The insurance industry has long been known for its stability and predictability, but the rise of new technologies and a more complex operating environment is forcing the industry to change rapidly. As the sector is facing multiple challenges, including changing customer expectations, increasing competition, and the need to modernise legacy systems, we brought together leaders in insurance to discuss how to embrace change and succeed in the new technological landscape. A huge thanks to the experts from the likes of Amlin, Aviva, Bupa and Swiss Re for the insightful discussion. This blog summarises some the main themes of the evening.
Navigating the future landscape
The insurance industry has always been a lynchpin of global commerce, providing essential risk management services to individuals and businesses around the world. In recent years, however, the industry has been disrupted by a wave of new technologies, including artificial intelligence, blockchain, and the internet of things. These new technologies are transforming the way insurers do business, but they are also posing significant challenges for industry leaders.
A summary of the key trends shaping the insurance sector
There are several key trends shaping the insurance industry today. The first is the increasing focus on customer experience. In an era of instant gratification, customers expect personalised, on-demand service from their insurance providers. Insurers must adapt to meet these changing expectations, leveraging new technologies to provide faster, more convenient service.
The second trend is the rise of InsurTech. Startups and technology companies are leveraging new technologies to disrupt traditional insurance models, offering new and integrated products and services that are faster, cheaper, and more flexible than traditional insurance policies. This trend is driving competition in the industry, forcing traditional insurers to modernise their offerings or risk being left behind.
The third trend is the emergence of new risks. As technology continues to evolve, so too is the nature of risk; cyberattacks and data breaches are all too common. Insurers must adapt and be able to offer specialised coverage and services to protect their customers.
While the rise of new technologies is creating opportunities for insurers, it is also posing significant challenges. One of the biggest challenges facing the industry is the need to modernise legacy systems. It’s no secret that the industry has been slower to adopt new technologies compared to other industries, and there are several reasons why.
Many insurance companies have been operating for decades, some for centuries, and their IT infrastructure has grown increasingly complex over time. Replacing or updating legacy systems is a significant undertaking, and it’s not uncommon for such efforts to result in costly failures. As a result, many insurance companies have been hesitant to invest in new technology, choosing instead to stick with what has worked in the past. Change, however, is essential for insurers to remain competitive.
Regulatory red tape
Another factor is the highly regulated nature of the insurance industry. Regulatory requirements can make it difficult for insurance companies to adopt new technologies, especially when it comes to data privacy and security. In some cases, regulatory restrictions have prevented insurers from fully embracing new technologies and the benefits they could unlock for their customers.
Despite these challenges, it’s clear that technology has the potential to revolutionise the insurance industry. From AI helping underwriting to be more granular and sophisticated to blockchain-based smart contracts streamline processing, there are many exciting possibilities on the horizon. However, in order to take advantage of these, insurers must be willing to take risks and invest in new technology, accepting the short-term disruption and expense that comes with it.
Putting CX and data at the heart of business
Despite the ever-changing tech landscape, there are a few things that remain constant: the importance of protecting people and their assets, putting customer experience at the heart of strategies, and adapting to changing needs of customers.
As much as insurance is about protecting people, it’s also about managing risk. And in order to do that effectively, insurance companies must constantly adapt to changing circumstances. For example, advances in technology have enabled insurers to collect more data than ever before, which can be used to improve risk assessment and pricing. At the same time, changes in consumer behaviour, such as the rise of sharing economy platforms like Airbnb and Uber, have created new risks that insurers must be able to assess and price appropriately.
All of this change can be challenging, both for insurers and for the people who rely on them. But it’s also an opportunity to innovate and find new ways to provide value to customers. For example, some insurers are experimenting with usage-based insurance models, where premiums are based on how often and how well a customer drives. This can help make insurance more affordable for safe drivers while also incentivising better driving habits.
Learn from other industries
Insurance companies can learn from other industries, such as pharma and banking, where touchpoints with customers are more frequent. Insurance companies need to build stronger customer relationships by moving away from just the annual cycle of communication. They need to find ways to interact more frequently with customers to drive faster change and innovation. They can leverage these industries’ best practices and incentivise their teams to innovate.
The quest for talent
Another challenge facing the industry is the need to attract and retain top talent. As the industry becomes more technology-driven, it is essential for insurers to have the right people in place to leverage these new technologies effectively. However, competition for talent is fierce, and many insurers are struggling to find and retain the skilled professionals they need to succeed in the new technological landscape.
To succeed in the new digital economy, insurers must be willing to embrace change. The insurance industry needs to become more agile and flexible in order to keep up with changing customer needs and expectations. Those that are able to adapt quickly to new technologies, modernise legacy systems, and rethink traditional business models will be better positioned to compete in an increasingly crowded market.
Insurers must also be willing to invest in their people, providing training and development opportunities to help them acquire the skills they need to succeed in the new technological landscape.
While the road ahead may be challenging, the rewards for those who are able to navigate it successfully could be substantial.
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