The first half of 2024 has witnessed significant strides in technological adoption, reflecting the industry’s commitment to innovation and enhanced customer experiences.
Insurtech Insights explores the key trends shaping the industry in the second half of 2024 and beyond, offering insights into emerging technologies, market dynamics, and future opportunities.
1. NLP & AI-Powered Chatbots for Insurance
Natural Language Processing (NLP) and AI-powered chatbots are revolutionising customer interactions in the insurance industry. These digital assistants can handle inquiries, process claims, and provide policy information in real-time, enhancing customer satisfaction and operational efficiency. By 2025, Gartner predicts that AI-powered chatbots will handle 75% of customer interactions in the insurance industry. Companies like Lemonade have successfully implemented AI-driven chatbots, significantly reducing response times and operational costs.
NLP (character recognition) and OCR can also work together to analyse insurance claims. For instance, IBM Watson can read both organised and messy text data to find the necessary details for processing claims. It then sends this information to a machine learning algorithm, which sorts the data into the correct sections of the claim form.
Industry leaders in NLP: Expert AI, Allstate, Sapiens, IBM
2. Growth in Embedded Insurance
Embedded insurance is transforming the traditional insurance buying process by integrating coverage directly into the purchase process of products and services. The trend simplifies the insurance acquisition journey, improves customer experience, and opens new distribution channels for insurers. By leveraging digital platforms and partnerships, embedded insurance reduces barriers to entry, enhances customer experience, and drives higher adoption rates. This trend is reshaping the insurance landscape, promoting innovation and expanding market opportunities.
According to a report by McKinsey, embedded insurance could account for up to 25% of the global insurance market by 2030. Companies like Tesla exemplify this trend, offering real-time premium adjustments based on driving behaviour.
Industry leaders in embedded insurance: Cover Genius, Munich Re, bolttech
3. IoT and Telematics for Usage-Based Insurance and Claims
The integration of IoT and telematics in insurance is enabling the development of usage-based insurance (UBI) models. These technologies provide real-time data on vehicle usage, driving behaviour, and environmental conditions, allowing insurers to offer more personalised and fairer premiums.
Telematics uses this data to assess risk more accurately and offer personalized insurance premiums based on actual usage. This results in fairer pricing for policyholders and incentivizes safe driving. In claims processing, IoT and telematics provide precise accident data, speeding up verification and reducing fraud. By leveraging real-time information, insurers can enhance risk assessment, optimize pricing, improve customer satisfaction, and streamline claims handling, ultimately transforming the insurance landscape
According to Allied Market Research, the global UBI market is expected to reach $125.7 billion by 2027. Companies have reported significant increases in customer acquisition due to innovative UBI policies.
Industry leaders in telematics: Dolphin Technologies, Metromile, Progressive, Liberty Mutual
4. AI-Driven Data Analytics for Automated Underwriting
AI-driven data analytics is playing a crucial role in the evolution of underwriting processes. By leveraging synthetic data and advanced analytics, insurers can automate underwriting, leading to more accurate risk assessments and faster policy issuance. Automated underwriting powered by AI reduces processing time, minimises human error, and enhances efficiency.
It also allows for real-time data integration from various sources, such as social media and IoT devices, providing a comprehensive view of the applicant’s risk. Ultimately, AI-driven data analytics improves accuracy, speed, and personalisation in the underwriting process, leading to better customer experiences and optimised risk management.
PwC reports that automated underwriting can reduce underwriting costs by up to 30%. Zurich Insurance, for example, uses AI-powered platforms to streamline underwriting processes, enhancing efficiency and accuracy.
Industry leaders in AI-Driven Data Analytics: Zurich Insurance, Lemonade
5. Cybersecurity Risk Assessment Tools
As cyber threats become increasingly sophisticated, insurers are developing advanced cybersecurity risk assessment tools. These tools leverage machine learning to identify vulnerabilities, predict potential threats, and provide actionable insights to mitigate risks. They also help insurers enhance their own cybersecurity defenses, protecting sensitive customer data. By providing a comprehensive view of an organization’s cybersecurity health, these tools enable insurers to offer tailored coverage, improve risk management, and ensure compliance with regulatory standards.
According to Allianz, the global cyber insurance market is expected to reach $20 billion by 2025. Companies like Beazley use machine learning to analyse clients’ IT infrastructure, identifying vulnerabilities and strengthening cyber defences.
Industry leaders in cybersecurity offerings: Coalition, Cowbell Chubb, AXA XL, Tokio Marine
6. Automated Digital Document Processing Solutions
Traditional document processing in insurance involves manual data entry, verification, and analysis. Automated digital document processing solutions use AI and machine learning algorithms to extract and process data from various documents, improving accuracy and efficiency. This leads to faster and more accurate processing of claims, applications, and policy documents. By eliminating manual data entry and minimising errors, these solutions enhance operational efficiency and reduce costs. They also improve compliance by ensuring consistent and accurate record-keeping. Overall, automated document processing streamlines workflows, boosts productivity, and provides a seamless experience for both insurance employees and customers.
McKinsey reports that automation in document processing can reduce administrative costs by up to 60%. Zurich Insurance, for instance, has implemented low-code platforms to streamline document processing and internal workflows.
Industry leaders in automated digital document processing: EY, Pigeon, Indico Data
7. Hyper-Personalisation of the Insurance Value Chain
Hyper-personalisation enhances customer satisfaction and loyalty. By leveraging advanced data analytics and AI, insurers can offer tailored products and services that precisely match individual needs and preferences. The personalised approach improves customer experiences, leading to higher retention rates. Additionally, hyper-personalisation enables insurers to better assess risk, optimise pricing, and reduce fraud. As customers increasingly demand customised solutions and seamless interactions, insurers that adopt hyper-personalisation gain a competitive edge. The trend is driven by the convergence of big data, AI, and evolving consumer expectations for personalised, efficient service.
Accenture reports that insurers implementing hyper-personalisation strategies can achieve a 15% increase in customer retention and a 10% increase in premium growth. AXAs uses AI to analyse customer data and provide personalised policy recommendations.
Industry leaders in hyper-personalisation: INSTANDA, Cognizant
8. Drones and Robotic Insurance Technology
The trend of using robots and drones in the insurance industry is growing due to several key factors. First, these technologies offer significant cost efficiency by automating tasks that would otherwise require substantial human labor, such as inspections and customer service. They also enhance speed and accuracy; drones provide quick, precise data for property assessments, while robots streamline claims processing and customer interactions, leading to faster, more accurate service.
Additionally, drones can safely inspect hazardous or hard-to-reach areas, minimizing risks for human workers. Advances in AI, robotics, and drone technology have made these tools more accessible and effective. Modern consumers’ expectations for fast, efficient, and seamless service also drive this trend, as robots and drones help meet these demands. Furthermore, these technologies gather and analyze large volumes of data, improving risk assessment, underwriting, and fraud detection. Overall, the numerous benefits of robots and drones are fueling their growing adoption in the insurance industry.
Industry leaders in robotic technology: Farmers Insurance, State Farm, Nationwide
9. Low-Code Digital Infrastructure Transition
Low-code platforms provide a visual development environment, allowing users to create applications using drag-and-drop components and pre-built templates. This approach reduces the need for extensive coding expertise and accelerates the development process. This accelerates time-to-market, reduces development costs, and enhances agility. Non-technical staff can also participate in app development, fostering innovation and improving responsiveness to market changes. Additionally, low-code platforms streamline integration with existing systems and enhance scalability. Overall, they empower insurers to optimise operations, improve customer experiences, and stay competitive in a rapidly evolving digital landscape.
Allianz has leveraged low-code platforms to streamline its internal processes and improve customer service. Zurich Insurance also uses low-code platforms to develop customer-facing applications and streamline internal processes, enhancing collaboration between IT and business teams.
Industry leaders in low-code digital infrastructure: Zurich Insurance, Allianz, Everest Group, Unqork, Appian
10. Smart Contracts: Blockchain in Insurance
Smart contracts are self-executing contracts with the terms of the agreement directly written into code, running on blockchain networks.
In the insurance industry, smart contracts can automate various processes, such as policy issuance, claims processing, and premium payments. These self-executing contracts, with the agreement terms directly written into code, enable automatic claim verification and payouts when predefined conditions are met. This reduces the need for intermediaries, lowers costs, and minimises fraud.
For example, in travel insurance, a smart contract can automatically trigger a payout if a flight is delayed. Additionally, blockchain’s transparency and immutability ensure that all transactions are secure and verifiable, enhancing trust between insurers and policyholders. Overall, smart contracts enhance efficiency, accuracy, and reliability in insurance operations. According to PwC, blockchain technology can reduce fraud in the insurance industry by up to 30%.
Industry leaders in smart contracts: Lemonade, Nationwide
