COVID-19 has been a real game-changer for most industries in the world. The crisis continues to have a significant impact on individuals, society, businesses and the entire economy around the world. The insurance industry hasn’t escaped its effects, but most insurers have reacted quickly to the crisis. As the overall economy recovers and reacts to the pandemic, insurers will face a number of obstacles, but also realize many new opportunities in the long run.
“The insurance industry is showing resilience in face of the COVID-19-led economic downturn,” Jerome Jean Haegeli, Group Chief Economist at Swiss Re said. “The magnitude of premium losses will be similar to that seen during the global financial crisis in 2008-09, even though this year’s economic contraction of around 4% will be much more severe. Unlike for the global economy, we expect a strong V-shaped recovery in insurance premiums, a remarkable showing considering that the world is currently in the throes of the deepest recession ever.”
As the dust settles, we can gain clarity on the key trends that have emerged in the wake of COVID-19
- Data-Driven Insurance
Although the insurance industry has always been data-driven, the need to incorporate new technology into big data has risen significantly. Consumers in this day and age expect instant and personalized policies. Insurers want to minimize risk and create customized policies using a larger number of data points. By using various sensors, smart homes, social media, and IoT devices, insurers can bridge the gap between demand and delivery. Low-risk customers can get lower premiums and only really high-risk customers have to pay steeper rates. If you put AI at the center of data-driven offerings reinvention, the insurer will be closer to the customer and will help maximize the lifetime value of the customer relationship.
- Automation and Machine Learning
Utilizing AI can prove to be beneficial to insurance companies. Through the automation of many key parts of the insurance process like underwriting, fraud identification and risk assessment, insurers can significantly increase their efficiency and accuracy. Machine Learning can automate and refine claims processes. When files are digital and accessible via the cloud, they can be analyzed using preprogrammed algorithms, which improves processing speed and accuracy. This automated review can be used for more than just claims – it can also be used for policy management and risk assessment. Newer patterns are captured and integrated into its algorithms as more data is analyzed.
- Blockchain and Cybersecurity
Blockchain can help automate claims functions by verifying coverage between reinsurers and companies. It also automates payments between parties for claims and thus lower administrative costs for insurance companies. The Coalition Against Insurance Fraud reported that fraud accounts for 10% of all property and casualty insurance losses and results in at least $80b of American consumers being stolen annually. This is where blockchain could prove to be useful in terms of efficiency, security and customer satisfaction. Many big players in the insurance industry have already adopted blockchain in their systems. It is imperative for smaller players to also follow suit.
- Cloud Computing
Cloud computing enables insurers to accelerate the introduction of new products and services and bring them closer to the goal of an engaging, agile, and customer-centric business model. The assurance of customer-oriented solutions at lower costs is a key driver that pushes insurers to use cloud technologies as a delivery platform. 2021 will see cloud computing coming into the insurance landscape more aggressively and as insurers rely on newer technologies, the use of cloud services will be vital.
The main benefits that are derived out of cloud computing that will assist insurers are:
- Addressing customer demands in a short amount of time
- Focusing on core business as opposed to simply managing IT infrastructure
- Staying competitive and cost-effective.
- The need for no-code/low-code development
With low-code/no-code development, insurers are given a simple route to building their ideas. It eliminates barriers to development from the IT department and opens up innovation to those without a coding background. By creating a system of dragging and dropping elements and by toggling product attributes on and off, you can easily experiment and build your prototypes.
The benefits of no-code and low-code development are tremendous. Some of the ways insurers can benefit greatly are:
- Accelerate the time-to-market
- Create an innovation culture and unleash untapped talent
- Standardize technical assets and methodologies
- Build solutions without straining IT resources.
The emerging tech trends listed above are being adopted at a rapid pace by insurers today. Harnessing and leveraging advanced technology to build ecosystems and customized insurance products makes a world of difference in terms of bottom-line profitability and growth.
With Axcel Beck Consulting, you can bring your insurance products to life with our Duck Creek and Guidewire support solutions as well as our staff augmentation services. Get in touch now.