Written by: Neelesh Kripalani, CTO, Clover Infotech
With the insurance industry innovating and transforming faster than ever, market leaders as well as new entrants are looking for new avenues to enhance their customer footprints. Many industry players have turned to technology to streamline their processes and improve ROI. The global Insurtech market was valued at $9,415.28 million in 2020, and is projected to reach $158,994.52 million by 2030, growing at a CAGR of 32.7% from 2021 to 2030. Changes in customer preferences have led to new trends in the insurance industry. Let’s look at few of the top trends that will continue to cause disruption in this industry.
- Microservices architecture for applications
Millennials form approximately 50% of India’s workforce and this generation is rejecting the traditional insurance products and services. The legacy applications based on monolithic architecture cannot keep pace with the evolving needs of consumers. Hence, the insurance industry needs to redesign their offerings and business model to support this shift. One way to do this is by moving to cloud-based microservices platform. When insurance applications are built on microservices architecture, they can be easily scaled up and down depending on the market trend, without incurring any additional cost.
This gives the flexibility to insurers to support myriad ways in which millennials want to select and buy insurance. Microservices architecture also allows room for creativity with user-friendly interface that facilitate seamless delivery of insurance products on any device.
- Cloud-Only Insurance
The shift from traditional to digital insurance has provided insurance providers with accelerated business growth and enhanced customer experience. Insurers worldwide are under constant pressure to innovate and evolve to keep up with market disruptors. Cloud computing solutions, specifically tailored for the insurance industry, can help insurers achieve greater IT agility and shorter project implementation time. It also enables them to test and deploy new technologies quickly. This agility and speed allow them to deliver their service offerings much faster than before.
- Hyper-personalization using new-age technologies
A recent study by Accenture revealed that 75% of customers are more likely to purchase from an organization offering personalized services based on their individual preferences, taste and needs. Hence, it has become imperative for the insurance industry to incorporate the concept of personalization in their offerings. Insurers need to design their offerings in a way that caters to individual consumer’s needs and customers should pay premium only for the risk they’re insuring against.
People want the best coverage for the lowest price. Hence, the latest trend is to incorporate new-age technologies such as AI and Big Data to collect and analyze data to segregate customers on the basis of risk and offer customized premium plans.
- Decentralized Insurance using distributed ledger technology
Decentralized insurance is one insurtech trend that makes insurance products available on a public decentralized blockchain network. This enables customers to buy and use insurance products, without going through middlemen such as agents or brokerages.
Blockchain and smart contracts optimize the efficiency, security and transparency of the insurance industry. Distributed Ledger Technology (DLT) has beneficial applications for streamlining insurance claims processing, boosting cybersecurity protocols and even speeding up payment times. Blockchain’s ability to create trust in a trustless ecosystem through the use of public ledgers and fortified cybersecurity protocols has positive implications for the insurance industry’s future growth.
- IoT in Insurance
The traditional insurance claim process has stayed the same for decades, and it doesn’t sit well with customers. Insurance claims that take several days or weeks to process can be really discouraging. The modern customers use technology in their everyday lives and expect insurance providers to do the same.
IoT can allow insurers to move more quickly and make powerful data-driven decisions. Insurance providers will no longer have to wade through paperwork, and can instead move through the claims process more efficiently. Instead of filling out countless forms, customers can now submit claims via mobile apps by taking a few pictures. Connected devices like biometric and environmental sensors make it easy to calculate risk and adjust policies as situations change.
Nobody had foreseen the unprecedented changes that the pandemic brought along. Suddenly, digital transformation and virtual interaction became a part of our daily lives. Every industry had to adapt to these changes and the insurance industry was no exception. The insurance industry was already going through transformation due to evolving customer needs but now that pace has accelerated by leaps and bounds. As a result, insurers are constantly innovating and integrating new-age technologies in their offerings to make it more attractive. It would be interesting to witness how much the industry gets transformed owing to these new conditions and trends.