Multiple disruptive forces threaten traditional insurance business models, necessitating a rapid and transformational response in order to remain relevant. Most of these trends offer new opportunities to insurers such as better management of risks, improvement of processes and promoting risk-based pricing.Key among-st these disruptive forces are;
1. Technology & Big Data Revolution..
Disruption from new technologies is a given. Acknowledging it and acting on it are very different propositions. Insurance companies need to know how to deploy the right technology for the right purpose. For instance, technology presents insurers with powerful tools to understand changing customer needs and expectations through data analytics.
Big data enables customization and accuracy of insurance products. Achieving the full benefits will require cross-sector partnerships and significant investments in data, infrastructure and talent. Such partnerships with technology companies will improve operational efficiency and respond quickly to changing customer expectations.
Insurers that are client-centric, innovative, technologically up-to- date and who invest in their talent of the future will lead an increase in insurance penetration in Africa.
2. Talent Shortages.
In order to attract and retain talent insurers need to invest more in training employees of the future. Emphasizing the same skills and knowledge of the early 1900’s will likely result in missed opportunities, lack of innovation and misguided strategies.
As the User Experience of buying insurance changes to better accommodate customers’ needs, new skills to pursue innovative solutions that drive engagement and growth need to be focused on by employers.
3. CyberSec (Cyber-Security) Threats.
This is one of the major emerging risk in insurance industry trends. Did you know cyber-crime is one of the fastest growing industries? Billions of people were affected just last year. As our world becomes more digitized our risk of becoming vulnerable to cyber criminals’ increases. It is an issue that insurers should look at from both the perspective of a security provider and a client since it affects them just as much.
While risk management is something that insurers deal with daily, they seem to be a bit behind in terms of cyber precautions when compared to other financial sectors.
Blockchain offers solution to most problems facing insurers as well as the customers.
There is incredible growth going on in the Blockchain insurance sector. The market for Blockchain in insurance increased from $65 million in 2018 to $ 1.4 billion by 2023. As a result, demand for Blockchain development services in the insurance industry is increasing.And it’s impact can already be felt through;
- Collection of information used in on-boarding new customers process through Blockchain platform.
- Validation of document authenticity
- Providing permanent audit trails that can be used to identify claims. Insurance constantly deals with fraud cases, adopting use of Blockchain helps in curbing fraud.
The progress and viability of Blockchain in the Kenyan Financial Services Industry is also wholly acknowledged by the Kenyan Government in this research finding through the Association of Kenya,Blockchain Advisory Council and it’s steps towards adoption of this technology are commendable.
5.Claims Automation with AI:
It involves making processes simpler and introduces efficiency through automation. I believe that this will have a profound impact on the future shape of the workforce and the skills that will be required in the industry.A perferct example would be this case study by Cognizant.
“Automation would ideally improve its first notice of loss process to meet the dual mandate of following business protocol while being sympathetic to its customers. Although the company must be cognizant of the fact that a first notice of loss process can be stressful for customers initiating a claim, it must also ensure that the issue is resolved to the customer’s satisfaction while minimizing the risk of litigation, detecting potential fraud and controlling costs.“
It’s rather cliche but true, …the writing is on the wall.
Insurance companies still struggle to provide their customers with the value they’re looking for. Most of them are afraid to take steps to introduce value innovation and to stand out. Companies that will respond and adopt to this inevitable change stand to reap big while those that adopt a wait to see approach will cheer early adopters.