Insurers are not known to lead the charge when it comes to being on the cutting edge of technology.
Cautious by nature and risk averse, it’s not a stretch to imagine why insurers are often followers rather than leaders in this regard.
But when new and emerging technology is an actual game changer, insurers adapt.
To remain competitive, insurers know they can’t turn their backs on the way technology is transforming business practices and the way customers demand to be served.
Here are three ways technology is transforming the insurance industry.
Big data is a term that refers to the staggering amount of digital information generated and stored on individuals.
This wealth of information is important to insurers as it can be analysed in order to produce more focused profiling and build models that predict future behaviour.
An example of big data at play in the area of health insurance, for example, is the growing trend towards “wearable” technology, such as activity trackers. These trackers reveal patterns in what people do and how they behave.
Based on these patterns, models of future behaviour are developed which help insurers:
- Develop more precise actuarial practices
- Better forecast risk, and
- Calculate more accurate premiums
The intelligence offered by big data is significant to insurers because profits or losses hinge on the ability of insurers to accurately assess the risk of their customers.
Platform Based Business Model
According to Applico, a platform is a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.
Insurers have an opportunity to build digital ecosystems that host platform-businesses, where those seeking insurance and those seeking a return on investment by taking on underwriting risk, can come together.
According to Accenture, 83% of insurers expect platform-based business models to become part of their growth strategy in 3 years.
YouTube is a good example of a platform business model as it allows people to produce video content for others to consume, as well as view and comment on the content created by others.
Platform businesses have the potential to transform the insurance industry. It presents the potential for insurers to create more interactive experiences with their customers, throw open the door to new markets and create additional revenue streams.
Mobile technology has become indispensable to consumers in terms of how they conduct business and get information.
A report by Ericsson Mobility, published in 2016, suggest that by 2021 there will be:
- 9 billion mobile subscriptions
- 7 billion mobile broadband subscriptions, and
- 3 billion smartphone subscriptions
Because mobile technology is so important to the way people function today, consumers expect more mobile capabilities from their insurers. This means ease of use concerning their policies and especially in navigating the claims process.
Insurers have responded by offering apps that assist consumers with:
- Obtaining quotes
- Connecting with their agents or brokers
- Paying premiums, and
- Getting information on the status of their claim
Insurers who fail to respond to this growing customer demand risk being perceived as less attractive and capable of meeting their customer’s expectations and preferences.
Technology, like time, waits for no one.
Insurers are a smart bunch and will no doubt continue to study mature and emerging technologies to mine the strategic advantages offered there.
Insurers understand that technology is a gateway through which they will have to continue to innovate in order to meet their customer’s increasing demands for outstanding products and services.