As we continue into 2024, it becomes evident that many of the prevailing trends in the insurance industry are not sudden breakthroughs, but the natural progression of existing innovations. This post explores five trends that embody the industry’s dedication to not only adopting new technologies but maturing in their integration and application—a commitment that aims to boost operational efficiency and strengthen customer relationships through more responsive and personalized services.
1. Generative AI
Generative AI is poised to transform the industry by enhancing risk assessment, optimizing processes, and improving customer experiences. With a recent boom in usage and popularity, its impact on the professional landscape this year is expected to be even more significant. Capable of handling high-volume analysis of information and unstructured data, it will be utilized for predictive modeling, policy summarization, and data analysis. This will lead to more personalized marketing campaigns and automated processing. Additionally, it will drive progress in hyper-personalization, generating greater customer engagement by creating products tailored to each client and personalizing marketing campaigns to effectively deliver product information.
While not new to the insurance sector, the impact of AI and advanced analytics is expected to grow, offering significant potential. The focus will be on the adoption of AI-driven analytics to enhance operational efficiency, using real-time data to automate insurance market analytics. This approach will be particularly useful for improving predictive pricing models, enhancing underwriting processes, refining risk assessments, and streamlining claims management.
2. Process automation
The insurance sector has been implementing process automation (RPA) for years, but the emphasis will now be on ensuring that automation adds value beyond just optimizing time and costs. Hyperautomation will become increasingly relevant, maximizing the use of information across different company cores, from industry-specific data to ERP, CRM, and other internal sources. An increase in sales volume generated through the automation of customer acquisition across various channels is also expected. These automated processes will include coverage definition, contract signing, and claims management, all handled seamlessly.
3. Cloud computing
The adoption of cloud computing in the insurance sector is set to continue its growth, focusing on enhancing operational efficiency and scalability. Insurance companies are increasingly leveraging data platforms and artificial intelligence to optimize data management, enhance policy underwriting, detect fraud, and improve customer experiences. The shift toward cloud adoption is a key part of the insurance industry’s modernization efforts, enabling significant improvements in operational efficiency and data acquisition speed. Digital transformation, supported by cloud computing, is crucial for delivering a superior and more comprehensive customer experience in the insurance sector. Companies that delay this transition may fall behind their competitors.
4. Core modernization
Updating insurance cores to meet the market’s demand for speed is a strong trend. Many insurers still use outdated core architectures, compromising their operability. Modern architectures focus on service applications, enabling much shorter time-to-market and benefiting the entire sales and customer management cycle. Insurers are now focusing on migrating to newer versions of their cores, which are cloud-based and modernized, or seeking new solutions. They are also adopting low-code/no-code practices to quickly generate new capabilities or facilitate integration with other services.
5. Embedded insurance
Embedded insurance is revolutionizing the industry by fostering partnerships between non-insurance entities, such as car manufacturers and retailers, with insurance providers offering coverage directly at the point of sale. This innovation is projected to unlock a significant market opportunity, estimated at $900 billion by 2040. It represents a shift from traditional, rigid insurance models to dynamic, usage-based insurance that adapts to individual needs, delivering timely and seamlessly integrated protection as part of everyday activities.
Key technologies such as cloud computing, AI, and machine learning, along with APIs, blockchain, and IoT, play a crucial role in enabling embedded insurance. These technologies facilitate real-time data exchange, scalability, personalized services, enhanced security, and efficient claims processing. They are instrumental in paving the way for strategic development and decision-making in the rapidly evolving field of embedded insurance. Insurers are encouraged to partner with digital enablers to harness these technologies and succeed in the growing embedded insurance market.
Conclusion
The trends outlined were at one time groundbreaking developments for the industry but now require constant maturation and refinement to remain competitive. The adoption—or more accurately, the increased maturity—of organizations in areas such as AI and cloud computing, underscores the deeper commitment to customer centricity, operational efficiency, and adaptability.
David Soto, Softtek's insurance subject matter expert, leverages extensive knowledge in AI, insurtech, blockchain, and health tech to support multiple insurance companies in their digital transformation. Explore Softtek's insurance page to connect with experts and discover our industry-revolutionizing initiatives.
