The insurance industry is not traditionally known for pivoting, innovation, and revolution. However, recent digitisation in the insurance industry is affecting the status quo profoundly, as tech offers much more on-the-ground insight into everyday life and simplifies any claims that may result.
From vague futuristic conceptions, global insurers must now accept that disruptive digital innovation is a reality. What’s more, it’s a reality that needs immediate action at a strategic level.
COVID has significantly fast-forwarded digitisation in the insurance industry. A staggering 85% of insurance CEOs in a recent global survey said that COVID had accelerated digitisation in their operations, and also accelerated the creation of next-generation operating models.
There’s pressure to change from external forces as well as internal ones. Bear in mind that this is an industry that has seen increasing regulatory requirements, ongoing cost pressures, competition, and ageing technology. An injection of digital innovation is a no-brainer.
AI is one of the central tech innovations that is already becoming increasingly more integral to the insurance industry.
Digital Transformation: AI
AI has already established itself as a crucial crutch for the insurance industry. Insurance carriers are best placed to make the most of the information it offers, and respond to the changing landscape. That’s if they work to become aware of all of the factors which will allow AI to inform claims. If insurers can begin to build the skills required to utilise these knowledge bases, their firms will be better positioned for future success.
According to a McKinsey study on the impact of AI on the future of the insurance industry, everything from claims to distribution to underwriting to pricing will be reshaped by AI.
As explained by Githesh Ramamurthy, chairman and CEO of CCC Information Services, the world of insurance claims is likely to change significantly as we hit digitisation in the insurance industry head-on. He considers car accident insurance in particular; he predicts, though, that although claim numbers may fall, the cost of vehicle repair is likely to continue to increase:
“We live in a mixed, multimodal world where some cars have different levels of autonomy. So in that world, we think frequency of claims may start to come down. But the cost of repair, we think, will continue to increase. That has to do with the complexity of the vehicle and the amount of electronics in the vehicle.”
How will it work? A digitally-transformed insurance claim process
Imagine a world in which in-car technology can report on itself, negating any ‘he said, she said’ claim difficulties and annihilating lengthy processes for claimants.
You crash. Your car and the vehicle you interacted with immediately and automatically report on exactly the nature of the collision, as sensors in the vehicle will already have ascertained the extent of the damage. Most of the information will be automatically gathered by the insurers involved.
Instead of that ten to fifteen-minute auto claim questionnaire, you might have to answer a couple of dozen questions.
We might even find that damage claims are automatically paid up, as before a claim is even filed, the insurer will have a take on the incident and the damages done. And forget a cheque – a direct deposit will appear in your bank. This is insurance, rewritten, in a self-service orientated fashion.
Whilst this article only touches the surface of what tech innovations can mean for insurance, as R&D tax incentive advisers, we’re excited to see what’s next for the industry as we move to an increasingly innovative, digital world.