Samir Kumar Palit, Delivery Manager, TCS BaNCS for Insurance
Digital Disruption in Insurance- a Myth or Reality?
Digital disruption, a key phenomenon concurrent in many industries of this day and age, has made its way into the insurance industry as well. Starting from product distribution to data analytics, new-age technologies are creating newer opportunities, increasing competitive advantages and dissolving traditional boundaries for companies across the globe.
For instance, emerging technologies like Artificial Intelligence (AI), Robotic Process Automation (RPA), chatbots, digital tools, blockchain, IoT and data analytics, have played a major role in ensuring greater market transparency, increased competition, growth of direct channels in the market and disaggregated value chains. Its vast applications across the insurance industry have paved way for path-breaking innovations like advanced processing capabilities, lower costs and streamlined operations facilitated through RPA and AI, personalized customer interactions through chatbots communicating with humans, machine learning enabling L&P insurers to gather insights from near real-time data via wearables and instantaneous fraud detection with AI providing access to data from a large number of sources to be used for analysis.
These advancements in digital technologies and analytics have led to facilitating usage-based pricing of insurance products. The increasing popularity of wearable devices can enable life and health insurers to better engage customers while obtaining real-time insights. Moreover, wearables and other health technologies are providing insurance providers with vast amounts of data that can be used to price rates more profitably and help customers prevent injuries and diseases. These days, connected wearable devices are being utilized in some really interesting ways, for example, the vitality program enables a diabetic life insured to track activity using an Apple watch and if a certain goal is met, the insurance premium for the following year can be reduced by the insurance provider. The P&C line of business was the first to adopt IoT, and the L&P sector is now witnessing more and more takers.
Insurers today are looking for a one-stop solution rather than just an insurance product. We are seeing the emergence of firms that offer products and services only for specific parts of the insurance value chain, or a disaggregated approach that creates fragmented systems where customers may interact with multiple providers as opposed to interacting with a single, vertically integrated player. The ease provided by plug-and-play systems for exploring new technologies makes a lot of things possible especially for incumbent firms restrained by legacy systems and processes. A single back-end platform can meet customer demands and foster greater transparency, convenience, and personalization by aggregating information from multiple value chains. This new ecosystem of players makes it imperative for insurers to develop and integrate with the right partners to avail a consolidated solution, capable of meeting requirements.
So, What Could be the Next Step?
With rising customer expectations, driven by their experience in other industries and growing competition, it is important for insurers to become more customer centric, rather than product centric. Connected technologies and advanced analytics are making it possible for insurers to connect with customers in a personal way and insurers are increasingly providing customers with a variety of value-added services in addition to core insurance services, creating a win-win situation for both the customer and the insurance provider. Value-added services can help insurers achieve better risk mitigation, deeper customer relationships, and competitive differentiation like medical teleconsultation, health care access, health management apps to help customers follow their medication etc.
To stay ahead of the curve, insurers would need to rapidly adapt to the dynamics of the insurance market and update themselves on newer technologies that would help them decide their next big move in order to disrupt, and not be disrupted.
Disclaimer: Views or opinions represented in this blog is based on author’s own research and does not represent TCS BaNCS.