Insurers continue to innovate and modernize operations with the help of emerging technologies like automation, artificial intelligence (AI), and the blockchain to meet the growing demands of modern consumers.
Today’s policyholders expect a frictionless digital experience at all stages of the policy lifecycle. They want to be able to request quotes and submit applications online, initiate claims and monitor their status through an online portal, and view important policy documents around the clock through a self-service platform.
But ongoing innovation in the insurance space isn’t just driven by rising policyholder expectations. Read on to explore how technology continues to revolutionize the insurance space, enabling more efficient operations and an enhanced policyholder experience for the digital age.
The Role of Technology in Shaping Modern Insurance Solutions
The insurance industry today looks starkly different from how it did at the turn of the century. In recent decades, digital transformation has swept the industry, altering the way consumers shop, compare policies and interact with insurance agents, and evolving critical workflows like assessing policyholder risks and delivering customer service.
In sum, technology helps insurers streamline both back-end and consumer-facing processes. Gone are the days of contacting an insurer with an inquiry and waiting several business days for a response. Technology enables constant connectivity and quicker, more accurate workflows, supporting an enhanced, frictionless policyholder experience.
Key Drivers of Innovation in Insurance
Several factors drive innovation in the insurance field beyond customers’ growing appetite for digital solutions. Here’s an overview of what’s behind the pursuit of innovation in the industry and how transformation helps insurers serve the digital-savvy consumer:
Efficiency Improvements
One of the biggest drivers for innovation in the insurance space is enhanced efficiency. With the help of modern technology, teams can move away from handling tedious, rote work by hand, giving them more time to spend on strategic work that enhances the policyholder experience, among other benefits.
Not only do internal teams reap the benefits of efficiency improvements, policyholders do too. When insurers leverage emerging technology to review applications, underwrite policies, and handle claims more accurately and efficiently, policyholders can enjoy quicker processing times and fewer errors, creating better satisfaction, loyalty, and retention.
Increasing Buying Power of Gen Z
Insurers will need to innovate operations over the coming years to keep up with the demands of the younger, more tech-savvy Gen Z market. A recent report from NielsenIQ shows that Gen Z’s 25% of the population is charting the fastest growth in spending power compared to previous generations, set to overtake Baby Boomer spending by the end of the decade.
In other words, it’s a good time for insurers to invest in the digital experience to help capture future revenue opportunities from this demographic. Most of this generation is still below the age of 25, so these market dynamics are still ramping up.
Growing Competition
Between leading incumbents and emerging insurtech solutions, traditional insurers have faced steep market competition in recent years. As policyholder demands evolve and become more digital-centric, forward-thinking insurers understand that innovating operations will help them enhance their competitive advantage.
This might mean leveraging technology to develop new products that better meet consumer needs or using data analytics to offer more personalized pricing and coverage options.
Either way, insurers that keep up with these demands could maintain and earn more market share over the coming years as laggards fail to modernize and fall out of favor.
Leveraging Insurtech to Meet Policyholder Expectations
A growing number of insurers are turning to insurtech solutions as a way to innovate operations and meet policyholder demands for a digital-forward experience. This is reflected in the significant growth projections for the insurtech market, which is expected to achieve a compound annual growth rate (CAGR) of 41% between 2023 and 2032.
While the specific applications of insurtech vary between insurers and the specific solutions they leverage, the following are some examples of how insurtechs support insurance innovation:
Automation and AI: Revolutionizing Claims Processing
A clear way that insurtechs help innovate insurance operations is by automating resource-intensive workflows like claims handling. As already mentioned above, this results in efficiency improvements for insurance teams and quicker processing speeds for policyholders.
Specifically with claims processing, insurtech solutions might use AI-powered systems to automatically assess the severity of a new claim, categorize it, and assign it to an adjuster. From there, automated fraud detection systems can help identify any anomalies or suspicious behaviors that might indicate the claim is fraudulent. Otherwise, the claim can be routed to the appropriate party for the final settlement decision.
With the right insurtech solution, functions like claims processing can take significantly less time than with strictly human management.
Enhancing Customer Experience through Digital Channels
Insurers may also use insurtech solutions to offer online insurance portals or apps for policyholder self-service. These platforms provide 24/7 access to important policy information and actions, like making a payment, renewing policies, initiating a claim, and more.
Previously, these were all actions that would have to be completed with the help of an agent during regular business hours. However, intuitive self-service portals turn this expectation on its head, catering to more tech-savvy policyholders who prefer to navigate digital platforms at their convenience.
Personalization and Data: Meeting Policyholder Needs
Underwriting can also be streamlined with the help of certain insurtech solutions, using data analytics and AI algorithms to automatically review applications and assess policyholders’ risk profiles. In turn, insurers can deliver more personalized product offerings and pricing tailored to each policyholder’s unique needs, behaviors, and preferences.
This enhanced personalization also extends to policyholder communications and marketing. Insurtechs make it easier for insurers to derive insights from the vast amounts of policyholder data they have access to, helping them deliver targeted marketing strategies, messages, and reminders based on the policyholder’s unique profile.
A recent Forbes survey found that 81% of consumers want a personalized experience. So, policyholders tend to find this level of detail favorable, and may reward insurers with better loyalty and retention because of it.
The Impact of Blockchain on Insurance Innovation
While not as common as some of the other solutions, insurtechs that utilize blockchain are also supporting continued innovation in the insurance space. These platforms help deliver unprecedented efficiency and accuracy in claims settlements and premiums payments, using technologies like smart contracts to automatically enforce terms and determine settlements without any need for human involvement.
Since the blockchain is completely decentralized and tamper-proof, it offers incredible transparency and trust between policyholders and insurers, even without direct involvement from either party.
The Future of Insurance: Trends to Watch
There is no end point to insurance innovation. It’s an ongoing journey insurers must embark on to meet evolving policyholder demands, technological advancements, market trends, and regulatory guidelines. Aside from the popular solutions we’ve discussed so far, the following trends are picking up steam and will shape the next evolution of the insurance market.
Increased Use of Predictive Analytics
Certain insurers have already begun using predictive analytics to price policies more accurately for policyholder risk profiles. However, the use of this technology will only continue over the coming years as more insurers implement AI into their core processes.
Aside from being used for underwriting, predictive analytics can also help insurers assess the likelihood of severe storms or natural disasters more precisely. This could help them prepare operations accordingly in anticipation for such events.
Usage-Based Insurance
In just one year (from 2023 to 2024), the usage-based insurance (UBI) market is set to grow at a CAGR of 29%, with further growth expected until at least 2028.
UBI is a type of coverage that only requires policyholders to pay based on actual usage. For example, a UBI auto policy might only charge policyholders based on how many miles they’ve driven in a certain period of time.
These policies are often supported by telematics and other types of connected devices, enabling real-time activity monitoring to ensure policyholders only pay based on their actual usage and risk. As more insurers offer UBI policies, they will become an attractive option for tech-savvy consumers, providing precise coverage for their specific needs.
No/Low-Code Tools
Low-code and no-code tools are quickly growing in popularity among insurers. They allow for quick app and product development without requiring advanced coding skills or technical knowledge. This means nearly anyone on the insurance team can contribute to updating insurance platforms or developing new products to support quick rollouts.
These tools help ease the burden placed on an insurer’s IT teams. Plus, policyholders can access new, updated products and pricing more quickly.
Modernizing Insurance Operations with Insuresoft
As the insurance space becomes more complex and tech-forward, insurers can rely on innovative tools like Insuresoft’s Diamond platform to help them stay competitive and deliver the digital experience policyholders today expect.
A flexible, all-in-one core platform, Diamond is expertly designed to support diverse lines of business, combining policy processing, billing, claims, digital engagement, and intelligent data into one convenient system.
Plus, Insuresoft helps you stay at the forefront of innovation, offering continuous updates with the latest technological advancements so you’re never relying on an outdated platform.
Contact us today to learn how the Diamond platform can help you innovate, differentiate, and grow.
