Insurance technology trends that are reshaping the industry

Soaring customer expectations combined with a rapidly advancing technology landscape are giving rise to new insurance products and business models that dramatically improve the customer experience.

As open APIs, intelligent automation, AI, internet of things (IoT) and advanced analytics mature, insurance executives and board members are exploring new strategies to give customers what they want, when they want it. Instant gratification and pay for what you use are staples of creating a differentiated customer experience across this new world of insurance. Let’s examine three trends that are set to enter the mainstream.

P&C insurance trend #1: Embedded insurance

From same-day delivery services to on-demand entertainment, we live in a world where instantaneous experiences are embraced … and increasingly demanded by customers in all walks of life. This new reality is one of the primary reasons embedded insurance is here to stay. 

For the customer, it’s all about placing the opportunity to purchase insurance products at the point of sale. For example, when a customer buys a new car, rents a boat, or pays for a $1,500 Caribbean cruise, insurance is offered in the moment. Customers crave this simplicity because they don’t have to shop for a policy by themselves.

More and more retailers are lining up and seeking to partner with insurance companies. They too see customers demanding simple experiences and embedding insurance into their product’s point of sale can eliminate a step that may otherwise distract from closing the deal.

Embedded insurance is here to stay. It’s incumbent upon insurers to capitalize on the opportunity to open new revenue streams and piggyback off reputable brands. By using open APIs to connect your insurance distribution into an adjacent industry player’s ecosystem — such as retailers, tech giants, financial institutions, digital real estate marketplaces, and auto manufacturers — you can gain access to new customer pools.

P&C insurance trend #2: Visual claims

A recent study by research firm ValuePenguin found that 68% of all insurance policyholder complaints were related to claims. Filing an insurance claim has notoriously been a sticking point, involving an excessive amount of time for both the insurer and the insured. 

Visual claims seek to solve this issue by enabling customers to engage with the insurance company via a mobile app and camera. The experience is fully interactive and provides policyholders with a faster, more straightforward claims process. 

Let’s say Sally gets into a fender bender. Instead of having to call up her agent, she opens an app on her smartphone and is able to share real-time video footage. Agents or digital/AI agents can assess factors like vehicle damage, weather conditions, skid marks, signage, and the position of the vehicle.

Because all imagery and videos are captured and delivered digitally, an on-site inspection by the insurer is no longer required — thus saving time and money. Through use of AI-aided analysis, Sally gets a near instantaneous claims payout with a repair appointment triggered automatically. 

According to McKinsey & Co., AI technology will reduce the overhead associated with insurance claims by 70% to 90% compared with 2018 levels.

P&C insurance trend #3: Usage-based insurance

As consumers increasingly demand coverage tailored to fit their lifestyle, the popularity of usage-based insurance (UBI) and behavior-based insurance is on the rise. Be it infrequent drivers seeking mileage-based policies, safe drivers who want to be rewarded for their good driving habits, or property owners who rent their homes on platforms like Airbnb or VRBO, UBI enables insurers to deliver more compelling customer experiences. 

Through seamless integration of data from a wide variety of telematics and mobile devices, UBI can support multiple models (for example, miles driven, driver behavior, change of use, etc.).

As smartphone and internet of things (IOT) manufacturers continue to enhance their technologies, UBI will continue to build momentum. In the near future, a wide variety of sensors are set to be added to devices and machines to track everything happening within and around personal and commercial property. This data will open the door for insurers to offer more and more types of hyper-personalized, usage-based policies.

Why P&C insurers can’t ignore the core

The promise of embedded insurance, visual claims, and usage-based insurance is real. However, underpinning these digital transformation initiatives and others is the need to modernize your insurance core systems. Before insurers can build their future, they must address their past. Replacing legacy enterprise software in favor of cloud-native platforms is crucial to unlocking your company’s digital potential. 

To learn more about the emerging technologies that will shape the industry’s transformation, download our free ebook: Six tech trends that will transform insurance in 2022 and beyond.” 

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