How Insurtechs are Addressing New-age Challenges
The Insurance industry is witnessing an unprecedented trajectory of changes, what with the emergence of digital technologies, product innovations, stringent regulatory compliance and evolving customer needs. This changing ecosystem poses corresponding challenges which were brought up and discussed at the recently-held Bimtech-FAIR International seminar, where I was invited as a panel speaker.
Here I try and list down some of these challenges, and also offer some solutions:
- Newer entrants disrupting the traditional landscape: Startups are disrupting existing business models e.g. Lemonade and Trove bringing technology platforms to garner market share in personal lines. Traditional insurers should modernize their legacy platforms and build impactful omni-channel front-end systems, providing anytime anywhere access to attract more customers and keep pace with times.
- Customer centricity and product innovation: Evolving customer expectations such as engaging rather than selling, 24*7 availability with community connection and one-click knowledge of policies are compelling insurers to undertake a 360-degree analysis of their customers. This will help them provide customized products covering different and newer types of risks. For example: driverless car insurance, very short period car rental insurance, cyber risk insurance etc.
In this demographic shift where millennials and GenZ are the new customers, insurance requirements are evolving, and servicing expectations is driving through simplicity and transparency via mobile or web.
- Data explosion due to IOT and changing compliance needs: Enormous data is available as real-time data is captured via social media, wearable devices, vehicle sensors, connected homes. Analyzing this data, deriving better insights for customer segmentation and buyer behavior mapping has become essential to provide competitive pricing and pattern analysis in case of claims.
New regulations such as GDPR and strict compliance can protect customers from new threats resulting from easy data availability as well as hackers. Solvency protection to ensure that customers interests are safeguarded for the long term.
- Changes in operating models: Due to digital disruption, the role of the underwriter has evolved to become more of an intermediary, causing direct businesses to grow and channels like broking, agency, etc. to plateau. The role of an actuary is also similarly changing to become a more dynamic, data-driven field expert, rather than a back-office function.
- Knowledge sharing and knowledge management using AI: Available in pockets and silos so far, knowledge is now flowing into data lakes, via new cognitive tools. Merging and melding enterprise data with big data creates new approaches for Knowledge platform creation. Knowledge mining using taxonomy, ontology and heuristic driven AI models is accelerating the speed of executing core functions of insurers.
- Focus on customer experience: Insurers, intermediaries, reinsurers, customers and the entire community seek a new digital customer experience. Simplification of insurance processes, elimination of manual intervention, and automation of tasks are driving “straight-through paperless processing”. Agility and adaptability in claims, underwriting, policy servicing using chat bots, Social media, Mobility, Analytics, Cloud, IOT, AI, RPA, etc. has become new mantra of survival and business growth.
On coping with change
To keep pace with the changing insurance ecosystem insurers needs to:
- Drive growth: Using intelligence like Amazon, omnipresence of Google, familiarity of Facebook, content of YouTube to attract, retain existing clients and incept fresh business.
- Enhance customer experience: Using Design Thinking concepts to drive ease and intuitiveness, enabling end-to-end digital delivery of products & services.
- Move to lower cost structures while improving service levels: Reducing cost of operations by waste elimination, reskilling, process redesigning, platform reengineering to be nimbler.
- Reduce leakages: Leakages happen in underwriting due to faulty pricing and in claims due to fraud and exaggerated payouts which digital tools can help to reduce and eliminate.
To summarize, technology is both an “enabler” and “disruptor” and needs to be strategized and implemented optimally for building the “insurance enterprise of tomorrow”.
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