Big data analytics - data, data and data once more
The use of big data analytics is nothing new for the insurance industry, but what is definitely new is the scope of data that can be obtained, and the way it can be used. Purchasing habits and credit reports are the examples of data sets that can be used by insurers when carrying out appropriate procedures. And with the right data sets, the insurers can offer personalised products and increasingly better protection with minimal claim ratios. Skillful use of data is, and will be, the biggest challenge for insurance companies in 2021 and beyond. And one of the main drivers of the data explosion is the increasingly widespread availability of IoT technology.
Internet of Things (IoT) - even more data
IoT systems collect huge amounts of dispersed data. According to IDC report "Data Age 2025: The Digitisation of the World, From Edge to Core", IoT devices will generate as much as 175 zetabytes or trillion gigabytes of data in 2025. For reference, in 2018 the number was 33 ZB. By 2025, the connected, smart devices will amount to 50 billion units. IoT is a technology that insurers already use in property insurance. In the next steps, the industry should maximise the potential of IoT in health and life insurance. This technology will support the process of claims adjustment, fraud detection and loss mitigation. It can also be used to build hybrid models of so-called smart insurance.
Smart insurance - personalisation and automation
Tracking the behaviour of the insured does not seem so terrible when it starts to work to their advantage. Mass data collection allows insurers to create insurance perfectly suited to our lifestyle and needs. What every prosperous business needs is profit - and offer personalisation is financially beneficial for both insurers and customers. This is where technologies such as AI analytical models or process automation and robotisation come in handy. Another challenge for the industry is to improve cost and loss ratios. In this respect, the said technologies can be developed on a large scale in the area of underwriting.
Virtual assistants and agencies - even more automation
Virtual assistants are one of the fastest growing technologies, also in the insurance industry. Insurers are using this type of automation more and more boldly and on an increasing scale. What may be the next step to further development in 2021 is investing in completely virtual agencies, where the customer, agent and employee meet and cooperate in the online world.
Digital omni-channel platforms - remote and mobile
If you have not yet replaced or modified your insurance management platform, let 2021 be the year of a new beginning. Supporting sales and service in multiple channels simultaneously is an absolute must. Another important aspect is mobility. According to StatCounter, the access to applications through mobile devices in Europe revolves around 40 percent, in Asia it is already 60 percent - and we should only expect an upward trend. A modern platform comes with access to information via mobile applications. The problem faced by the insurance industry in this area is the fact that many of the available platforms still lack the necessary features such as electronic signature. As a result, the customer, using a digital platform, is often redirected to other channels, such as websites or call centers. Certainly, what is worth planning for 2021 is to allocate resources to mobile support.
With the migration of insurers to digital platforms, one of the main technologies to be developed constantly is cyber security. With professional hacking attacks, traditional tools such as firewalls and antivirus software are not enough. According to EY research, 71 percent of insurers believe that their company may now have trouble detecting a sophisticated, planned attack.
Violations of cyberspace are only one of the problems faced by the insurance industry. Inefficiency (still using paper documentation), fraudulent damages, or human error are another problems – and here, the blockchain technology is a helpful tool, worth investing in. Thanks to the use of blockchain, insurers can reduce the amount of paper forms, which significantly affects the time of handling transactions. Blockchain data is decentralised, while decentralisation of information and the use of advanced blockchain cryptography technology significantly improves the security of transactions.
Cloud computing - on-demand platforms in the cloud
And finally, will this be one of the hottest technological trends in 2021? Definitely so - using cloud systems, insurers have control over their businesses anytime, anywhere. IDC analysts say that already in 2020, more data will be stored in the cloud than on consumer devices, and by 2021, more data will be stored in the cloud than in traditional data centers. That’s worth investing in, hands down, but we should make haste slowly - excluding crisis situations when our adaptability comes to the fore. It is thanks to cloud computing that insurers can implement new technologies much more efficiently, which, again, accelerates the delivery of their services and products. So here we make the full circle - data, data and data once more. If insurers want to use their data sets efficiently, they need the flexibility and power of cloud computing.
Innovations will continue. According to many analysts, the current economic disruption of the global ecosystem will take up to 2 years. All the more so, the process of digitalisation will speed up. IDC estimates that by 2022, 2/3 of the world's GDP will come from digital products and services, and IT spending between 2020 and 2023 will reach $6.8trn. As the current and emerging trends show us, there is a need to focus on data sets. Based on them, we will build increasingly complex digital ecosystems. In order to drive sales, create personalised offers and mitigate risk, the insurance industry should develop proficiency in the use of these technologies.
And what about the future? Augmented reality, edge computing, combined technology, quantum computers are another exciting technologies that could be a breakthrough for the industry. Let’s keep our ears to the ground.
It's never too early to plan and it's never too late to change. Let's be brave and make brave decisions. Let 2021 and the technologies it brings be the driving force for all of us, because, as Andreas Pflüger said, "we can’t change the direction of the wind, but we can set sails differently”.