Innovation Trends in Insurance Service Delivery
Even with the advent of insurtechs, some insurance firms still trail behind, while others have picked up on the problem-solving power of disruptive digitalization in the industry.
Incorporating digital technology into their core businesses will enable them to discover emerging markets, and provide personalized & on-demand services, which enables focus on risk assessment and management.
Therefore, the transformative process of insurance firms on the old business models will require transforming insurance processes, optimizing customer experiences, and pro-activeness in decision-making policies.
We present 4 trends: AI for claim processing & customer experience, Blockchain in reinsurance operations, Digitization in internal processes, and Personalization of customer data & services rendered.
1. Artificial Intelligence
The integration of Artificial Intelligence into the claim processing system has been observed to reduce cost by an estimated 30%, and save employees’ time for more productive tasks. Claim processing which usually takes weeks to process, can be done in minutes with AI. AI can also improve customer experiences using chatbot automation as virtual agents and brokers.
On the note that an agro-based client reports a drought disaster, this would take weeks for the employees to collect and analyze data sufficient to validate the claim. The similar use of machine learning algorithms used in a French AI firm, Shift technology, helped. Shift technology testing has had an accuracy rate of more than 90 percent.
An aerial view of farm acres is taken and compared to the policyholder’s contract to verify and validate the claim and payout. When AI cannot make predictions, manual processing will be required. This innovation reduces claim errors, costs and saves time.
Examples of insurance firms incorporating AI technology are Carpe Data and Shift Technology.
2. Blockchain technology
Blockchain enables a ledger that cannot be manipulated, thus serving as an efficient fraud detection system. Blockchain, a distributed ledger technology, is a tech application used in the finance industry to effect safer and more affordable transactions, resulting in its application in several levels of insurance firms. This includes:
- Dashboard enablement processes
- Optimization of insurance administrative activities such as data recovery, data reconciliation among trustees and sponsors, and automated Id solution (KYC), which all aim for cost reduction.
- Improving the role of insurance, by enabling flexible partnership among customers.
- Improved portfolio management and its transparency.
Examples of firms using Blockchain in insurance are Lemonade and Teambrella.
3. Digitalization with APIs and other Softwares
About 61% of customers according to Altexsoft prefer their applications on an online platform. To meet customers' growing needs, insurance firms have made efforts to integrate, but this has been a struggle. According to Mckinsey, insurance companies are struggling with implementing the tech structure setup. What’s more interesting is the internal process's complexity that must be dealt with daily.
To tackle these challenges, firms will have to do more than integrating digitization, but digitalization on their internal processes, and introduce digitalization to revamp their business model.
In providing a solution, insurance firms are building APIs, and other automation software such as Robotic Process Automation (RPA) software, that eases staff workload. This automated internal workflow has helped cut costs on payouts, labor and time.
Integration of APIs on digital platforms has helped boost online distribution of products/services, information exchange and enable avenues for the suggestion of more versatile products.
Examples of insurance APIs to innovate on are Lemonade API and Haven Life Insurance API. Impressive digital Insurance players are Zhong An and Atidot.
4. Personalization & Data
In the personalization of insurance services, insurance firms are collating data on customer activities and experiences using smart devices (IoTs) in offering tailored insurance plans that meet customer needs. These plans are offered in the form of customized, pricing, coverage and consultation. Wearables and telematics are being used as mechanisms in data collation.
In mobile insurance firms, telematics has helped improve risk management on cars. These car insurance devices have features such as GPS tracker, motion sensor, and driving analytics software, which tracks driver’s speed, distance, time, location, auto crash, and other data. Data obtained is sent to the insurance firm, analyzed and saved on the client’s profile.
This data enables car insurance firms to create personalized insurance plans and improve risk management. This new business model plan will include:
· Pay-how-you-drive (PHYD)
· Pay-as-you-drive (PAYD)
· User-based-insurance
Using these models, charges differ for diverse clients and aids the firm in giving tips that would help mitigate risk and improve driving performances.
Examples of insurance firms using IoTs are Beam and John Hancock.
