The insurance industry is facing a critical moment. Rising costs, a talent shortage, fluid customer expectations and even regulatory changes have created an inflection point.
While it’s easy to see how these challenges could inspire anxiety, many of us in the insurtech space see an exciting opportunity to transform the industry.
Economic and environmental pinch points have implications for budgets across departments, and tech is no different. But it’s important that insurance leaders lean into this moment by investing in innovation. With all business leaders searching for the most effective uses for artificial intelligence (AI), investing in automation to lay the groundwork for future AI policies is one of the smartest ways to future-proof your operations.
In a recent webinar hosted by Insurance Thought Leadership, and alongside InvoiceCloud, my colleagues dug into the various ways the insurtech industry can meet this moment head-on.
Customer expectations are evolving. Insurance providers must evolve with them.
While there’s still a lingering perception of millennials and other digital natives as adolescents, they now make up a significant percentage of insurance customers. As they’ve become adults, they’ve purchased homes and cars—and the necessary insurance. These are people who came of age when the internet was already ubiquitous as a marketplace, so they have different expectations of services (including insurance) than their older counterparts. Many younger people have become accustomed to flexible and streamlined customer engagement experiences like those they encounter with big e-tailers like Amazon.
Forget mailing a check—they expect to be able to make payments digitally, set and forget AutoPay for recurring bills and resolve any issues on their own time, instantly. Achieving these standards can be challenging for traditional insurance carriers, but it’s increasingly important for those who want to stay competitive.
AI has the potential to surpass even the loftiest customer demands. It can provide personalized experiences, like tailored product recommendations, customized communication and proactive assistance based on an analysis of a customer’s needs. AI can also facilitate predictive analysis based on historical data and customer behavior patterns, allowing it to offer tailored risk mitigation advice and policy adjustments and provide timely alerts and notifications.
Of course, it will take time for the promise of AI to be fully realized. That’s why insurance companies should focus on automation as a stepping stone toward this AI-driven future. Automation can address current consumer demands and pave the way for seamless AI integration later, while improving the experience for both insurers and policyholders in the process. For instance, by automating certain customer touchpoints, insurers can enhance self-service, empowering policyholders to access information, file claims and manage policies independently, even at hours when traditional customer service agents are unlikely to be available.
The webinar highlighted the most common, routine touchpoint between insurers and their customers: the billing and payment process. According to industry insights, 73% of insurance customers prefer digital claim payments over paper checks. Automation can streamline administrative tasks, reduce manual intervention and speed the payment process, ultimately improving policyholder satisfaction and retention. These options help build trust and positive sentiment by matching the demands of today’s younger cohort of policyholders.
See also: How Automation Can Address Today's Growing Underwriting Challenge
True SaaS, digital ecosystems and the opportunity for digital billing
Another topic we touched on was the importance of traditional insurance carriers investing in the software as a service (SaaS) business model.
The main business model of insurance companies is to offer financial support to people when the unexpected happens. That said, insurance leaders would benefit from considering their sector a software as a service (SaaS) business, as well. The average customer’s interaction with an insurance company is through the digital ecosystem that the insurer has created. True SaaS enables insurance companies to deliver modern experiences instantly and ensures consistent updates and system improvements. This technology helps insurers build a reputation for reliability, extend their reach beyond just sales and renewals and adapt to changing customer demographics and demands.
Consider a straight-through processing (STP) experience that enables an application to be processed, evaluated and approved automatically by the insurance company's system. It delights customers when the process is faster and more efficient, reducing waiting times and minimizing the chance of errors, while omnichannel engagement ensures the entire experience is consistent and integrated at every stage, regardless of how one chooses to interact with a carrier. These are the sorts of insurtech innovations that can make a huge difference come what may with AI tomorrow.
See also: Why Hasn't Insurance Automated More?
Effectively investing in AI begins with embracing automation.
AI’s capacity for collecting and analyzing data in an instant could prove revolutionary and help bring the insurance industry into the future. For example, AI could analyze climate data, geography, temperature and historical weather trends to predict weather patterns, enabling carriers to provide customized solutions such as three-month flood insurance policies ahead of shifting hurricane seasons.
But the truth is the AI-driven future is still some ways off, particularly when it comes to insurance and insurtech. This doesn’t mean leaders in the space should ignore AI—to the contrary, it’s worth taking the time to create a solid foundation for integrating AI technologies in the long run, by embracing and investing in automation now.
