This year’s series of extraordinary events have forced insurance, a notable digital laggard, into action. Experts claim that the insurance sphere has experienced the equivalent of five years’ worth of digital acceleration in a matter of months, having adopted a remote workforce, developed new digital customer journeys and embraced AI and data-driven technology. Importantly, this trend looks likely to stick, with IBM predicting that insurers are now on a mission to use this tech to shape a more human approach to their service.
Customers, for their part, remain skeptical. The industry’s decades-long track record of inefficient, analog processes is all too fresh, with a recent study showing more than 40% reporting they don’t fully trust their insurer and a further 64% saying they want their insurer to understand them better.
There is a clearly long way to go before insurance can win back the hearts and minds of consumers, but legacy giants and small players alike believe the rapid rise of innovation within the insurance industry will pave the way toward personalization and customer-centricity. Let’s look into how these solutions could, at long last, bridge the gap between providers and the people they serve.
Legacy Players Have Been Shocked Into Action
COVID-19 has exposed some of the biggest cracks in insurance. As demand for health and life insurance has risen, companies that have been unable to send healthcare professionals to customers’ homes have added cases to their backlog of tasks or simply refuse coverage to the customers. This inefficiency and impersonal attitude towards customer experience notably comes from established businesses.
Why? Well, for a long time, major players in insurance had faced little competition and little real need to update their offerings. Their risk-averse mentality often prevented them from growing with the times, so they continued to function using antiquated processes. That includes analogue practices like photocopying, scanning, and faxing, and favoring paper insurance applications requiring in-person signatures, confirmation phone calls, and physical delivery.
In 2020, however, these steps simply aren’t plausible. People have been sheltering-in-place, courier services have been delayed, and the new urgency of applications means they cannot take weeks to be approved. In turn, customers have grown increasingly anxious about insurance processes, and legacy companies risk seeing dissatisfaction levels rise if they don’t switch to a more customer-centric, caring model.
What’s more, consumer expectations have evolved. With so many aspects of life moving online, people anticipate fast, streamlined processes that weren’t being met by legacy players. In fact, in a mid-2020 survey by PwC, 41% of respondents were inclined to switch carriers because of their lack of digital capabilities.
Insurtech Is Fueling Technological Advances
In Q3 this year, health and life insurtech startups accounted for half of the total invested capital in insurtech++which was up 69% from the previous quarter.