Artificial intelligence (AI) and machine learning (ML) have started taking baby steps in transforming a somewhat laid back insurance sector, enabling traditional insurers to learn more about their customers, improve risk-modeling and revamp critical processes throughout the value chain. However, the speed of this transformation is nowhere near what is required to match the macro changes that we are witnessing in the sector.
These macro changes are driven by shifting consumer preferences, while others involve new and nimble competitors thriving without the burden of legacy processes. Here are three of the key changes that are transforming the insurance market.
1. Evolving buyer behaviors.
The share of digitally-active customersย increasedย by approximately 60% between 2014 and 2018. Also, in many major markets,ย more than 80%ย of millennials are open to switching to another insurance provider in return for enhanced customer experience. This particular force is further amplified by other sectors adopting emerging technologies at a much faster pace than insurers. They have created a differentiated customer experience, with the steepest difference felt by millennial customers who expect consistency in experience levels in every single digital touchpoint impacting their day to day life.ย
2. An explosion of data and devices.ย
According toย Gartner, in 2017, 8.4 billion โthingsโ were connected to the internet, which is 30% more than in 2016. By 2020, itโs estimated that 20.8 billion โthingsโ will be connected. The wearables market alone is expected to be worthย $34 billionย by 2020. This increase of connected things represent an influx of data that can be harnessed and utilized by the insurers to know more about customer behavior, analyse risks better and create products tailored to match the customer preferences.ย
3. Rise of the InsureTechs.
InsureTechs are companies using technology innovations to make traditional insurance models more efficient and cheaper for customers. Most are becoming insurance providers or distributors themselves. This new breed of providers is challenging traditional insurers on many fronts, including improved customer experiences, speed of information delivery and providing data-driven offerings. The rise of these companies is substantiated by theย double-digit increaseย in funding in the InsureTech space.
How traditional insurers can survive and thrive
As customer expectations and market dynamics evolve, digital agility is critical for insurers to predict and respond quickly to shifting attitudes, market opportunities andย risksย across the value chain. This means using cloud and mobile services in new ways, embracing new data sources and leveraging advancements in AI and ML.ย
Smart solutions such as chatbots, damage estimators, fraud analytics and loss-likelihood calculators can help automate tasks, increase customer satisfaction, boost loyalty and improve overall business processes.ย
Todayโs customers also expect a consistent experience, whether itโs online shopping or handling claims through their insurer. Particularly in the case of a claim, they expect a certain degree of ease and quality to inspire loyalty. With claims being the only real โmoment of truthโ for the customers, an insurer should start their AI journey by looking at their claims cycle.ย
To help reimagine the claims life cycle through the lens of AI, weโve developed the first guide in our โInsurance 2.0: Reinventing the Traditional Insurerโ series. In this guide, weโll help insurers get started in using advanced technologies to create an intelligent, customer-centric claims journey that drives revenue, satisfaction and repeat business.
Download the โInsurance 2.0 eGuideโ now to ensure your business stays competitive.