It’s no longer enough just to offer a competitive price as clients now want an insurer that fully understands their business and needs, and offers a personalised, digital experience. They expect their insurer to go beyond traditional risk coverage to a risk-prevention model.
With a softer economy, increasing insurtech competition, rising cyber-risks and expanding regulation, insurance firms are looking to drive forward innovative initiatives and projects to retain a competitive advantage, as well as combat emergent risks.
“It’s a perfect storm. Customers are demanding a lot more in a difficult environment for insurers that also need to protect themselves against disruptors,” says Sudhir Chaturvedi, president of sales and executive board member at Larsen & Toubro Infotech (LTI), a global technology consulting and digital solutions company.
Through leveraging exponential technologies, such as artificial intelligence (AI), the internet of things (IoT), blockchain and data analytics, insurers can transform the customer experience and ensure they are staying ahead of startup competitors. The current dominant model in the insurance industry where firms offer similar indemnity products and compete primarily on the basis of price is outdated and lacks refinements. It is notably high-touch experience via an omnichannel approach and value accuracy that consumers expect.
In an increasingly competitive market, new models need to be developed that more closely match consumer expectations
By embracing a more holistic approach, there is a major opportunity for insurance companies to become clients’ cognitive risk advisers, to help them across their entire risk portfolio. This shift from offering a simple indemnity product to becoming an integral business adviser can best be achieved when the right technologies are implemented into operations.
“The industry has already adopted telematics successfully, and we are seeing a lot of interest in adopting IoT for insuring smart homes, smart plants and ensuring safety of workers. The adoption will accelerate over the next 18 to 24 months, mainly due to the growth of IoT solutions, IoT networks and 5G solutions. Intelligent IoT devices are becoming cheaper with 5G enabling devices to feedback real-time data, which will be invaluable to insurers,” says Mr Chaturvedi.
One of LTI’s insurance clients insures more than 2,000 churches in the United States and is making use of the integrated sensor technology programme to better service these customers. The maintenance and upkeep of churches is usually an expensive proposition, due to their typically old age and the fact that they must contend with everything from leaky roofs to subsidence.
In this context IoT devices can enable the transition to a more proactive service, by automatically monitoring environmental aspects such as heat, humidity and water levels. Insurance companies can benefit from a lower number of claims and their customers will be able to better manage their properties.
“We can act much faster when we have access to data in real time. We can actually locate where the problem is much quicker than before, and gain an immediate ability to understand the exact situation the client finds themselves in and help them manage their risks,” says Mr Chaturvedi.
Moving away from offering a single product to being vital risk advisers who help manage risks is the next step for forward-thinking insurance companies that want to make the most of the opportunities created by innovative technologies. In an increasingly competitive market, new models need to be developed that more closely match consumer expectations.
In an age of personalised and tailored experiences, the insurance sector can use the details they already possess about their clients to establish a unique risk profile and use AI-backed tools to only offer the most relevant services. There is an opportunity to create a long-term relationship with clients who deeply value the benefits of having an insurer that knows their needs in depth.
“Consumers will always remember a well-handled claim and, if they believe their insurer is proactively offering a service that suits their requirements almost perfectly, they will think twice before switching. And, of course, a loss-ratio reduction by 2 to 4 per cent using cognitive claims is also quite helpful,” says Mr Chaturvedi.
AI-backed tools have a tremendous potential for automating claims processes and thereby improving cost effectiveness and customer experience. For example, LTI leveraged its Mosaic AI platform to automate processing of fender-bender accident claims by analysing photos of damaged vehicles to identify the damaged parts and estimate the payment. There is still a central role for the experience and judgment of trained insurance professionals, but their skills can be augmented by these new data insights.
“The most difficult part of making AI work is to continuously fine-tune models until a desired level of accuracy is achieved. With our investments in Mosaic tools, such as AI Tutor for Insurance, we make it easy to train, test and fine-tune models by leveraging in-built insurance vocabulary,” says Mr Chaturvedi.
Recent technological developments will be important in many different aspects of the insurance industry, but one of the easier ways to put the benefits of these solutions into practice quickly is through reducing the administrative burden.
“The opportunities for automation in insurance are tremendous. There is a lot of intelligent automation that can be done, which will actually enhance the productivity of people and keep administrative tasks to a minimum to allow staff to focus on customers and relevant risks. Automation for straight-through processing is a key enabler for improving operational efficiencies,” says Mr Chaturvedi.
LTI is working with its clients on some of the exciting solutions to leverage blockchain as a trusted source for certificate of insurance or for premium accounting, assisting a wide range of stakeholders, including brokers, carriers and reinsurers. The company has developed many blockchain-based use-cases for customers, such as smart contracts, proof of insurance, catastrophe bonds and automated payment of claims based on parameterised triggers.
Insurers need a reliable partner with the right expertise to become a data-driven insurer of the future or they run the risk of continuing to lose out to insurtechs that are already taking some of the pie from the traditional players. Gaining access to high-quality technological talent is extremely difficult in the current job market where there is no shortage of attractive job opportunities.
By partnering with LTI, companies in the insurance market can instantly gain access to a diverse range of top-end AI, big data and automation skills. LTI can prove instrumental in unlocking new sources of revenue and establishing future-proof business models that are well suited and adaptable to the often disruptive insurance sector.
For more information please visit lntinfotech.com
