By no means is the insurance industry the same as it was a decade ago. Its current market conditions can be considered by insurers as both exciting and difficult to navigate—given that today’s insurance sector has been shaped by events like the digital revolution of the 2000s and the COVID-19 pandemic.
Now that digital technology has made real-time, personalized, and effective service possible for so many things, it’s often what customers demand by default. This applies to banking via open banking, shopping for essential goods via ecommerce, and healthcare via telemedicine. There’s strong evidence that customers also seek the same things out of their insurance policies, which is why the insurance market is quickly being transformed by digital trends.
Which trends are currently the most prominent, and which ones have the highest chances of affecting an insurance organization? To answer those two questions, here’s a briefer on the five issues that every insurer needs to know about.
Simple, Efficient, and Digitally Driven Insurance Experiences
One of the clearest trends to emerge is that of the “one-touch” insurance experience. Many of the world’s top insurers, as well as up-and-coming brands, are concentrating their efforts on digitalization to decrease touchpoints for processes like enrollment, billing, and claims.
Much of the focus has been on bolstering speed and efficiency in these processes using automation. For example, some insurers have unlocked the ability to do real-time claims processing through the use of solutions that can help resolve hundreds (or even thousands) of claims in a matter of minutes. This capability has proven especially important given the fast pace of healthcare and the urgency of quick, dependable health technology solutions—including the issue of calculating insurance coverage.
Modular Core Processing Functionality
A second trend that’s slowly become mainstream within today’s insurance sector is the adoption of core modules within upgraded insurance systems. In practice, this involves the augmentation of a core insurance system to expand its services and capabilities. More insurers are waking up to the fact that upgrading their core modules on a reliable system is better than sticking to their clunky, outdated legacy systems and going through a one-time, big-time tech overhaul at the very last minute.
Insurance companies have deduced the practicality of investing in solutions that can accommodate modularity. The principle is to refurbishing the system now so that functionalities can be added in the near future. This saves carriers from having to go through a painful, difficult, and expensive tech transition later down the line.
Highly Streamlined Back Offices
Insurers are also digitalizing to deliver greater workforce support in addition to customer support. The digital transformations occurring in insurance companies have made working environments more forgiving on underwriters, agents, customer support staff, and IT support staff, among others.
The most up-to-date insurance solutions now enable a single source of truth for insurance data handled by multiple departments in the organization. Technology is also driving up compliance efforts for standards like the International Financial Reporting Standard 17 (IFRS 17) and the US Generally Accepted Accounting Principles’ Long Duration Targeted Improvements (LDTI). In the most successful use cases, these new digital solutions have led to greater synchronicity, higher rates of achievement for the company’s key performance indicators, and reduced costs for operation.
Greater Product Flexibility
This generation of insurance customers is also not one to favor the bulky, all-in-one insurance packages that their parents or grandparents may have purchased. A large population of customers, especially those that lean towards the younger side of the workforce, now seek more lightweight policies that “cut the fat” out of the insurance process.
As a result, the trend has been for insurers to administer these with systems that allow far more flexibility than the off-the-shelf solutions they bought two decades ago. For the most part, the investments have been worth it due to the growth that carriers have experienced from their younger clientele.
A Focus on Member Engagement
Lastly, the use of advanced data gathering and data analytics capabilities for member engagement is now widespread among today’s insurers. This technology is being used to deliver insurance services that have a much higher degree of personalization. Some examples include custom-tailored policyholder responses and personalized insurance advice.
This heightened focus on member engagement has been one of the most rewarding trends thus far. The most successful insurers have helped their customers feel less of the burden when it comes to paying their obligations. Instead, their insurance plans feel more like blueprints for supporting customers’ individual lifestyles and life goals.
Final Words: Is Your Insurance Organization Ready for the Digital Future?
Moving forward, insurance companies have a lot of opportunities to use digitalization for an important goal: the restoration of faith in an industry that many customers have grown disillusioned with. Technology can prove the point that insurers aren’t as slow, outdated, uncaring, or opportunistic as some paint them to be. It can further bridge the gaps that exist between insurance carriers and their customers and push carriers to deliver services of higher value to their policyholders.
If you are involved in the insurance sector, remember how valuable it is to be a forward thinker and innovator in your industry—especially with regard to tapping newer markets. Be aware of these trends, and resolve to keep up with them while time is on your side.