Be it a surging economic boom or a major health scare like the pandemic, there is one sector that witnesses tremendous traction whether markets are good or bad. We are talking about the insurance industry.
With more people becoming increasingly aware of the risks to their health and wealth in the wake of an unfortunate incident, there is a massive market opening for insurers to help consumers make more informed choices and ensure more certainty in their future should the unthinkable happen.
However, as the insurance industry witnesses a surge in demand from consumers, there is an even bigger need for every insurer to stay competitive, adequately serve the more digitally savvy and opinionated purchaser, and ensure their profit lines remain sustainable. To do this they need to drive in a major shift from their traditional operating models to embrace a more modern data-driven business psychology.
When insurance businesses started digitizing their operations, massive volumes of data from different facets of their businesses started pouring into their technology ecosystem. Simply storing them away in databases is a missed opportunity for insurers. They need to leverage powerful analytical systems to see through data patterns and uncover hidden insights that can help them sell insurance products faster.
That said, data analytics is not a new phenomenon in the insurance sector today. This has become “table stakes” as the competition increases, customer expectations elevate, and digital experiences disrupt tried and trusted paradigms.
It’s clear that analytics alone isn’t the holy grail anymore for insurers to win customer confidence and improve their business prospects. Today, insurance businesses need to bring on board a broader spectrum of data, analytics, and emerging technologies to drive better customer experiences and also drive more sales across their target customer base. From artificial intelligence to blockchain, several innovative solutions are being created and launched into the market by key players in the sector and any hesitancy to innovate can result in several doors being closed on an insurer’s face soon enough.
Let us examine why there is now a need for insurance companies to invest in state-of-the-art technologies that use analytics as the base but go beyond:
The insurance sector thrives on price sensitivity. Events like the COVID 19 pandemic can derail even the most accurate budgeting plans as the healthcare sector will witness a massive onslaught of insurance claims for both medical and life insurance cases. Hence, insurance companies need to operate at controlled costs and win more subscribers through digital channels where manpower requirements are less. To facilitate this, they need to drive a great deal of automation in their back-office processes, optimize customer experiences across digital sales channels and enable self-service mechanisms that do not add to their operational expenditure. Technology innovations powered by AI help in building such self-sustainable digital sales channels which lower the cost of operations as they require minimal or no manpower effort.
McKinsey points out from their study on market trends in different industries that, personalization in marketing can help cut down customer acquisition costs by as much as 50% for businesses. Using the vast treasure trove of customer data, industry outlook and market trends, insurance companies can streamline their marketing efforts to enable a more personalized outreach via campaigns, and promotions to attract potential customers faster. Connecting with customers in their local languages for promotions, sending mobile-friendly emails, and recommending products based on budgets obtained through past interactions with the insurance company are some examples of how insurers can leverage data analytics and high-performance marketing automation to drive more conversions in their business.
Efficient Risk Assessment
When human agents calculate the risks on new applicants, there is always a scope for biased decisions or errors crawling into their thought process and this can result in ignoring risks that may prove to be very costly in the future. The digital world is spawning new professions and roles that old algorithms may not be trained to recognize. Missing these potential customers because of a lack of knowledge could be a significant opportunity cost. Over-compensating by lowering the bar could become a risk. By using AI-driven risk assessment techniques, hidden factors or risky behavior in a potential customer’s medical or credit history can be uncovered. Analyzing their online footprint can present some more data points to be accounted for thereby providing a more reliable profile.
Faster Claims Processing
Insurance companies often advertise their claims processing time as it is a vital selling point that influences buyer decisions. Using technology, the highly fragmented insurance claim process can be streamlined and rapidly completed with more accurate results. This would result in optimum service with minimum inconvenience for claimants and help insurers eliminate fraudulent claims by identifying data manipulation or tampering efforts in claims that normally do not get discovered through manual inspection and processing.
Insurance companies worldwide are in a race to become leaders as the paradigm shifts in favor of the digital economy. They need to deliver amazing customer experiences, build a more risk-free customer base and facilitate an open environment to collaborate with new-age fintech startups to jointly sell and market their services. To achieve these milestones, insurance companies need access to powerful data analytics and high-performing emerging technologies like AI and they also need guidance on how to best leverage these technologies for maximum ROI.
Get in touch with us to know more about the world beyond data analytics for insurance companies.