Shaping the Insurance Industry in 2024: Part One – Evolving Technology Trends for Companies
Digital transformation has improved procedures from quotation through coverage administration in the property and casualty insurance industry. With an omnichannel approach to customer service and other aspects of business, this digital revolution is accelerating as we look ahead to 2024.
In fact, in order to maintain their competitiveness, insurers of all sizes are using adaptable, sustainable solutions. These five cutting-edge technological trends, which we’ll discuss in Part One, are now strategic necessities for insurers that want to get the upper hand.
1. Anticipatory Data Analysis
Predictive analytics is widely used by insurers to acquire a variety of data for client behavior analysis and forecasting. There are new uses for it, though, which can improve the accuracy of the data.
In 2023 and 2024, insurance companies can use predictive analytics for:
- Risk selection and pricing
- Recognizing customers who might cancel
- Identifying fraud risk
- Classifying claims
- Detecting erroneous claims
- Recognizing trends
Numerous Property and Casualty insurance companies have seen increased accuracy and increased revenue after adopting predictive modeling methodologies. According to research done by McKinsey & Company in 2023, the top four performers in EMEA in 2022 had an operating profit increase of 10–25% because of the use of predictive analytics.
Additionally, it is anticipated that this influence would increase during the next two years. It’s important to note that numerous businesses believe predictive analytics will increase their operating earnings by over 25%.
2. Artificial Intelligence (AI)
Artificial intelligence (AI) is becoming widely used, and there are now many AI-capable devices in households all over the world. The use of voice assistant technology in the United States is anticipated to grow steadily over the coming years, according to a Statista estimate. By 2026, it’s expected that the 142 million people who signed up in 2022 will have increased to more than 157 million members. So how can the insurance sector take advantage of this pervasive and available technology?
Customers are particularly on the hunt for tailored experiences when purchasing something as important as P&C insurance. AI allows insurers the ability to create these unique experiences so they can meet the quick-paced demands of modern customers. The key lies in harnessing AI’s abilities to leverage the enormous amounts of consumer data that are already available to create personalized experiences based on a person’s behavior and habits.
In addition, insurers can use AI to speed up the underwriting process and reduce the time it takes to process claims. Additionally, AI helps insurers to access data more quickly, and doing away with human intervention may result in faster, more accurate reporting.
According to a McKinsey & Company analysis, AI might transform the insurance sector by moving it from a “detect and repair” approach to one of “predict and prevent,” which would alter how brokers, customers, and other stakeholders operate. The outcome? enhanced customer experience, better decision-making, increased productivity, and cost savings.
3. Training Machines to Learn
The incorporation of machine learning operations will determine the insurance technology trends of 2023. To maximize the benefits of data-driven analytical tactics, this will require cross-departmental cooperation. The deployment and administration of machine learning (ML) requires a number of different processes and practices, according to Deloitte Insights. The potential of AI may be difficult for organizations to realize without adequate MLOps skills.
Not only can machine learning make claims processing better, but it can also be automated. Digital files that are accessed via the cloud can be examined using pre-programmed algorithms, enhancing processing efficiency. This automated evaluation can affect more than just claims; it can also be applied to risk analysis and policy management.
You don’t want to fall behind when it comes to embracing machine learning skills. All indications are that machine learning will spread throughout the insurance industry. According to a SMA poll, 66% of P&C insurance executives think machine learning will have a significant influence on commercial lines of business while 53% of executives think it would have a significant impact on personal lines.
4. Connecting the World: The Internet of Things (IoT)
The Internet of Things (IoT) can automate much of this data sharing because most consumers are eager to contribute extra personal information if it means getting a better deal on their insurance coverage. When calculating rates, reducing risk, and perhaps preventing losses altogether, insurers can leverage data from Internet of Things (IoT) devices like the numerous smart home components, car sensors, and wearable technology.
P&C insurers simply cannot afford to wait to take use of IoT capabilities, as predictions indicate that the market for IoT insurance will grow to be quite large by 2029. IoT will support other insurance technologies with first-hand data, increasing the accuracy of risk assessment, allowing insureds more power to directly affect the pricing of their policies, and offering insurers the potential to increase accuracy and revenues.
5. The Intersection of Insurance and Technology
The insurtech industry, or more precisely insurtech businesses, makes use of the most recent insurance technologies to save costs for both consumers and insurers, boost operational effectiveness, and enhance the entire customer experience. Insurtech advances the capabilities of existing digital insurance services, which may sound similar to those that have been in use for some time.
The third quarter of 2022 will see the first growth in P&C insurtech funding since the second quarter of 2021, according to a report by Gallagher Re. Over 75% of the entire insurtech investment for Q3 2022 came from the $1.8 billion in funding, which represented a growth of 20% quarter over quarter.
Since 2012, the insurtech market has brought in over $50 billion, reaching its peak in 2021 before tumbling in 2022. The financing split favors P&C insurtechs over their peers in the life, accident, and health sectors by a 60-40 margin.
Look for more ways that technology trends are changing the insurance industry in 2023 beyond in Part Two, coming soon.