Upcoming Technology Innovations in the Insurance Industry

The digital transformation of the global insurance industry is well underway, as top competitors in the space continue to invest in new technological innovations at a rapid rate.

As of 2021, the global insurtech market had reached a value of US$3.85 billion, with an astounding forecasted compound annual growth rate (CAGR) of 51.7 percent between 2022 and 2030. 

With digital transformation taking the insurance industry by storm, insurance firms must consider how to implement improved digital infrastructures that can support the upcoming insurtech innovations. For many insurers, this involves embracing partnerships with fintech providers that are well-versed in the implementation and management of insurtech resources. 

In this article, I discuss why implementing innovative technologies is so crucially beneficial for insurers, as well as five of the top technology innovations and trends to watch in 2023. 

Benefits of Implementing Innovative Technologies for Insurance 

As stated, the digital transformation of the global insurance industry is accelerating at a remarkable pace. The growing popularity of insurtech only spurs this acceleration onward, leading insurers to reevaluate their approaches to digital planning and investment. 

Key benefits of implementing innovative technologies in insurance include:

• Greater Staff Productivity: The use and implementation of innovative technologies are hugely important for providing insurance staff members with greater daily freedom from time-consuming and cumbersome back-end tasks. For instance, insurtech has shown great potential in reducing time spent on claims management thanks to technologies that enable claims automation. 

• Heightened Operational Performance: Advanced and innovative technologies provide insurers with greater organizational support that enables better overall performance. With technology supplementing areas of insurance like  underwriting, actuarial, and claims, operational efficiency can be increased significantly. 

• Improved Customer Relations: Many of the prominent technologies currently being deployed in the insurance industry help insurers to restructure their businesses to be more customer-centric. As a result, positive customer relations can be better maintained, increasing customer loyalty, retention, and more. 

The Top 5 Technology Innovations 

Keeping the benefits of technology innovations in mind, here are the Top 5 technology innovations for the insurance industry in 2023: 

1. Artificial Intelligence (AI) and Machine Learning

AI and machine learning have an expanding variety of use cases within the insurance industry.

For starters, AI serves as the basis for insurers to create personalized customer experiences tailored to each customer’s individual risk profile, insurance needs, and more. For example, let’s look at how AI can be applied to underwriting and claims tasks.

Underwriting is becoming an increasingly automated activity thanks to AI and machine learning being incorporated into the technology stack. With an estimated 10 percent to 55 percent of insurance tasks becoming automated over the next decade — including underwriting, actuarial, claims, finance, and operational roles — this makes the need for AI-powered automation all the more pronounced. 

According to McKinsey & Company’s Insurance 2030 report, the use of AI in underwriting can help to significantly boost the pace of pricing innovation, leading to real-time pricing based on dynamic data assessments that empower customers in decision-making when it comes to coverage and insurability. 

On the topic of claims processing, the McKinsey report remarks on the vital role of AI in creating more advanced algorithms that can handle initial claim routing with greater efficiency and accuracy.

2. Cloud Migrations

In a 2021 survey of more than 80 insurer CIOs, 76 percent of respondents planned to expand their organization’s cloud adoption significantly or moderately, while 6 percent planned to pilot cloud adoption for the first time in their organization’s history. 

As insurers grow more accepting of advanced technologies, the shift away from legacy systems and toward cloud migrations and cloud-native infrastructures is growing in popularity. 

Deloitte’s 2023 Insurance Outlook report outlines six key advantages to cloud-native insurance systems:

• Cloud-native platforms allow an insurer’s core system to become a part of a broader ecosystem, allowing for greater collaboration and data sharing with other institutions

• Applications on cloud-native platforms are modular, making them more simple to plug in, play, and replace

• Data organization and use are streamlined from multiple sources, both internal and external, making this data easier to consume, assess, and share across applications

• Industry cloud providers offer a cloud layer that can contextualize the underlying platform, making it easier to customize for insurance-specific purposes

• An API layer in a cloud-native system enables insurers to add customized functions

• Cloud-native infrastructures provide more secure digital environments

3. Self-Service Portals and Insurance Apps

Self-service portals and mobile insurance apps are seeing a rise in demand from customers. 

These types of applications can drastically improve the customer experience, reducing the time customers spend resolving customer service issues and boosting the ability of customers to be more in control of their day-to-day insurance tasks and account management. 

Globally, the insurance mobile apps market has grown from a million-dollar market to a multimillion-dollar market between 2017 to 2022. Furthermore, the growth of this market is expected to accelerate from a value of US$27.292 billion in 2021 to an estimated US$53.162 billion in 2028, expanding at a CAGR of 10.4 percent in this forecast period, according to Globe Newswire.

Some of the key benefits of adopting self-service and mobile app solutions for insurers include:

• Lower customer acquisition and onboarding expenses

• Heightened productivity of insurance agents due to supplemental AI and machine learning support built in to these applications

• Greater customer loyalty, retention, and referrals

4. Omnichannel Customer Experiences

With more digital channels popping up each year — including the self-service portals and mobile apps discussed above — insurers must consider how to provide an adequate level of accessibility to customers. 

The trend toward digital channels was accelerated by the COVID-19 pandemic. However, customers have not turned away fully from more traditional insurance channels, such as phone service and call centers. As such, the biggest challenge for insurers to face is how to make the customer experience continuous and seamless, regardless of which channel is utilized at any given time.

According to McKinsey & Company: “Highly effective lead routing from online to offline channels is a crucial factor in converting the captured online traffic into business. Yet insurers’ lead-routing capabilities are barely foundational: when online customers request in-person advice, their current journey is invariably interrupted — in most cases, even without a seamless transition to an offline channel.”

In turn, insurers striving to expand their digital accessibility in 2022 and beyond must focus not just on how to provide digital channels to customers but also on how to integrate these channels into a centralized, omnichannel system where customers can migrate between channels with ease. 

Not only can this boost customer satisfaction but, according to Forbes, an omnichannel strategy may be the key to weathering the storm of an economic downturn — such that which  the global financial industry is currently facing. 

5. Staff and Resource Augmentation 

Staff and resource augmentation is the practice of acquiring talent and technological resources from a third-party fintech provider. As insurance companies continue to face the challenge of talent acquisition in 2022 and beyond, staff and resource augmentation is becoming a more appealing option. 

As of May 2022, the global staff augmentation services market, which typically accounts for resource augmentation as well, sat at a value of US$81.87 billion with an expected CAGR of 3.53 percent. 

These services offer insurers many key advantages, most notably of which is the ability to access technologies and the respective experts with greater efficiency without having to go through time-consuming hiring and onboarding processes.

More than anything, staff and resource augmentation provides insurers with the necessary support required to fulfill the growing digital demands of customers while minimizing the costs of upfront investments. 

The Vital Role of Insurtech Consultants

Implementing innovative technologies as an insurer is becoming a necessity but without the proper support and guidance, it can also create quite a digital headache. 

Digital transformation has become a cornerstone to maintaining a competitive edge in the insurance industry. Through partnerships with insurtech consultants, such as our team here at Exadel, your insurance business can leverage the power of these technologies with ease. 

With experts trained in the complexities of implementing and developing digital solutions, as well as deep knowledge in a wide range of industries, Exadel has the support and expertise you need to stay ahead.

Get in touch with the Exadel team today to learn more about our custom solutions.