Top 5 Digital Transformation Trends in Insurance Software Solutions

Just two months into COVID-19, we witnessed an unprecedented change in the way businesses work and operate with over two years of digital transformation happening in such a short period.

IT services and consulting firms have been working round the clock alongside their clients to help them adapt and stay open for business in a world of remote of everything. In a way, this reflects the pace of change and acceleration of digital transformation across industries, including insurance.

Insurance software solutions driven by the latest technologies are helping the insurers and brokers to create a much safer and more efficient environment for their customers to interact. According to 360 Research Reports, in 2019, the global insurance rating software market size, which was at $444 million, is expected to reach $831.4 million by the end of 2026, at a CAGR of 9.3%.

Driven by modern and innovative technologies, including IoT, AI/ML, blockchain, cloud, AR/VR, insurance software solutions, are vital for insurers to sustain business continuity even through inopportune times such as the COVID-19 pandemic.

Here are the latest technology trends that are bringing innovation in insurance software solutions leading to better business outcomes.

1. Artificial Intelligence (AI) and Machine Learning (ML)

Over the past few years, AI and ML technologies have emerged as powerful tools for the insurance industry. Implementing these technologies enables enhanced service delivery to create better customer experiences. AI and ML have been put you use in the insurance industry in business processes such as:

· Underwriting

· Fraud detection

· Claims handling

· Sales

· Customer experience

· Product pricing

Machine Learning, in particular, is helpful in risk analysis and damage assessment. The technology can help predict the repair costs based on the data from similar cases. Better computing power, driven by the global connectivity of people, memory capabilities, and big data technologies, enables machines to run complex algorithms faster.

Among the prominent use cases of AI in the insurance industry is InsurTech startup GetSafe, which leverages AI to advise the customers on which insurance policies they should buy based on their past buying behavior. The startup has also developed a mobile app for the customers to manage their policies in one place.

Another example of the application of AI in the insurance sector is startups like Lemonade, Geico, and Lincoln Financial, using chatbots as virtual assistants to provide customer support.

2. Internet of Things (IoT)

Another emerging tech trend in the insurance space is the extensive use of IoT devices and sensors. Such devices can generate large volumes of meaningful data that insurers can leverage to generate insights to improve their products and services. With the help of real-time data generated by IoT devices, insurers can provide health advice remotely, immediate accident assistance, and claims processing.

Additionally, the Internet of Things allows companies to leverage statistics during risk assessment analysis and modeling potential risks. IoT technology also helps insurers improve customer interactions and offer them personalized products and services based on data to foster brand loyalty.

3. Blockchain

The blockchain distributed ledger technology is a secure way of storing insurance-related data such as personal information provided by the customers. Blockchain solutions can help insurers to keep customers’ data protected by preventing any unauthorized access. Safeguarding customer privacy and creating transparency have become top priorities for insurance companies and a means to win customer loyalty and build long-term relationships.

A real-world use case of blockchain in insurance is Etherisc, a company that has built an open-source platform for decentralized insurance. Blockchain is also used extensively for fraud detection and claims verifications based on the data from multiple data sources.

4. Mobile Applications

Mobile applications are powerful tools for virtually every industry, including insurance. The mobile app is a primary channel for the insurers to communicate and interact with their customers, partners, and agents. The millennials prefer to download a mobile application and check the policy-related information rather than visiting the website of the insurance company. Insurance buying apps can help achieve the following business objectives:

· Help customers find complete details related to the company and its products and services

· Allow customers to search for suitable insurance plans

· Enable users to compare and buy an insurance policy online

· Online calculation of premium

· Connect with the insurer/agent/broker

A mobile application is not only beneficial for the end-users or customers but also for the insurance companies and agents, allowing them to work with the documentation on the move, maintain records, and report generation.

One such real-world use case is of auto insurance provider Allstate. The Allstate mobile application allows the customers to perform tasks such as paying bills, claims submission, locating agents, etc.

5. Big Data

Big data-powered solutions serve as digital tools for data storage, reporting, and analytics to provide insights into customers’ behaviors and habits, facilitating efficient planning and real-time reporting.

Big data analytics unlocks opportunities for the insurance carriers to make risk predictions based on the customers’ behavioral patterns. The implementation of big data can enable better claims management.

In the insurance space, big data involves leveraging structured/unstructured data to perform business functions such as underwriting, pricing, forms, rating, and claims handling, among others.

How is Digital Transformation Driving the Insurance Industry?

The discussion on modern insurance software solutions cannot conclude without mentioning about digital transformation. Although the insurance industry has been slow to adopt digital technology, the current scenario offers no other alternative for the insurers but embrace digital transformation.

Insurers today are rapidly digitizing various aspects of their business operations to keep pace with the evolving demands of the customers. An insurance business that wants to stay competitive in today’s marketplace needs to connect with the customers where and when they want.

The pandemic has influenced the insurance industry in multiple ways, from the perspective of employees, insurers, brokers, and financial promises. At Kellton Tech, we expertise in providing cutting-edge insurance software solutions to traditional insurers and emerging InsurTechs.