The digital trends and tech disrupting the insurance industry

By Javier Puga Chief Marketing Officer

With their sights set on post-pandemic growth, insurers are gearing up for a transformational period. At the same time, the persistent challenges of security and changing customer behavior are looming larger than ever, presenting the insurance sector with a series of moving targets.

Expectations are also evolving within insurance workforces. This demand for meaningful work is not only asking that firms enhance their reward systems, but also that they’re able to tell a clear brand story defining the social purpose of their particular product or service.

Thriving within this complex industry environment will likely come from adopting a holistic digital mindset—which means investing in people as much as technology strategy. At the outset, it’s worth roadmapping the evolving landscape of insurance technology trends.

The insurance technology to watch

Artificial intelligence

Artificial intelligence (AI) is disrupting almost every industry, with 74% of insurers expecting to increase AI spending in 2022 (Deloitte).

Forward-thinking insurers are seeing this as a real opportunity for cost reduction and service innovation. AI will soon automate (or heavily facilitate) many core processes, shifting the day-to-day responsibilities of insurance administration. What is likely to emerge is a “human in the loop” model, boosting productivity and opening up the availability of agents for higher-touch interactions with customers (Mckinsey).

However, the ripple effect of AI across markets also means that insurers will need to innovate existing models and underwriting procedures. For instance, in the auto insurance space, AI advancements in the efficacy of self-driving cars would shift risk away from drivers and towards the software they are operating on. That, of course, would warrant a huge change in the way that insurers evaluate risk.

Cloud computing

A significant barrier to technological advancement in the insurance industry is the widespread use of on-premise legacy data storage systems. This has been changing over the past five years, with more and more insurers embracing ‘cloud-first’ infrastructure strategies in spite of initial resistance to leave their on-premise systems behind. In fact, 75% of insurers are now planning to expand their use of cloud computing in the coming year (Aite-Novarica Group).

Without a doubt, migration to cloud-based storage would serve as an agile foundation for many insurers, facilitating advancements from the development of new products to the personalization of customer experiences.

What’s more, the advent of hybrid cloud systems could be a game changer in insurance, presenting a range of benefits for both deployment and partnerships. Hybrid cloud systems would allow insurers to integrate with tools and third-party systems, keeping them open to market opportunities that arise in an increasingly embedded insurance ecosystem.

Zero-trust architecture

Cyberattacks are a pressing issue for everyone operating in the digital realm. Across all industries on a global scale, cyber intrusions increased by 29% in the first half of 2021, with a 93% increase in ransomware incidents being the major contributing factor (Deloitte).

Due to the sensitive nature of insurance data, this is particularly problematic for the industry. In the UK, ransomware attacks doubled from 2020 to 2021—and insurance was among the top three most impacted sectors (Insurance Times). Inevitably, this also affects CX from the standpoint of customer loyalty and trust. More and more, customers want to be reassured that their data is protected, especially when dealing with digital providers.

With this in mind, the uptake of blockchain technology is steadily increasing among insurance providers. Blockchain helps insurers to manage customer data consistently across networks, simplifying processes like identity management and fraud prevention.

Zero-trust security frameworks could offer another layer of protection. By necessitating continuous authorization and establishing what is sometimes called a ‘perimiterless network’, zero-trust makes digital environments highly resilient to cyber intrusions. In an insurance setting, zero-trust security is capable of securing remote working environments as well as hybrid cloud environments to make digital business as secure as possible.

Four trends driving digital transformation in insurance

How are these breakthroughs in technology fuelling the digital revolution in the insurance sector? It’s a layered paradigm that is paving the way for new kinds of customers, models, processes and partnerships.

Changing customer expectations

For an increasing number of consumer needs, digital services are changing what customers want—and what they expect. Such a shift in preferences has marked a turning point for insurance experiences. Customer satisfaction now depends on the ability to complete most insurance processes remotely with the help of digital tools, suggesting that self-service is favored for routine actions.

Due to accelerated adoption of digital tools among agents, brokers and customers alike, digital-first insurers are leading the competition. Today, 80% of customers would actually switch insurance carriers due to lack of a user-friendly interface (PwC). Unsurprisingly, the reaction among insurers has been to prioritize improvements in customer experience (Forrester).

One compelling example of the appetite for digital insurance products in the auto space is UK insurance provider Cuvva. The company offers an app-based sign-up, quote offer, and coverage purchase process. New customers simply have to send a picture of themselves, their driver’s license and their vehicle, which is verified against geolocation and government data. The entire self-service can be carried out in minutes—with an outcome guaranteed.

Towards a hybrid model

AI is certainly on the horizon of insurance—but as anyone who has engaged with a chatbot will know, it’s far off becoming a mature and self-sufficient technology. It still requires a human touch to guide it and, in any case, the demand for human-led customer interactions isn’t going anywhere. Even the best of AI would struggle to replicate the customer relationships that are built through face-to-face meetings.

That said, deploying digital technology can assist insurers in delivering resonant and memorable customer service. Although it might seem like a paradox, thoughtful use of each digital channel can actually augment human competencies, rather than replace them. The natural conclusion of this strategy would be a hybrid CX model that leaves the door open for an insurance agent to assist at different stages of the customer journey.

To take an industry case, an effective implementation of this is Swiss health insurance company Sanitas’ video call functionality—supported by a co-browsing tool and scheduling capabilities. Such a comprehensive stack replicates the personalized experience of a physical meeting where the agent can guide the customer through insurance processes end-to-end. Co-browsing even enables the shared review of any relevant materials.

Automation of everyday processes—from underwriting to claims

Insurance businesses are waking up to the benefits of robotic process automation for everyday, repetitive tasks. US insurance company Clearcover is among the leaders in automation, having developed an AI-based claims processing capable of approving coverage and fast-tracking payments for eligible claims. On the customer end, the entire process can be carried out through a mobile app.

Beyond claims, we’re also seeing the potential of AI and digital for policy administration and risk assessment. Files stored in the cloud can be analyzed with algorithms to increase processing speed, and AI can also assist insurers with data retrieval for reporting purposes.

AI also assists the personalization of insurance services. Machine learning functionalities can generate well-informed recommendations for brokers by analyzing client behavior and new data—anything from a house move to a new car.

Hippo Insurance is one insurtech player with a digital offer that leverages on the demand for personalization. The company offers customers smart-home devices to collect data on hazards around fires, water damage, and burglaries. As well as making homes safer, this usage-based insurance model gives customers data-evidenced savings on their premium by curtailing household incidents.

Embedded insurance

The proliferation of digital customer-facing platforms has given rise to embedded insurance. In this context, insurance policies are presented as a native feature in various sector-specific marketplaces. In practice, this means a consumer buying a holiday could buy travel insurance on the same platform, reducing frictions in the buying experience.

Alternative providers are behind this development, with ecosystem orchestrators like Tesla, for example, pushing into the auto insurance space. Incumbent insurers have taken note, with many looking to identify new embedded distribution channels for their products and services (Forrester). With the embedded insurance market expected to account for $722bn in Gross Written Premium (GWP) by 2030, it’s probable that many firms will soon be looking to increase their exposure in this way (InsTech London).

Unblu for digital insurance experiences

For firms and insurance executives looking to create a holistic insurance experience that satisfies digital demands, Unblu is the missing link in the chain. Through a single suite of integrated communication features, Unblu turns a self-service platform into a multi-user application that lets you support your clients and close more transactions. Insurance multinational AON plus Swiss insurers Smile and EGK are just a few among 150+ financial institutions doing better by their customers with Unblu.