Re/insurers are owning the InsurTech wave with a sustained focus on modernisation as newer technologies drive efficiencies and strategic advantages and the market is said to be heading for an inflection point as a result.
Most firms studied in a recent A.M. Best survey revealed plans underway to upgrade legacy underwriting and claims systems, business processing systems and website functionality.
According to the survey, companies are focused on four primary areas they consider to be most in need of technological improvement: customer experience, legacy administrative and claim systems, data aggregation and mining, and underwriting systems.
InsurTech has opened up new possibilities for firms to enhance actuarial analytics with computing to influence key metrics, thus partnerships between InsurTech start-ups and insurers, could lead to an “inflection point that could change the typical insurance model,” said Jason Hopper, associate director, of Industry Research and Analytics.
Adding, “Insurtech companies will find deploying these capabilities difficult as they lack scale, while insurers may lack the depth about the power of computing and machine-learning techniques.”
According to a Harvard Business Review report cited by A.M. Best, insurance agents who embraced digital platforms cut costs by 65% and turnaround time on key insurance processes by 90%.
Advanced technologies such as artificial intelligence could boost sales by shortening application, underwriting, and policy issue processes, and predictive analytics could lower expenses through the implementation of straight-through processing, improved claims management, and optimization of auditing procedures, loss control, and billing.
Sridhar Manyem, director, Industry Research and Analytics, commented; “Industry CEOs can no longer relegate technology to their IT divisions. They need to have an in-depth understanding of technological concepts and how they relate to specific business operations and strategy, given the potential for industry disruption. If done properly, technological improvements and increased automation can increase efficiency and offer better insights.”
However, insurers which have grown through acquisitions face additional challenges to integrating and updating processes, A.M. Best said, explaining that like enterprise risk management, technological advancements have to flow throughout a company culture.
The rating agency further highlighted that insurers need to provide a differentiated, enhanced customer experience to see improved net promoter scores that translate into higher retention, If not, customer lifetime value metrics could deteriorate due to shortened lifetimes.