Technology today goes a long way towards humanizing the insurance industry. Insurtech has been a catalyst for growth for the sector, but arguably even more so since the pandemic's start. Traditional insurance companies have been forced to reach out to customers by alternative means with restrictions and lockdowns.
As with every other industry, the insurance sector is becoming more technologically advanced to meet growing customer expectations. Competitive market pressures also increasingly challenge the industry to innovate its processes or be left behind.
Despite much market volatility, which has disrupted industries worldwide, the digital insurance market has rapidly grown, giving rise to insurtechs. Tech-first insurance companies are revolutionizing the industry with innovative offerings that deliver simplified, fast-paced, and affordable insurance for the masses.
In 2022 and beyond, let's look at some of the key trends paving the way towards insurance 2.0.
Big data in product development
Over the past few years, consumers have become more digitally savvy. This has resulted in an increasing preference for innovative insurance products delivered in a seamless and digital-first way.
We have also seen the emergence of technological advancements and shifts that are reshaping products. Insurers are now starting to put customers at the heart of everything they do, leveraging big data and underwriting innovation to understand what products need to be improved and determine the correct pricing to develop on-demand and value-for-money insurance policies that truly cater to their needs.
For example, micro-life insurance and in-patient products offer individuals tailored coverage at lower values starting from 8,000 rupiahs (US$0.56) per month.
Delivering delightful customer experiences through personalization
While "insurance" and "love" might not be commonly used together, changing the public's perception and making insurance delightful is important for the new generation.
A key part of customer-centricity is personalized services. With customers wanting to feel special and not just another face in the crowd, personalization is the best way to achieve that.
Incorporating chatbot AI systems can help personalize the customer service side of insurance. The use of machine learning enables the chatbot to identify ways to personalize the conversation, making it feel natural and, at the same time, accurately answering customers' queries.
Rise of AI-powered claims processing
Lesser human intervention is involved in manual processes like automation, and AI solutions roll out across every domain in the industry and join forces with front-end customer experience technologies to increase efficiency and deliver higher customer satisfaction.
Despite this, many traditional insurers are still spending disproportionate time manually handling their claims processes.
Insurers today will need to leap utilizing AI and advanced algorithms to simplify claims processes and spot "red flags" in fraudulent claims, to effectively increase efficiency and accuracy.
From the moment a customer opens an insurance claim, AI technology can streamline the administrative process through automation, processing claims in an average of just 18 seconds.
Collaborations to fill gaps and expand market reach
Generally, the insurance process is complex, time-consuming and lacks transparency.
With the increasing competitive challenges to attract and retain customers, insurers will need to develop and use a broader distribution ecosystem that engages customers when and how they want and meet them at their point of need.
Through a multi-channel strategy, they must create an ecosystem of connected channels, using a range of digital capabilities to connect with customers.
Insurtechs with new and innovative products are blowing their traditional counterparts out of the way by leveraging partnerships and ecosystems across many different areas of the distribution spectrum.
We are also starting to see partnerships form within the industry with insurers leveraging new marketplaces to expand reach and companies including Gojek, Shopee, and Xiaomi becoming channels for insurance.
Together, the partnerships represent a powerful distribution ecosystem that places insurance products directly in the path of customers' life journey events, where relevant and needed.
Greater focus on increasing financial literacy for the community
The global pandemic has heightened awareness of the importance of insurance protection.
In particular, it has drawn attention to the predicament of large uninsured and under-insured populations, especially in emerging markets within Asia, where a lack of financial literacy and mistrust of financial institutions hinders greater insurance penetration. However, it is precisely in countries like Indonesia where insurance can make a difference in the lives of everyday people.
With the widening protection gaps, insurtechs are leading the charge in making insurance more accessible and affordable for all through microinsurance policies that are low in cost and efficient in administration.
From mobile-based insurance apps to remote services via AI-powered digital assistants, insurtechs are improving their outreach to customers in rural locations and offering advice on insurance through digital channels.
In a world of digital transformation, leveraging emerging technologies and data sources to drive efficiency and expand capabilities may be the thing to enhance the customers' experiences.
Insurers and insurtech firms must continue focusing on accelerating their digital journey, streamlining processes through automation and providing customized services are needed to remain relevant in the long run.
Insurance can be delightful, and we want to bring the words "insurance" and "love" closer together.
This article was written by Cleosent Randing from e27 and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to firstname.lastname@example.org.