Crunchbase reports “In the world of venture capitalism, you’d be hard-pressed to find a sector with more buzz than insurtech,” and Deloitte contends a revolution in insurance has been sparked.
There’s no denying it: insurtech is booming.
There are a few trends that I think executives should anticipate next. Let’s take a look at what’s to come in 2022.
Prediction #1: Rapid adoption of artificial intelligence by leading insurance carriers will grow with an emphasis on implementing a touchless claims process
As an industry, insurance has been widely perceived to lag in the adoption of cutting-edge technologies, like artificial intelligence and machine learning, to improve existing business functions and processes — until the pandemic hit. Now, 82% of insurers believe COVID-19 created more impetus to implement next-gen tech solutions, with AI expected to be a focal point, according to a survey from Digital Insurance.
Let’s say you’re one of the unlucky millions who find themselves in a fender bender this year. Even with minimal damage, you might expect a painstakingly long process before you’re back on the road. That is unless your insurer is taking advantage of the innovative insurtech solutions available today, such as AI.
As the economy bounces back and customer demand for a frictionless customer experience heightens acceptance and adoption of AI will only continue to explode, whether it’s to accelerate claims as we do, or in areas like underwriting and fraud detection.
One of the most significant transformations AI offers to the insurance industry is the ability to execute touchless claims, or claims that are entirely processed through AI, and despite little attention, this automation is happening right now.
With major insurers realizing its benefits — timelines cut from weeks to seconds, spared resources so experts can focus on complex cases and overall happier customers who settle faster — we’ll only keep hearing about touchless claims and it won’t be long before it becomes an industry standard.
Prediction #2: Insurers will weigh tech solutions to address the impact of climate change
This summer, one in three Americans experienced a natural disaster, according to the Washington Post. With a global spotlight on climate change and how businesses address its impact, which includes more frequent and costly catastrophic events, the insurance industry is in a unique and pivotal position to uncover solutions that directly support customers, who so far this year are estimated to have endured a record $104.8 billion in damage.
And industry leaders understand this: a recent survey from BlackRock reported that 95% of global insurers anticipate climate risk to impact portfolio development over the next two years. With almost two thirds of respondents also reporting plans to increase spend in tech solutions in the next two years, insurance leaders have the opportunity to invest in products that tackle the disruptions caused by climate change.
The good news for insurers amidst the climate crisis is that ever-advancing technology, like Tractable’s AI and others such as risk modelling or underwriting automation, has opened the door to insurtech solutions that can be quickly and efficiently implemented and make an immediate difference for customers and our environment.
Prediction #3: Established incumbents will feel intensified pressure to accelerate tech offerings to compete with up and coming industry players
Not only will insurtechs continue to experience explosive growth in the coming year, but the insurance industry will be faced with another shift as the next generation of customers begins buying insurance. Legacy industry players, including the top P&C insurers, will be forced to evaluate their tech stack and integration of innovative tools to stay competitive – both against fellow incumbents and digital insurers like Lemonade and Hippo, who already embrace new technology.
As insurers begin to zero in on a new generation of digitally native customers, we’ll see more partnership and even M&A activity between incumbents and insurtechs. Collaboration will allow the industry to more swiftly meet the demands of Gen Z and young Millennials who expect speed, exceptional accuracy and an overall frictionless experience from the palm of their hand, combined with the reliability and security offered by established insurers.
Already, most leading insurers are implementing emerging tech like artificial intelligence and soon will come a day when the efficiencies and automation these technologies offer are the industry standard. Maintaining a real competitive edge will mean having these solutions fully implemented with trustworthy AI partners, and industry executives should prioritize this in 2022 to get ahead, before features like touchless claims are considered ubiquitous.
2022 will be the time for industry incumbents to invest in insurtech partners and solutions that allow them to stand out and better prepare for continued disruption and ever-evolving consumer expectations. As the world begins to truly bounce back from the pandemic era and realizes the remarkable innovation that resulted from the past two years, we’ll continue to see a rapidly evolving industry with new technologies and new industry leaders emerging.
Here’s the article on DigitalInsurance in case you’d like to share it.
Photo credit: Aaron Burden