The Role of Technology in Shaping the Future of the Insurance Sector

By Apac CIO Outlook | Monday, October 12, 2020

FREMONT, CA: Technology has become the driving factor in every sector of business. Companies are looking to leverage the latest technologies to stay in business and fight in an increasingly competitive market. The same is the case for the insurance sector. Technology has now become an essential aspect of every stage of the insurance value chain. The majority of insurance companies are now investing in building an ecosystem, Internet of Things (IoT) solutions, big data, and mobile applications to expand their offerings to the customers and build businesses that are resistant to disruption.

The outbreak of the COVID-19 pandemic has impacted businesses around the globe in an unprecedented manner. Insurance companies are now facing a wide range of new problems following the outbreak. The circumstances are changing, and insurers need to adapt quickly to increase efficiency and reduce costs by leveraging innovative technologies and creating new products and services that are tailored to the changing expectations of digital customers.

However, many insurers continue to struggle to launch innovative value-added products successfully. Legacy systems, regulatory restrictions, and the lack of determination are some of the prime reasons for failure. The first step to success for these insurers is to optimize the internal processes. Research shows that the insurers’ net income grew by 66.3 percent in 2018 compared to that in 2017. A significant percentage of this growth can be attributed to the usage of automation, analytics, and insurtech tools that are focused on optimizing specific tasks in the value chain.

As customers move towards digital platforms, their demands have also continuously grown. This has driven the technical departments to focus on more personalized services that can be availed from any place, at any time. As more and more customers shift towards a digital experience, insurers still working with legacy systems need to up their game and match the new-age companies' experience leveraging insurtech. Simultaneously, two emerging trends can be seen among insurance customers; they want to be actively protected and not just insured and want to pay only for their services, like a pay as you go model.