How tech can help insurers build resilience, stay relevant

Like many industries, insurers have been impacted by an increased reliance on technology. Expectations on service, personalization, and accessibility are extremely high. In many cases, you only have one chance to get the customer experience right before they move on, especially for new customers during the application process.

For those in the insurance industry, building an agile, yet highly resilient business is essential to weather these changes, stay relevant, and be competitive. This means taking a closer look at the technologies and human factors that must be addressed for lasting success.

Embracing new tech

Innovative technologies can make things far more efficient and customer-focused. The cloud and SaaS can ensure that businesses are able to operate in real-time, provide 24/7 support on multiple devices, easily share data, and upgrade and update policies in bulk. Ultimately, it can make life easier for customers, enable more streamlined and optimized processes, improve security, take fast advantage of new revenue opportunities, and reduce the need for expensive IT monitoring and maintenance as a third party does all the work.

Then there’s the Internet of Things. Connected smart devices that are increasingly used in cars, telematics apps, homes, various industries, as wearables, and much more. For insurers, they can provide a range of policy opportunities by being able to directly track user activity, monitor behavior, and determine risks. Policyholders can receive lower premiums or other incentives to use the devices, where low-risk behavior can provide a reward. Do they drive safely? Are they exercising? Are home alarm systems activated?

Whether building efficiencies, providing insights into your customers, or optimizing processes, technology is essential. But to get the most of it, organizations must develop a digital-first mindset.

APIs and microservices

When it comes to creating new products and distribution opportunities, application programming interfaces (APIs) and microservices offer immense potential by letting you provide services exactly when and where a customer needs them. Such ’embedded insurance’ means providing policies via third-party channels, whether a car manufacturer, travel agency, comparison portals, online store, or healthcare provider. As more purchases are made online, this will see a massive rise of consumers buying most of their insurance through online and mobile apps. APIs and microservices will enable you to create a seamless customer experience as they do so.

By breaking down applications to their core functions, microservices then use an API to treat that function as a single, self-contained service (this application could also come from a third-party service and communicate through the API). Ideal for future-proofing, creating new revenue streams, scaling and/or re-using operations, and providing more personalized products and services.

AI, machine learning, and automation

Workflow automation is essential to improve efficiencies and the customer’s experience.

If a task is common, routine, and repetitive, workflow automation utilizing AI and ML can take care of it and where there is missing or conflicting information, pass it on to a human agent with the AI learning as it goes. 

Overall, it’s a way to cut processing times and reduce the amount of repetitive work. That means more claims processed and more people served.

Big data analytics

Today, getting to know the customer in detail is a competitive advantage. This requires the use of unstructured data, including shopping habits, social media use, blogs, medical records, comments, business documents and anything that provides a holistic view of the customer.

All can help you to provide personalized offers and, from the analysis of data, make faster claims, identify potential risks, predict their lifetime value, manage risks in real-time, and more.

With data gathered through telematics in a car, for example, you can gain a true picture of how someone drives and make appropriate offers based on that information. Perhaps you’re using IoT data to check if a business consistently locks their doors? Social media data to see if a policyholder is making a fraudulent claim?

Cyber risks

Data is also extremely valuable. As more organizations use digital, cybersecurity concerns naturally increase. Consumers need to know their personal data is safe and that they can trust it will be protected. If a data breach occurs, it’s a sure bet many will leave, and regulatory fines and lawsuits may follow. This is a big concern, as cyberattacks are increasing. From 2020 to 2021 there was a 50% increase in overall attack per week on corporate networks, with insurance/legal seeing a big rise of 68%.

From phishing attempts to malware attacks, to ransomware attacks along a supply chain where data is blocked (or an entire system), or personal data is threatened with release or destruction, until a ransom is paid. While all industries are targeted, one of the biggest to hit an insurer cost them $40 million to recover stolen data.

Such risks also include digital fraud, and these have also grown at a massive rate. Between Q2 2021 and Q2 2022, global digital fraud attempts targeting insurers increased 159%. Attacks can also be made on smart sensors, in-car telematics devices, anything that connects to the internet.

The human touch

As we invest more into digitalization it’s easy to only think of streamlining and optimizing processes, boosting security, and opening up new revenue opportunities. But it’s important to keep the focus purely on the human customer.

All interactions should be about boosting the customer experience, and this means deeply evaluating customer journeys to understand their expectations, spending habits, etc. It’s also essential to remember that for many, certain interactions with insurers only happen at difficult moments in their lives. And each generation will have its preferences. Millennials (in their 20s and 30s) clearly prefer customized solutions they can access via different platforms. Others may simply prefer personal interactions with people.

A chatbot, which optimizes your call center response times, may become a big negative if the customer isn’t happy with the experience. A study even showed that 73% of Americans would not use a company’s chatbot again if they had a bad experience with it.

Ten years from now it’s likely that nobody will ever notice the difference between an AI-driven chatbot or an actual person, but we’re not quite there yet! Significant effort must be made to ensure that the chatbot behaves in a way that doesn’t feel too mechanical and unreal.

A matter of trust

From the digital solutions you utilize to the human elements you promote, everything is essential to build lasting trust. For insurers, this is vital. It is a substantial element in developing a truly resilient business that can withstand any number of unforeseen changes.

People must feel you are there for them, that you understand their needs, and that through your real-world actions and digital solutions that you can meet them quickly, simply, and when it’s important for them.

This requires solutions where the quality is assured. This takes testing with real people in real-world situations. Only then can it be certain it’s user-friendly, reliable, and works on any device or operating system while having no bugs, no security issues, and no functional or localization issues.

As the world rapidly changes around us, getting this right is a true competitive advantage.