The use of technology in the insurance industry has increased and defined the ways services are provided. As customer expectations shift and demands fluctuate, insurance companies must rely on tech to overcome the evolving challenges.
Here are nine insurance trends that are shaping the industry in 2022:
#1 Predictive Analytics
Predicting customer behavior is essential when it comes to collecting and interpreting data. Beyond understanding customer behaviors, predictive analytics are also used to help improve the accuracy of data.
Predictive analytics can
- Inform pricing
- Identify customers likely to cancel or lower coverage
- Inform more granular customer segmentation
- Use predictive underwriting to analyze the probability of risk
- Mapping out future trends
- Be used to compare factors of new and pending claims with past losses
Adopting predictive analytic models increases revenues and provides more accurate information about insurance customers. Two-thirds of companies have reported that predictive analytics has reduced the number of underwriting expenses and issues, while 60% of companies credit it for increases in profitability and sales. Implementing this trend also improved direct premiums by 53%, compared to the 18% average of the market.
#2 CARE-Based Distribution Channels
Insurance companies are focusing on providing better customer service through the CARE model, which we explain below. This be done by incorporating digital tools for supporting more convenient and accessible customer experiences. Insurance providers are working hard towards building these CARE-based distribution channels, but many are still struggling. What does CARE stand for?
- Convenience- The ease at which one can buy insurance
- Advice- Customers should have access to all information needed to make product choices
- REach- Make it easy for clients to get products they need when they need them
Insurance companies are shifting gears to focus on digitalizing across all distribution channels to remain competitive as more customers demand CARE experiences.
#3 Artificial Intelligence (AI) & Faster Payouts
Artificial intelligence has rapidly changed how devices are being used around the world. In 2020, there were 4.2 billion digital voice assistants used around the world. By 2024, it is predicted to grow to 8.4 billion users – which exceeds the number of human population. The insurance industry can use AI to help leverage large amounts of consumer data to create personalized experiences based on their habits.
AI can also help claim turnaround cycles and the underwriting process. AI tools reduce the time it takes to access data and lead to shorter reporting times. They also streamline pay cycles and lead to faster payouts by automating estimates and inspections. Pay cycle time is becoming one of the biggest differentiators for insurance companies. The quicker claims get resolved, the happier customers are.
#4 Blockchain Data
Blockchain technology is a set of records that are virtually incorruptible. Every block is marked with time stamps that allow data to be managed without issues.
Experts believe that blockchain technology offers a huge opportunity for the insurance industry, with the potential to positively impact:
- Process efficiencies
- Claims processing
- Fraud detection and prevention
- Customer trust
Customer trust is paramount to insurance companies who are expected to protect sensitive data. Secure blockchain technology can maintain correct information and reduce costly overhead while benefiting all parties.
#5 Usage-Based Models
Usage-based models have become more intriguing to consumers since the start of the pandemic. In 2021, there was a huge spike in usage-based models for car insurance particularly. Since no one was driving anywhere because of the lockdown, there was a huge awareness of the wasted money being spent on unnecessary car insurance for vehicles sitting in our driveways. More of these kinds of models will help insurance customers only pay for what they are using, and in turn increase satisfaction and loyalty.
By 2025, 95% of customer conversations and interactions will be powered through chatbots. Using AI and machine learning to communicate with your customers saves time and money. Having a chatbot feature allows the program to walk your customer through common questions that don’t require human intervention, or route ones that do to the appropriate team member for faster issue resolution. Insurance companies will take greater advantage of chatbots in the coming years to streamline customer interactions and learn about customer behaviors online.
#7 Social Media
Social media in the insurance industry is evolving past unique ads and marketing strategies. Some insurers are allowing customers to use credentials from Facebook and Twitter accounts to file claims and request services. Social media activity is also providing new frontiers for protection against fraud. Insurance companies can investigate fraud and compare cases by referencing a customer’s social media activity on the day of the event.
Looking at customer preferences on social media results can also help insurers formulate policies to provide the best services. It can help nurture engagement and offer insights about customers that can grow the business and inform product development.
#8 Low Code
Insurance companies must multitask and have efficiency when managing their platforms, deploying updates, and getting new products to market. Low code makes it easy to configure, develop, update, and manage all apps and software with easy-to-use drag and drop features. Insurers using low code can quickly deploy different interfaces.
The biggest benefits of low-code software development are:
- Increased speed for getting products to market
- Widespread development of apps
- Empowering employees to control their work
- Increased productivity
- Improved agility
- Faster transformations
- Better customer experiences
#9 Climate Risk Modeling
Over the years, climate-related disasters have increased significantly. Hurricanes, floods, storms, forest fires, tornadoes and earthquakes have created a huge loss in the insurance industry. To combat the losses, many insurers increased prices, but those prices can’t keep going up, or insurance will become completely unaffordable. To counteract this trend, the insurance industry will need to further research and predict the impact of severe weather when disasters occur. Big data modeling solutions can help predict risks related to weather conditions so insurers can mitigate and prepare in advance. Competitive insurance companies must start considering these types of technologies going forward.
Shaping the insurance industry around modernized technology and updated policies will help foster the rapid changes the industry desperately needs. Insurance companies must adopt these technologies to effectively meet new challenges and evolve in the competitive marketplace.
For more information on how to build more custom experiences for your insurance company, visit our website.