We build superior products that harmonise the insurance experience for you and your customers.Find out how we can help your business →
Cast your mind back only a decade or two and you'll remember that much of the work of insurers was done with pen and paper. This was the way it worked for decades, but today the landscape of insurance looks very different.
The insurance industry is undergoing a digital transformation which is led by AI and machine learning technology. Not only is this making life easier for insurers, but it's opening up the floor for innovation to pave the way for new kinds of insurance products.
What does the insurance digital transformation look like?
Insurers are now embracing technologies that ease their workload and improve the quality and value of the service they provide to customers.
In today's competitive market, insurers are realising that it's important to stay ahead of the curve. Customers have high expectations, many of which can only be met by digitising paperwork and utilising artificial intelligence in the workplace.
In essence, the digital transformation of insurance means digitising data that might previously have been kept on paper and adopting digital tools, including new software, that can be used to simplify and streamline working processes and perform advanced predictive analytics that can inform decision-making and product innovation.
The Harvard Business Review breaks digital transformation down into four main areas: technology, data, process, and organisational change. The challenge for insurers is pulling all four of these facets together to create digital change for the better.
What is driving this digital transformation?
A survey by Celent found that the key motivation for insurers driving this digital transformation is improving the customer channel experience, which 77% of insurers said was a significant motivator. Other considerable motivators include implementing advanced data and analytics and achieving process excellence.
For some insurers, this digital transformation is about embracing technologies that can improve the customer experience by introducing new and innovative products; for others, it's merely about keeping up with the competition. In a market where customers are beginning to shop around for superior products, it will be those insurers in the former category who stand apart from the crowd.
What role does AI play in the insurance digital transformation?
Artificial intelligence and machine learning are leading the pack when it comes to those technologies that are proving essential to the digital revolution. We've discussed many use cases before, including how AI and machine learning can be used to process claims data and how algorithmic underwriting can be used by insurance syndicates to automate decisions.
AI and machine learning are integral to a number of the technologies that underwriters and insurers are beginning to take advantage of.
One such technology is big data; insurers have huge amounts of data at their disposal, and this data can be used to improve insurance products and offer more accurate pricing. Human underwriters lack the time and the scope to properly analyse big data sets and turn them into something meaningful; AI, on the other hand, can handle it.
Machine learning and predictive analytics can streamline the work of an insurer, pricing policies and processing claims automatically, which frees up underwriters to spend more time making judgment calls on more complex applications. Live chat and digital assistants are speeding up customer service, while IoT devices provide data - that can be analysed by AI software - that can be used to price innovative new products like pay-as-you-go insurance packages.
There's no doubt that AI is leading the insurance digital transformation, with machine learning technology forming the foundations of the industry's digital armoury.
What does the digital transformation mean for brokers and customers?
Digital transformation across various sectors is often dubbed a 'disruption', but this word brings with it negative connotations that are unwarranted. While some insurers might feel at odds with new ways of working, in reality digital transformation is having a positive, transformative effect on the industry.
For insurers, embracing AI and machine learning can streamline working processes, both reducing workloads and enabling brokers to add value by spending more time on other elements of insurance. AI is improving accuracy in risk identification and enabling brokers to automate claims and offer new products to the market that would not be possible without it.
From the point of view of the insured, AI is even more revolutionary. The insurance digital transformation is paving the way for new insurance products including pay-as-you-go, usage-based (UBI) insurance: for example, a car insurance product that you only pay for when you actually hop in your car and drive it.
Telematics and wearable devices can even be used to offer fairer premiums to policyholders, with data being used to price premiums based on an individual's own risk level rather than a broad category-based approach that grouped policyholders on the basis of little more than demographics.
If all of this still sounds futuristic, it might be time for a friendly reminder that the future is very much here already. Experts predict that by 2025, the world will be home to up to one trillion connected devices and by 2030, dynamic, usage-based (UBI) insurance products will be proliferous across the globe.
This is perhaps the primary reason why the insurance digital transformation is snowballing; once customers get a taste for the highly individualised products they can expect from digitally-led insurers, it becomes necessary for traditional insurers to follow suit if they want to offer similar value.
Learn more about beginning your digital transformation with Artificial
If your brokerage needs to get a foot in the door of digital transformation, read more about the basics of AI in our AI buyer's guide. This Artificial white paper will teach you how to make the right AI buying decisions and how to prepare your team for a revolutionary new product.
At Artificial, we are dedicated to making digital transformation accessible to insurance providers of all sizes. Get in touch with us to find out more about how artificialOS could help you to automate processes and transform your business.