It could appear that the insurance sector is not at the forefront of digital transformation in terms of innovation. When it comes to selling insurance products, one could think that technical innovation is not possible. This is untrue, as many companies in this industry have switched to digital operations. According to a recent report by Accenture, 86% of insurers believe that insurance businesses must adopt new business strategies to stay competitive. Due to this, these businesses have begun putting money into various cutting-edge technologies that will help them become more cost-effective and customer-focused, thus increasing their return on investment.
How Do New Technologies Impact the Insurance Sector?
The development of numerous insurtech firms offering digital solutions specifically designed to fulfill the requirements of insurers has forced insurance companies to adapt and adjust their established business models.
We’ve uncovered five distinct digital trends that affect the insurance sector and prompt significant changes in the insurance industry.
- Big data and predictive analytics enable businesses to better understand consumer behavior, pinpoint their demands, and predict customers' future behavior. This expanded understanding enables businesses to adjust their policies and come up with new pricing strategies.
- Distributed ledger technology (DLT), also known as the blockchain, enables businesses to safeguard customer data and keep it secure from hackers. The system can lock up any form of insurance documents that have been input, alerting the owner to any tampering or theft attempts.
- Using each user's digital footprint, insurance companies will be able to give them customized coverage thanks to the Internet of Things (IoT).
- By identifying billing irregularities or errors and enabling predictive pricing, automation/machine learning can automate and simplify the procedures of producing insurance policies.
- Artificial intelligence (AI) gives businesses the chance to offer their consumers an even more individualized experience through chatbots for communication or by calculating premiums using facial recognition to identify life-threatening practices.
Without a question, this kind of digital revolution benefits both consumers and insurers. In other words, by standing out from the competition and providing customized and distinctive services, all insurers who can extract deep insights from data using these digital trends would have extraordinary potential to increase their revenues.
5 Ways New Technologies Add Value to the Insurance Industry
Partnering with insurtech startups or businesses that have the same target market is one of the best methods for insurance firms to gain from new technologies. For instance, AgileSoft is a digital legacy planning service whose users often have life insurance or intend to get it. Insurance firms can expand their customer base and even boost their revenue by utilizing this service.
Here are the 5 ways that explain the value of different emerging technologies to the insurance industry:
Competitive Differentiation
The greatest strategy to expand your business and differentiate yourself from the competition is to provide a unique product or service. Simply, a company would stand out from the competition if it offered a special feature or extra service with every insurance policy it sold. As a result, the insurance firm will stand out if it provides Stornest with a secure spot to store the just purchased insurance policy.
Enhanced customer retention rate
Every firm wants to expand its clientele while maintaining its current clientele. By including Stornest service in the life insurance package, the insurance provider may attract more new clients while retaining and converting existing clients into devoted ones. Potential clients could see the usefulness of this digital tool as a way to provide them with more assurance that their assets wouldn’t be lost in the event of early death.
Enhanced opportunities for Cross-selling other products
Insurance firms can market a variety of insurance products by partnering with various insurtech startups or businesses that offer digital solutions. It may be advantageous for both parties if life insurance plans and health insurance policies are combined.
Added value empowers the insurance industry to increase the price
The sheer ability of a business to offer a service in addition to its primary offering entails the addition of value to the good or service. Having said that, the insurance business would be able to raise the cost of its policy because it gives potential customers the choice to purchase another service from them. The business might promote Stornest’s legacy planning as an addition to a life insurance plan, for instance.
Because they are risk-averse by nature, insurers seek to control risk while still safeguarding their clients. Nowadays, insurers frequently demand cybersecurity attestations from their business clients. The need for security assessment work is anticipated to increase. The price of cyber insurance has increased along with demand.
The need for commercial liability insurance has increased as a result of the regulatory environment’s tightening. Generally speaking, society is growing more and more litigious. In the United States, bringing a class-action lawsuit is simpler than ever. Additionally, organizations in the EU are now more exposed as a result of the General Data Protection Regulation (GDPR).
Reduced cybersecurity risks
Another important issue for the insurance sector is cybersecurity. Insurance executives’ focus has been drawn to the relentless wave of cyberattacks, which has elevated cybersecurity to a major priority. The increased usage of new technologies, self-learning machines, cloud computing, digital ecosystems, 5G, and an increased reliance on intelligent devices have all increased risk. The number of online devices is expected to rise five times to 125 billion in the next ten years from the 27 billion that were online in 2017.
Why should your insurance company use New Technologies?
Every industry must adapt to technological changes to survive, grow, and achieve a higher return on investment. Since the insurance sector is not an exception, all insurance companies must review their operational procedures.
The world’s leading insurance companies also accept new technologies to provide their users with an extraordinary experience. IDC projects claim that global IT spending in the insurance sector would grow at a CAGR of 6.0% and reach $135 billion by 2024.
To increase long-term profitability, insurers are continually investing in technology to enhance the client experience and operational effectiveness. If you also want to upgrade your insurance company to the next level, then talk to the insurance software developers in USA at AgileSoft Systems, Inc.