In 2020, the COVID-19 pandemic catalysed unprecedented digital transformation across the economy. Telco providers worked tirelessly to ensure the resilience and reliability of their networks in order to support remote working and learning; retailers accelerated their drive towards ecommerce, with the ONS reporting that online sales reached higher than usual levels over the course of the pandemic; and the NHS acted at pace to adopt technology solutions to improve outcomes for patients and medical professionals.
Historically, the insurance industry has been slow to integrate technology into their processes. Years of good results have led to continuous reinforcement that the traditional way of doing business is the correct (and only) option. However, the pandemic effectively usurped traditional ways of working, forcing insurers to rethink some of the core fundamentals of their industry and consider how to use technology to adapt to the new economic reality.
This accelerated a growing trend towards digitisation in insurance. Development of new technologies is reimagining what is possible with customer experience and as a result customer expectations are higher than ever before. Customers want efficiency and personalisation – experiences that technology has the power to deliver.
What does the digital transformation hold for the future?
This is a pivotal moment for insurers. With the increasingly widespread availability of technology and ever rising customer expectations, insurers are being forced to step outside their comfort zones and embrace technological innovation. In particular, insurers are having to work harder than ever to connect with younger customers, who, as the first generation to grow up with smart phones, real-time responses and 24/7 access to information, have come to expect this at every interaction.
In essence, to meet consumer demands in 2021, insurers need to get their omnichannel experience right. Insurers need a unified customer experience with seamless transfer between channels, and to digitise in a manner that considers the evolving nature of how younger consumers operate. There are a number of key technologies that will facilitate this enhanced experience – several of which are explored below.
Automation will play a crucial role in helping insurers achieve their desired omnichannel experience. AI and machine learning technologies enable several aspects of insurance to be automated, freeing up time for insurers to carry out more pressing tasks, whilst improving accuracy and efficiency.
Underwriting, risk assessment and fraud identification processes can all be automated using artificial intelligence. As the amount of data your AI software has to analyse increases, the more it will be able to identify patterns and produce value-added insights for the business.
Insurance may have always been a data-driven industry, but access to new technologies means that insurers can now utilise big data to their advantage. In order to be of any use, the data needs to be sifted and ordered into a structure that is bite sized and actionable. Once people across their business can easily access and utilise these insights, insurers are far better placed to create a personalised experience for their customers.
As insurers rely more heavily on new technologies, cloud computing services will become increasingly important. Cloud is essential for insurers looking to make the most of big data, allowing firms to efficiently manage and analyse data at scale. It also offers key advantages for businesses looking to streamline and modernise their operations, enabling firms to be more agile in responding to change – not to mention important cost savings in the long run as well.
2021 will likely see big players in the industry continue to buy up insurtechs, adding to their raft of capabilities. As insurers continue to respond to the demands driven by the pandemic, they will likely require the flexibility and technological innovation – generally in one specific field of insurance – offered by insurtechs.
Acquisition of insurtechs also eliminates the competition. If incumbents want to secure their place over the coming years, they will need to minimise market risk – or in this case, absorb it.
Of course, the above list is far from exhaustive. There are a number of other intriguing, new applications of technology that business leaders should be aware of. Claims management, underwriting, and fraud are all areas in the process of huge digital transformation – 2021 may well see other parts of the sector follow suit.
The experience of 2020 drove home the message to insurance executives that change was essential to secure the future of the insurance industry. Lloyd’s of London, the global specialist insurance marketplace, is leading the way here, demonstrating that centuries of tradition can be married to new opportunities offered by technology.
This is only just the beginning for technology in insurance, and 2021 is set to be an exciting, and unprecedented year.