By Kannan Amaresh, SVP & Global Head at Infosys
New and emerging technologies are disrupting the business-as-usual approach by displacing established models, forging new revenue streams and driving unprecedented innovation. This is triggering a ripple effect across industries. The insurance industry is not immune to these forces. Today, customers want to shop for policies and claim damages as seamlessly as they would browse for and buy any product on Amazon. To keep up with customer expectations, insurance companies must first understand how technology can revolutionise their value chains.
- Hyper digital adoption – Digitisation is becoming a top priority for insurance companies. Most digital transformation initiatives are driven by customer demand for omni-channel and personalised experiences. Hence, insurers are refocusing their investments on digital transformation initiatives, so they can better serve their customers.
For example, mobility solutions help insurance agents instantly catalog damage, file reports and access customer claim information. Such round-the-clock connectivity streamlines tasks, thereby improving agent productivity. On the consumer front, apps provide instant information about policies and allow customers to file a claim, compare policies and get instant quotes. Further, as wearables become popular among users, there are lucrative opportunities to leverage data gathered from sensor-enabled devices to improve product design in health, home and automobile insurance. Leveraging robust digital insurance platforms can help insurers better differentiate themselves in the market and accelerate growth.
- Data and robotics – Currently, innovation in robotics focuses on machine learning software that automates repetitive processes by learning like humans do. Many companies are using automation and software robotics to enhance productivity and minimise errors in back-office functions. However, robotics can play a much larger role than just process optimisation. For example, the recent launch of Haven Life's Facebook-embedded chatbot has made it much easier to dispense quotes for life insurance. The bot can converse with interested customers, assess life insurance needs and provide premium estimates within minutes.
Here, one must not forget the importance of data. Any automation or robotics initiative is unlikely to succeed without a strong data management strategy. For robots to be effective at what they are programmed to do, they should be able to access unstructured data across every channel. Thus, robust big data tools coupled with innovative AI technology are critical for such initiatives.
The policy change for robotics adoption is clear in Germany. Leading insurers are reimbursing beneficiaries with robotics-based solutions to cure medical problems. ReWalk Robotics is a leading robotics company that provides patients with wearable robotic exoskeletons. These enable hip and knee motion by integrating a wearable brace support, computer-based control systems and motion sensors so physically-challenged individuals can stand upright and walk. While ReWalk has already been associated with leading insurers across the globe on reimbursement policies for its exoskeleton technology, now a major German insurance company, Barmer, will reimburse ReWalk systems for qualifying customers.
- IoT and InsurTech – Close on the heels of the FinTech revolution in the financial services industry comes InsurTech, a trend that promises to channel technology-led disruption into existing insurance models. Consider how a Canada-based IoT, AI and data analytics company called Mnubo received nearly US $16.5 million in financing from Munich Re, the German insurance giant. These investments will help Mnubo's customers who are making IoT investments benefit from financial products for risk management and RoI-enablement.
Further, emerging InsurTech companies will find avenues to leverage smart devices powered by the Internet-of-Things (IoT) for extreme product innovation and personalisation. For instance, data gathered from sensors embedded in cars can track driver behaviour so insurance companies can customise policies, accurately assess risk and reduce cost. As early as 2015, Germany was already leading the way in driving the adoption of telematics. In fact, the Commissioner for Data Protection and Freedom of Information for North Rhine-Westphalia was the first authority to evaluate a telematics-enabled product to determine violations of data privacy. The pay-as-you-drive product provides insurers with driving insights to help customise premiums. Today, customers, too, are increasingly interested in the prospect of lower premiums on auto insurance. A report by Business Insider estimates that nearly 50 million US drivers will have dabbled in usage-based insurance by 2020. These IoT applications range across all insurance verticals such as home, assets, property, land, equipment, etc.
- New risk assessment models – While technology transformation delivers tremendous value, it also comes with its own set of risks. As companies go digital, the threat of risk shifts from physical attacks on assets to cyber attacks where the target is sensitive data. With the explosion of mobility, smartphones are an easy target, emphasising the importance of protecting one's device. In fact, many insurers are developing and launching products to address cyber security issues. Recently, France's central bank has urged French insurers to enhance cyber risk coverage for their clients, as hack attacks and data privacy laws in Europe spur rising demand. The idea behind is to create a more mature market in France and Europe for insurance against cyber risks.
- Dynamic industry landscape – In the face of pervasive disruption, the insurance industry is becoming increasingly competitive. Even as traditional companies struggle to seamlessly adopt new technologies, nimbler start-ups are competing aggressively to establish themselves in an industry governed by trust. This creates an environment ripe for mergers and acquisitions where established insurers can choose how to reposition themselves based on specialised market segments. Some of the examples above clearly indicate how insurers are reaching out to smaller start-ups to deploy sophisticated technologies across their product lines.
The insurance industry is on the cusp of pervasive disruption and transformation. Existing business models such as traditional auto insurance may soon become redundant as consumers shift to innovative schemes. Thus, organisations must look ahead and reinvent their product and business strategy through technology if they are to stay relevant and competitive.