8 Key Technology Trends in Insurance for 2022

Jun 17, 2022 | Business, General | 0 comments

Even before COVID-19 there has been an uptake in the use of technology across multiple industries. From automated processes, improved operations, data storage, social sharing and meeting the demands for immediate information and entertainment, technology has embedded itself into the everyday needs of individuals, businesses, organisations, as well as various sectors and industries.

The challenges brought on by COVID-19 accelerated the use of tech as people, businesses and industries found innovate ways to navigate the various restrictions put in place due to lockdowns, border closures and health risks. Meetings and gatherings were suddenly online, sales of gadgets boomed, and online retail sales hit record-breaking numbers. The e-commerce retail industry grew by 23% per year in Malaysia, the second highest growth in the world just after the Philippines at 25%, above the global average rate of 16.5%i. According to Nikkei Asia, there are now 350 million digital consumers across Indonesia, Malaysia, Singapore, Vietnam, and Thailandii. The digital economy in Southeast Asia is expected to grow to $1 trillion by 2030iii – a staggering figure that any industry who hopes to continue growing during this current economic period must not fail to overlook.

The insurance industry needs to jump on this bandwagon – and fast.

Despite the increasing cost of healthcare Southeast Asia, insurance spending has never been a priority in the region. However, the COVID-19 pandemic led consumers to rethink their priorities especially with regards to healthcare and financial security. The Swiss Re COVID-19 Consumer Survey found that 58% of consumers in Southeast Asia were actively seeking for new policies, of which more than a third made a purchase. This same research also discovered that 68% of the respondents considered the ability to process their insurance online as an appealing value-added serviceiv.

Agencies, brokers, agents, wealth planners, and underwriters can benefit significantly by embracing technology, or more specifically, InsurTech – technology designed specifically for the insurance industry. From shorter sales cycles, improved workflow, online claims submissions, and policy management, InsurTech has the capacity to improve efficiency across all functionalities of the insurance process. Additionally, InsurTech helps industry players shift their focus from labour-intensive manual methods of managing potential customers, underwriting existing policyholders, servicing, claim assessments, pay-outs, and etc., towards improved customer engagement and automation.

Let’s explore some of the latest insurance technology trends that are transforming the insurance landscape.

 

1. Automated Processes

Traditionally, the various steps of insurance processing have been a primarily manual exercise, taking place mostly face-to-face. The COVID-19 pandemic has disrupted this process significantly as agencies, agents, brokers, and other insurance players found themselves unable to meet potential and current policyholders to get their signatures, medical reports, and other physical documentation required to register for new policies, process claims, and so on.

With InsurTech, many steps in the insurance process can be easily automated including:

  • Underwriting
    Streamline information gathering through the use of artificial intelligence (AI) to collect data, assess risk, determine suitable coverage, and make electronic premium payments.
  • Claims
    Enables faster processing of claims and reduce wait times. This inadvertently leads to better customer experience, who are then more likely to continue using your products and services, and recommend it to others.
  • Smart contracts
    Smart contracts enable the speedier execution of insurance products by automatically implementing the approved terms of a policy between the insurer and the insured. Smart contracts minimises manipulation and errors as it is executed by the system automatically. It also improves transparency as information is stored in a shared ledger, so all policy and contract information is always accessible to clients and insurers, along with any amendments, transactions, and so on.
  • Renewals
    Automatically generate quotes and renewal notices for existing clients based on their policy contract, renewal date, and additional benefits including insurance bonus pay-outs for customers with good renewal persistency ratios.
  • Virtual assistants
    Using virtual assistants or AI-based chatbots helps provide standardised answers to frequently asked questions. While customers generally prefer communicating with an actual person, a chatbot, when implemented correctly, can simplify the process of getting responses to common questions while reducing costs and turn-around times. Furthermore, virtual assistance has scaling capabilites, increases customer interactions, and provides 24/7 support, which adds value to both policyholders and insurers.
  • Compliance checks and regulations
    Compliance checks, customer due diligence, as well as monitoring and updating constantly changing regulations, can be time consuming. By automating these processes, InsurTech (through the use of RegTech) can help you save time, provide access to new regulatory requirements, and improve consistency throughout your organisation. Additionally, these automated processes are less prone human error, which can cost a lot of time and money to fix.
  • Fraud prevention
    Another benefit of automated compliance checks and regulatory requirements is the capacity to mitigate risk and reduce occurrences of online insurance fraud, such as money laundering, fake accounts, false claims, terrorist financing, tax evasion, and so on. InsureTech provides a safety net by protecting your assets and that of your clients by monitoring and analysing transactions, verifying and authenticating identities, and accessing fraud alerts. Having these processes in place builds trust, and trust builds good insurer-customer relationships.

 

2. Cloud computing

Cloud computing has significant benefits to the insurance industry. Instead of relying on expensive, fixed, in-house physical databases that are at risk of breaking down or power disruptions, cloud computing provides a safe, flexible, and reliable infrastructure that is easily accessible at significantly reduced costs.

Understandably, insurers are wary of moving to the cloud due to potential security risks. Cloud providers, however, work round-the-clock to ensure their platform is secure, with regular system updates and backups to provide clients with peace of mind and enhanced security. Furthermore, enhancements in cyber security peaked in the last two (2) years along with the rapid pickup of digital transformation.

 

3. Data gathering & machine learning

Machine learning collects and analyses large amounts of data to predict potential outcomes. By processing data quickly and automatically, machine learning can identify patterns that may go unnoticed by the human eye.

Applications include:

  • Fraud prevention
  • Telematics for creating personalised insurance products
  • Predictive analytics
  • Proactive risk management
  • Machine vision

There are limitations to machine learning as they are rigid in their analysis and may not be able to compute situations that are out of context. One possible method for overcoming this limitation is by understanding that machine learning is not a one-size-fits-all solution. Instead, the challenge will be to develop different models based on different contexts and scenarios.

 

4. Robotic Technology

Robotic technology, such as drones, can be very useful for claims processing and inspections. Drones can reduce the risk of entering dangerous or tight spaces to inspect damages, for example, or collect visual data in hard-to-reach locations such as rooftops, building exteriors, and so on.

 

5. Customer touchpoints & self-service 

From submitting claims to policy purchases or renewals, a digital customer touchpoint provides clients an alternative for those who would prefer to conduct their insurance-related business at the click of a few buttons instead of waiting for a call-centre assistant to pick up the phone or a busy agent to return their call.

Additionally, self-service tools enable lower-risk customers to purchase insurance policies without having to go through the traditional route of medical examinations. Instead, a set of questions assesses the client, analyses it against available data and underwrites the policy accordingly.

Simplified self-service processes have led to increased sales, better customer satisfaction, and quicker turnaround times. This gives insurers the time to personally communicate with their customers, balancing the technological and human aspect of insurance.

6. Apps & wearables

With the growing use of mobile technology, apps, wearables, and smart home devices have become a substantial resource of electronic data. From tracking heart rates, meal plans, level of activity, sleep patterns, GPS information and so much more, this data can help insurers access risk and offer personalised policies and customer experiences.

Larger insurance companies like AIA and Prudential have already stepped on the app-bandwagon, allowing clients to purchase and check policy information, make payments, track habits, book doctor appointments, and so on, directly from their apps.

Insurers, too, can mitigate risk by sending health alerts based on user data. Apps can also be used strategically to encourage healthy living by connecting insurers closely to their policyholders on a regular basis.

7. Embedded insurance

Embedded insurance broadens the scope of insurance by enabling third-party distributors to sell add-on insurance along with their products and services, such as mobile phone screen protection or one-to-one defect replacements. This provides third parties with an alternative revenue stream, while making it very simple for customers to purchase dedicated insurance without having to do very much.

8. Low- or no-code InsurTech platforms

Implementing a custom InsurTech platform is time consuming and expensive, putting off smaller insurance agencies and players from going thoroughly digital.

Low-code and no-code InsurTech platforms is an affordable option that provides a ready-made and often customisable solution to going digital without having to put significant amounts of time, effort, energy, and money into building it from scratch. Larger firms with their own IT departments and the finances to build their own platform can also benefit from low- or no-code InsurTech platforms as it allows their IT department to focus more strategically. Additionally, low-/no-code InsurTech platforms often includes upgrades, regular security fixes, and system updates to ensure your service and data remains constantly available.

However, it is important that insurers do their homework and work with a reputable InsurTech platform developer.

Moving towards InsurTech

Many governments in Southeast Asia have introduced supportive policies to boost their digital infrastructure including tax incentives, implementing national digitalization strategies, and introducing personal data protection acts, among many others. In Malaysia, insurance regulator Bank Negara Malaysia is looking into the licensing of digital and electronic methods of providing insurance products and services to the marketv. They believe digital technology can enhance the insurance business model, improve customer experience, and, crucially, address the protection gap in the local market.

The uptake of going digital in the insurance industry in the region, however, has been a little slow despite significant benefits not just from the standpoint of automating and simplifying processes, but also offering personalised policies for customers, improved industry standards and practices, as well as lower costs and better profitability.

A mistrust of technology and the hesitancy to abandon legacy systems or tried and true methods of managing insurance processes, plus the cost, has led many industry players to avoid going fully digital. However, those who avoid embracing technology will risk getting left behind and losing their market share to competitors.

Agiliux – your InsurTech solutions

Created by Soft Solvers Technology, Agiliux provides a suite of fully compliant SaaS (Software as a Service) solutions for various insurance players, including agencies, brokers and providers.

Cloud-based and customisable, Agiliux is designed to grow with your needs, so you don’t have to pay for features you won’t use. With clients spread across Asia, our digital connectivity platform ensures you can use our system globally, with multiple currencies, languages, tax rates and local regulatory requirements. Our platform connects seamlessly with any 3rd party systems and providers worldwide, ensuring a smooth transition without disrupting your current infrastructure regardless of your existing legacy system. And, perhaps, most importantly, we work with reputable cloud providers, implement regular upgrades, conduct regular audits on our servers and maintain distinct applications and databases for each customer to ensure your data always remains safe and highly secure.

At Agiliux, we don’t sell insurance. We give technology to the people that do.

For more information on how Agiliux can work for you, book a demo with us. And if you would like to know more about Agiliux and how we can help you with your insurance technology needs, get in touch with us today. 

References

(i) “How digitalization is making South and Southeast Asia engines of growth” by Azaz Zaman, World Economic Forum, 10 February 2022, https://www.weforum.org/agenda/2022/02/digitalization-south-southeast-asia/

(ii) “COVID’s striking impact on Southeast Asia’s digital economy” by Stephanie Davis, Nikkei Asia, 17 November 2021, https://asia.nikkei.com/Opinion/COVID-s-striking-impact-on-Southeast-Asia-s-digital-economy

(iii) “ASEAN’s digital economy projected to hit $1tn by 2030” by Dylan Loh, Nikkei Asia, 10 November 2021, https://asia.nikkei.com/Business/Business-trends/ASEAN-s-digital-economy-projected-to-hit-1tn-by-2030

(iv) “Swiss Re COVID-19 Consumer Survey: Almost one-third of Southeast Asia consumers fear their financial future”, Swiss Re, 15 September 2020, https://www.swissre.com/risk-knowledge/building-societal-resilience/covid-19/covid19-consumer-survey-sea.html

(v) “Licensing Framework for Digital Insurers and Takaful Operators”, Bank Negara Malaysia, 4 January 2022, https://www.bnm.gov.my/documents/20124/943361/DP_on_Licensing_Framework_for_DITOs.pdf

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