4 insurance tech themes driving innovation amid uncertainty

Uncertainty and risk are two factors insurance professionals know well. And while they are built into the folds of the industry, from a business perspective the insurance sector continues to face pressures of increasing operational costs, escalating regulatory demands and increasing competition. For a traditionally risk-averse industry, the disruption that has happened in the last 10 years has turned operations upside down and caused many insurers to reassess business approaches to ensure they are meeting the evolving needs of their customers.

While digitalization and digital transformation have become a commonplace trend, it remains a priority theme within the insurance industry, with more insurers moving into more advanced steps within transformation journeys. With new technology and innovation driving continuous change, insurance companies that want to remain competitive during uncertain times will need to embrace change head-on and take hold of the following four themes on their path to innovation.

1. Customer experience & engagement

Customers today are more educated and empowered than ever. They expect those they do business with to know their needs and offer a unified omni-channel experience, designed to their specific needs. While providing an omni-channel experience has been part of many insurers’ strategies for years, it’s only a small segment of the customer experience equation — because as we all know, customer experience is only as good as the content from which it is delivered. To meet customers’ expectations, insurance organizations need to deliver content that is dynamic, interactive, persuasive and timely. But if everyone is focused on the same goal, how can organizations provide a competitive advantage/? To do this, insurers should focus on gaining a holistic understanding of their customer, delivering tailored products and leveraging personalized content to efficiently interact with individuals.

2. Cloud first & cloud ready

It’s all about embracing the cloud. What formerly was a delivery option that had insurers skeptical has turned 180 degrees to most organizations adopting a cloud-first approach. Cloud technology strategies today are about more than just saved costs on infrastructure. Instead, they focus on the improved agility, speed to change and access to new functionality or solutions. According to an Aite-Novarica survey published in June 2021, three-quarters of insurers plan to expand their use of cloud computing in the next 18 months, and even those who remain hesitant are starting to change their view on cloud computing. By taking a cloud-first approach, insurers will also improve their customer experience goals, because it allows for more complex analytics to offer more personalized touchpoints.

3. More connected — putting data to use

The Internet of Things (IoT) revolution is changing traditional business models for many insurers, especially when it comes to assessing risk. While telematics and usage-based models have been around and integrated into the business strategy for auto insurance, property insurance is just starting to see an impact with the greater adoption of smart devices for homes, offices and commercial buildings fitted with sensors that deliver real-time data on hazards from overheating malfunctions to building material strength.

Risks such as water leaks, or gradual deterioration, can be immediately recognized and monitored, delivering proactive prevention rather than risk mitigation.

While still only clearing the first hurdle of understanding the full value of IoT, the industry is seeing the potential and evaluating ways to incorporate it into different parts of the value chain to best interact and serve customers.

4. Incorporating data with automated intelligence

Insurers are inundated with data, but they realize that simply storing data and not doing anything with it isn’t valuable for the business. The true value comes from utilizing the data to make informed business decisions. This is where machine learning (ML) and artificial intelligence (AI) play a critical role to ensure fast, fact-based business decisions. Insurers understand the value ML and AI and bring to the organization — many have already hired data scientists to assess systems and processes and find repeatable takes where automated intelligence can be most useful. Typically, successful implementations follow four steps — accumulate structured and unstructured data from all systems, explore analytics to identify trends, deploy AI models with the right rules and parameters and monitor if models need to be refined, retuned or retired.

As the past two years have shown us, it is vital for every business to assess its processes to ensure they can withstand any event. Most importantly, it’s imperative to review processes, utilize technology to eliminate inefficiencies and become an innovative insurer. By prioritizing the four areas outlined above, insurers will be better able to deliver tailored products, services and communications their customers expect, in the ways they prefer and expect them. These journeys certainly don’t happen overnight, but by partnering with the right experts and technology providers, insurers can take solace knowing they are working together to meet their goals

Jeff Hiegert is insurance industry strategy and product manager at Hyland Software.

Opinions expressed here are the author’s own.

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