The insurance industry is undergoing a rapid digital transformation, driven by changing customer expectations and competitive pressures. To succeed in this dynamic environment, insurance providers need to adopt a digital mindset and keep up with the latest technology trends that can enhance their business processes and customer experiences. Here are nine technology trends that will shape the insurance industry in 2023 and beyond.
Many insurance providers still rely on legacy systems that run on-premises and limit their agility and scalability. Cloud computing can help them migrate their core business processes to the cloud and leverage its benefits, such as lower costs, faster time-to-market, higher security, and better data management. Cloud computing can also enable insurance providers to connect with various ecosystem partners, such as healthcare providers, vehicle providers, smart home device distributors, and so on, and offer more personalized and integrated services to their customers.
Digital customer experience
Technology spending by policyholders is expected to reach £255bn this year, indicating the growing demand for digital services. Insurance providers need to respond by enhancing their digital capabilities across all customer touchpoints, such as customer support, claims management, transactions, and overall customer satisfaction. Customers are using multiple digital channels and expect seamless and consistent user experiences across them. Insurance providers need to adopt a multi-access approach and offer omnichannel solutions to their customers.
Automation can help insurance providers optimize many of their operations, such as claims management, automated payments, compliance management, underwriting, policy management, and so on. Automation can reduce human errors, increase efficiency, and improve accuracy. Robotic process automation (RPA) is a technology that can automate repetitive and manual tasks with software bots, eliminating the need for human intervention. ZhongAn, a leading insurance company in China, achieved 99% automation for underwriting and 95% for claims settlement, demonstrating the potential of automation in the insurance industry.
Low code/no code development
Insurance providers need to be agile and innovative to keep up with the changing market conditions and customer needs. They need to be able to develop, test, and deploy new applications and products quickly and cost-effectively. Low code/no code development is a technology that enables simplified and robust configuration, development, testing, and management of insurance applications without requiring extensive coding skills. Low code/no code development can help insurance providers increase their productivity and improve their customer experiences.
Artificial intelligence (AI)
AI is transforming the insurance industry in various ways, such as underwriting, pricing, claims, decision-making, cost optimization, and customer experience. AI can help insurance providers analyze large amounts of data from various sources, such as customer behavior, claims history, risk factors, market trends, etc., and provide insights and recommendations. AI can also help insurance providers detect frauds and prevent losses. Fraudulent insurance claims in the U.K. increased by 10% during the pandemic. By using AI, insurance providers can identify and reject false claims and flag them for further investigation.
Predictive analytics is a technology that uses data mining, machine learning (ML), and statistical techniques to predict future outcomes based on historical data. Predictive analytics can help insurance providers improve their sales and underwriting processes by providing them with data-driven insights into customer preferences, risk profiles, pricing strategies, etc. Predictive analytics can also help insurance providers identify fraud risks, triage claims,anticipate trends, etc. A study from Valen Analytics found that insurance companies that used predictive analytics improved their loss ratios by up to 9% and increased their direct written premiums by 53%.
Connected insurance internet of things (IoT)
Connected insurance is a new model of insurance that leverages IoT devices to collect real-time data from customers and offer personalized and dynamic services based on their behaviour.
For example, connected car insurance is a type of insurance that bases premiums on the driver’s driving habits. Connected insurance can benefit both customers and insurance providers by improving driving behavior, reducing frauds, lowering operational costs, improving customer experience, etc.
IoT devices can also help insurance providers prevent losses by alerting them of potential hazards or damages in real-time. IoT devices can include smart homes, smart fire alarms, fitness trackers, automobile sensors, etc.
Chatbots are software applications that use natural language processing (NLP) and AI to interact with customers via text or voice. Chatbots can provide 24/7 customer service without requiring human agents. Chatbots can guide customers through various processes, such as filling up forms, signing up for policies, raising claims, etc., while humans can handle more complex issues. Chatbots can help insurance providers save time.
The insurance industry is facing a digital transformation that requires insurance providers to adopt new technologies and trends to stay ahead of the competition and meet customer expectations. In this article, we have discussed nine technology trends that will shape the insurance industry in 2023 and beyond, such as cloud computing, digital customer experience, automation, low code/no code development, artificial intelligence, predictive analytics, connected insurance internet of things, and chatbots. These trends will enable insurance providers to optimize their business processes, enhance their customer experiences, improve their risk management, and increase their revenues. Insurance providers that embrace these trends and implement them in their business strategies will be well-positioned to thrive in the dynamic and evolving insurance landscape.