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 customers increased by approximately 60% between 2014 and 2018. Also, in many major markets, more than 80% 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.
2. An explosion of data and devices.
According to Gartner, in 2017, 8.4 billion “things” were connected to the internet, which is 30% more than in 2016. By 2020, it’s estimated that 20.8 billion “things” will be connected. The wearables market alone is expected to be worth $34 billion 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.
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 the double-digit increase 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 and risks 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.
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.
Today’s customers also expect a consistent experience, whether it’s 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 “moment of truth” for the customers, an insurer should start their AI journey by looking at their claims cycle.
To help reimagine the claims life cycle through the lens of AI, we’ve developed the first guide in our ‘Insurance 2.0: Reinventing the Traditional Insurer’ series. In this guide, we’ll 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 ”Insurance 2.0 eGuide” now to ensure your business stays competitive.