Digitizing The Insurance Industry Landscape For The Future

Here at Inmediate, we believe that the industry is now in a position in which executives can embark on a digital journey to achieve real impact. It is no longer “if” digital technologies will change the industry, it is “how” and “when.” The challenge — or opportunity — for incumbents in the digital transformation lies in determining the concrete steps they should be taking right now to join (if not lead) the digital revolution while maximizing existing assets.

With new attackers on the hunt for customers, incumbents must move quickly to integrate digital technologies into their operations. Claims should be a top priority. To capture the value of digital, claim functions must embark on a transformation to become customer-centric, digitally enabled organizations.

So where to start? There are five essential elements needed to digitize and transform property-and-casualty (P&C) claims. And these are:

  1. Claims Prevention
  2. First Notice of Loss (FNOL)
  3. Claims Management
  4. Loss of Asset and Repair
  5. Settlement

By examining each of these areas, P&C claim functions can start to rethink the claims customer journey and back-office processes. This approach should be synthesized into an aspirational future state that outlines the digital assets needed to achieve the ideal state (interactive).

What does the future of insurance look like?

The future of digital insurance is bright and increasingly determined. Surveying the landscape, a few interesting themes emerge. Ecosystems, the Internet of Things, and artificial intelligence will each play a significant and interconnected role. Few global countries are already feeling the effects of online aggregators, while commercial insurance is facing a future in which its players need to decide on whether and how to partner with insurtech companies.

Insurance beyond digital: The rise of ecosystems and platforms

Society’s growing reliance on digital technologies is not only reshaping customer expectations but also redefining boundaries across industries. Insurers cannot avoid this phenomenon: as traditional industry borders fall away, the future of insurance stands to be greatly influenced by platforms and ecosystems.

An ecosystem is an interconnected set of services that allows users to fulfill a variety of needs in one integrated experience. Consumer ecosystems tend to concentrate on needs such as travel, healthcare, and housing. B2B ecosystems generally revolve around a certain decision maker — for example, marketing-and-sales, operations, procurement, or finance professionals. Seven of the ten largest companies by market capitalization — Alibaba, Alphabet, Amazon, Apple, Facebook, Microsoft, and Tencent — are ecosystem players, and that only hints at the power of digital.

Insurance 2030: The impact of artificial intelligence on the future of insurance

By 2030, artificial intelligence and its related technologies will have a seismic impact on all aspects of the insurance industry, as follows:

  1. Distribution. Cycle times for completing the purchase of an automobile, commercial, and life policies are reduced to minutes or even seconds. Smart contracts enabled by blockchain instantaneously authorize payments from a customer’s financial account. Highly dynamic, usage-based-insurance products proliferate and are tailored to the behavior of individual consumers. And the role of agents transitions to processing facilitators and product educators.
  2. Underwriting and pricing. Manual underwriting has ceased to exist for most personal and small-business products across life and P&C insurance. Underwriting is reduced to a few seconds, as the majority of the process is automated and supported by a combination of the machine- and deep-learning models built within the technology stack. Sophisticated proprietary platforms connect customers and insurers and offer customers differentiated experiences, features, and value.
  3. Claims. Carriers achieve straight-through-processing rates of more than 90 percent and dramatically reduce claim-processing times to hours or minutes, from days. Internet of Things sensors and an array of data-capture technologies, such as drones, largely replace traditional, manual methods of first notice of loss. Customer interaction with insurance-claim organizations focuses on avoiding potential loss.

While no one can predict exactly what insurance might look like in 2030, carriers can take several steps now to prepare for change.