As the insurance industry continues to navigate the pace of change, complexity and uncertainty in our world, consumers continue to respond and expect companies to be more responsive to their needs. This year’s insurance predictions provide guidance on how carriers can react more quickly.
1. Development of cognitive technologies will help insurers capture opportunities from more discrete market segments
Technological advances in AI and data analytics are helping insurers further refine market segments. As these more discrete segments grow, so does the opportunity for insurers to address them with new products and services offered through a wider range of digital distribution channels. One such channel is built-in insurance—place insurance in non-insurance company customer journeys — for example, offer life insurance during the mortgage application process.
New cognitive insurance platforms supports these new products and distribution channels and gives life carriers a way to take advantage of that opportunity, and as these platforms evolve, they have tremendous potential for the warranty function. These insurance platforms already automate evidence gathering and provide recommendations based on a continuously updated data analysis engine. With this level of automation and intelligence, insurance decisions can be made in real time. Those cases that require further review are then automatically referred to a human underwriter. With much of the evidence gathering already completed, the human underwriter is free to focus on further analysis, leading to more efficient decision-making – a distinct competitive advantage in fast-moving digital distribution channels. We believe that innovation in this area will continue to develop over the next year. Actually our report Spread the future of insurance describes on page 11 how a life insurer in China is improving operational efficiency and customer experience by leveraging AI and a smart algorithm.
2. Customer experience will continue to drive innovation in underwriting
In last year’s insurance predictions, I discussed how customer experience will determine who wins the digital competition for new business. We expect this trend to continue, but with an increased awareness of consumer expectations and how insurers can respond more quickly to their changing needs. For example, ours Accenture Insurance Consumer Study research identified that millennial and younger consumers are not the only group embracing a digital experience. The 55 and older cohort is becoming more comfortable with digital interaction. And if insurance companies are to attract and retain customers, a digital customer experience is the stake of the table. Underwriting plays a critical role in supporting the digital customer experience, especially with the proliferation of customer experience technologies available through ecosystem partners.
As our industry moves from claims to protection products, digital technologies will be critical to providing differentiated experiences that leverage these platforms and ecosystems to capture opportunities from new product innovations. We believe that product and insurance innovation will provide a significant source of revenue in the coming years. However, it will require increased use of AI, automation, data analytics and the cloud profitably drive revenue.
As insurers modernize their legacy core systems and free up siled data, they can automate their insurance workflows to provide a faster digital buying experience, while connecting to additional data sources that help them apply the right level of risk management. This not only shortens issuance timeframes and reduces costs, it also improves the customer (and insurer) experience. Similarly, it supports the advanced experience that consumers are looking for – seamless, proactive and personalized.
According to a Gartner® report (Richard Natale, Kimberly Harris-Ferrante, August 2022), “By 2027, digitally designed policies will have reached mainstream adoption in the life insurance industry, resulting in significantly increased revenue and policy profitability and improved customer experience.”
3. Human + machine operating models will help alleviate insurance skills shortages
Digital technologies such as AI and automation are not replacing insurance jobs. On the contrary, these technologies will become even more necessary as insurance companies face continued shortages of skilled labor. Besides, they will need a talent and investment strategy that focuses on digital skills in data analytics and no/low-code capabilities along with the use of flexible staff to optimize the underwriting function.
For example, with the increasing use of third-party data, AI and automation provide an efficient way to bring data in and make it useful for insurers. This frees up insurers to do what they do best – assess and price risk—while driving timely, efficient decision-making. What prevents them is the administrative work that takes up 40 percent of their timeaccording to our survey of 500 US life insurance underwriters.
The first step is to improve the efficiency of the backend warranty operations. Interoperability is key to simplifying all customer-facing functions including product distribution, marketing, sales, service and commerce, in addition to using an integrated technology stack across platforms and ecosystems. The cognitive platforms described above can also help here. As insurers improve their digital capabilities to rapidly meet the ever-changing needs of consumers with even more discrete insurance products and distribution channels, insurance capabilities must keep pace. This combination of human + machine can facilitate a better experience for insurers and potential policyholders.
This is good news for the insurance value chain and further reinforces my optimism about our industry and the ability of insurance companies to meet the challenges and opportunities that lie ahead. We are ready to help. Let’s talk about making the most of your technology and human ingenuity.
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Disclaimer: This content is provided for general information purposes and is not intended to be used as a substitute for consultation with our professional advisors.
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