In terms of innovation, it may seem that the insurance industry is not among those that are at the frontier of digital transformation. One may get the notion that there isn’t any room for technological advancement when it comes to selling insurance products. In reality, this is not the case as there are numerous businesses in this field that have gone digital. A recent study from Accenture points out that 86% of insurers believe that in order to remain competitive, insurance companies have to implement innovative solutions to their business. For that reason, these companies have started investing in various new technologies that would make them more customer-oriented and cost-effective, which would eventually lead to a greater return on investment.
How do New Technologies Influence the Insurance Industry
The emergence of many insurtech startups with digital solutions tailored-made to meet insurers’ needs has urged the insurance companies to be ready to evolve and change the traditional business model.
In fact, we have identified five different digital trends that influence the insurance industry and drive drastic changes in the insurance business.
- Big data and Predictive Analytics helps companies understaСnd their customers’ behavior, identify their needs, and gives them enhanced insights to predict their actions, which allows them to adapt their policies accordingly and create new pricing strategies.
- Blockchain or distributed ledger technology (DLT) enables companies to protect personal user data and keep it safe from hackers. Any type of insurance documents entered in the system can be locked up notifying the owner of any attempts to tamper or steal them.
- Internet of Things (IoT) will allow the insurance companies to offer personalized policies to each user by using their digital trails left by them.
- Automation/Machine Learning can automate and simplify the processes of creating insurance policies by locating billing anomalies and errors, as well as enabling predictive pricing.
- Artificial Intelligence (AI) gives companies the opportunity to provide an even more personalized approach to the customers by AI chatbots for communication or using facial recognition for calculating the premiums by detecting life-threatening habits.
Undoubtedly, this type of digital transformation works well for both the consumer and the insurers. In other words, all insurers who can derive deep insights from data using these digital trends, have exceptional opportunities to grow their profits by differentiating themselves from the competition and offering tailored and unique services.
5 Ways in Which New Technologies Add Value to the Insurance Industry
One of the best ways for insurance companies to benefit from new technologies is to partner up with insurtech startups or companies that have the same target audience. For instance, Stornest is a digital tool for legacy planning whose customers would typically own or want to purchase life insurance. By connecting with this service, insurance companies will gain a new pool of potential customers and a possibility to increase their revenue.
There are five main ways in which new technologies such as Stornest can add value to the insurance industry.
#1 Competitive Differentiation
Offering a unique product or service is the best way to grow your business and stand out from the competition. Simply put, if a business adds a unique feature or an additional service to every insurance policy sold it would put them high above their competition. Hence, offering Stornest as a safe location to store the newly purchased insurance policy will give the insurance company a point of differentiation.
#2 Increased Customer Acquisition and Retention
Getting more customers and keeping the existing ones satisfied is the goal of any business. Adding Stornest service to the life insurance package may bring the insurance company an increased number of new customers and retention of the existing ones turning them into loyal customers. This digital tool can be the value proposition to potential customers that would offer them additional peace of mind knowing that none of their assets will be lost in case of their untimely passing.
#3 Cross-Selling Other Insurance Products
By connecting with various insurtech startups or companies that provide digital solutions, insurance companies have the opportunity to sell different insurance products. Combining life insurance packages with health insurance policies may be a winning combination for both parties.
#4 Ability to Increase Price Because of Added Value
The mere fact that a company can provide an additional service to the main one means adding value to the product or service. That being said, an insurance company would be able to increase the price of its policy due to the option that it gives to potential customers to buy another service through them. For example, the company can sell Stornest’s legacy planning as an add-on to a life insurance policy.
#5 Additional Touchpoints for Communicating with the Customers
Adding a new service or incorporating a new feature allows companies to get in touch with their existing and potential customers and use this as an opportunity to sell. As a result, the revenue will grow and the customers will be happy to get additional value from the company and feel appreciated.
Why Should Insurance Companies Use New Digital Technologies
No industry can resist technological advancements and every company needs to adapt to digital trends in order to sustain and grow and get a greater ROI. The insurance industry is no exception to the rule, therefore all insurance companies need to evaluate their way of work.
A great example of a business that has accepted the new technologies is Allianz, the world’s largest aviation insurer, who has partnered up with Flock – an insurtech company building a big-data-driven risk intelligence platform for drones. Flock provides an alternative on-demand insurance which is used only in a specific period of time when the user needs it. In other words, the customer pays for the insurance coverage only when they are actually flying their drone.
This successful partnership should be a role model for insurance companies looking for sustainable growth and increased revenue.