How Insurers can Bet Big in a Post-Pandemic World?

Customers expect simple, self-service applications that give access to information 24/7 anywhere. So how do carriers measure up to the challenges?

Seasoned agents! They have been the core strengths of insurance carriers. And they were the ones who lost direct access to the customers, thanks to the pandemic. In 2022, both pandemic and digital transformation posed significant challenges to the insurance sector.

According to Worldometers, the total number of Covid deaths as of July 27, 2022, is 1,052,935. The sudden spurt in cases increased claims requests. An example of this is the life insurance policy settlement of more than $90 billion in 2020, showing a 15.4% increase[1]. When agents lost direct contact with the customers, the insured had to reach the customer service online, creating a demand for digital acceleration.

The challenges before insurance carriers are:

·??????Changing consumer perception like synchronizing with millennials and millennials.

·??????Huge claims in the context of a pandemic induced compensations.

·??????Increased ransomware threats to insurance due to the rise in internet traffic.

·??????Legacy infrastructure restricts the speed of processing.

·??????Demand for improved customer experience due to massive processing requirements.

·??????Direct access to services on mobile and reduced dependence on agents.

The impact

The millennial habits like using online research and social media interactions to evaluate financial products forced the industry to change its approach toward customers. Surveys found that 34% of Americans seek reviews and recommendations before buying an insurance product. Of that, more than half are millennials (54%)[2]. The shift in consumer preferences made the insurance industry alter products and platforms and reach out to millennials and Gen-Z with digital marketing, personalized messaging, and self-service online[3].?

Pandemics can happen again. Similarly, WFH is likely to continue due to factors like great resignation and competitive policies firms offer to attract the best talent with hybrid or WFH offers. The same phenomenon applies to insurance firms also. For example, during the pandemic, there was a greater urgency to provide relief to the customers.

1. Bet big with a seamless claims experience

Data analytics have tools like performance analytics and reporting that can evaluate the productivity of the claims-servicing team based on cases handled per week. Similarly, it also can assess the performance of the customer service team based on the incidents successfully closed in a day.

2. Bet big with cloud services

Customers look for continuous improvement in processing. Customers demand claims processing late at night on their mobile devices. Insurance on the cloud helps carriers in underwriting, processing claims, and fraud prevention, ultimately increasing the insurer's credibility. Technologies like A.I.A.I., ML, chatbox, automation, and analytics began to help claims processing like never before.

The next important step is collating data from external data sources and using new technology like Blockchain.[4]

3. Bet big on SaaS

While building an end-to-end, software-as-a-service (SaaS) insurance solution helps insurers launch in new markets, onboard new partners, and improve customer experience. It offers solutions to enhance claims, policies, distribution, workflows, CRM, and more. In addition, configurable SaaS technology helps consolidate siloed claims and servicing systems and reduce manual workloads and workarounds to create strong digital foundations for digital transformation. As a result, SaaS can decrease 50% in time to market, 40% rise in revenue, and a 50% boost in customer satisfaction. ?

4. Betting big on predictive analytics

Virus fears brought $3.3 trillion in life insurance coverage in 2021, adding around 43.1 million policies bringing insurance coverage to $20.4 trillion in the U.SU.S. As the stage is set for more variants and resultant health issues, insurance carriers need to develop sophisticated predictive models to determine risks. They do not need to rely on the agent's intuition or analysis to fix the premium[5].

5. Bet big on dynamic pricing

Insurers can improve customer experience through dynamic pricing by leveraging IoT sensor data to change prices individually. IoT sensor data also helps implement microinsurance policies that are more dynamic and individualized. As a result, insurers can explore more opportunities on their product development side.[6]

6. Bet big on automation

As the insurance sector faced restricted movements during the pandemic, they faced delays in processing. Delays in claims processing can lead to loss of trust, ratings, etc. If the carrier still uses legacy infrastructure with physical processes, handling the mass volume of customer requests will be challenging. The solution for this is digitization.

Many traditional insurance carriers still have legacy tech that retards their progress. These outdated systems and processes could lead to unplanned outages, slower development cycles, slower product delivery times, and higher costs. Besides, this also restricts the developers from deploying new code quickly. The problem identified here is outdated applications, which are not designed for automation testing. The key takeaway is that insurers need to do away with legacy systems to enrich customer experience.

7. Betting big on Telematics

Statistics tell us that 140 million people worldwide are expected to subscribe to Telematics services by 2023. This includes in-car applications that track driving behaviors or personal fitness trackers that gather health-related data[7].??

8. Bet big on cybersecurity

Ransomware attacks continued ravaging the bottom lines of their victims and insurance carriers. Insurers lost $590 million in ransom payments in 2021 instead of $416 million in all of 2020. Insurers should have enough resources for claims, certainly not for ransom. Moreover, they should have robust cyber security to be in the market.

Insurance carriers need to continuously explore relevant technologies. They need to choose competitive managed services/managed cybersecurity services to address various challenges in the wake of changing consumer perception, digital transformation, process automation, dynamic pricing, risk prediction, and ransomware threats. Yeah, that is the way forward.

By SBase Research Team

References

[1] Chris Morris (2021, December 9). Life insurance payouts see the highest growth in over 100 years. Fortune. Retrieved from https://fortune.com/2021/12/09/life-insurance-payouts-2020-record-high-covid/

[2] AAN. (2018). Over 50% of millennials use social media to vet insurance agents. Asia Advisers Network. https://www.asiaadvisersnetwork.com/Article?aid=42303

[3] Gary Shaw. (2021). Midyear 2021 U.S.U.S. insurance outlook: Most carriers primed for growth as the economy rebounds. Deloitte. https://www2.deloitte.com/us/en/insights/industry/financial-services/impact-of-pandemic-insurance-industry.html

[4] Fintech Global (2022, March 18). Why improving claims experiences could mean more business for insurers. Retrieved from https://fintech.global/globalinsurtechsummit/bostons-new-hub-massrobotics-is-like-a-wework-for-robotics-startups-2-2-2-2-2-2/

[5] ibid

[6] Fintech Global (2022). How Cloud Insurance helps insurers in "our chaotic and exciting world." Global Outreach Summit. Retrieved from https://fintech.global/globalinsurtechsummit/bostons-new-hub-massrobotics-is-like-a-wework-for-robotics-startups-2-2-2-2/

[7] Gijsbert Cox (2022, January 10). 5 Technology Trends Insurance Companies Should Watch for in 2022. Appian. https://appian.com/blog/2022/5-technology-trends-insurance-companies-should-watch-for-in-2022.html