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10 Technology Trends shaping the Insurance Industry in 2022

Written by Sarah Lewis

May 9, 2022

  1. CARE Distribution Channels

As the digital landscape develops, companies are competing with each other to offer the best customer service experience with their distribution channels. The goal for many is to adhere to the care model:

  • Convenience – Make it easy for the consumer to buy insurance
  • Advice – Clients should have access to the resources and information they need to make informed decisions
  • REach – Get to your clients when they most need and want your product

Few provide all three to their consumer base.
Digitalizing distribution efforts and following the CARE model will keep companies competitive in response to the behavioral changes we are seeing among customers that are sure to continue in the future.

  1. Faster Payouts

People are becoming used to receiving faster and faster results as technology continues to improve. Pay cycle time is no different. The time it takes from opening to closing a claim is quickly becoming one of the most influential differentiators between insurance companies. The most successful will be using technology to swiftly resolve claims at the touch of a button.
Solutions some have found include using AI-enabled tools that automate their estimation and inspection processes. These tools are predicted to make the information gathering process faster and make settling claims more comprehensive.

  1. Cyber Attack Prevention

Recent years have seen an increase in cyberattacks, with 2021 having dramatically high spikes. Ransomware is also becoming more popular as a tool to extort money from companies of all sizes. The industry has introduced cyber insurance as a response, but this does not answer the root issue, how do you prevent attacks in the first place? It’s been noted companies with cyber insurance may be more attractive targets because whatever money they ransom will be paid back to the company.
In 2022 the goal is not to pay back but to protect. Insurers are working with cyber-security experts to limit the opportunities these scammers have to attack. This proactive approach includes new products that will be of interest to companies large and small.

  1. Usage-Based Models

In 2021 there was a massive increase in usage-based insurance products. The pandemic allowed consumers to become aware of the waste that occurs when paying for insurance, particularly on their cars sitting unused in their driveways. This will not stay confined to auto insurance as daily routines shift and change for many, and successful insurance companies will be offering products based on user behaviors.
User-based insurance will be something to follow to understand it better when it enters the industry as a whole.

  1. Faster Application Processes

The speed of your process is highly influential on your level of competitiveness in today’s landscape. Change came at a slow pace in the past, but now it comes at a faster and faster rate. Software, features, and products are continuously changing, and you have to keep up or risk being left behind. Insurance companies must reduce the time it takes to go through their application process to follow the market.

  1. Comprehensive Automation

Automation is not a new concept in the insurance industry. Robotic Process Automation (RPA) was the first attempt to speed up processes while not changing the applications used and being cost-effective. This took care of the repetitive steps in the insurance process but didn’t affect productivity or any core functionality in need of automation.
Currently, AI and Machine learning is the backbone of intelligent automation, where not only repetitive tasks are automated but the decision-making process itself. Intelligent automation is expected to directly influence decision-making in underwriting, claims, and other such areas of operation in the coming years. Automating these processes increases efficiency and better customer experiences, from faster processing to the rapid deployment of targeted insurance products.

  1. Climate Risk

It seems as if climate-related disasters are becoming more and more common. Hurricanes, devastating storms, floods, forest fires, and more are responsible for mass loss in our communities as well as in the insurance field.

With the increased frequency of these events, property insurance has risen as a response. However, if rates continue growing at this rate, insurance will quickly become unaffordable. To ensure this doesn’t happen, the industry’s responsibility is to further understand the risks and develop more accurate ways to predict the impact of these severe weather events and what protections are relevant.

Resilience-oriented strategies that mitigate and reduce losses associated with climate-related disasters will be trending in the near future. Competitive insurance companies will use Big-data type modeling solutions to semi-accurately predict weather risks. While this isn’t an option currently, the recent past has shown it as a necessary next step, with 2022 acting as the starting line.

  1. Risk pricing Accuracy

Discussions of telematics have become a hot topic not only for offering discounts to customers but also for setting appropriate prices for insurance products; matching rates to the expected risks. There is currently a lot of focus on innovating these processes to increase fidelity between the risks and price of insurance. A result of these efforts has been a change in models insurers use. The traditional linear regression models are being replaced by AI and Machine learning practices with better predictability and fidelity in relation to the associated risk.

These new AI and Machine learning models are being rolled out at scale across all parts of the insurance industry.

  1. Integrating Sustainability into Strategy

The insurance industry has traditionally been uninvolved with social responsibility movements and environmental concerns. However, several insurers have taken steps to change the status quo, working on climate initiatives to divest themselves from fossil fuel involvement, refusing to cover extractive industries, or denying insurance to carbon-based industries altogether. Global resilience strategies have become more popular as companies adopt things like flood protection or building standards to foster a more sustainable and lower-risk global environment.

  1. Collaboration

The most notable trend for 2022 is the selling of embedded insurance products. This refers to selling insurance products as a part of a larger purchasing experience. This change in process has fundamentally changed how insurance is sold and consumed. Embedded insurance is becoming more popular due to the increased use of APIs that offer simple ways to connect insurance to other customer experiences. It will become increasingly common for insurance companies to use APIs to expose themselves to a broader marketplace.

With all our resources and technologies, Agent Pipeline is here to assist agents in staying competitive in the industry. To learn more about technology trends and how we can help, contact us at 800.962.4693.

 

 

 

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