In the past, insurance companies have maintained two distinct groups, namely, the technical and operational sides of the business. While equipment use helped the operations team, the operations division, which comprises claims, underwriting, and marketing, was the main driving force for company performance.
As insurers dedicate more resources to specialized activities, they reduce their spending on day-to-day operations. Incumbent boards believe this initiative will lead to higher profitability and improve their capacity to compete in the digital marketplace, particularly with insurtechs with digital-based business models. And it’s no secret that several insurers are using the latest technologies to serve their customers better. Automation will revolutionize the way insurers do business using technology such as the automation of traditional, manual procedures.
Moving Toward the Digital Era
When it comes to insurers moving into the digital era, we’ve seen that these companies will end up automating around half of the tasks that traditionally take place in back-office systems. To adapt to the recent trends in working techniques, insurers must reorganize their operations’ organizations into interdisciplinary teams and expressly merge the technology and operations groups, in addition to developing relevant solutions that better meet customer needs. They should also acquire the ability to collaborate with external service providers frequently, especially when identifying individuals who have the requisite skills to use the associated technology to enhance operations and build their organization’s culture of innovation.
Companies with divisions must undergo a significant undertaking with substantial effort to change how they function. While it can certainly cut down on spending, it would also reduce its time to get products to market, allowing for more investment and lower prices. When insurers refuse to change, they will lose their share of the market.
Insurance and Tech
Where does all of this money go? The entire IT systems no longer relevant to many insurance companies have been replaced by software as a service (SaaS) applications designed to help distribution, operations, HR administration, and commission processing. This helps to remove or decrease the amount of work required for older processes.
Besides automation, which automates procedures, advanced analytics and digital applications are all altering processes further. These features can assist customers in self-servicing throughout the underwriting, servicing, and claims procedures. Consequently, these digital-first solutions help digital-first companies reduce their property/liability costs to about 40% cheaper than traditional insurers. Incumbents also use artificial intelligence to automate more complex processes, including answering all kinds of customer queries.
Improve Insurance Processes
Insurance companies can now use a suite of Internet of Things (IoT) technologies to provide more sophisticated technical capabilities. These technologies help the insurance industry improve claims handling and pricing. Connected sensors, for example, may take the role of in-person claims examination from insurance claims adjusters, like property insurance. Using IoT technology for other purposes, such as mitigating traffic accidents, workplace injuries, and personal accidents, can save insurance companies millions of dollars each year.
Many insurers use predictive analytics to gather a range of data to understand better and anticipate consumer behavior. This includes applications for various vehicle insurance packages and especially those applying for a reliable non-owner sr22 for vehicles not owned by the driver. However, there are novel ways technology can be used to enhance data accuracy.
By 2021, insurance firms will be able to use predictive analytics for
- pricing and risk assessment,
- identifying consumers that are likely to cancel,
- detecting fraud,
- prioritizing claims,
- identifying outlier claims, and
- predicting trends.
Predictive Modeling in Insurance
Many property and casualty (P&C) insurers have found that using AI-driven predictive modeling and other techniques have increased their revenues and accuracy. According to a 2018 Valen Analytics research, businesses that used analytics and predictive modeling saw their loss ratios increase by 3%–9% higher than those that did not. They also found that insurers that used predictive analytics increased their direct written premiums by 53%, compared to the industry average of 18% growth over the same period.
Customer service departments use much of this tech since customers are increasingly seeking transparency and control in their dealings with companies of all sizes. Therefore, insurers must adapt by providing specialized experiences that are quicker, more engaging, intuitive, and customized to the requirements of their customers. For example, a chatbot service available 24 hours a day, seven days a week, can assist clients with simple activities like changing chosen beneficiaries. Instead of immediately answering common customer questions, the operations department (historically responsible for delivering this experience) will now play a significant role in ensuring these tools meet different customer and business use cases.
Technological advances are transforming insurers from the inside out, which is most visible in a company’s operations. While it is unclear how technology can affect the insurance industry in the following years, companies will need to restructure themselves to make the most of the technological tools that will enable them to run more effectively and enhance client experience.