The world of insurance is changing — what once was an industry dominated by legacy technology and manual processes is now home to one of the most rapidly growing technology subsects.
Insurtech is making waves in the insurance space, helping to boost profits and maintain greater stability despite current economic headwinds and uncertainty. For insurers striving to sharpen their competitive edge, leveraging insurtech in 2023 and beyond is a must.
In this article, we discuss what insurtech is, some of the main use cases for it, and three key technologies to keep an eye on. Plus, keep reading to learn how CPQi can help your institution implement insurtech.
What is Insurtech?
Insurtech refers to technology implemented for improving the insurance industry. It is a subsect of FinTech (financial technology) that is quickly gaining traction within the insurance market.
Overall, insurtech has many potential use cases within the insurance industry — and with the right implementation, insurtech can offer end-to-end optimization for an insurer’s business model.
Some key use cases for insurtech include:
Onboarding & Underwriting: Some of the most time-consuming manual processes for insurers are customer-related tasks like onboarding and underwriting. Insurtech provides the opportunity to simplify and automate these processes, allowing data to be gathered continuously to create more dynamic customer profiles.
Risk Mitigation & Management: As the insurance industry becomes increasingly digital, the opportunity for cybercrimes rises as well. Preventing fraud and maintaining a high-quality compliance program is essential in the face of digital disruption. Insurtech helps insurance companies to deploy more efficient and accurate risk models.
Contract Execution: Carrying out key contract tasks — such as settling claims or evaluating if an insurance contract’s criteria have been met — in a timely manner is critically important, both for ensuring business continuity and for maintaining a high level of customer satisfaction. Like with onboarding, underwriting, and risk mitigation, insurtech can help to automate and manage these tasks.
An Outlook of the Insurtech Industry for 2023
Insurtech is growing at an incredibly rapid pace, making it one of the fastest-growing subsects of the entire Fintech market. Globally, the insurtech market has an expected annual growth rate of 51.7% from 2022 to 2030 and a value of $3.85 billion (USD) as of 2021, according to a recent report from Grand View Research.
Additional key statistics and facts reported on by Grand View Research include:
59% of insurance companies plan to increase investments in digital infrastructure as of 2021
Top technologies used in insurtech include artificial intelligence, the internet of things (IoT), big data, and predictive maintenance
The healthcare segment of insurance is expected to see the fastest growth over the 2022 to 2030 forecast period
Deloitte’s 2023 Insurance Outlook report explains two fundamental ways that insurtech is helping to accelerate the use of technology and technological transformations in the industry:
Insurers relying on legacy technology now face increased competition from insurtech companies that have adopted customer-centric business practices from their launch. As a result, insurers must consider how to remain competitive by either partnering with insurtechs or implementing their own updated digital infrastructures.
Carriers who embrace collaborations from insurtechs are experiencing the customer-related benefits that come from point solutions in underwriting, claims, and online distribution platforms.
3 Key Insurtech Technologies for Insurance Companies to Leverage
Though there are many innovative technologies for insurers to embrace coming out of the insurtech market, three in particular stand out for the ability to boost profitability, flexibility, and business stability.
The three insurtech technologies to focus on leveraging in 2023 and beyond include:
1. Artificial Intelligence & Machine Learning
Artificial intelligence (AI) and machine learning are core components for enabling automation.
Whereas in legacy systems, certain tasks required manual processes and human interactions to perform, AI technologies enable these tasks to happen automatically and with greater efficiency than could ever be achieved manually.
For example, customer service desks are one of the easiest elements of an insurance business to upgrade with AI-powered automation. Many customer queries can be handled by interactive chatbots that can provide the customer with everything from claim advice to how to start the onboarding process.
Additionally, machine learning — a subsect of AI — is essential for extracting key data points and building predictive models that can be used to assess the market and provide more detailed recommendations for both the business and the customer.
2. Advanced Analytics
Personalization is the name of the game when it comes to modern insurance.
In decades past, providing customers with one-size-fits-all solutions was the general approach most insurers adopted. Nowadays, customers have grown increasingly expectant of solutions designed and tailored to their exact needs.
Advanced analytics give insurers the ability to more effectively work with Big Data and gain meaningful insights from it. In turn, insurers can then offer customers more personalized services based on their specific characteristics, habits, and behaviors.
3. Blockchain Technology
As insurance becomes increasingly automated, the need for automated contract execution is becoming more and more pronounced.
Blockchain technology is still a relatively new technology being used within insurance but it offers an abundance of potential. Although cryptocurrencies are by far the most well-known application of blockchain tech, they are far from the only ones.
One important use case for blockchain technology in insurtech is the ability to create smart contracts — a type of unalterable, secure contract with a set of pre-determined criteria. Once these criteria are set, the smart contract can act independently of manual processes if and when the criteria are met.
This can add two key layers to contract execution: vastly improved efficiency and next-level security.
Final Thoughts: Implement Insurtech with CPQi
For insurers to make the most out of insurtech, it is crucial to partner with a Fintech provider with deep knowledge of both how to implement these technologies and the inner workings of the insurance industry.
At CPQi (an Exadel company), we have the necessary solutions and expertise insurers need to expand into insurtech. From transformational services like robotic process automation and predictive technology, to managed platform and regulatory change services, CPQi has the end-to-end solutions your insurance organization needs to implement insurtech with ease and efficiency.
The time is now to begin embracing insurtech — as one of the fastest-growing markets in both the insurance industry and the greater financial sector, early adopters of these technologies are assured to pull ahead of the competition.
To get started with CPQi, contact our team today to book your initial consultation.