Insurance industry is in the midst of transformational changes that not only includes digital focus but also involves multiple categories of insurance which did not exist 5 years back. Every business is running to the forefront of this technology revolution. Customers are embracing digital channels and buying products, making payments. This also increases the interest for the humongous amount of data that is being generated from these digital customers, devices, IoT and more. By 2021, digital transformation will add an estimated USD1.16 trillion to Asia Pacific’s GDP, and increase the growth rate by 0.8% annually, according to a new business study released today as per Microsoft Recent research.
There has been dramatic acceleration in the pace of digital transformation across the entire lifecycle of insurance. These innovations in the insurance sector will enable us to overcome the challenges insurance businesses are facing for decades due to legacy systems, manual processes, traditional risk assessment models, time taking for process, errors and much more.
Insurance is now being seen as protection than just tax saving investments earlier. Insurtech innovation will be having next top trends:
- Digital Transformation at Organization Level: With a changing ecosystem, the transformation at organization level will not be just about technology but also on skills, thought process, design essence and more importantly understanding the need to convert into value. Winning war for talent and skills is crucial for successful transformation. The pressure to rebuild tools or even transform the workforce is critical for organizations actively seeking to diversify beyond plain vanilla products and launch new business models that vertically integrate the value chain. Besides the regular workforce, such firms need easier access to specialists who can drive such diversification and transformation. Mixing of domain expertise with these critical needs, design and process will be the next wave for Insurance transformation.
- Alternative data, IoT, Connected Device Infrastructure & usages-based insurance (micro/on-demand/sachet/Sharing/Gig) — Customers are embracing digital channels and with that adoption of various apps, Smart Devices, IoT devices, Smart homes, connected cars, smart logistics and more, more & more data is getting generated which was not even available 5 years back. As per Gartner, there will be 25 billions connected devices by the end of 2021, producing immense volumes of data. Data is the new fuel for businesses to have digital transformation, building new age solutions to the customer need, in-depth analysis and predictive models. Alternative data from smart devices, social, web activities, location, trends, reports will enable to develop new age & personalized risk assessment. This will help in understanding the user needs, usages patterns about them and so helping creating in usages-based insurance for critical needs like health protection, vehicle insurance, rent sharing insurance, sharing economy like bike sharing, ride sharing, freelance insurance, contract insurance, SME insurance etc.
- Branchless or agentless sales & distribution — D2C: Engaging customers is more important than just selling the policies and hence businesses want to connect with customers directly. The ecosystem will thrive for direct channels to build better engagement and experience for customers. Direct engagement with digital-first customers through platforms is another critical component of growth strategies or insurers across the region. Outside of the largest players in China, very few have gained traction in direct channels. Increased investment and activity in this space are to be expected, even though it’s well understood that initial returns may be modest. Forward-looking executives take a long-term perspective on direct and digital investments, recognizing they need the right capabilities to be successful in the future. This will also impact on reducing cost for customer acquisition, and enabling further efficiency and reduction in churn.
- Dynamic Underwriting & Instant Claims with Transparency: The increase in data & digital awareness enabling both businesses and customers to realize the importance for quick & personalized way of doing business together. Existing legacy systems, processes or rules will not longer be applicable for future as with the change in customer behaviour, data, environment, ecosystem the need is changing, this means new systems need to come in place that understand these changing behaviours, data points to assess risk better at individual level and provide right pricing & benefits. This will be worth expecting in future that each individual is different and hence so their data & needs. The new age systems will be dynamic and will provide instant assessment to customers and engage them. Customers are investing or buying insurance with the fact that they need to claim this when need is there. Therefore, it will be important for intact customers to help them during need without any hassle. These changes will impact the way existing business work and new ways of processes need to be functional in coming time. Transparency & Trust will play a critical role to enable these changes in future. Customers want to find out value during each interaction and also want to ensure that insurance companies keep their trust during need with full transparency in terms of pricing, benefits, terms, facts and keep updating them with any changes during their association.
The receptive response among consumers during present time shows that digital transformation efforts are headed in the right direction, as companies are providing bespoke solutions that better meet policyholders’ needs and bring state-of-the-art products and services to market. The extremely high expectations of consumers in the region for seamless and personalised digital experiences inspire a great deal of innovation.
Originally Published at Yourstory by Layak Singh Read more at https://yourstory.com/mystory/insurtech-innovation-transforming-insurance-india