Ever since the start of the digital era, many industries have adopted digital transformation. However, digital transformation in insurance agencies still needs to be improved. Then, the COVID-19 pandemic flipped the insurance industry where it stood, causing a speedy adaptation of digitalization. Now, there are new technologies that promise to improve the industry in a way that was never seen before.
We discuss the new technologies in the insurance industry and how they will become crucial for insurers in running their business.
Top New Technologies in Insurance Digital Transformation
While some of the technologies below are already gaining headway in the insurance industry, insurers continue to gain a competitive edge by adopting new technologies. Read below to learn about some of the up-and-coming tech trends for Insurance Digital Transformation in 2023.
Tools for Automated Underwriting
In traditional underwriting, insurers would go for in-person evaluations. One of the new technologies trends for Insurance Digital Transformation is automated underwriting, which allows insurers to gather information easily and effectively, reducing as much human error as possible.
Such automated tools include robotic process automation and AI that can collect, assess, manage, store, and correct data accurately and quickly. According to data from Deloitte, more than 65% and 74% of insurers have increased investment in RPA and AI, respectively.
According to Juniper, AI chatbots can save up to $1.3 billion by 2023 in various insurance sectors. AI chatbots help customers get the required information and save on labour costs. Moreover, these chatbots adopt machine learning software to constantly improve performance.
While 18% of insurers are already using chatbots, 64% state that they plan to hand over greater responsibilities to AI chatbots, bringing a new rise in insurance digital transformation.
Tools for Fraud Prevention
Fraud is one of the biggest threats to insurance agencies. According to the FBI, insurance fraud can cost insurers up to$40 billion yearly. However, digital transformation in insurance has brought forward new fraud detection and prevention technologies.
With new technologies and solutions, claims management and fraud detection has become a valuable and affordable asset for insurance agencies. These tools use data sets to predict outcomes, process data quickly, and analyze malicious and fraudulent activities. Moreover, these tools can help produce fraud-preventative strategies.
One of the biggest and ever-growing technologies for digital transformation in insurance is cloud computing. In 2023, more than 80% of insurers aim to expand their cloud computing network, allowing them to improve accuracy, reduce fraud, improve customer satisfaction, generate new leads, and improve customer retention.
Low Code Configuration Tools
Insurance digital transformation includes software platforms and applications that help insurers market new services and gather data. Creating such software platforms requires experienced IT professionals, long hours, complex strings of codes, and high costs. Moreover, 41% of carriers state that they are likely to switch insurance providers because they lack better digital platforms. However, low code configuration technology has made the process faster, easier, and less costly.
Low-code and no-code tools allow insurers and IT professionals to easily update and manage their applications and software. Such tools equip a drag-and-drop function that allows quick implementation of features. Moreover, insurance agency employees can take charge of developing or updating applications.
Drones for Risk Assessment
A big part of running an insurance agency is calculating risks before issuing insurance policies and assessing damage after a loss. For analysis of a large-scale area, insurers are now using unmanned drones. These drones are used for roof inspections, damage assessment, risk calculations, and collecting demographical data. The data collected can then be transmitted onto the cloud and analyzed further.
Data Ecosystems and Insurance Communities
Data is the most crucial part of the insurance industry. Recent technologies are now allowing the creation of data ecosystems and insurance communities that allow data sharing across industries. This includes public and private industries creating a combined ecosystem to share data for easy and quick application. One of the prime examples of industries in the insurance ecosystem includes health management industries, allowing data on the health of insurance carriers to be made available on the cloud through different devices used by the customer.
According to a McKinsey study, insurance ecosystems may account for 30% of the global revenue in insurance. Moreover, 84% of insurance agents state that insurance ecosystems are crucial for their future strategies.
Smart Insurance Contracts
One of the biggest innovations of the 21st century was the blockchain network, which gave rise t cryptocurrencies such as Bitcoin and Ethereum. One of the innovations brought forward by blockchains was smart contracts, self-executing contracts, given that a criterion is met.
Smart insurance contracts can be made using cryptocurrency and be executed once the criterion is met.
According to a report by Market Research Future, the global market for smart contracts will reach $300 million in the following year.
Smart insurance contracts can help eliminate human error and interference, lowering the risk of manipulation and increasing transparency in policy, increasing customer trust. Moreover, it can speed up the claims process and lower administrative costs.
However, the implementation of smart contracts in the insurance industry is still lacking, mainly because 53% of insurance carriers still do not understand blockchain applications. Nevertheless, the potential of smart contracts in the future of insurance digital transformation is high.
Application Programming Interfaces
Application programming interfaces (APIs) consist of the programming interface for applications that use back-end and front-end frameworks. One of the biggest innovations in the digital transformation of insurance is the introduction of open APIs in digital insurance communities.
Open APIs involve application interfaces available to insurance agencies in the community, allowing them to develop software applications. This allows external partners to use the insurance services and increase value.
According to Accenture, more than 82% of insurance executives state that digital insurance ecosystems allow them to grow, while 58% search for digital insurance clubs to join.
Digital transformation in insurance has allowed the industry to grow unprecedentedly. Moreover, this growth does not seem to stagnate any time soon. With the introduction and implementation of new technologies in the digital insurance industry, insurers are planning new strategies for lowering cost, increasing security, improving analysis, increasing lead generation and customer retention, and improving customer experience.
New technologies in the digital insurance clubs have allowed insurance agencies to achieve a competitive edge in the market and improve their business.
Wesurance is an Insurtech company in the U.K. providing a platform that empowers insurance companies and brokers to easily build, develop, and grow their digital insurance branches. Through a simple-to-use and easy-to-implement solution, you can build your own digital insurance quickly and with ease. No worrying about coding to integrate the digital insurance process into your insurance business. Learn more about us at https://www.wesurance.io/.