There is no denying the impact that evolving technologies have had on the life insurance industry — but the evolution is far from over.
As all sectors of business continue to find innovative ways to adapt to new technologies and digital demands from clients, life insurance providers must determine where they fit into the equation. Doing so requires paying special attention to the top trends in the industry, including applied AI, distributed infrastructures, and the future of connectivity.
In this article, we will discuss these three trends and some of the complexities and benefits involved with them. Plus, we will cover how each of these trends can potentially reshape the landscape of life insurance.
3 Key Trends to Watch in the Life Insurance Tech Industry
In September of 2021, McKinsey & Company released a report titled How Top Tech Trends Will Transform Insurance. This report lists several of the biggest technology trends in the insurance industry, as well as names the top 5 trends expected to have the greatest impact.
These top 5 trends are:
- Applied AI
- Distributed Infrastructure
- Future of Connectivity
While each of these five trends has the potential to reshape the insurance industry, the life insurance niche is expected to experience a particularly major impact from the first three trends.
With this in mind, let’s examine these top 3 trends for life insurance with a closer lens.
1. Applied AI
Applied AI is the use of AI and machine learning to focus more heavily on enhancing software-based products and applications.
Some of the key principles of applied AI include:
- Placing greater emphasis on end-to-end automation to enable faster deliveries, higher engagement, and improved convenience
- Creating more precise performance objectives to create decisioning models that are capable of making more informed and accurate decisions or predictions
- Focusing on the need for improved continuous learning and adaptive programming
For the life insurance industry, applied AI has many powerful potential uses. Some of the more promising uses to consider include more consistent and accurate management of an exponentially increasing pool of client data and AI-powered customer experiences with advanced personalized support capabilities.
New to our applied AI is Robotic Process Automation (RPA) as more and more businesses are turning to RPA to transform their operations.
👉 Learn more about RPA in banking and financial markets here!
2. Distributed Infrastructure
As digitally-based infrastructures become more commonplace in the insurance industry, the need for a distributed infrastructure that enables greater flexibility has become strikingly apparent.
Life insurance businesses are working hard to keep up with digital transformation, with one of the biggest changes being a partial to full migration to the cloud. Today, the cloud has been put to use fairly commonly in the financial industry, causing it to evolve and mature into an even more powerful computing model.
The use of distributed technologies — aka, technologies that are shared between multiple systems and across multiple different locations — allows life insurance providers to take the stance of a cloud-native insurer. In turn, this provides life insurance companies with the opportunity to have a meaningful impact on and role in the increasingly connected financial industry.
3. Future of Connectivity
Speaking of an increasingly connected financial industry, we would be remiss to not also discuss the future of connectivity. The future of connectivity is a term used to describe the acceleration of connected technologies and an interconnected system.
From the growth of open finance to an increasing public interest in blockchain technology, it is clear that greater connectivity is at the forefront of the minds of clients and professionals alike.
In terms of what the future of connectivity means for life insurance, one of the most likely changes to expect from this trend is a greater demand for omnichannel communication and secure data sharing. Clients want the ability to access their accounts and services through their preferred channels while also being assured of the safety of their sensitive financial data.
Final Thoughts
For life insurance providers, staying ahead of the technological curve has never mattered more.
All financial service providers across the financial sector are feeling the impacts of the widespread adoption of digital transformation and new technologies. In the life insurance industry specifically, the adoption of technologies like applied AI and open finance is what will likely set apart the industry leaders in the years to come.
To maintain a competitive edge, it is crucial for life insurance providers to not only acknowledge the growing role of technology in the industry but to also embrace the top trends. These technologies are essential for providing clients with the digital services they expect, building greater loyalty along the way.
