Claim Visionaries

Expert insights from the claims industry’s top leaders

The state of the claims market

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hange is the only constant in life — and the claims marketplace is no different. From top to bottom, this industry is going through a significant transformation. It takes true visionaries to see the way through this chaotic time and to seize upon the opportunities therein — but fortunately, it’s something well within reach of motivated, forward-looking professionals.

As the economy slowly recovers, insurers face shifting consumer expectations in an increasingly digital, connected world. The pressure to cut costs remains, but with it is also a driving need to modernize operations and harness technological advances to create new product lines and attract new business.

Set against a backdrop of relentless competition — digital disruption always lowers the barriers to entry for new players in the marketplace — there’s plenty of work to be done in the months ahead. There’s also a great deal of regulatory change that must be accommodated. But with challenges, there are also opportunities.

There’s plenty of growth potential for nimble insurers willing to experiment with emerging markets. Capital and surplus levels are high, interest rates are low and Big Data analytics are beginning to yield important insights.

Insurers will find the most success through service and product innovation, greater operational efficiency and the agility and insight to pivot and fully exploit existing and emerging opportunities.

The global IoT insurance market will be worth more than $42 billion by 2022.”

The impact of digital trends

Technology is relentless in its advancement. The Internet of Things (IoT) is expanding into our homes, cars, businesses and even our bodies, bringing both enormous potential and enormous risk. New capabilities like blockchain, driverless cars and wearables are on the verge of making major impacts.

IoT is a new growth frontier for the insurance industry: The global IoT insurance market will be worth more than $42 billion by 2022, according to MarketsandMarkets research.

And as sensors flood everyday life, telematics offers a new level of personalized insurance that was never possible until now. Connected cars bring new levels of insight to driving habits, offer advanced driver assistance capabilities and enhance stolen vehicle recovery. Connected homes present new frontiers in monitoring, risk mitigation and rapid problem discovery.

The connected self, through wearable devices, promises new data on lifestyles – which have the potential for real-time monitoring of the physical and emotional wellbeing of customers and employees. There’s enormous potential for IoT to help avoid preventable losses in brand-new ways — a win-win for insurers and their customers that could reduce both incidents and payouts.

Advances in artificial intelligence (AI) are now driving of the value of the IoT and all the fresh data it harvests: A full 79 percent of insurance executives agree that AI will revolutionize the way they receive information from and interact with customers, according to Accenture.

Improvements in Big Data analytics and machine learning will pave the way for greater insurance process automation – and deliver proactive insights that can help reduce claims volume by mitigating the risk of disaster. AI can also enhance the accuracy of estimates and assessments of everything from total damage to the level of coverage required.

79 percent of insurance executives agree that AI will revolutionize the way they receive information from and interact with customers.”

New worker and client needs

Consumers have dramatically shifted their expectations about the service provided by insurers. In a 24/7 digital world, workers and customers want transparency, flexibility and control over coverage and claims. Convenience is key, and access to information from any location and on any device is vital for both agents and insureds.

To this end, there are many benefits to self-service portals with robust and secure system access. With these tools, agents and customers can find suitable products with the right level of coverage by entering just a few details. What’s more, field claimants and investigators can facilitate claims processing by uploading new information, images and video.

This new level of accessibility also provides the transparency that modern workers and clients need. Clarity, after all, is a vital component of good service and can be an important factor in regulatory compliance. But there is still a need for stringent security.

By 2018, one-quarter of insurance industry employees will be within one decade of retirement.”

Industry challenges

As insurers operate in an increasingly connected digital world, they must contend with serious cybersecurity risks. All collected data must be carefully protected; data breaches could seriously damage customer confidence and negate any opportunity posed by the IoT. The cyber insurance market is still in its infancy, so insurers must tread carefully — and may benefit from sharing data more effectively.

Recruitment is an important issue for the insurance industry when you consider that the number of insurance professionals aged 55 years and older has increased 74 percent in the last 10 years, according to the U.S. Bureau of Labor Statistics. By 2018, one-quarter of insurance industry employees will be within one decade of retirement. Resources must be allocated to recruiting and training new staff.

The shortage of skills in the IT sector can also hamper carriers’ abilities to leverage new technologies.

Greater economic uncertainty could pose greater problems for insurers. Possible taxation changes, interest rate hikes and new regulatory requirements could all have an impact. It may be tricky to balance the needs to take risks and innovate with maintaining a sound financial foundation.

The future looks bright for some

The insurance industry is in flux; someday, we may look back on 2017 as an inflection point.

It won’t be easy to find the right strategy that leverages legacy systems and data while seizing on the opportunities afforded by new technological advancements. It is incumbent upon insurers to build new, customer-driven services and processes that meet modern expectations — or risk being swept away by disruptive newcomers.

Technological advancement is changing the face of insurance. It’s transforming the way we interact with customers and agents, fostering greater operational efficiency and opening many new potential lines of business. Some insurers will inevitably fail to innovate and keep pace with these rapid changes. But for those who streamline, differentiate and maintain a competitive edge, the future looks very bright indeed.