The COVID-19 pandemic has surely spurred digital transformation in insurance.
Besides software solutions supporting remote work, the industry’s been quick to adopt robotic (RPA) and intelligent process automation (IPA) tools to streamline claims processing. Telematics usage has also soared, paving the way for usage-based insurance (UBI) programs. And generative AI helps tech-savvy agents serve customers better and excel at risk assessment.
A team of innovation analysts from Symfa, a custom insurtech development company specializing in workflow automation and optimization, has summarized the top technology trends disrupting the global insurtech market, which exceeded $5 billion in 2022 and could be growing at a CAGR of 52.7% in the next seven years.
Key Insurtech Trends for 2023
Trend #1: Increasingly Personalized Customer Experience
Insurance companies are placing a strong emphasis on delivering personalized experiences to customers. And here’s where recent technology advancements come in handy.
Let’s take ChatGPT, a large language model (LLM) developed by OpenAI. Your company can turn the tool into a virtual assistant for your website and customer support platforms. It could also help you craft more detailed customer profiles and personalized policy recommendations — and there’s no shortage of plug-ins to assist you with the task. Similarly, intelligent algorithms can provide insurance companies with insights and recommendations for risk assessment, fraud detection, and smarter underwriting decisions.
Other insurance technology trends in customer experience personalization include the implementation of multi-language portals and mobile applications, social listening tools, and even immersive technologies like augmented reality (AR). These technologies open up new self-service opportunities for digital-first customers and empower agents to become better salespeople.
Trend #2: AI-Driven Analytics and Automation
By 2025, 32% of insurance companies will move their IT infrastructures to the cloud, unlocking its endless innovation potential.
In addition to efficient data storage and traditional analytics, cloud vendors offer services like AWS SageMaker and Azure Machine Learning. These solutions allow companies to train and deploy custom machine learning (ML) models, tapping into predictive and prescriptive analytics.
- Predictive analytics helps spot correlations in large datasets to anticipate trends (e.g., insurance sales volumes in Q4), assess the likelihood of fraudulent activity in a particular customer group, or prevent customer churn.
- Prescriptive analytics solutions serve as personal advisors to your agents, identifying the root causes of particular events (think sudden drops in home insurance sales) and recommending the best course of action (e.g., offering bundled policies coupled with a customer referral program).
But the cloud is not the only place where the AI magic happens.
Automation Anywhere, Blue Prism, Power Automate, and other RPA giants infuse their systems with artificial intelligence (AI) algorithms, transforming them into IPA solutions.
This could be a game-changer for the insurance industry, where agents must spend several days manually verifying reports and damaged photographs as part of claims processing. Lightweight bots with natural language processing (NLP) and computer vision (CV) capabilities can do that in minutes, taking the burden of mundane work off your employees’ shoulders and freeing up their time for meaningful interactions with customers. And that’s why we consider AI the biggest and most promising insurtech trend for years to come.
Trend #3: Mass Adoption of Usage-Based Insurance
Usage-based insurance is another insurtech trend that will continue to gain momentum in 2023.
Also known as telematics insurance, UBI calculates personalized insurance rates based on the insured’s actual usage patterns and driving behavior. Instead of relying solely on traditional risk factors such as age, gender, and location, usage-based insurance scavenges data across various technologies to assess driving habits accurately.
Some examples of technologies used in UBI include onboard computer systems, custom telematics devices equipped with sensors, data analytics modules deployed in the cloud and closer to the edge of the network, and GPS.
What makes us think UBI will become one of the hottest technology trends in the insurance industry this year?
With the extended work-from-home policies, growing climate change concerns, and burgeoning sharing economy, we’ll likely see fewer vehicles on the roads in the near future. As a result, more car owners will lean towards dynamic insurance models, and agents will have to follow suit.
Additionally, there have been significant advances in the connectivity and data processing fields, which allows companies to analyze more real-time data, get better at driver behavior profiling, and accelerate claims processing.
Trend #4: Proactive Approach to Cybersecurity
As cyber threats continue to evolve and multiply, cyber insurance is on track to become a $20 billion market in just two years.
To help customers mitigate the financial impact of cyber accidents and enhance data security measures, insurers are expected to work in tandem with technology companies to create and implement innovative products addressing present-day security risks, including data theft, malware attacks, social engineering, and crypto-jacking.
Some examples of such products include:
- Cyber risk assessment platforms, such as ConnectWise Identity and Tandem
- Real-time monitoring and notification systems like Splunk, POF, and OSSEC
- Incident response services from Cisco and IBM
While the list is not complete, it’s worth mentioning that most cybersecurity tools in the insurance industry rely on ML-based network activity and data monitoring, bringing us back to the analytics and automation insurtech trend.
Trend #5: Insurtech Partnerships and Ecosystems
One of the prominent insurance technology trends for 2023 revolves around closer cooperation between traditional insurance companies and tech vendors — specifically, startups.
Insurers recognize the need to tap into external expertise and technologies to accelerate their digital transformation journeys. And life insurance companies go as far as establishing venture capital divisions, aiming to get a competitive edge by acquiring novel technology solutions and bridging the widening talent gap.
According to recent studies from E&Y and Swiss Re, 75% of insurance executives view insurtech partnerships and collaborative ecosystems as key innovation enablers in the digital era. And, having analyzed insurtech trends for 2023, we find it hard to disagree with the statement.
Summing It Up
From personalized customer experiences to advanced analytics, AI, UBI, cyber insurance, and strategic partnerships, the insurance technology landscape in 2023 is filled with promising trends that hold the potential to reshape the sector.
By embracing these trends and focusing on digital transformation, insurance companies can stay ahead of the curve, deliver exceptional value to customers, and thrive financially. And if your company lacks in-house IT talent or is not au fait with emerging technology solutions, you can always entrust your projects to experienced insurtech consultants.
