Ever since the Pandemic hit, the Insurance industry is upgrading at a fast pace. The main focus hovers on pandemic rehab and customer experience by developing data-driven ecosystems and hyper-personalization models.
According to a Gartner research, the long-term spending for insurance is forecast to grow at a CAGR of 7.5% to $311.8 billion in 2025 driven by IT services and software growing at a CAGR of 9.2% and 12.3%, respectively. These increased investments in data, AI, and digital twin technologies resulted in the emergence of a new generation of business and intelligence in the insurance industry.
But there have been several obstacles that the insurance business has faced.
The challenges of the current or traditional insurance industry
- Shortage of speed to deliver new services into the market: Because insurance businesses’ digital implementation timescales are lengthier, customers may feel their insurer is slow and unable to cater to their demands.
- High IT run time expense before migrating to digitally improved systems: When trying to get rid of legacy systems and introduce new sales methods that are incompatible with their current legacy technology, becomes substantially more expensive and time-consuming.
- Interpreting a considerable volume of client data: With the vast amount of data available for customers and employees in one system, there comes the challenge of ensuring the shared information is comprehensive and accurate. Any discrepancy in handling or interpretation of data may lead to the approval of the incorrect type of insurance claim, causing further delays for clients.
5 upcoming trends in insurance to look forward to:
Let’s take a look at how these insurance trends are transforming and automating core business procedures, improving claims processing, and providing better insurance products.
Professionals and non-professionals alike can use modern low-code platforms to create software tailored to their organizations’ specific needs.
By replacing or lowering the need to write code with a graphical interface, low/no-code platforms democratize and speed up the software development process. Insurers may now deploy digital applications with little or no computer programming, allowing them to quickly react to changing conditions, thanks to the growth of low-code and no-code platforms.
Using low-code platforms, insurance companies can increase their operational efficiency by removing the unfavorable consequences of skill gaps among their staff.
Gartner estimated that low-code platforms will make up 65% of application development activity by 2024.
Some of the well-known Low-code platforms are Zoho Creator, Salesforce Lightning, Mendix, Appian, Microsoft PowerApps, and Google App Maker, which are making the code development process faster and reducing the complexity of the application development process.
According to a Mantra Labs report, 64% of insurers plan to allow chatbots to do increasingly advanced customer-facing tasks in the next five years.
Many of these employee assistance queries may be automatically fielded and resolved by conversational AI platforms, minimizing the need for human engagement and saving enterprises significant time and money.
Insurance chatbots enabled by advanced conversational AI might deliver omnichannel, round-the-clock, and multilingual support, to name a few obvious advantages. They can also help you create one-of-a-kind, high-quality client experiences. Chatbots can also be used to detect and track fraud signs, informing the insurer as well as the customer.
Smart contracts: Blockchain technology in insurance
According to Verified Market Research, the Smart Contracts Market was worth USD 144.95 million in 2020 and is predicted to reach USD 770.52 million by 2028, growing at a CAGR of 24.55 percent from 2021 to 2028.
In the past, uncontested claims may take months to process, but thanks to Blockchain and smart contracts, insurers can now automate the execution of insurance products agreements without the use of mediators, making them more transparent and less manipulable. The insurer’s administrative costs are decreased when claim processing speeds up. As a result, companies may reduce rates, increasing market share.
Neither party can lose information regarding the arrangement. Both the insurer and the insured cannot lose since smart contracts are traceable and irrevocable.
There are several Blockchain use cases in insurance, which you can read here: https://www.mantralabsglobal.com/blog/blockchain-use-cases-in-insurance-industry/
Extended reality (XR) insurance technology
According to an Accenture study, 85% of insurance executives agree that it’s critical to use XR insurance technology to bridge the physical distance gap between personnel and customers.
Some insurers are employing XR technology to improve and enhance certain portions of their business, including training customer service representatives on how to communicate with customers and guide them through the purchasing process using virtual customers. To hunt for risks in constructions, underwriters utilize on-site pictures and other images to create XR simulations. Using augmented imagery, insurers may engage and connect with their consumers remotely.
National Roads and Motorists’ Association Insurance in Australia and Liberty Mutual Insurance in the United States are using AR and VR technologies for car crashes and breakdown simulations. Zurich Insurance is using the same technology to improve staff training, and AXA Insurance uses VR for advertising.
Drones and Robotic insurance technology
IMARC Group expects the market to reach US$ 43.4 Billion by 2027, exhibiting a CAGR of 12.56% from 2022 to 2027.
Drones and robotics are currently being used by many insurers in their risk management and claims management techniques. Drones are a low-cost way to collect data, conduct surveys, and design mitigation plans. The system allows for more proactive and predictive fraud detection and reaction.
Robotics are being employed in their claims management operations to help forecast the result of a claim and recommend the best strategy based on that prediction (for example, recommending an early settlement on cases where the data suggests a high potential for long-term litigation). Robotics may even aid in the detection of discrepancies between internal policy terms and those offered by brokers. When a policy is originally issued, this allows insurers to spot plans that may result in future losses.
According to a report by McKinsey, programmable, autonomous drones; autonomous farming equipment; and enhanced surgical robots will all be commercially viable in the next decade.
Reasons behind insurance tech trends’ massive adoption
The majority of human workers can be removed from warehouse operations with AI-enabled infrastructure, changing the nature and purpose of workers’ compensation coverage. Wearables and artificial intelligence (AI) are transforming the way insurers use data to produce predictive insights and inform a variety of interactions with policyholders by providing real-time feedback on the impact of physical activity on personal wellness.
Many insurers are still updating their technology stacks and are at the beginning of their digitalization journey, making them vulnerable to being surpassed by more agile competitors.
According to a PwC survey, 65% of insurance agencies believe that AI investments in customer experience (CX) have lived up to expectations. 49% believe that improvements in internal decision-making have likewise met expectations, and 45% say the same about innovation in products and services.
While these technologies possess great opportunities for insurers, many are struggling to adapt. In fact, 53% of carriers struggle to understand blockchain and its use cases, 43% have other insurance technology taking priority, and 38% are concerned with its data security.
All of this emphasizes the significance of modernizing business operations by investing in training and implementation methodologies. This not only speeds up digital transformation but also improves organizational change readiness.
Other technology trends such as Automated Underwriting, Machine Learning, Cloud Computing, Telematics, Predictive Analytics for Competitive Benchmarking and Modeling, Open APIs, Proactive Risk Management, Embedded Insurance, and Machine Vision are also being researched as well as utilized aggressively to find their applications in the insurance market.
As a result of the convergence of these technological trends, insurers will be able to cover individuals in a more dynamic and responsive manner.