Staying Ahead Of The Curve In The Insurance Industry
How insurance firms can prepare themselves for the changes hitting their industry
Artificial intelligence (AI) is no longer a futuristic concept. It is integrated within our homes, workplaces, vehicles, and day-to-day portable devices like wearables, which has implications for the insurance industry. No longer a distant possibility in our future, AI is a tool of the present, and as insurers, we need to know how to leverage it in order to stay relevant.
Over the next 10 years, we will see a rapid increase in the number of connected consumer devices, such as smartwatches, smartphones, and fitness trackers. The adoption of these devices will continue to grow exponentially, joined by new entrants across several segments including medical devices, clothing, footwear, eyewear, home appliances, and the list just goes on. As the quantity and capabilities of connected devices improve, several insurable items such as cars, homes, and buildings will provide relevant data, making it possible for insurers to collect real time information on conditions of customers’ assets.
This avalanche of data brings a wealth of opportunity, and AI is the tool that will help insurance firms take advantage of it; however, simply adopting the technology is not enough. The insurance industry is being disrupted by insurtech companies that are run with lean cost margins, and offer high-tech solutions at a low cost. Traditional providers will have to reinvent their business models and mindsets to keep up or risk being outdated. At Takaful Emarat, we recognize this trend, and are currently implementing drastic changes over the last year to stay ahead of it. From our experience, there are three ways firms can capitalize on AI and the big data waves hitting insurance:
1. MANAGE CHANGE
Adopting new technologies will not work unless an organization invests in changing the way employees work, think about their business, and do their jobs. Firms that don’t adapt to this massive industry shift risk being left behind, hence the change needs to be implemented rapidly. Analyze your workforce– you might find that certain job roles are no longer needed, and those people and skills can be better leveraged in another department. Really look at your culture– is it working for the new direction of your company? If not, create a new corporate culture, one that is more fitting with the pace of change of today’s insurance industry. Creating a new corporate culture will also attract the right type of talent to help take your business to the next level, and stay ahead of the digital curve.
2. INTEGRATE AND AUTOMATE
Use AI technologies to your advantage, examine insurtech firms, and form alliances that can better service your customers. At present, AI has numerous applications in the insurance industry, from interactive chatbots that process new customer registration and claims, to predictive analytics for proactive measures, and visual analytics in claims management, for example, damage assessment through pictures and videos. Accenture’s 2017 global distribution and marketing consumer study found that 74% of consumers say they would be happy to get computer generated insurance advice. This indicates a global shift towards technology aided buying processes, while human interaction is needed only when things go wrong. Companies that automate as much of the customer acquisition and claims processes as possible can realize benefits such as reaching prospective clients, studying their real time needs, developing insight on their risk magnitude, and creating custom solutions.
3. INVEST IN R&D
Traditionally, insurance firms have not seen the need to invest in a research and development department. However, today, innovation is no longer an option; it is necessary to stay relevant. Whether it is a department, a task force or a business unit, a research and development team would be an asset to a large insurance firm looking to stay ahead of the curve. The research and development team would be responsible for optimizing solutions for your current and future customers, whether through organic technology development, acquisitions or partnerships. The insurance industry today is going through a perfect storm– technological disruption, changes in demographics, and changes in the workforce. Customers expect more from their insurance providers, they require the speed and elegance of digital retail, using the channel of their choice. New players are entering the market and taking away market share from large established players, while larger, more traditional firms struggle to attract top talent. However, by managing change, integrating new technologies for automation and investing in research and development, I believe insurance firms can stay ahead of the curve, and even shape the future of the industry.