The digital age is transforming industries across the board, but which technology trends should insurance companies take advantage of?
Profitable growth is a number-one priority for today’s insurance providers. The competition within the industry is heating up and as the digital age continues to progress, all businesses are finding innovative ways to leverage new and emerging technology to their advantage.
However, the insurance industry has faced plenty of disruption due to the proliferation of advanced mobile technologies. Not only are disruptions happening, but this type of technology is not only changing the insurance industry, but it’s also shaping the way consumers now think about how and who they do business with. For example, IoT improvements such as connected sensors and devices enable consumers to expect convenience. Customers today also expect to be able to easily reach companies via a number of different touchpoints.
Due to the risk-averse nature of the industry, adoption to new and emerging technologies has traditionally been slow. However, seeing the cost-saving and revenue-improving benefits has led to a number of digital trends impacting the industry in recent years.
If insurance firms fail to act on these trends, they are positioned to be disrupted by startups like Oscar—the health insurance company that uses technology to simplify the insurance-buying process.
Leveraging customer service through technology
One of the reasons Oscar is disrupting the industry is because it’s able to reach millennial consumers on mobile and social touchpoints through user-friendly experiences. They’re also using data and analytics to provide customers with the lowest costs for health insurance premiums within their area.
This is why it’s vital for insurance companies to leverage customer relationships across all touchpoints and on every channel. This includes social media communication, developing for and reaching consumers on mobile devices, video-based communication and content marketing/thought leadership.
The changing role of the chief information officer (CIO)
For the insurance companies who do not yet have a chief digital officer (CDO), the responsibility of uncovering and implementing the emerging technologies that will support transformation is taking a toll on CIOs within the insurance industry. They are usually the ones trying to harness disruptive technology while keeping an eye on the future and the current day-today operations. As a result the position of CIO is shifting to that of a chief integration officer.
Insurance companies may want to relieve some of the burden off the CIO by hiring a CDO. A CDO can handle the research of new digital technologies and work with the CIO to implement them within the company. Onboarding a CDO will effectively free up the CIO so they can focus on providing excellence in IT operations throughout the organization.
Application programming interfaces (APIs) becoming a business model driver
Once upon a time APIs were merely a development technique for insurance companies. These days, however, they have become a business model driver and boardroom consideration. Both public and private APIs are showing success in several industries and the models they develop can help inform the insurance industry’s transformation. Overall, APIs can provide value through core insurance systems, developing common insurance services, through government regulatory agencies, and via intermediaries.
Connecting with the Internet of Things (IoT)
The IoT is the ever-growing network of physical objects—like sensors and devices—that deliver information to internet-enabled systems. The possible use cases and implications IoT can have for the insurance industry is almost overwhelming. IoT can be used to:
- Transform underwriting
- Improve workforce and operational efficiency
- Promote health and wellness initiatives through behavior tracking and incentive-based modification
One such way in which IoT can improve health wellness includes the rising popularity of wearbles. Gyms like Orangetheory Fitness track users’ heart rates and performance, encouraging wearers to beat their own best scores and that of their peers. If the information provided by wearables was plugged into an insurance plan, it could help customers lower their own premium costs, while saving the health insurance company money.
IoT is also providing amplified intelligence resulting from the breadth of available data. It improves upon analytical models to eventually create granular and targeted pricing models across the industry. This is similar to the way in which Uber’s pricing surges when it rains or to how Progressive and Allstate will have premiums go up (through safe drivers programs) if drivers continually go too fast or engage in other risky behaviors.
These health insurance technology trends can help to cut costs, improve efficiency and boost revenue. For example, low cost data storage with cloud computing is a prime example of the ability to store data at a fraction of the cost of legacy infrastructure. And speaking of which, infrastructure, for the most part, can be automated, including the automation of compliance with government regulation and oversight. This will free up IT professionals at large insurance firms for more advanced functions.
Overall, it’s important for insurance companies to stay on top of these trends and have the right talent in place to help them implement the technology. These types of digital tech trends can work to speed up profitability growth and assist against possible disruption.