The landscape of the insurance sector has undergone a profound shift, thanks to advancements in technology. Insurtech has emerged as a game-changer, utilising technology to provide affordable and accessible insurance solutions to low-income and remote customers. This tech-driven transformation has allowed the industry to reinvent itself, cutting costs, enhancing efficiency, and elevating service models for clients. The global insurtech market size was valued at $9.42 billion in 2022 and is projected to reach $159 billion by 2031, expanding at a CAGR of 32.8 per cent. Increasing adoption of insurance is likely to boost the market.
In addressing long standing challenges within the insurance industry, many insurtech companies are leveraging technology to improve various aspects, from the purchasing experience to intricate product structures and lengthy claims processes. The year saw the insurance industry embedding multiple tech innovations into their force. As more tech innovations emerge, we are likely to see adoption of multiple new technologies in the coming years too. Let’s take a look.
Four tech innovations that gained pace in 2023
- Automation: The adoption of automation has emerged as a significant trend in recent years. Intelligent process automation has proven to be a practical solution, especially in navigating challenges presented by the pandemic. By reducing reliance on manual processes, insurers have achieved quicker claims processing, reduced costs, and enhanced customer experience. Automated claims processing workflows and policy issuance based on pre-built robotic process automation (RPA) use cases are notable examples, enhancing efficiency and enabling insurers to focus on personalised customer interactions.
- Artificial Intelligence: To tackle the complex task of processing unstructured data, insurers are turning to artificial intelligence (AI) for a streamlined, swift, and accurate approach. AI is revolutionising claims document summarisation and renewal predictions, leading to improved renewal rates. From pre-inspection in motor insurance to automated claim payouts in travel insurance, AI plays a pivotal role in enhancing various facets of the insurance business.
- Cloud Computing: The foundation of insurtech companies has been strengthened by cloud computing, offering a valuable delivery model for insurers to facilitate business transformation. This technology allows insurers to employ scalable service delivery models, supporting their application requirements and reducing time-to-market. Hosting core management systems on the public cloud, combined with an ecosystem of applications, ensures a seamless customer journey. The elasticity of the cloud provides scalability and storage-related functionalities, contributing to smoother and faster functioning.
- Generative AI (GenAI): The technology that led the charge this year is Generative Artificial Intelligence (GenAI), which harnesses the power of AI along with generative capabilities to improve risk assessment and simplify claims processing in 2023. GenAI is anticipated to transform customer interactions, providing personalised insurance solutions through advanced algorithms that analyse extensive datasets in real time. The potential of Generative AI to create new and synthetic data will also be something to watch in the coming year. The tools in this field are expected to be game changers, enabling businesses to operate, interact with customers, and manage risks more effectively.
Trends to watch out for in 2024
Looking ahead at 2024, the insurance sector is poised for a transformative evolution driven by cutting-edge technological advancements.
- Advanced Data Analytics: While data has become the new oil for the insurance industry, a substantial increase in the utilisation of advanced data analytics is anticipated, providing deeper insights into customer behaviour, market trends, and emerging risks, thus enabling better decision-making. This analytical capability will optimise decision-making processes and facilitate the development of innovative insurance products tailored to individual needs.
- Edge Computing: This technology could enhance data processing capabilities at the local level, reducing latency and improving the responsiveness of applications used in insurance processes, leading to faster data analysis and decision-making. For example, it helps quickly assess damage in processing claims, speeding up claim settlements. Overall, integrating edge computing into insurance processes can optimise data processing, reduce response times, and bolster operational efficiency.
- RegTech for Compliance: Regulatory Technology (RegTech) will be essential for insurers to efficiently manage the growing complexity of compliance and regulatory requirements. RegTech uses AI, machine learning, and data analytics to streamline compliance and ensure adherence to regulations. With advanced data analytics, RegTech helps insurers monitor and analyse large data sets to identify potential compliance issues. It empowers insurers to confidently navigate regulatory changes and uphold compliance and governance standards.
- Enhanced Connectivity with 5G: The widespread use of 5G in India could mean faster and more reliable data transmission, transforming connectivity and improving telematics-based insurance products. Insurers can receive real-time information from connected devices, leading to more precise risk assessment and personalised insurance offerings. 5G’s faster data transmission can also speed up insurance claims processing, making it more efficient for customers.
Also Read | Insurtech brings significant acceleration in insurance space
The fusion of advanced data analytics, edge computing, RegTech and benefits of 5G adoption are poised to redefine the insurance landscape in the coming years and create a more responsive, efficient, and customer-centric industry. The journey of insurtech continues to shape a dynamic future for the insurance sector, bringing about unprecedented changes and opportunities.
Views expressed by Vishal Shah, Head of Data Science, Digit General Insurance
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