For almost a century, no major changes occurred within the insurance industry. However, over the last few years, fierce changes have been hitting the industry driven by regulatory and technology pressures. Furthermore, the industry is facing numerous challenges that would impact heavily the very concept of insuring. Customer expectations are changing at a speed almost impossible to keep up with in the current organization set-up. Driven by a new generation of consumers, rapidly-maturing technologies, and non-traditional competitors, the insurance industry is experiencing a fundamental change after decades of relative stability. The nature of these changes and insurers’ slow reaction time is now quickly eroding their core competitive advantages leading to an important strategic challenge to be addressed –by InsurTech.
InsurTech can be defined as a set of innovative business models and platforms that create a new customer experience by applying the latest technologies and solutions in the insurance sector. Using new technologies like Artificial Intelligence (AI), the Internet of Things (IoT), Blockchain, social media and more, backed by proven methodologies such as Agile and The Lean, InsurTechs enable the creation of new business models and technologies that re-invent key elements of financial services and undermine the traditional insurance business models.
Synechron’s InsurTech Accelerators, designed in our FinLabs, utilize emerging technologies like the Internet of Things (IoT), Mobile, Customer Experience Design and other approaches and help to solve the top challenges facing the insurance industry today.
Millennials and Digital Natives Setting the Stage for Change
Millennials are increasingly changing their perception on customer engagement, loyalty, and communication and are pushing these trends to other generations. Research shows that Millennials, being early adaptors of trends, are not loyal to insurance providers. They are more open to alternatives and welcome disruptive technologies. The generation after the Millennials, called Digital Natives, will be even more tech savvy and will demand 24/7 and 365 assistance.
Maturing New Technologies and Explosion of Data
New technologies are rapidly maturing and constantly creating new and unexpected customer interactions and platforms. IoT will transform risk monitoring, loss detection and incident prevention, leading to new usage-based models of pricing and premium determination. Advances in Artificial Intelligence and specifically Deep Learning, and Natural Language understanding are offering never seen, data analysis capabilities. And Blockchain is now acknowledged for its potential to deliver enormous value. When combined, the impact of these technologies will only grow and keep pushing innovation.
Non-traditional Competitors Entering the Industry
Non-traditional competitors are entering the market quickly, focusing on customer engagement as a growth strategy. For example, Google is expanding its presence in the insurance industry through investments in new InsurTech concepts. While these new players might struggle initially with complex regulation, they do have the capital reserves to pose a serious threat for insurers.
Create Customer-centric Offerings
Customer ownership and direct access to end-customers is key to tailoring targeted customer experiences. This is realized through personalized offerings by extracting customer needs based on product usage instead of generic criteria such as age, zip code and historic records. Creating customer-centric offerings requires bundling different products and services based on customer usage through the entire customer journey.
Provide End-to-end digital services
A fundamental process redesign from a customer-centricity perspective is required to offer end-to-end digital services. To do so, an integral view on all front, mid, back office activities to eliminate client bottlenecks and process waste is critical. Key to realize this will be the gradual automation of knowledge to perform complex insurance activities through the use of smart technologies. This will result in seamless Omni-channel experiences and maximum self-service.
Monetize Customer Data
Through smart sensors, tremendous amounts of additional data on top of already existing customer and claims data are received. Insurers can continuously collect this data, analyze it and develop new propositions around smart usage insights. The data can also be used for internal purposes such as risk management, price optimization and fraud analytics to boost data driven decision-making.
Synechron applies its Digital, Business Consulting and Technology expertise to deliver InsurTech solutions that solve real-world operational problems. Synechron's InsurTech Accelerators are based on the following cutting-edge techniques:
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Robotic Process Automation
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Customer Experience Design
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