The insurance industry is undergoing a digital transformation. Insurance companies are investing in AI, machine learning, analytics, new risk management tools, fraud detection and other high-tech advancements. For businesses, this digital transformation is bringing increased value to commercial insurance.
Digital Transformation in Insurance
According to PwC, digital investments are increasing as most insurance companies realize that digital transformation is necessary to compete, stay relevant and grow their market share. The COVID-19 pandemic accelerated digital transformation efforts by exemplifying the need for virtual, digital-enabled interactions.
The insurance sector’s digital transformation includes a wide range of initiatives. Some key digital trends developing now include:
- AI in insurance. AI capabilities have exploded in recent months, with the release of new generative AI tools like ChatGPT. Many industries have been scrambling to see how they can leverage these new tools – the insurance industry is no exception. Generative AI is valuable for insurers due to its ability to summarize information, translate text, and respond to inquiries. Although the technology is still new, potential uses include a streamlined underwriting process, improved fraud detection, and sophisticated chatbots that can help policyholders with questions about their coverage.
- Big data in commercial insurance. Success in the insurance industry depends on accurate underwriting and pricing of risks. The rise of big data and more powerful analytics tools has opened the door to better and faster underwriting. Predictive analytics, in particular, is giving insurers better insight into risk, whereas telematics systems have revolutionized commercial auto insurance and enabled usage-based insurance options for individuals. Insurers can also leverage analytics to fight insurance fraud.
- Online insurance platforms. The digital transformation is changing the way insurance companies and policyholders interact. The rise of online insurance platforms makes communication more convenient and may impact every stage of the insurance process – from the initial application and policy management to claims.
What Does This Mean for Policyholders?
Many of these technological advancements will have a direct impact on the policyholder experience. Furthermore, the current digital revolution isn’t merely about adopting new tools – it represents a fundamental shift in the industry’s approach to insurance and risk management.
As KPMG explains, insurance companies must shift from focusing on products to focusing on consumer needs. Insurance companies are also prioritizing innovation and partnerships with other companies that will help them roll out new services and better serve their customers. This should result in a more customer-centric model of insurance.
The Benefits of Commercial Insurance Technology
Insurance digitization trends are yielding real benefits for risk assessment and policy management. Some of the ways insurance is changing for the better include:
- Proactive risk management. Insurers that leverage predictive analytics to improve their risk assessment and underwriting accuracy can use the same insights to help policyholders. Bain & Company explains that insurers are transitioning to provide prevention as well as protection. This shift will help policyholders avoid losses, which benefits both the policyholders and the insurance companies.
- Personalized service. New digital tools and platforms make it easier than ever for insurance companies to offer a personalized service. For example, insurance companies can leverage AI to provide customized insurance product recommendations to help policyholders fill gaps in their coverage.
- Streamlined underwriting. AI tools expedite the underwriting process, making quote and coverage selection processes faster and easier.
- Superior communication. In the past, if you wanted to speak to your insurance company to report a claim or ask a question about your coverage, you might have had to make a call – and then wait on hold. Technology has provided new options, including chatbots that can handle simple issues instantly and asynchronous messaging that eliminates hold times.
- Reduced fraud. Insurance fraud costs insurance companies billions of dollars, which the companies ultimately pass on to consumers. The Coalition Against Insurance Fraud says insurance fraud costs American consumers at least $308.6 billion every year. New digital tools help insurers identify and reduce fraud, which benefits both the insurance companies and their policyholders.
Leveraging Insurance Industry Innovations
The insurance industry’s digital transformation is rapidly evolving. If your business hasn’t explored the new offerings from its insurance partners recently, you may be missing out.
There are a few ways large businesses can leverage digital insurance tools:
- See what your insurance partners offer now. Since new products and services are continuously introduced, it’s easy to overlook them. Talk to your insurance provider to explore new offerings.
- Take advantage of risk management tools. As insurance companies pivot to prevention, they have become critical risk management partners. See what resources your insurance provider has to help you take control of your risks.
- Review your insurance needs. Insurers companies are launching innovative insurance products that address the needs of their customers. This is a good time to review your coverage for gaps and see what else might be available.
- Discuss your company’s emerging and changing exposures. The insurance digital revolution is still underway, meaning more innovations are coming. If your insurance providers are not fully meeting your needs, this may be a good time to discuss what else they could do for you.
- Incorporate new digital tools into your processes. Insurers are changing their processes; their customers may benefit from doing the same. Consider how you could adapt your internal processes for better safety training, incident documentation, claims monitoring and reporting, cyber security and other objectives.
Are you taking advantage of the insurance industry’s digital revolution? Watkins Insurance Group can help you explore what’s possible.
