brand logo

InsurTech: The digital future of insurance industry

21 Sep 2019

Despite the fierce competition in the market, Sri Lanka’s insurance industry has largely remained conventional in its business operations for decades. Earlier this year, however, signs of an eminent disruption appeared with online insurance aggregators and comparison platforms entering the market. The increasingly important role of digital technology in the global insurance industry brings with it myriad possibilities. Let us explore a few of the latest digital trends that have been introduced to the industry. Artificial intelligence (AI) Here are a few cases of AI use:
  • Facial recognition in underwriting – the app utilises a combination of facial recognition technology to scan the selfie and uses gamification techniques to detect life-threatening habits and predict the lifespan to calculate the premiums.
  • Personalised customer experience – the AI-based chatbot provides a delightful automated, customised buying experience for prospects based on their geographical information and social data. It also offers a quick response to client queries.
Robotic process automation (RPA) RPA automates the ordinary routine tasks of the insurance industry and thus reduces the workload (i.e. automation of bank reconciliation, etc.) and cost of operations, and also saves time and money and improves customer satisfaction.
  • Claims settlement – RPA reduces the claims processes by automating the data collection process. This can significantly reduce the average processing times.
  • Data management – manual data collection and entry is an arduous task and could lead to inconsistencies and errors in data management. RPA automates and simplifies the data management processes, and that too at high speeds.
Big data and predictive analytics Every day, a massive amount of data is generated exponentially. Big data and advanced analytics help to manage, analyse, and understand data and make forecasts. This helps insurance companies make data-driven decisions to drive profitability to their business. Machine learning (ML) ML can offer improved underwriting and reduce fraud in claims data and malicious activities in payment systems. Trained ML models can help in identifying lapsed policies and billing anomalies and making personalised offers. Augmented reality (AR)/virtual reality (VR) This provides a superior experience to customers in learning about insurance products and services. The usage of AR/VR technologies applies in remote claims handling process, accident recreation, and many more.
  • Insurance policy education – AR/VR simplifies the complicated insurance policy education with exciting and engaging AR/VR videos. The videos can be stimulating real-life situations to showcase the value of life, health, and various insurance coverage plans and help boost the insurance policy purchase rate.
  • Virtual driving test – VR can be used by insurers to take practical driving tests that could help insurance providers while deciding the coverage for a new client.
IFRS 17 IFRS 17 is expected to be effective with effect from 1 January 2022. Financial reporting will change substantially with IFRS 17 and up to 50% of the chart of accounts and financial statement positions will be impacted. Reporting efficiency and improved productivity within the finance closing process will be necessary.
  • Internal KPIs will need to be adapted to new external measurements. Fast close for internal management information (MI) will be under even greater pressure to deliver the new figures efficiently. Consistency across products can spur productivity.
  • Existing models need to be adapted to the new regulations of actuarial – new data flows/calculations/projections need to be implemented.
  • New IFRS requirements need to be designed, implemented, tested, brought into production, and maintained and operated in the field of operations and IT. Changes in systems must be planned at an early stage to minimise disruption.
  • Planning/forecast processes have to be adjusted to the new metric arising from SLFRS 9 and IFRS 17 earlier than their release in the first public report. For analysis and planning purposes, it may be useful to perform simulations on the impact of the new IFRSs on KPIs based on IFRS earnings/equity at an early stage.
Greater external transparency (in aggregate) is expected to demand a more detailed audit trail and “historisation” of financial and actuarial data. The interaction between finance, risk, and actuarial will increase (cross-skills opportunities), offering the opportunity to integrate these functions. Avoiding the pitfalls On top of the changing and increasingly digital, mobile, channel-agnostic, and demanding customer, InsurTech and certainly the moves of those GAFA (Google, Apple, Facebook, Amazon) giants, other challenges for the insurance industry include ongoing commoditisation, easy-to-replicate innovations, regulatory changes, macroeconomic uncertainties, decreasing loyalty, the need to find a different narrative in approaching today’s customer, and challenges regarding digitisation of business processes (e.g. insurance claims processing). Insurance firms are disrupted, disrupting, and going through important digital transformation projects, which de facto often revolve around the need to optimise the end-to-end customer experience. The reaction of customers The customer experience challenge starts with the way policyholders communicate. They are used to communicating via email, text, and a whole range of new channels and formats. Furthermore, if they’re not satisfied, they use social media to tell the world. This challenge affects many industries, also in other financial services industry areas. However, in the insurance industry, dissatisfaction is easily voiced, as customers expect almost immediate accuracy and responsiveness. This is a huge challenge, especially as 84% of customers trust other consumer’s experiences. Today’s customers expect the same capabilities and experiences they have when interacting with retailers, entertainment providers, the travel industry, and retail banks. They want to receive service anytime, anywhere, through any channel, and on any device they choose. The new trend towards digitalisation is unleashing the power to transform insurance with easier, more cost-effective, and socially acceptable processes. This is made possible by the proliferation of mobile devices, which has become the new basis for business for the millennial generation and others. Non-traditional players are entering the insurance market, challenging the status quo and bringing innovation to an industry that has been historically slow to evolve. Predicting the future With the advancement in technologies, what is different now is that traditional insurance institutions can leverage technologies to acquire and process internal and external data at high speeds and come up with sustainable and robust business models to compete with the digital natives. Dynamic technological changes evolve the customer’s expectations and demands for the simplified online personalised experience. The digital economy will make usage-based, on-demand, and “all-in-one” insurance lifestyle products more relevant. Customers will prefer personalised insurance covers instead of the one-size-fits-all products currently available. Flexible coverage options, microinsurance, and peer-to-peer insurance will become viable options in the long run. Reinsurers will provide risk capital directly to digital brands, and regulatory frameworks will accommodate shorter value chains. RPA and AI will occupy centre stage in insurance, driven by newer data channels, better data processing capabilities, and advancements in AI algorithms. Premiums will become highly personalised, enabled by new sources of tech-enabled data such as Internet of Things (IoT), mobile-enabled InsurTech apps, and wearables. InsurTech firms have been showing significant growth in the areas of auto, home ownership, and cyber insurance. Such strong growth will stimulate traditional insurers to either acquire technology capabilities or partner with InsurTech companies. With an increasing demand for innovative products and services from millennials, such collaboration will become a critical imperative. (The writer is the Secretary of the IASL and is the Managing Director at Softlogic Life Insurance PLC)

Kapruka

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!


More News..