Insurance Going Digital: Technology and the Insurance Industry
Change is coming…and insurers know it
Digital transformation is gaining pace across all industries, with insurance now moving at a notably faster rate compared to its historic reputation as a dinosaur. As it faces digitalization, the industry is striving to remove pain points that will help their customers enter a new era of insurance convenience. Further expedited by the COVID-19 pandemic, insurance providers are aiming to integrate tech solutions to improve the relevance and utilization of their products and bring them only a few clicks away from their customers.
Over the last 10 years, Insuretech investment has grown massively, reaching $3.1bn in 2019 ($0.1bn in 2011). Insuretechs have become the central focus of this huge and previously slow-moving industry with the key priorities being to:
• increase sales through speeding up the process, and
• improve customers’ usage experience
However, the climate in which digitization plays out in insurance is different because it is associated with undesirable events; the very nature of insurance is that it is not a product that customers get excited about buying or using.
Increasing sales: Encouraging customers to buy insurance
Investing in correct outreach is important to make sure that customers receive products they understand, will actually benefit from, and then actively value and use. Digitization has helped insurance providers tailor their outreach processes in more than one way, but mostly through:
1) Targeted distribution
Over 40% of technological innovations in the industry have been targeted towards improving distribution. Banks, agents and brokers are now steadily making way for apps, bots, and API-enabled partnerships
2) Personalized products
Technology has increased knowledge of customers’ individual desires, needs, and risk profiles. This data allows insurance providers to design products that meet customers’ expectations
3) Accurate and reduced pricing
Prices are becoming more accurate with growing access to digital data collection and improved customer profiling, with a higher scope for reduction, as digitization secures cost savings for insurers
Improving customers’ experience: Improving user-friendliness
Making sure customers are able to easily access services without concerns over difficult interfaces or long processes has become central to the future of insurance. The industry is now focused on facilitating:
1) Quick and easy payments
Insurance providers now invest in multiple gateways that make in- or out-bound payments easier for a wide range of customers
2) Seamless claims experiences
According to a study by Watermark Consult, insurance companies with solid user-experience outperform their competitors by 35% in the S&P index. As such, high-tech solutions are now becoming essential, and insurance claims are now made accessible via websites and apps using a few steps. Additionally, the use of smart contracts and blockchain technology (for flight cancellations or delays) mean a claim does not need to be made at all, and can get picked up and paid without any human intervention
With much room for improvement in insurance, the future of insuretechs is in digitizing every consumer touchpoint and integrating platforms for better experiences. Analysts predict a 45% annual growth rate for insuretechs in the coming years, as digitalization enables the leapfrogging of “old” insurance. For countries like Egypt where insurance penetration is under 1% (world average: 8%), going digital holds the key to revolutionizing the industry.