Over the next 10 years or so, the fully tech-enabled insurer will not be the same as today’s. Five trends, individually and in combination, will have a huge impact on this.
1- Applied AI
While many insurance providers are experimenting with AI, few have truly scaled their capabilities across the enterprise. As AI becomes more prevalent and algorithm creation becomes commoditized, carriers will be able to more fundamentally reengineer core processes to be more predictive in nature. AI will utterly disrupt distribution, underwriting, claims, and service as core processes become AI-enabled, creating a “human in the loop” model that increases productivity and allows for higher-quality touchpoints with customers. Carriers have yet to fully realize the potential of their data assets—for example, claims histories and distribution interactions. In addition to reengineering core processes, leading carriers and ecosystem players will use the advent of AI to create products and services based on data and analytics.
2- Distributed Infrastructure
Insurers around the world have significant technology debt, with many core processes weighed down by extensive on-premise legacy technologies. As cloud matures, a rapid shift to the cloud for all core systems will help insurers to be more nimble in launching new products and creating better customer service. Cloud will also be critical for enabling the type of compute power that is needed to fully understand and make use of the incredibly large data sets (such as tens of millions of claims data points). As ecosystems continue to develop globally, cloud-native insurers will be best positioned to act as ecosystem orchestrators—acting as a connecting hub among customers, distributors, insurtech, healthcare providers, carriers, and reinsurers, among others.
3- Connectivity
In many markets, insurers have begun using telematics to evolve the core auto product. The wider adoption of IoT could usher in a similar reshaping of product in life, health, property, and commercial lines. Increasing the frequency and specificity of data being shared through IoT devices helps customers provide a more accurate view of their needs and insurers better understand risk, both at time of purchase and an ongoing basis. The increased prevalence of 5G allows this data to be shared at lower latencies and helps insurers provide real-time services to clients..
4- Advanced Process Automation and Virtualization
While many carriers are experimenting with AI, few have truly scaled their capabilities across the enterprise. As AI becomes more prevalent and algorithm creation becomes commoditized, carriers will be able to more fundamentally reengineer core processes to be more predictive in nature. AI will disrupt distribution, underwriting, claims, and service as core processes become AI-enabled, creating a “human in the loop” model that increases productivity and allows for higher-quality touchpoints with customers. Carriers have yet to fully realize the potential of their data assets—for example, claims histories and distribution interactions. In addition to reengineering core processes, leading carriers and ecosystem
5- Trust Architecture
Across lines, insurers handle sensitive customer information, and the ongoing evolution of products and services will require customers to share even more of this information with carriers. New technologies will allow carriers to more effectively manage risk and make use of complex customer data—a critical step in evolving to a “predict and prevent” model of insurance where data is shared more frequently between parties with insurers playing a more active role in claims prevention. As blockchain becomes more widely adopted, it will help carriers more effectively manage customer data in a safe and consistent manner and simplify current issues such as identity management and verification. Zero-trust security and similar approaches will help carriers create resilient networks that protect against cyber intrusions.
With the emerging of these five efficient technologies and their on going adoptions in the insurance industry, it is clear what are the directions that need to be taken by the insurance industry players to thrive in the future.