On the heels of RIMS, seven predictions for the insurance industry

We’ve attended numerous annual RIMS events and we’ve often walked away inspired and excited about the future of the insurance industry. But after meeting brokers and carriers at this year’s event and discussing Neuron, our digital trading platform, we’re more excited than ever before about the future role technology will play in the insurance industry. – The insurance sector is now poised for a digital transformation that will benefit brokers, insurers and insurance buyers alike.

A data-driven digital transformation of insurance The insurance industry already has the ecosystem and data to enable digital trading. Brokers and carriers are using data and analytics and application programming interfaces (APIs) to connect with trading partners. Now they’re also looking for ways to use data they already have to connect any broker to any insurer and drive better decision making, improve risk appetite and more effectively match risk to capital. In this context and after the conversations we had at RIMS, we foresee numerous changes that will propel the insurance industry into a digital future:

1. New industry entrants will further transform the industry. New entrants to the industry, often backed by significant funding and staffed with talent from outside the sector, are already transforming the insurance industry. Their impact over time will be profound. These new players are introducing fresh perspectives and novel, digital-first strategies that challenge the status quo, creating a greater sense of urgency to propel the industry toward more innovative and customer-centric solutions. They’re helping to further raise standards for operational efficiency and customer engagement.

Established players are looking to partner with new and innovative market players such as InsurTech, for example. They’re working to transform from within to trade digitally while viewing the industry more holistically to more efficiently match capital to risk.

Private equity’s role in the insurance industry has also increased. These firms have helped create economies of scale by integrating smaller agencies, increasing access to capital and enhancing technological capabilities.

2. Data, AI and technology will return the human touch to the center of insurance. It might sound counterintuitive, but AI and automation will help put people back at the center of insurance. Though the industry has been built on relationships, we’ve become too subservient to process. As insurance professionals, we’re often spending too much time on necessary, but low-value, redundant tasks. We’ve essentially become process managers, rather than solutions architects. But that’s changing.

Repetitive and time-consuming tasks such as data entry, claim processing and policy management can be automated, freeing us to focus more on complex, value-added activities where human judgment and interaction are crucial. By reducing administrative burden, we’ll be able to spend more time with clients. And we’ll be able to more fully and holistically understand their needs, focus on strategic decision making and provide more personalized customer service.

With more routine tasks automated and less redundancy through data sharing, brokers will have more time for value-added services and complex client needs that require empathy, negotiation and deep understanding — qualities that AI can’t replicate. The result will be more meaningful interactions, a better customer experience and more strategic risk management decisions that are more closely aligned with overarching business objectives.

3. The insurance industry will move from insure and restore to predict and prevent. Driven mostly by advancements in technology, data and analytics, and a more connected marketplace, the insurance industry will become more focused on anticipating risks and implementing measures to prevent them, rather than simply providing financial compensation after a loss. A digitized market, powered by big data and advanced analytics, will use AI to analyze vast amounts of information from multiple sources, identifying patterns and predicting potential risks before they occur. With more data and better predictive capabilities, insurers can offer more tailored insurance products that align closely with the specific risks of individual customers.

A more proactive and predictive approach to risk can also help reduce the number and severity of claims. With more industry benchmarking and other information at hand, insureds can focus more on preventative measures that reduce risks, lower premiums and improve terms and conditions.

4. The insurance market will become more connected and less fragmented than ever. By connecting virtually any insurer to any broker, new digital insurance trading platforms like Neuron will replace one-to-one and one-to-few with many-to-many connections, creating levels of connectivity unseen in the industry.

Powered by many of the APIs brokers and carriers have already built, different systems and software can communicate and share data in real time, reducing the need for manual interventions and the inherent delays and errors. The industry is also adopting more unified data standards, enabling different insurer and broker systems to interact without extensive customization. Such standardization reduces fragmentation by facilitating the easy exchange of information across the insurance market.

With more actionable data at their fingertips, brokers can quickly assess insurer appetite for a particular risk and more efficiently match clients with the right insurers. This unprecedented level of connectivity will also enable better client service through faster access to information and quicker response times from more insurers.

5. A faster pace of innovation will close insurance coverage gaps. Data, technology and a more connected, digitized insurance market will enable insurers and brokers to more quickly understand and identify changing client needs. For example, by analyzing emerging risks data, insurers can more quickly create products for uninsured exposures or new types of risks arising amid changes in technology, business operations or ways of working.

Through greater connectivity and data sharing, brokers and insurers can more easily and quickly collaborate to develop new solutions. With more real-time data, insurers will be better positioned to tailor products to close coverage gaps.

6. A principal challenge for the industry will be change management. The digital transformation of the insurance industry will require business leaders to address multiple technological, cultural and regulatory challenges. Determining how to power existing relationships, use networks of relationships and drive a connected market and ecosystem quickly easily and efficiently will require planning.

The technology itself is easy to deliver. Change of this magnitude naturally comes with some fear, so bringing people along on the journey will be the challenge. Clear communications and training can help alleviate trepidation and help more people see the opportunity amid the uncertainty.

Integrating new digital tools with existing systems can be technically challenging. Ensuring these integrations are successful without disrupting existing operations is critical, requiring careful planning and execution. Effective change management must ensure that the transition incorporates new technologies, supports employees and improves trust and compliance throughout the process.

7. Transparency and trust will come to define the industry. With an abundant amount of easily accessible data and analytics, insurers will be able to better explain their decisions around pricing and terms and conditions. Faster processing of claims and a more connected, integrated market will give insurers more timely information, further enabling them to keep rates current and help temper boom-and-bust cycles.

With more real-time information, insurers will be able to rely less on historical information, which isn’t always an effective predictor of future risks. They’ll have the tools to be more forward thinking, focused on arising trends and market changes.

If brokers can spend more less time placing risks through carrier markets and focus on ensuring clients have the right coverage in place and advising on practices they can employ to reduce risk, they position themselves more as trusted advisors than brokers of insurance policies.

We believe insurance is among the most noble industries. It helps people and organizations, often after terrible things happen. It provides the confidence and stability that empowers organizations to take risks that power innovation. And it frees capital to finance those ventures. Today, with a digital revolution in insurance already underway, we have an unprecedented opportunity to better serve our clients and play an even greater role in creating better tomorrows.