As the insurance industry innovates and transforms faster than ever before, market leaders as well as new entrants are looking for new avenues to improve their customer footprint. Many industry players have turned to technology to streamline their processes and improve their return on investment.
The global insurtech market was valued at $ 9,415.28 million in 2020 and is expected to reach $ 158,994.52 million by 2030, growing at a CAGR of 32.7% from 2021 to 2030. The changes in customer preferences have led to new trends in the insurance industry.
Let’s take a look at some of the top trends that will continue to disrupt this industry.
Microservices architecture for applications
Millennials make up around 50% of India’s workforce and this generation rejects traditional insurance products and services. Legacy applications based on a monolithic architecture cannot keep up with changing consumer needs. Therefore, the insurance industry needs to rethink its offerings and business model to support this change. One way to do this is to migrate to a cloud-based microservices platform. When insurance applications are built on a microservices architecture, they can be easily scaled according to the market trend, without incurring additional cost.
This gives insurers the flexibility to support a myriad of ways millennials want to select and purchase insurance. The microservices architecture also leaves room for creativity with a user-friendly interface that makes it easy to seamlessly deliver insurance products to any device.
Cloud insurance only
The shift from traditional insurance to digital insurance has enabled insurers to accelerate business growth and improve the customer experience. Insurers around the world are under constant pressure to innovate and evolve to keep up with market disruptors. Cloud computing solutions, specially designed for the insurance industry, can help insurers achieve greater IT agility and shorter project implementation time. It also allows them to quickly test and deploy new technologies. This agility and speed allow them to offer their service offers much faster than before.
Hyper-personalization using new-age technologies
A recent Accenture study found that 75% of customers are more likely to buy from an organization that offers personalized services based on their individual preferences, tastes and needs. Therefore, it has become imperative for the insurance industry to incorporate the concept of personalization into their offerings. Insurers must design their offerings to meet the needs of individual consumers, and clients must pay a premium only for the risk against which they are insuring.
People want the best coverage at the lowest price. Therefore, the latest trend is to incorporate new age technologies such as AI and Big Data to collect and analyze data in order to segregate customers based on risk and deliver personalized premium plans.
Decentralized insurance using distributed ledger technology
Decentralized insurance is an insurtech trend that is making insurance products available on a decentralized public blockchain network. This allows customers to buy and use insurance products without going through intermediaries such as agents or brokerage houses.
Blockchain and smart contracts optimize the efficiency, security and transparency of the insurance industry. Distributed Ledger (DLT) technology has beneficial applications to streamline the processing of insurance claims, strengthen cybersecurity protocols, and even speed up payment terms. The ability of blockchain to build trust in a trustless ecosystem through the use of public registries and strong cybersecurity protocols has positive implications for the future growth of the insurance industry.
IoT in insurance
The traditional insurance claims process has remained the same for decades, and it’s not right for clients. Insurance claims that take days or weeks to process can be really overwhelming. Modern customers use technology in their daily lives and expect insurers to do the same.
IoT can empower insurers to act faster and make powerful data-driven decisions. Insurers will no longer have to go through the paperwork and instead can follow the claims process more efficiently. Instead of filling out countless forms, customers can now submit complaints through mobile apps by taking a few photos. Connected devices such as biometric and environmental sensors make it easier to calculate risks and adjust policies as circumstances change.
No one foresaw the unprecedented changes the pandemic has brought about. Suddenly, digital transformation and virtual interaction have become part of our daily life. Every industry has had to adapt to these changes and the insurance industry was no exception. The insurance industry was already undergoing transformation due to changing customer needs, but now that pace has accelerated by leaps and bounds. As a result, insurers are constantly innovating and integrating new-age technologies into their offers to make them more attractive. It would be interesting to see how much the industry transforms due to these new conditions and trends.
(Neelesh Kripalani is CTO, Clover Infotech)
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Posted on: Monday December 27th, 2021 9:28 PM IST