The insurance companies have faced several challenges in the last 2 years, including the global pandemic, severe workload, a shortage of highly skilled people, continuously changing circumstances, and a global trend toward remote work. But according to the most recent statistics, Insurtech will begin to alter through innovation in 2022. What’s going on right now, and what can we expect in the future?
Digital transformation of Insurtech
Insurtech is a term that combines the words insurance with technology – many technologies have already been shown to be effective in this market. But during the pandemic, according to FCA, people were dissatisfied by insurance companies’ poor support. Nowadays people want to pay for genuine assistance that can be obtained at any facility, which is why service-based insurance is in high demand. As a result, insurers are attempting to become more customer-centric.
Even though it’s a slow-moving sector crammed with outdated, massive systems, expectations are rising. Decision-makers usually have a high-risk aversion when it comes to innovations. What has changed is that financial success, sustainability, and developing new business models while maintaining a good profit margin, have all become even more important.
Like any crisis, many new companies are forming and some of them will change the insurance market in the future. According to new research, there are up to 3,475 Insurtech firms throughout the world, with over 1,500 of them launching in the previous five years. It’s undeniable that the Insurtech sector is set to expand much more. To keep up with market demands, startups try to advance digital transformation by using AI to automate, machine learning to make predictions, blockchain to protect data, IoT to make devices friendly, or by increasing emphasis on virtual customer experiences. And insurers searching for a competitive advantage should consider adopting emerging new technologies trends.
Automation and machine learning
Artificial intelligence has grown in popularity in recent years. According to Deloitte Digital research, there has been a 4.6x increase of AI deals from 2012 to 2016 in the insurance business. Because manual processing takes a long time, machine learning and artificial intelligence come with help. Insurers and brokers may use AI software to streamline various areas of the business such as underwriting, or risk assessment. It not only improves the efficiency or accuracy but also the customer experience.
When it comes to using machine learning, it can not only simplify processing but also automate it. We may expect that machine learning in digital products will improve the industry operations. Algorithms will be used more and more frequently to value products, anticipate damage, and analyze resistance factors among other things.
Many people only think of blockchain technology when they think about cryptocurrency. While these are the most common use cases, it also has the potential to revolutionize the insurance industry. This technology might be essential in terms of security. Incorporating it into encryption methods will be far more secure against cyber threats. Moreover, with its blockchain architecture, the Insurtech market is rediscovering social insurance. It was previously available in the P2P (peer-to-peer) model, but with help of blockchain, it has substantially improved the security of this solution. Although blockchain is still in the beginning in this sector, insurers using it would be well ahead of the curve.
Internet of Things (IoT)
The term IoT refers to the many physical devices that are connected to the internet and gather data in real-time. Consumers, as well as insurers, benefit from IoT integration. It aids in the simplification and acceleration of the underwriting, lowering costs and increasing revenue. In fact, it’s been predicted by McKinsey that automation may cut the cost of claims process up to 30%.
The majority of consumers are ready to provide additional personal information in exchange for lower insurance premiums, and the IoT can automate much of this data sharing. Insurers may leverage data from devices like intelligent homes or smartwatches to minimize risk, and perhaps even prevent losses. As the market for IoT-driven analytics increases, we foresee a lot more innovation in this field. You can read more about successful IoT implementations in our blog post on the best Insurtech apps in 2021.
Gamification is proving to be an intriguing and viable method that will likely gain in popularity in the next few years. It entails enhancing the digital consumer experience by including traditional game aspects such as collecting rewards, bonuses, and clearing levels, among others.
This trend has also shown potential in terms of enhancing consumer engagement and loyalty. For example, one of our clients was Steppie – an insurance start-up based in Warsaw, which was recognized as one of the top fintech start-ups in 2020 by Business Insider. With introduced gamification elements, it draws users’ attention to a healthy lifestyle. Users are rewarded with points for their everyday activities and use the Steppie app often to get more rewards. The application uses a combination of technology and science to benefit both parties: insurer and customer. For more information, check out the case study.
Virtual Insurance Experiences
When remote working was quickly implemented in 2020 and 2021, many of us saw the virtualization of workplaces. This was simply a crisis-driven acceleration of an already occurring trend. But we’ll become more familiar with the permanent digital realms that exist alongside the actual world. While many of us have had some experience with relatively immersive virtual worlds via headsets, dozens of new technologies on the horizon may soon vastly improve the experience by providing tactile sensation and even smells. According to Accenture Research, there will be a greater emphasis on virtual diagnostics and customer service in 2021 and beyond. Virtualization has been already used in healthcare applications development. Insurers could reinvent the whole customer journey using the tools available in a digital context.
Keep up with the latest Insurtech trends
Taking a broad stroke, it’s clear that the insurance industry will never be the same as it was before the pandemic. These trends developments have the potential to significantly alter some of the basic inputs and key functions of insurance products. The fundamental changes are now taking place. A tech-focused attitude will keep you on unstoppable growth. At Applover, we love realizing ideas for new apps, and the more innovative they are, the more fun we have! If you want to achieve a one-of-a-kind experience for the Insurtech app in 2022 and beyond, get in touch with us!