Most economists agree that a recession looms, but the inflation rate has slowed, and this provides some optimism about a potential downturn’s length and depth. Regardless, the economic circumstances have insurance providers looking for ways to improve efficiency and customer loyalty.
Savvy insurers can harness digital trends and technology that are already emerging to streamline customer-facing processes, improve the customer journey and build more positive, valuable relationships in the year ahead. Here’s a closer look at seven 2023 trends and how forward-thinking insurers can use them to gain a competitive advantage and move the industry toward a better future.
Expansion of data sources: The most successful insurers are already using data and analytics to refine their underwriting practices and manage risk more effectively. Insurers also rely on data to handle disaster response. In the year ahead, insurers will double down on data and expand their sources, finding valuable information from a wide variety of datasets, including civic water table data and images captured by precision cameras. In 2023, more comprehensive data will drive greater efficiency and boost the bottom line.
More insurance products in the cloud: The migration of insurance products from on-premises systems to the cloud will accelerate in the year ahead. Many insurers have already made the initial leap and moved some core product functionality to the cloud, but in the coming months, there will be a continued push to utilize the cloud and further streamline operations.
Data privacy legislation’s impact on claims management: Insurers operating in Canada and the U.S. will have to be mindful of privacy protections enacted at the federal, state and provincial levels. This is because it may impact how they handle claims, including data access and storage. For example, in the U.S., some states are the workers’ compensation claims payer, so insurers are bound by state laws in addition to federal privacy protections such as HIPAA. Privacy legislation is trending up, and the most efficient way to handle it is to build compliance into the technology at the ground level.
Commercial text messaging growth: Most people want businesses to communicate with them by text — according to one study, 64% of customers overall want more text communication from brands, and more than 80% of Gen Z customers prefer this channel. Commercial texting is on the rise in the U.S., so it’s critical for insurers to understand the importance of obtaining and managing consumer consent for text communication and to fully integrate opt-in and opt-out functions. Properly managing text communication using consent and valuable messaging will improve outreach and customer relationships.
Core systems efficiency: As part of their drive toward greater efficiency, insurers will revisit the function of core technologies like their customer relationship management and content management systems. In projects aimed at improving customer loyalty and outreach results, insurers will look for ways to streamline and simplify systems, evaluate product overlap and aim for vertical integration to achieve efficiency and cut costs.
Immediacy of information and payments: The SaaS purchasing model, i.e., regular monthly fees for information and services, is gaining currency across multiple sectors over the more traditional, large upfront investments. The immediacy of information and payments offered by this model will make inroads in the insurance industry in 2023 to streamline payment processing and offer greater flexibility. This trend is likely to drive changes across the industry, including on the claims payment side and premiums collection processes. Insurers will need to have the right payment processing and automation technology in place to ensure payments and available information are as easy to access as possible for customers.
Smart home and smart city evolution: The technology exists today to harness data from smart homes and smart cities to keep people safer and prevent or mitigate damage to property. But first, broad concerns around privacy, consent, transparency and trust will have to be addressed. Insurers will be instrumental in unlocking that future with better cyber policies, but moving forward will also require government action and consumer consensus on trust and safety.
This is an exciting time for carriers, agents, brokers and vendors in the insurance industry. Digital technologies and data and analytics capabilities are driving new possibilities in all facets of operations, from customer communication to claims adjudication.
Smart insurers are getting ahead of these trends using automated technology to understand customer expectations, increase customer loyalty, safeguard privacy and improve efficiency. There will be challenges in the year ahead, and an economic downturn seems all but inevitable. That said, insurers who automate workflows and communication can get ahead of the curve, compete more effectively and thrive in 2023.
Source: Digital Insurance
