Once considered a slow adopter of digital transformation, the insurance industry is now experiencing tremendous changes and adaptations. And automation in insurtech is one of them.
From the online real-time rate, quote, comparison, and purchase to consumer/broker portals, technology has played a pivotal role in the insurance industry. In fact, McKinsey & Company reported in 2019 that companies using insurtech “may end up automating 50 to 60 percent of traditional back-office operations.”
Let’s unpack the most prominent trends that are shaping insurtech today.
Top trends driving automation in the insurtech industry
During the COVID-19 pandemic in 2020, we witnessed a deluge of tech trends across several industries. However, many of these trends were already in motion in the insurtech space:
- Blockchain technology eliminates the need for paperwork and facilitators. “[I]t is a technology based on the principle of a distributed ledger,” explains Code&Care. “Copies of the general ledger are stored in different user locations, giving any approved insurance company, agent, broker, or insurer access to the same real-time data source.”In other words, blockchain allows for unlimited data storage and makes transacting data more decentralized, accurate, and transparent.
- Artificial intelligence and machine learning tech automates complex insurance processes like claims processing, enrollment & underwriting, and account servicing to better serve your customers.This technology can also comb through information and detect patterns that humans simply can’t, which removes errors in risk assessments, fraud detection, and the distribution chain. “People get tired and bored and make mistakes, but algorithms don’t,” noted Argo Group’s vice president of tech Andy Breen, quoted in an article by Business News Daily.Today’s consumer expects a high degree of digital interaction with service providers, and insurers have met this need by adopting AI/ML technology like Robotic Process Automation (RPA) services. Because RPA lessens the highly repetitive and operational tasks that insurers face daily, it can improve efficiency and scalability, create sales growth, and help insurers form stronger digital relationships with their customers.
- Mobile technology is a valuable tool for attracting new customers and retaining current policyholders. Consumers can buy and purchase insurance products, compare offers, and even file a claim on the spot via mobile devices. This technology can reduce risks by controlling cost, increasing productivity, and enhancing customer experience.
- Big Data: The adoption of digital platforms in the insurance industry has opened the door for information sources that were unimaginable before. Enter big data: a large set of structured data (think names and dates) and/or unstructured data (like browsing activity and social media posts) that help companies recognize a customer’s complex behavioral patterns, preferences, and risk class.
Insurers can use this information for tasks ranging from underwriting to customer acquisition and retention. According to a 2018 market report from SNS Telecom & IT, big data produced 30% better access to insurance services, 40-70% more cost savings, and 60% higher fraud detection rates.
Automation is the fuel for insurance providers, agencies, brokers, MGAs, and MGUs who want to remain competitive in the age of digital transformation. It supports sustainable growth and performs mundane tasks with greater accuracy and efficiency–giving you the time to take better care of your customers.