Digitally enabled transformation of insurance in the post-COVID world — I

How managing the COVID crisis is transforming insurance businesses through automation of processes that need not be performed in person, and why insurtech is poised to impact every process — from underwriting to claims to customer support.

The COVID-19 pandemic has undoubtedly affected the global insurance industry, with a direct impact on the growth and adoption of insurtech in the coming years. But unlike many sectors, the global health crisis is not expected to stunt insurtech’s progress. Rather maturity of the existing direct-to-consumer model with increased technology investments is in the offing.

What changed when the pandemic hit

The pandemic has made a lasting impact on customer behavior, and global lockdowns have proven to be an acid test for the existing business models in insurance. The shift in insurance strategies will stem from the fundamental change in how people will live, travel, work, and secure their health concerns.

Customer Behavior

Even though the pandemic will wane, some key changes in customer behavior are expected to be permanent. Consumers, in general, have now experienced the convenience of mobile and online services and will continue to expect comparable connected services from insurers as well.

Traditional vs. Digital

Never have the differences between insurers that lack digital products and processes, and those with advanced technologies that allow remote transactions, become so clear and urgent. Traditional distribution collapsed due to global lockdowns, while digital models proved to be resilient and future-proof by offering continued protections against the crisis.

STUDY BY SANKT GALLEN UNIVERSITY, BAVARIADIREKT AND VERSICHERUNGSKAMMER BAYERN

What does this mean for insurtech

The limitations of traditional distribution models due to the pandemic have become most tangible and require a recalibration of nearly all the touchpoints of the customer’s journey. Several insurtech innovations deliver exactly this to incumbents by bridging the distance between all stages — from sales and onboarding to claims and self-service.

With COVID-19 inducing mass remote working practices, paperless processes and adaption to virtualization have become a strategic necessity in this new world. Paperless online determination, verification of identity, digital signatures, digital documents, digital onboarding, virtual assistants, and remote claims assessment are all proving indispensable to business continuity for insurers.

01 Accelerated Digital Interaction

Insurtechs that offer advanced analytics and artificial intelligence solutions have provided the solution for insurers to streamline their claims processes and reduce operational expenses. Advanced AI platforms automate high volume, mundane underwriting and brokering processes, enabling insurance carriers to grow their business, increase operational capacity, reduce risk, and deliver a better customer experience.

Digitalizing the claims process has become a priority as protracted claims cycle times have persisted. Insurtech improves the digital claims journey for customers by replacing forms with a rich digital interface that guides the insured party through a user-friendly claims process.

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02 Demands for a Dynamic Product Portfolio

Personalized bite-sized insurance solutions like mobile screen damage insurance, house roof insurance, Covid-19 insurance, e-commerce insurance, pet insurance, and many more such products, which cover specific threats at low costs, are witnessing a demand surge. Players that can deploy data and analytics accurately to craft customer-friendly, personalized bite-sized solutions are set to be the clear winners.

Flexible premium models with increased value transparency have become important as customers are over vigilant about their spending in an uncertain economic climate brought on by the pandemic. Insurance pricing and premium models can no longer remain a cost-plus model, compelling the transition to advanced analytics to estimate customer willingness to pay, predict fraud, and initiate necessary actions and products in time.

03 Rethink of Mobility Insurance

In the aftermath of the Covid-19 crisis, mobility is expected to change significantly. People will travel less, especially because of remote working. Although, it is also expected that those who can afford to avoid public transportation, will drive alone to minimize the risk of exposure.

Innovative AI solutions like drivebuddyAI analyze driving data to better assess risks and develop fairer and more transparent offers. It enables motor insurers to create usage-based products quickly with the availability of driving behavior insights, distraction & crash detection, driver lifestyle profiling, trip predictions, trip context, and trip analytics via AI, data science, ML, and behavioral modeling technology, which make platforms scalable, secure, and highly accurate.

Further, as low carbon transportation poses a new set of challenges, both for the automotive industry and insurers, insurtech continues to be in a unique position to pivot the mass adoption of electric and autonomous vehicles.

The Post-COVID Decade

While the insurance industry has progressively adopted automation over the past few years, the current crisis has accelerated digital transformation and the importance of involving insurtech in their process. It has also brought to the forefront, which types of insurtech solutions are more relevant than ever. The significance of insurtech that offers contactless, digital, user-based, insurance policies, which provide security and threat coverage at flexible premium models have gained huge impetus, and will transform the insurance business model in the coming post-COVID decade. We will decipher more such emerging trends in the second, and concluding blog post.

Insurance made simple. www.roadzen.io

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Insurance made simple. www.roadzen.io

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