How insurers embracing innovation in ‘digital-first’ world amid pandemic

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Global investors are now pouring millions of dollars, hoping to get value for their investments as InsurTech grows rapidly.

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The rise of the next-gen customer, their rapidly changing needs and the new digital realities – all growing in the backdrop of a pandemic has led to the reimagination of the insurance sector.  For eons, there is a believed narrative: Insurance is always sold, not bought. But the insurance companies are not cutting through the noise to create a customer-first world. 

Just like the ongoing pandemic has forced millions of people to stay home, making every business opt for digital solutions to stay afloat, the insurance sector too adapted with the situation. In fact, the pandemic proved to be a game changer for the insurance sector which was resilient until 2019 without leveraging the power of technology. 

InsurTech, a subset of fintech, which uses tech to make the insurance industry efficient opened many possibilities. Researches reveal that the global InsurTech market was worth US $2.72 billion in 2020 and is now anticipated to grow 48.8% between 2021 and 2028, thus providing massive opportunity.

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Today, the key is to delight customers who are hard-pressed for time and want things done yesterday. Initially, insurers opted for a digital-business model to survive, but higher customer satisfaction, especially in GenZ and millennials, made them adopt innovative ways to get better returns. A sharp decrease in cost across the value chain for insurers, improved communication, and automated operations also triggered a desire for digitisation. Apart from that, adoption of tech tools has also enhanced transparency, allowing businesses to detect fraud without human intervention. 

Global investors are now pouring millions of dollars, hoping to get value for their investments as InsurTech grows rapidly. Insurers are now required to demonstrate that they are not only cutting-edge technological marvels but also business leaders. Many InsurTech companies are building frontrunner solutions that are helping insurance carriers get an edge over others in the market. One such company is SE2, an Eldridge Industries business, technology-driven third party administration that serves nearly 2 million active policies on behalf of its 25+ clients. 

Stressing on the need for a customer-centric approach, Chirag Buch, Managing Director, SE2 India, said, “More than ever, the insurance sector must embrace innovation for this new Digital-First world and transform legacy systems. Today, customers expect frictionless, connected services that are interactive. And with the right strategy and interactive customer engagement solutions, insurance companies can catapult into the digital age, enter new markets through new distribution channels, and create new operating and engagement models.”

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“InsureTechs can reduce the end-to-end purchasing process that historically takes upwards of 3 weeks to only 5 – 10 minutes through digital interventions. With the pandemic impact, there is a rise in term insurance demand and the way insurance is now catering to the customers has also transformed with IRDAI sharing new guidelines with insurance companies,” Buch added.

New trends that could dominate the insurance industry: 

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Reimagining Customer Experience Journeys: Consumer, like always, will be the king. Insurers will have to provide low cost, digitally transparent, and quick solutions to grow sustainably. 

Data Analytics and AI: Data is the new gold. Insurers will use methods of sourcing and interpreting data. Data Analytics can expand boundaries and garner a competitive advantage to managing risks and identifying frauds.

Emerging technologies: Insurers will automate complex tasks and lengthy processes with emerging technologies. 

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Innovation: To provide a valuable product to the customer, insurance carriers will rethink their strategies to offer agile and innovative solutions and break away from the traditional models.

Ecosystem Transformation: Insurers will look at transforming their internal systems and how they interact with their customers with the help of modernization and automation.

Breaking away from legacy processes, today InsurTech is creating innovative solutions that help users buy, maintain and leverage insurance. 

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The latest trends reveal that the young aged between 25 and 35 are rushing to buying term insurance in the wake of the pandemic, indicating the urgent need for better processes and tech-enabled conveniences. 

READ MORE: Family pension, insurance to dependents of those who lost lives due to Covid: Govt

READ MORE: Why health insurance is important during COVID-19 times – Explained

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