutions.
Insurers must also focus on the trends set to dominate the insurance sector in the coming months, including an AI-powered hyper-personalized experience for customers. The new era of the insurance industry led by technological disruption will facilitate real-time synchronous interaction between insurers and customers. Hence, insurers should look at investing in predictive modeling to understand consumer behavior using big data analytics that captures every information that influences the behavior of consumers.
Insurtech is the future of the Insurance Industry. Automation, artificial intelligence, and big data will power the rapid growth of Insurtech in the coming decade. And new digital technologies, along with innovative and on-demand products, will drive customer engagement to a new level.
Views expressed in the article are the personal opinion of Chirag Buch, Managing Partner, SE2 India.
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