Digitally enabled transformation of insurance in the post-COVID world — II
The future of the post-COVID insurance sector lies in artificial intelligence, IoT, and insurtech partnerships. The unprecedented challenge posed by a pandemic, has triggered business continuity plans across the sector and necessitated full-scale digitalization of the industry that will have a lasting impact beyond the current environment. With a ‘new normal’ yet to be defined within an evolving economic narrative, speed, accuracy, and efficacy of data has become increasingly important. How insurers adopt new technologies in these uncertain times, will determine their future growth.
What does this mean for insurtech
A year ago, the insurance industry would have dismissed the idea of a wholesale work-from-home model, and new business not needing to be conducted in person. Insurers cannot afford a ‘wait and see’ policy on digitalization anymore, especially when digital competitors are already expanding upon the opportunity. It has become clear that investing in the right digital solution will deliver a lasting strategic advantage. Let’s continue examining the direct impact of the Covid-19 pandemic on insurtech.
04 Accelerated Product Development Cycle
In recent months many insurers found that their products, processes, and systems were not sufficiently equipped for the digital world. Their current lack of truly digital products, which does not mean traditional products that are digitalized, but digital products designed specifically for a digital world, needed to be solved immediately.
To respond to the changing customer demand, fast launch of digital, and flexible products has become a necessity. Insurtech offers the solution by dramatically decreasing time-to-market, with modular platforms along the entire value chain, which significantly accelerate time-to-market for a seamless digital product.
Insurance-as-a-service (IAAS) platforms allow insurers and other companies to offer digital insurance with limited impact on their existing structure, by building on cloud-based microservice architecture, that can either be implemented as a complete turnkey solution or integrated into the existing system environment. Platforms created by Roadzen facilitate end-to-end digital process, or enable the building of advanced solutions on top of the existing systems. They power real-time, dynamic underwriting and parametrically triggered claims to make insurance simple, fast, and transparent.
The continuing trend to reskill workforce for more agility and efficiency, and the use of data analytics to support underwriting and fraud prevention, which began before COVID-19 is now more pertinent than ever. Artificial intelligence is likely to transform the world of business, and the everyday lives of people, as profoundly and deeply as any of the great technological innovations of the past. But it is likely to do so in a much shorter timeframe, leaving incumbents less time to weigh their options.
Insurers that transform their workforce to collaborate effectively with intelligent machines will not only realize the full potential of AI, but top-performing businesses could boost their revenue by an average 17 percent and their employment by 7 percent by the year 2022.
A future-ready insurance workforce will need to reimagine work, to better understand the machine and people collaboration, pivot areas that create new forms of value, and scale up the training for new skills to enable people to work with intelligent machines.
06 Reduced Operational Costs
Insurers need to consider investing significantly in direct-to-customer channels to reduce dependence on intermediaries and reduce commission costs, by focusing on AI to improve efficiency, hiring high-skilled workforce who can enable a truly digital and agile organization, improving productivity by ensuring employee satisfaction and reducing dependence on legacy operations to increase resilience in future risk scenarios.
Insurers will also need to focus on building or participating in new ecosystems, which might include embedding insurance journeys into customer ecosystems, providing a single interface for all financial services, and using data analytics to facilitate transitions between services.
Insurance players that quickly deploy emerging technology to provide a safe and connected experience, and insurance processes to customers and prospects across channels, will be the leaders in the post-COVID era and beyond.
The New Normal
Although the crisis has created uncertainty, insurers will benefit from digital and automation tools to support a return to normalcy. It has also offered businesses time to think more deeply and focus on innovation, improved customer experiences, fundamentally different cost structures, and reskilling of workforce into an up-skilled asset. Insurance firms will be transforming the traditional perception of risk, into a value-identifying, second line of opportunity.
Updating of policy-issuance guidelines for prevention and incident response, and engagement with regulators to seek approvals for simplified policy issuance need to be dynamic and immediate in the future.
There should also be a greater focus on realistic stress tests, and scenario planning that considers the possibility of a potential second outbreak and susceptibility to future pandemics. At the same time, other emerging risks need to be prepared for, from cyber-crime to climate change — that have been evolving for some time now.