Among businesses, insurers rule the game when it comes to appraising value, managing risks and monetising the future. That’s why the insurance industry is all-in for digital.
In today’s economy, nobody can continue doing things the same way and expect to withstand the digital torrent. Even antique shops, organic farms and artisanal handicraft sellers are scurrying to make their businesses digital. Likewise, the centuries-old insurance industry saw the signs, did the math and smartly embarked on a massive transformation — some players making giant leaps, others taking steady, tiny steps, but all moving towards a new digital reality.
The entire world of finance is rapidly changing: artificial intelligence (AI) (such as Abe AI) helps consumers stay within budget; mobile apps (such as Wally) show how to maximise credit card benefits; and software tools (such as TurboTax) speed up tax prep. Meanwhile, banks embrace machine learning to augment their back-office operations and support their customer-facing staff. Leading institutions such as DBS now offer a full digital banking experience (digibank) built on technologies such as short message service (SMS), biometrics, AI and mobile computing.
The rationale behind the change is easy to trace: Just follow the money. Because customers control the flow of money, they also call the shots. And digital customers want everything that will make it easier for them to access their financial accounts, spend funds, grow their wealth and manage risks. They want policy applications — and claims — to be processed as fast and as efficiently as possible.
Digital customers want secure transactions and seamless experiences that can be accessed over any channel or on any device. They want exceptional service 24×7, hyper-personalized for their unique needs. No insurer, bank or other financial institution can provide that without shifting its mind-set, rethinking its customer engagement strategies, and adopting sophisticated technologies that will not only deliver what customers want but also drive operational efficiencies and scale revenue.
For insurers, orchestrating the experiences that the next generation of customers demands plus the business outcomes that shareholders expect entails a complete embrace of digital culture.
Adopting AI in the insurance sector
While insurance lags behind other financial sectors when it comes to technology adoption, it is catching up. Today, practically every player in the sector — whether small or big, incumbent or start-up — already has a digital footprint. And it goes beyond online access and back-office automation. In fact, a new sub-field within financial technology appropriates leading-edge innovations in AI, machine learning, data science, image recognition and natural language processing to dramatically enhance the business and benefits of insurance.
Called “insurtech,” the subfield is gaining traction and attracting a steady stream of hefty investments, signalling market confidence in its long-term profitability. The game-changing potential of insurtech is already being realized:
- Automating workflows in processes such as applications and claims assists underwriters and provides a better customer experience.
- Using data analytics helps achieve a more equitable risk distribution and improves pricing models.
- Consumer data can be used to develop new, responsive insurance products.
- Machine learning improves fraud detection and early warning systems.
- Virtual assistants help insurers market and sell their products better.
- Robo-advisors educate and guide consumers in making insurance-related decisions.
- AI-assisted learning management systems (LMS) provide hyper-personalized learning for both customers and staff.
Digital insurance in Asia-Pacific
Asia-Pacific insurers are among the earliest adopters of technology, with players from Southeast Asia leading the charge.
Much of this trend can be attributed to consumer demographics. While the regional population is very large, insurance penetration in the region is comparatively low. Dramatic improvements in personal wealth and purchasing power as well as the rising proportion of tech-savvy millennials and younger generations compel insurers to become more customer-centric and to build the digital environment preferred by the vast majority of finance consumers. Competition has also become fiercer, forcing industry players to adopt measures that enhance sales capabilities and improve operational efficiencies.
Noteworthy players in the region include AIA, which launched an online sales platform that enables policy seekers to buy insurance products in just 3 minutes. The Hong Kong-based insurance group also launched a chatbot named Andy that answers insurance-related questions from customers. Meanwhile, insurers such as Manulife, MetLife and Allianz started harnessing the power of data to calibrate premiums and coverage. Incumbents enjoy an early lead, but new players such as Singapore Life possess greater agility in introducing innovations like paperless application and policy management.
Embracing digital enables insurers to ditch outdated processes and systems, improve profit margins and generally make every stakeholder in the business happier. Automation frees underwriters from paperwork and tedious tasks, allowing them to focus on making meaningful connections with clients. Data analytics help actuaries calibrate risks, pricing and coverage with ever-greater precision. Omnichannel access vastly improves the experience of agents, prospects and policyholders to sell, buy or customise insurance products whenever they want and from wherever they are.
The future is uncertain, but going digital guarantees relevance whatever happens down the line. Insurers know this. After all, finding the sweet spot between uncertainties and assurance is their game.
Interested in learning more about where the insurance industry is headed? Watch the 3-minute video, Defining the future of digital insurance.