Technology and socioeconomic conditions are changing the way businesses operate across all sectors. The financial services sector, which was trapped in outdated product development and delivery models, is experiencing major disruption due to the impact of technology. Today, innovation is the driving force in the financial sector, especially insurance, and things are changing at a rapid pace. All processes are being reassessed and optimized for better results. Right from creating target market segments, underwriting, getting the policyholder on board, managing risks, servicing requests, and processing claims, everything is undergoing a change. This has created an environment of new solutions and focus for this industry.
Today, we will talk about some insurance market trends that will shape the next decade:
While this decade can be attributed to internal changes in the insurance sector, the next decade will undeniably focus on customer satisfaction and experience. As insurers are streamlining and optimizing their processes, they are also realizing the importance of customer-centricity. Hence, we have already started seeing the sector make giant strides towards personalizing processes by using data on customer behaviour gathered from their digital touchpoints. Insurance companies are also leveraging the internet to settle claims online while creating highly customized products.
Over the next decade, we can expect this to grow further and see some positive changes where insurance companies start looking at their customers for their unique traits as opposed to the traditional market segment approach. Insurers will leverage artificial intelligence, spatial mapping technology, and telematics, etc. to create risk profiles that are customer-specific. Hence, we can expect customer-focused processes that can lead to personalized products and solutions.
Insurance will delve into new and untapped markets
India has a huge potential for insurance. In fact, around 50% of the country’s population still doesn’t have health insurance. While these numbers might have changed after the coronavirus pandemic, there is still a large market waiting to be tapped. Earlier, reaching these untapped markets was difficult. However, with mobile phones making technology available in the remotest corners of our country, we can expect to see an increase in the number of people with health insurance policies and many untapped markets being explored by insurers.
India has medical inflation of around 18%. Hence, the cost of a specific medical treatment nearly doubles once every few years.This is an opportunity for insurers to help people while increasing their presence in the country.
Digitization of process
While major insurance companies like Tata AIG have already started using digitization to improve operations and enhance customer satisfaction, we can expect these initiatives to increase and generate results over the next decade. The banking sector has set benchmarks displaying how much companies from the financial sector can benefit from leveraging technology.
The insurance sector can learn a lot from banking companies. Over the next decade, we can expect paper-based processes to be replaced with digital processes that optimize performance and customer experience. It will also help in improving turnaround times and resolving issues speedily.
The next decade will also see artificial intelligence and machine learning help insurers make all processes more efficient. These technologies will also help them solve challenges that were present in traditional processes. These technologies are based onlearning from the data already received by the system. Hence, as time progresses, the outcome will get better. Hence, over the next decade, we can expect these technologies to provide some headway into improving the processes.
Health insurance in India is over two decades old. Hence, insurers have a wealth of information in the form of data sitting idly on their computers. Over the next decade, we can hope to see insurers using this data well and come up with some analytics-driven processes and products.
Blockchain technology is the latest development in technological tools that can enhance the security of a database and create a permanent, verifiable record. While blockchain is associated with cryptocurrencies, the technology can immensely benefit the insurance sector too, especially in third-party payments, security, and service processes. Blockchain creates transparency and accountability in the system too.
In the insurance sector, customer needs are rapidly evolving.InsureTech or technology in the insurance sector is evolving to build systems and processes that are more resilient and meet the evolving needs of consumers. Over the next decade, technology is expected to be the primary driver of business and customer experience in this sector. Also, technological tools will help insurers create products and processes to make insurance easy and surpass customer’s expectations.
While technologies like AI & ML and blockchain might take time before they make an impact, insurers will leverage other technologies to offer better services to their customers. In India, health insurance is expected to increase its presence and make processes more customer-friendly.