January 7, 2021

6 Areas Where Insurance Companies Must Adopt Digital Technologies

Technical innovation is something few companies can afford to ignore. In today’s digital age, for companies in the insurance sector, deploying technology to improve operations becomes mandatory. Those who refuse to do that find their competitors cruising ahead. Rapidly evolving technological advancements today mean there are several ways in which leveraging cutting-edge technology can help insurance brokerage companies.

According to Gartner research, in 2019, insurers spent about $225 billion on IT. Though the pandemic pressed the pause button on investment in 2020, the tech innovation spree is all set to return in the post-pandemic era. 

Here are six areas where insurance companies can adopt digital technologies:

Claims Processing

Insurance fraud eats into insurers’ revenue to the tune of billions of dollars per year worldwide. Businesses can streamline their claims processing via advanced automation and analytics, thus preventing fraud or, at least, minimizing it. Data analytics and digital signature technology can also be used effectively to this end.

Data analytics comprises quantitative analysis and data mining. These tools augment the fraud detection process and help stem false payouts during claims processing. Thanks to these tools, the risk management ability of insurers shoots up emphatically.

Digital signature technology has demonstrably curtailed fake insurance account activation. For instance, some people file an insurance claim after an accident falsifying the date of insurance purchase. Digital signatures can irrefutably verify the date when insurance was purchased, negating all such claims.

Insurance Personalization 

Various types of insurance policies are inherently different. Each case is distinct from the other simply because what is suitable for someone may not necessarily fit with the requirements of the other. To offer customized policies catering to people’s specific needs, insurance agents need to have specialized knowledge and need access to customer data. This is where technology moves in.

Machine learning can help analyze numerous patterns and identify the fitting underwriting clauses. Based on the data provided by a person, systems backed by machine learning can offer the perfect customized plan. This unprecedented efficiency can transform customer perception about an insurance company.

Customer Interaction

Artificial Intelligence (AI) can considerably boost the quality of customer interaction while bringing down the operational costs for insurers. Customer interaction is gradually making way to AI globally. 

According to an estimate, by 2025, chatbots will power 95% of all customer interactions.

Chatbots powered by AI and machine learning facilitate seamless interaction with customers. They ease up things for the organization as well as customers. A bot is intelligent enough to guide someone through a claim process or a policy application. For more complex cases, the bot can channel human intervention. 

An algorithmic virtual assistant can communicate with customers through text or voice, without taking leave or a vacation, round the clock. As the chatbot capabilities increase, there are more things that a bot will be able to do.

Premium Optimization 

In insurance, telematics plays an important role by connecting real-time data generated by the automobile with the insurers’ software. Telematics serves as wearable technology for the policyholders’ or applicants’ car, using the monitoring devices installed on a car for measuring indicators, such as location, speed, mishaps, etc. Analytics software processes the data collected and plays a key role in the policy premium.

Telematics is advantageous for the insurers as well as the policyholders. In one stroke, it alters the relationship between carrier and customer from reactive to proactive. It also brings down claim costs for insurers. For customers, it encourages them to drive in line with the traffic rules.

Insurance Rates

Technology helps connect fitness apps or wearable devices with insurers’ software. There are apps and devices people use to help maintain weight and keep unhealthy food habits under control. Insurers can rely on the data generated by these apps/devices to get precise information about the current health status and future health prospects of their policyholders as well as applicants, enabling them to offer the right insurance plans with customized rates.

Integration of apps/devices with insurers’ software can help them prevent losses they face because of the incorrect information fed by customers. On the other hand, it can promote a healthy lifestyle for anyone who wants to buy insurance as it will enable them to buy a policy at lower rates.

Premium Collection 

Common challenges in the premium collection include the integration of the payment collection system with various software. RPA (robotic process automation) bots can efficiently imitate employees’ actions in collection-related processes, helping insurers avoid costly mistakes in daily operations. RPA solutions can be used in several areas to facilitate automation to-  

  • Set multi-currency custom rates

  • Manage service and product library with custom price-lists

  • Automate payment reminders

  • Forecast regarding revenue or expenses

  • Track the actual and planned time spent on collection

Removal of repetitive human tasks and automation of processes regarding premium collection allows a lot of flexibility to the insurers. Timely reminders regarding the approaching due dates help lower unintentional defaults by policyholders.

The Road Ahead for Insurers

Technological innovations around have brought along several opportunities for the insurance providers to modernize their processes and transform with the evolving industry. Finding gaps in their existing processes and then using technology to plug them up enables them to innovate new products and services while ensuring excellent customer experience.

Automation and digitization using emerging technology can help insurers facilitate seamless back-office operations. As the world moves ahead, insurers that are more digitized compared to their customers will have more chances of drawing new customers.

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