What does the future hold for insurance industries in the context of technological advancements? As of now, it seems that all the technologies and systems being used till date are adequate, and new ones probably won't be needed. Nonetheless, it's a digital world, and it's never static. As a result, it is characterised by progressive developments and high-tech advancements, emerging 10 years down the line.
Among the advanced technologies, artificial intelligence has already dominated most industries by making the workforce shift from manual to automated systems. And with the increasing integration of such high-tech systems in the insurance industry, insurers will have to keep on with the changing business scenario and landscape.
Insurance companies must look into the industry's future and understand how forward-thinking technologies will impact policy distribution, premium pricing, claim processing, and underwriting. Gaining this understanding will enable them to work according to the latest technologies to stay at the top of the insurance game.
With the turn of events brought by the pandemic in the work front, insurance companies have been compelled to switch to dynamic technologies and rely on automation. PwC reports that 82% of Indian insurance companies have adopted artificial intelligence after the pandemic.
So, here's a look into how the future technological advancements will impact the insurance industry in the next 10-years.
A study estimated 47% of buyers rely on chatbots to buy any product. And insurance policies are no exception to it. Thus, chatbots play a significant role in customer acquisition and after-sales service. Besides, AI-powered chatbots can be very helpful in managing user operations like goal setting and claim filing, enabling insurers to address customer queries more flawlessly.
Thus, chatbots incorporated by insurance companies will optimise customer experience and reduce the workload to a large extent. Using a rich database, these AI-driven systems will strive to enlighten customers about various things such as policy suggestions, policy comparison, and process flow.
The insurance sphere is stocked with several administrative tasks, which are repetitive. But unfortunately, most insurance companies still stick to manual labour for these tasks. So, this is exactly where RPA (Robotic Process Automation) can come into action.
It will enable insurers to process data from many systems more accurately and quickly. Also, it will eliminate errors in data processing, thereby reducing operational risks. RPA's effective implementation will minimise manual tasks and increase the workforce's efficiency.
Studies suggest that predictive analytics reduced underwriting costs and increased the profits of more than two-thirds of insurance companies in the USA. Hence, it is expected by 10 years; predictive analytics will even dominate the Indian insurance industry.
Predictive analytics collects data from various internal and external sources such as social media, telematics, and agent and customer interactions for enhanced management of operations like underwriting, claims processing, etc. Insurers can even use this data to identify concealed clues and predict fraud.
Technological advancements in Artificial Intelligence and Machine Learning renders computers a higher memory capacity, global connectivity, enhanced computing power, and more exclusive features.
Computers and software systems operated on AI-ML algorithms can process data better and faster than humans, which can be further used for fraud prediction, underwriting, claims processing, and customer experience. So, instead of detecting and repairing an issue, AI and ML enable insurers to predict and prevent the problem, which fosters better risk management.
IoT refers to the abbreviation of the technology, Internet of Things, which includes a web of smart devices connected to the internet. There are currently 26 billion networked devices, and by 2025, it is expected to be 75 billion. Hence, you can imagine how strongly IoT will influence every industry in the upcoming days, including the insurance sector.
IoT will give insurers access to real-time data rather than historical data or information obtained from uncertain external sources. Thus, insurers can identify risks using this data and prevent losses. Also, they can enhance internal processes and provide a better customer experience through customised products.
While the future is unseen, technological advancements are sure to keep emerging every year. And for insurance businesses to keep progressing, utilising these technologies is necessary to streamline their operations and leverage customer experience. So, instead of viewing technological developments as a complexity, insurers must start perceiving them as an advantage.