The continual development of technology in the business landscape is no surprise. Companies in multiple industries are taking advantage of the opportunity to deliver faster and more convenient service while reducing costs through digital innovation. As discussed in a previous blog post, the insurance industry is now following suit with new innovations designed to optimize the customer experience while finding opportunities for new services and increased revenue. Although it’s commonly regarded as a disruptor to the industry, many insurance companies are embracing the change and seizing the opportunity to benefit. According to the IT Spending in Insurance 2017 Report, worldwide spending on technology by insurance companies will reach $185B, mainly on data analytics and InsurTech. At this rate of investment, the insurance industry will certainly experience momentous change. The main question is where the change could have the most impact. To give clients, prospects and others additional insight, JLK Rosenberger has provided a summary of key trends in 2017 and beyond.
Key InsurTech Trends
- Process Improvement – InsurTech innovations are helping insurance companies find new and more cost-effective ways to manage internal processes. This includes the digitization of key processes like claims acceptance, review and processing. In fact, there are several solutions in the marketplace today that claim to automatically manage a sizable percentage of a company’s claims. One product, CynoClaim, has also reported a 40% increase in customer satisfaction from its first several implementations. Given the potential cost savings and customer experience improvement opportunities, it’s expected that InsurTech companies will continue to focus on improvements in this area.
- Data Analytics – The amount of data insurance companies has available through new InsurTech innovations is staggering. As an example, automobile insurance companies can determine a driver’s behavior simply by tracking data. Amodo offers insurance companies the ability to better understand driver behavior and risks by tracking key driving data. By tracking driver behavior, location and automobile performance through the OBD device, insurance companies have access to essential data. Companies can adjust premiums based on environmental and individual trends. While access to this data opens new possibilities, insurance companies need tools to analyze it, to make policy changes or create new service offerings. Because data is the cornerstone of the insurance industry, InsurTech will continue to focus on data analytics for the immediate future.
- Privacy Innovations – InsurTech is creating access to new and previously unavailable types of data. One challenge insurance companies face is how consumers will react to the collection of such data points. As concern grows, so will resistance to sharing personal information. To address these concerns, InsurTech companies are creating new and innovative privacy and security features to protect the consumer at the preferred level. Given the radical change being ushered into the marketplace, expect to see continued interest and investment in privacy innovations.
- Growing Relationship with InsurTech Companies – The relationship between insurers and InsurTech companies will become closer and more intense. It’s clear that there is a need for these companies to be in close communication to create and manage solutions that will drive value not only to the companies but also their customer. Given the strong value proposition of many solutions, insurance companies have a lot to learn about the technology investments they are making and customization opportunities for their business. This is evidenced by the increasing number of insurance companies directly investing in technology, such as AIG, Liberty Mutual, Mass Mutual and Aviva, to name a few. Expect to see this trend continue and expand soon.
The opportunity for insurance companies to reduce cost, optimize premium models and innovate new product offerings seems endless. Continued technology innovation will open the doors to opportunities never previously considered.