From integrating AI to the rise of blockchain in health data, insurers will be adapting some seriously innovative strategies in 2024.
But just because these strategies are optimizing on recent tech trends doesn’t mean they’re falling prey to shiny object syndrome. These digital transformations and adaptations are rooted in core system updates that have been a long time coming, and will help insurers stay digitally resilient for years to come.
This blog post was adapted from this article in Actuarial Post, where we released our insurance sector forecast for this year.
1. Settling the Great AI Debate
With the explosion of AI in 2023, there was a lot of fear and confusion, especially for highly regulated industries like insurance that can’t afford any “hallucinated” data or information.
In 2024, though, we’ll see solid, incremental action in this area. Keeping employees and customers aware of AI usage within an insurer, however, will be paramount.
AI will be used for what it’s good at now, especially in areas of reducing claims leakage like reducing human error, and identifying and mitigating fraud.
2. Adaptability Speed Becomes #1 in Digital Transformation
Gone are the days when insurers could plug along with the status quo and take months or years to deploy even the smallest changes in pricing or policy. The world is changing rapidly, and the financial security individuals rely on (insurance) needs to keep up.
We’ll see underwriters adopt real-time data sources and use OpenL-style pricing engines. Property insurers will be able to adapt to new reinsurance services, like the Flood Re initiative, and motor insurers will be able to gain control of their supply chains to create internal efficiencies and improve customer experience.
3. Fast Innovation Will Only Get Faster
Insurtechs will keep pushing insurance as a whole to stay modern and focus on the future.
Insurers will welcome this, and we predict even more fintech-style acquisitions in 2024.
4. Health Insurance Leaps Into the Unknown
Post-pandemic, customers are more aware of their health than ever before, and expect their healthcare to be more customized. Wearables, IoT, and other smart devices that let individuals manage their health data will come online fast, and health insurers will be expected to adapt.
Here, we’ll see blockchain step in to improve the sharing of medical data in the healthcare system.
5. Group Insurance Becomes Relationship-Based
Just like customers expect their health insurance providers to be more personal, they’ll also expect the insurance carriers in their employee benefits packages to do the same.
In group benefits, we’ll see a desire to optimize and personalize customer service driving technology innovation. Lengthy onboarding processes are no fun for employees, and the complex data integrations and low enrollment rates aren’t good for HR departments or insurers.
We’ll see more embedded digital offerings, mirroring the rest of the fintech world, and a new generation of workplace benefits emerging, both in the US and in EMEA.
6. Investment Opens Up
Even though the economy is a little less than recovered, insurers will continue investing in innovation, because they know that this is what will drive their success and sustainable longevity.
However, because inflation is easing and investment performance is going up, access to credit will increase while shareholder pressure decreases, giving breathing room for more strategic investment for the long-term.
7. Per-Customer Offer Customizations
In the shift towards customer-centricity, insurers who adopt a customer-centric architecture will have the data (and the data structure) to feed a modular approach to insurance products.
We’ll see more insurers with digital platforms enabling more direct-to-consumer propositions, with consistent and personalized interactions across multiple touchpoints to back them up.
8. Analog Life Insurers Racing to Digital
Now that the business case for digitization in life insurance has improved with lower cost of change, transformation in this sector will accelerate. Quickly.
We predict that permission-based, fintech-like services in this market will be on the rise this year as more and more life insurers adapt the technology to enable it.
9. Regulatory Requirements Keep Pushing Digital Transformation Forward
Working hand-in-hand with consumer expectations, governmental bodies are taking notice of what technology can enable, and where it’s in the consumer’s best interest to require certain financial bodies to embrace and deploy this tech to better serve their customers.
To be clear, most regulatory bodies don’t care exactly what technological setup you have at your core. They’re just concerned that you’re delivering on the required end result.
When insurers stay a step ahead and proactively integrate these new requirements into their strategic planning, they notice the alignment in technological enablement that the market is demanding anyway, and will come out as leaders.
10. Agility and Customer-Centricity Become the Key Competitive Differentiators
Being able to meet consumer demands quickly is the thing that will differentiate one insurer’s competitive edge over another both this year and into the future.
When insurers focus on having the backend technology needed to drive this agility and customer-centricity, they’re ready to capitalize on emerging opportunities the instant they come up.
“Speed of adaptivity will be the defining characteristic of 2024,” said our own Rory Yates in this article. “The headwinds the sector is facing and the changes required to confront them are multifaceted. Only those ambitious enough to adapt will move from the slow to the fast lane of change, accelerating past competition at a blistering pace.”
2024’s Transformation Agendas will be Ambitious & Future-Focused
“In the rapidly evolving insurance market,” said EIS CEO Alec Miloslavsky, “distribution expansion, ecosystem building, and embedded offerings will drive transformation agendas… These strategic pillars won’t only redefine how insurers reach customers but also enhance the integration of services, delivering personalized experiences at scale.”
If you’re interested in knowing how to pick out the best technological backbone for your company to enable all of this, check out our series, Nitpick Core Systems Like an Analyst. It delivers in easy-to-read, bite-size pieces, and helps you make sure you select only the best for your company’s needs.
