The insurance industry as of today, is a major business segment across the globe, with a yearly revenue of thousands of billions of dollars. Though it was under the influence of technology disruptions, digital transformation is a new avenue that is poised to transform it into a complete digital insurance industry within the next 5 years. Insurance carriers are getting equipped with latest digital technologies, offering new and innovative services to their customers, thus being on the edge of business competition.
Key components that are undergoing this digital insurance transformation are claims
assessments & corporate performance, risk management, telematics, usage based insurance (UBI), analytics based predictive underwriting decisions, and enhanced customer experience / agent performance through proliferation of smartphones.
The trends that are driving the digital transformation in the insurance landscape are:
1. Business Drivers
- Strategic acquisitions of digital insurance start-ups by legacy and established insurance institutions.
- Partnerships with technology companies as new channels and delivery platforms.
- Legacy Modernization and digitizing system offerings to improve internal and external manual workflows.
- Process Automation & Optimizations in the areas of:
- Claims processing with improved efficiency and loss prevention
- Home insurance utilizing data from home automation/security solutions
- Commercial insurance utilizing data about structural issues or risks of buildings/bridges through digital scanners
2. Technology Drivers
- Big Data Analytics helps to make better the predictive underwriting decisions, improve risk quality assessment and optimize prices, better understand fraud patterns and track carrier’s own performance in the market.
- IoT: Insurance carriers are massively leveraging wearable devices and Internet of Things (IoT). Google Glass is in successful use by field claims adjusters and property risk engineers to relay back real time feedback from the field. Fitness bands measuring lifestyle of the insured, like attendance to fitness programs etc., and provide discounts or premium adjustments.
- Telematics provides Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD) business models, wherein the customers are charged based on the their driving patterns and behaviours from the auto machine learning. Based on this data, carriers offer safe driving sessions, accident/crash notifications, vehicle pilferage & tracking, remote access and vehicle diagnostics.
- Social media and collaborative platforms / portal solutions help carriers in branding, marketing, trend analysis, self-assessment, performance monitoring, and sentiment / behaviour analysis of customers.
With such aggressive advancements, we perceive that insurance carriers have lot of challenges ahead to address aggressive timeframes, real-time agility, rapid adaptability to market conditions, utilize new unprecedented secured data, absorb volatile regulations, and deal with legacy applications. SPAN is gearing up to provide service offerings centered on the technology drivers to assist carriers address some of these challenges in a seamless way.