10 Factors which will reshape the Insurance Industry in 2021 and Beyond(Front, Middle and Back Office)

Last year and now, the COVID-19 pandemic more than anything has forced disruption in almost every industry hasn’t spared Insurance industry either.

It has certainly triggered a transformation where multiple aspects of Insurers are being re-examined — from product creation, distribution to operations. These changes are underpinned by the need to go remote, digital and contactless.

In my opinion, Insurers will spend the most money and time in 5areas below

1. Product Innovation (Top Pick)
2. IT (Emerging Technologies, Open API architecture and Insurance as a Service)
3. Operations Automation (Key areas like Underwriting, Pricing and Claims will get automated)
4. Data Capture
5. Customer Care ( Human + AI)

Investment into these areas will lead to the below Top 10 Factors

1. Need Based Insurance Products will come up which will be created by the Product Innovation teams basis data collected and actuaries feedback.
2. Engaging Platforms will come up which will keep the loop between customers and Insurance companies open.
3. More investments and collaboration around preventive and healthcare related policies where Insurers will help customers in taking best care of themselves Aand prevent accidents. In my opinion, Insurance companies should move to a whole new offering where in the case of life insurance rather than paying for death of a customer provides best care during the lifetime of the customer (not by paying hospital bills but guiding them of what is best for them).
4. Human + AI agents along with proper UI to explain the Insurance policies customers have taken. Insurance companies should stop hiding behind the black box; they shall come out with the best and clear policies and build trust which they have long lost. Human Agents to help increase the customer experience by explaining the benefits of policies and in case of conflicts solve it. AI chatbots will help settle the claims quickly and also open accounts etc. where human intervention isn’t needed.
5. More Data will be collected through Telematics, GIS, Smart Home Products, IOT etc. to understand the behavior and offer the best products. Data marketplaces will be created and used. Information collected from external sources and devices will be used to proactively assess risk and offer new and innovative products where Users may need it the most.
6. Advanced Machine Learning Algorithms match customers to best priced offers and agents to quickly disburse the policies. Insurers will become as proactive as Credit Card companies.
7. Accelerated and Automated Underwriting with Pay as you Use (We are seeing Pay as you Drive), more use cases of the same will arise but for that quick underwriting would be needed and humans can’t be involved in these use cases as this would increase opex by huge amount. These will be low price, low risk and high volume game. Like every industry, Insurance industry will become a game of speed and agility.
8. Platforms based approach and Insurance as a Service will help Insurers to reach their clients in the most meaning full way possible. There will be a rise in the number of Neo-Distributors and to enable these Neo-Distributors insurers will have to create an API ecosystem internally to offer their services at speed to these Neo-Distributors. Mostly these Neo- Distributors will be customer facing apps.
9. Claims settlement will become completely digital. You wont be required to follow the mail trail and chatbots will make the journey much more easier and personalized. You will be offered Data Vaults within the apps where you can store policies. To improve the customer experience and increase trust, this is another area where Insurers will have to invest a bit more.
10. Better UI with proper explanation of the Insurance policies or renewal. Insurance will become personalized and trust worthy when they will give clear identification of what is covered and why within the policy. Insurance companies have always focused on how to better hide the terms and condition and make sure the claims are never made. Incumbents are already trying to solve this problem by using computer vision and giving customers better understanding of what is covered and when their next payment is due.

There is so much more Insurers will have to do to make sure the Trust, Engagement and Customer Experience increases and for this investment into Emerging Technologies and Product has to increase.