In 2022, the insurance
industry saw a boom in predictive analytics, blockchain data, and chatbots,
among other technologies. Economic uncertainty in 2023 has solidified some 2022
tech trends, but also originated new ones to meet the moment. Here are the top 6
tech trends shaping the insurance industry in 2023.
#1: ChatGPT, BARD, and Other AI Tools Gain Momentum
The introduction of ChatGPT and Google’s Bard AI tool democratized
AI across various industries in 2023, and insurance is no exception. Industry
slated AI as a power player for 2023 insurance, and the advent of ChatGPT
and BARD took that even further.
AI is being used to structure and prepare documents faster, giving
insurance providers the ability to handle higher volumes of digital
submissions. It’s also being applied across underwriting, pricing, and claims
processes. ChatGPT is being used to assist insurance teams with contract writing
and improving customer satisfaction by assisting in document classification. It
also has applications for improving the quality of customer service chatbots
and reducing claims leakage.
#2 Flexibility, Scalability, and Resilience
To minimize costs and drive long-term growth, insurers are eliminating
legacy architecture in favor of a simplified, modern technology stack. Many of the
more digitally adept insurers are already integrating insurtech into that mix
as well. The resulting technology ecosystem is meant to support core offerings
that are flexible, scalable, and resilient across the organizations.
For example, automating specific aspects of the claims
process to improve efficiencies and reduce manual intervention by internal
teams. Or, insuring risk more accurately by analyzing third party data to fill
in blind spots. The 2023 insurance landscape demands the competence of these
technology stacks to tamp down operating costs and position the company for stable
growth if economic windfalls arise.
#3 Behavioral Analytics and Effective Nudging
Behavioral analytics are used to monitor, analyze, measure,
and interpret the digital footprint left by users across websites, mobile apps,
and digital products. While behavioral analytics are not a new concept, their
relevance and growth in the insurance industry is notable.
Insurers are using behavioral analytics more frequently—applying
it to optimize digital solutions, increase personalized sales, reduce fraud,
and improve both employee and customer satisfaction.
A behavioral science approach called nudging has proven
particularly effective. Nudging uses subtle, non-coercive interventions to guide
people towards better decisions while respecting their freedom of choice. For
example, McKinsey highlighted a successful
use of nudging in a recent article. A German multiline insurer pulled
insights from behavioral analytics to alter the language they used to explain a
cost-effective service offering. As a result, more than 30% of customers accepted
the offer, up significantly from the small minority of claimants who had accepted
it in the past.
#4 Customers Choosing Telematics
Sensory technology from wearable devices and vehicle
monitors is a growing insurance tech trend that’s not going away. People are
opting for plans that analyze the data from these devices to better inform
their insurance policies and hopefully lower their premiums. In fact, as of
2022, all of the top 10 auto insurance companies are offering telematics solutions.
Expect telematics to continue as an insurance tech trend. A recent
survey of nearly 2,000 adults confirmed interest in it. In the survey, 30%
of respondents weren’t currently taking advantage of telematics-based insurance
policies but were highly interested in trying it. A further 69% expressed at
least some interest in participation.
#5 Unstructured Data Analysis
Insurance analytics traditionally rely on the structured
data of forms, policy information, claims data, and financial data to draw
conclusions. But the proliferation of unstructured data is on the rise.
Unstructured data includes data from social media, multimedia, claim notes,
images and videos, and medical records (for medical insurers). Technology like
IoT is giving insurers a method of mining and analyzing this data to build more
robust customer profiles. For example, using social media data to detect fraud
and communicate with customers.
#6 Big Impacts of the Metaverse
The metaverse is still a novel concept, but its influence is
growing rapidly. For insurance, this tech trend will have the biggest impacts on
handling plan coverage and identifying risks. It will also offer potential
opportunities to the insurance value chain.
The insurance industry has a lot to think about when it
comes to the metaverse. People will be using this technology for numerous
reasons, and insurance must be ready to respond. For example, the metaverse economy
will be built on virtual currencies like NFTs and crypto. Insurance companies will
be expected to provide coverage for assets in the metaverse to cover these
kinds of transactions. Avatars and immersive experiences will allow insurers to
communicate with users and create more tailored experiences to increase
awareness around insurance-related services. When it comes to governance, the
laws and regulations of the metaverse are constantly evolving, and insurers
need to identify what they can an cannot do there.
Meanwhile, the metaverse presents numerous and varied
opportunities. Insurers can use this tech to develop new products for risks
specific to metaverse users, engage in sales activities via immersive
experiences and avatars, allow customers to pay premiums and receive payouts via
crypto assets, and utilize digital twins in the metaverse to conduct damage
As with any technology though, there are risks of hacking,
unintentional infringement on real-world rights, unintentional leaks of confidential
information by users, etc. Insurers must proceed with cautious optimism.
Tech trends for the insurance industry are ever-changing and
evolving with the advent of new technologies and the changes to social norms.
It’ll be interesting to see how this industry adapts through the remainder of
2023 and into the future.