The insurance industry is having a real shakeup. In the challenging environment characterised by uncertainty we find ourselves in, firms have recognised the need to review key processes.
Mergers and acquisitions have become common over recent years, we’ve seen new entrants to the market and shifts in consumer behaviours. We’ll discuss all key aspects, plus the 3 technologies shaping digital claims handling.
- Surges in Mergers & Acquisitions (M&As)
- New Entrants to the Insurance Market
- Soaring Pet Prices & Other Consumer Shifts
- 3 Technologies Shaping Digital Claims Handling
M&A activity has increased in recent years in the desire for scale and reaching new customers and markets. The uncertainty of the past year has not hindered this M&A activity. A total of 407 M&As completed worldwide in the insurance sector in 2020 (Clyde & Co.). M&As are of course an accelerated route to growth and enable stickiness within the market.
The key drivers have been:
- Capitalisation on carve-outs
- Accelerated digitisation
- Accounting, regulatory and tax influences
- Non-traditional considerations for inorganic opportunities
Legacy insurers for example might be looking to update their core systems so that they can unleash the full potential of transformative technologies like artificial intelligence (AI) (Forbes).
As with any turbulent time, new ideas will always surface. Just like the banking world where companies taking advantage of fintech have emerged to challenge traditional banks, companies using the latest insurtech are emerging to challenge traditional insurance firms.
“85% of insurance CEOs say COVID-19 has accelerated the digitisation of their operations and the creation of next-generation operating models” – KPMG Global Survey
We’ve already outlined why firms are going to need to act like startups in order to maximise agility, adopt hybrid working and respond quickly to changes in the environment.
Unlike more traditional insurers, who require paper applications in some cases that can take weeks, startups using insurtech often provide rapid digital application processes. Zego for example, started in 2016, wanted to solve the problem for business insurance by providing quick and easy business insurance to save time and money. This company using insurtech provides their service both as a mobile application and on desktop.
Insuretechs tend to be able to pivot quickly according to changes in the environment. They are usually not held back by legacy systems, like some of the larger traditional insurers.
During the pandemic, prices for pets, in particular dogs has skyrocketed. According to Dogs Trust, online searches for ‘buying a puppy’ increased by 166% in the first lockdown. With some in-demand puppy breeds, like dachshunds and bulldogs going for as much as £30,000! (BBC).
This has had a knock-on effect with the price of pet insurance. The average price of dog insurance hit a record high in May 2020 of £378 annual, 26% higher than the price the year before (GoCompare).
Accenture outlined that value for money was a priority for consumers in these recessionary conditions. Some motor insurers for instance paid some money back to their customers last year due to the fact many were completely homebound and not driving nearly as many miles as they usually do.
Digital claims handling and FNOL automation are helping to modernise what can be a clunky process. Here’s the 3 top technologies that are helping to shape the digitisation of this process.
Digital Claims Chatbots
Chatbots can offer a 24/7 quick and easy service to customers. Helping with the First Notice of Loss with FNOL automation, or looking to gather all the data you need to process a claim.
Introducing more self-service into insurance chatbots can help to:
- Make the claims process quicker by automating next steps
- Relieve the frustrations of waiting in a call queue
- Enable customers to contact you whenever and wherever
- Reduce the need for form filling
- Reduce agent involvement time
- Update backend systems
With the technology always evolving, chatbots can even now begin to understand the sentiment of customers. So, if a customer using the chatbot is showing signs of anger or frustration for example, the claim enquiry could be immediately escalated to a human agent for resolution.
Digital Claims Handling Automation Software
Automating the claims process is a vital step in increasing efficiencies and reducing costs across insurance firms. Making the process slicker and quicker for the customer.
Using technology that enables you to build a workflow, you can automatically complete next actions like collecting missing information or upload documents to backend systems, as well as communicating to the policyholder at every step of the way.
This has the potential to save a lot of time and money spent on processing both low value claims and higher value claims.
Optical Character Recognition (OCR) Scanning and Email Parsing
OCR scanning and email parsing use cutting edge technologies to leverage the data within documents and emails. This enables you to extract, route, enter and update data within your backend systems.
Helping to severely reduce manual admin tasks like data entry that can hold up the claims handling process.