Insurtech Solutions: Their Latest Trends, Benefits, and Successful Adoption in Risk Assessment

BY: RAJESH NAMBIAR – FOUNDER, CEO
DECEMBER 21, 2021

Key Takeaways

  • Intelligent digital solutions are transforming insurance risk assessment in many positive ways
  • Risk management can adopt insurtech solutions to remain competitive
  • The insurance industry is upbeat despite being a slow digital adopter
  • Insurers should balance between tech platforms and people to succeed in their tech adoption

Although insurance has been slow in adopting insurtech solutions, its overall outlook is still sound and safe. But how is risk management doing in this sector, given more than 25% of P&C professionals are about to retire? Well, although these professionals’ exit could negatively impact the industry, this crucial sector won’t collapse. The good news is that intelligent digital solutions can help stabilize the industry’s risk management and policy profitability.

So, how can top risk assessment policy and decision-makers reconcile with these two opposite trends? How do they balance vacancies experienced risk managers leave with the possibilities digital solutions are bringing to the table? Answering these questions is like receiving with one hand and losing with another. The best news is that AI’s timely inflow is a blessing for this crucial industry.

This guide will discuss practical insights into how risk assessment policy and decision-makers can successfully manage these two trends. It shares insights to help you leverage intelligent digital solutions to meet today’s insurtech trends and position your organization to benefit from them. Let’s start with how to get the most out of intelligent process automation in insurance.

The 7 digital transformation trends forcing insurance risk assessment to evolve

Risk assessment and management are insurance’s soul because risk necessitates the industry’s very existence. The latest automation trends reveal that the sector has more opportunities than the risks it faces. Here are the seven top trends changing risk management.

1. Insurance ecosystems are rising

Digital ecosystems are gaining dominance in risk assessment. Many tech-savvy insurers are adopting data-driven cultures to leverage data from various sources and homologate risk assessment across the ecosystem. This trend exposes conventional carriers to digital-driven relationships and companies. Digital ecosystems’ potential is so high that they will account for 30% of worldwide revenues before 2025.

For example, tech-savvy carriers can optimize these systems to enhance their home insurance policies by creating smart home technology adjustments. Such technologies can detect risks like smoke and carbon monoxide and alert policyholders to avert losses.

2. Insurers are implementing intelligent digital solutions

AI’s sustained rise is exposing carriers to countless opportunities that improve risk management across different portfolios. It helps them make smarter, timely, and accurate risk management decisions. Carriers embracing these solutions in their risk management can manage their unstructured data more safely and effectively.

3. Unstructured big data

Insurance companies are ditching the traditional home risk assessment methods that rely on zip codes and collaborating with insurtech solution providers to offer more accurate data based on home and location history. For example, they make identifying potential risks easier by accessing precise wildfire burn parameters.

4. Underwriting talent

McKinsey & Company noted the looming retirement of many of P&C insurance’s most experienced workers above. This retirement will force carriers to rethink their risk assessment to survive. Why? Because these experts have decades of experience in accurate risk assessment that is necessary for upholding the industry. Insurers seeking to survive this looming talent vacancy must upgrade their current talent and learn to leverage emerging technologies.

Remember, insurtech solutions are just as good or bad as their users. Equipping and preparing your employees to fill these retirees’ shoes must be a top priority.

5. Data risk assessment for value creation

Data plays a critical role in the insurance industry’s survival. Insurers who can better analyze and leverage data gain more value while navigating fresh challenges surrounding sensitive areas like:

  • Social expectations
  • Security
  • Transparency
  • Accuracy
  • Privacy
  • Legal requirements

These six challenges are forcing insurers in this digital era to embrace intelligent digital solutions for effective data and risk management.

6. Emerging digitization governance and regulation

Trend number five pointed to legal requirements as one of the emerging challenges facing tech-embracing insurers. Governments are stepping in and regulating matters to protect all stakeholders as carriers embrace intelligent process automation in insurance. Make sure you understand these regulations and needs in all of your markets.

7. Protection from the evolving cybersecurity risk landscape

Lastly, insurance companies are embracing insurtech remedies to protect themselves against emerging cyber vulnerabilities and threats.

How insurtech solutions revolutionize risk assessment

The very thought of computerized technology replacing or outsmarting humans isn’t new. Tech zealots have always anticipated the day computers will solve ambiguous and complex problems across industries. The good news is that intelligent digital solutions are emerging as one of the leading strategies to do just that.

The insurance industry’s risk assessment wing is one area where digital transformation can revolutionize matters. Conventional risk management and assessment models depend on past claims to make decisions. Intelligent digital solutions help advance risk management models in the following ways.

  • Access to real-time data and smart observation helps automate risk factor monitoring, producing speedy and more certain decisions.
  • Policymakers have multiple channels for accessing data collected from different applicants over time.
  • Risk-based pricing allows firms to promptly detect risk-changing events that may adjust rates.
  • Formulate predictable reinsurance plans based on comprehensive data regarding policyholders’ risk appetites.
  • Leverage more sophisticated and efficient risk mitigation alternatives covering data-dependent risk avoidance, transfer, and retention.
  • Faster underwriting processes due to more revealing data insights and process digitization.
  • Advanced risk-based pricing enables insurers to minimize loss risk events and optimize their investment.
  • Insurance policymakers can leverage AI’s prediction power to reduce costs, improve decision-making, and boost productivity across business operations.
  • Improve underwriting efficiency by recognizing risks, detecting fraud, and optimizing risk selection.
  • Digital solutions also help claims departments predict potentially fraudulent claims, elevating an insurer’s investigative capabilities.
6 ways insurers can prepare for these tech-led risk assessment trends and solutions

Those are the major trends and how they benefit and complicate your risk assessment function. How can you position your team to benefit from these tech-led risk assessment solutions and trends? Here are actionable steps you can take to avoid lagging in this transformative revolution.

1. Install a comprehensive data implementation and creation strategy

Data is the king in this tech-dependent revolution. Risk assessment executives should embrace comprehensive data creation and implementation strategies. Why? Because how your organization identifies, quantifies, places, and manages risk all depends on the quantity and quality of the data collected during a policy’s lifecycle.

You have to take this step because most AI solutions work optimally with high data volumes from various sources. Therefore, your organization should formulate appropriate internal and external strategies and infrastructure to use such information. Organize your internal data to enable and support the agile development of fresh analytics capabilities and insights. Organize your external data to secure easy access to information that consolidates and enhances your internal information resources.

This step is costly but worth every dollar you wisely invest in it. Trying to shy away from it will gradually return to haunt your organization. Why? Because your external ecosystem’s continued expansion fragments, making it less convenient to detect affordable and qualitative information. Therefore, your data creation and implementation should allow everyone to access and obtain external information securely.

2. Prioritizing solutions to the talent dilemma

We already saw that information is king in this digital economy. However, every king has kingmakers and handlers that directly influence how he rules. Likewise, your data generators and implementers are equally important in your matrix because they’re your organization’s data “kingmakers and handlers.” Otherwise, your strategy will collapse on their shoulders.

Prioritizing the talent dilemma resulting from generational succession is critical. Insurers should prioritize developing a new generation of tech-savvy insurance employees who can leverage technology in all customer satisfaction efforts and daily operations.

Please, don’t ever forget this one critical point: All technology is made by people and for people.

The people who use your digital platforms — their skills, training, and experience — will have the biggest impact on whether they fail or succeed. It’s imperative for risk management decision-makers to invest in people the same way they do in technologies. Carriers can achieve this goal by taking the following steps:

  • Acquire or develop talent with relevant skills and mindsets
  • Instill skills, insights, and technologies from across their organizations to offer exclusive, holistic customer experiences
  • Nurture a supportive culture shift that allows risk management technology to have a successful top-bottom implementation
3. Stay abreast of AI-related tech and trends

Risk management decision-makers also need to stay abreast of AI-related trends and technologies to benefit from them. You can’t expect to benefit from something you don’t even know exists.

All insurance players who don’t want to lag in this tech revolution need to adjust their system orientations. For example, they must stop viewing tech-based trends and technologies as the IT department’s exclusive domains. Other players inside and outside the risk assessment department should also play their roles. They need to take time and familiarize themselves with these trends and technologies.

This will help insurance companies better position themselves to understand the scenarios that could disrupt and expose their organizations to avoidable risk. This understanding will enable decision-makers to figure out what potential disruption could mean for their businesses. Also, they will be better placed to deal with all emerging issues.

4. Draft and implement a coherent strategic plan

You also have to draft and implement a coherent strategic plan for your organization or its risk assessment department. AI-gathered data helps build on insights that empower you to leverage AI in your risk management strategy. The strategy can incorporate critical issues like:

  • Long-term transformation for top leadership to enable them to harness relevant insurtech technologies, talent, and operations
  • The possibility and rationale of acquiring or collaborating with insurtech startups and firms
  • Forming new entities or developing homegrown capabilities to enable them to succeed in target tech-driven areas they want to invest in
  • A comprehensive schedule that details every milestone and checkpoint. This way, insurers can regularly establish how best to adjust the plan to address industry-wide technological shifts and disruptions.
5. Product innovation and reallocation of portfolio priorities

Modern insurers find themselves in a tech-savvy and highly unpredictable generation. This new generation of insurance consumers is dynamic and always wants to embrace what makes technological sense to it. Therefore, carriers should remain on their toes to provide innovative products and portfolios.

Additionally, this generation loves calling the big shots and remaining in the driver’s seat. This trend calls for risk assessors and managers to adjust their market strategies and prioritize resources to meet these demands. Insurers must also prioritize their investment portfolios to address risks facing different customer lines. For example, commercial customers face data and cybersecurity risks that insurers should support with appropriate product innovations.

6. Grow ecosystems and shift to solutions

Lastly, carriers must prepare for these trends and insurtech remedies by growing ecosystems and shifting to timely, relevant solutions. They must design their solutions to reflect the modern customer experience and buying journeys. This seamless integration will enable them to offer better solutions with enhanced value propositions.

How do carriers arrive at the above? By closely looking at their relationships with consumers before deploying AI. Remember, we said that all technologies are made for people, and your customers are your business’s most important people. Otherwise, adopting the best technology could = become your latest white elephant in the room.

After doing the above, you will be better positioned to succeed in your ecosystem-building endeavors. You will get more value from your accumulated data and stay relevant, enjoying a competitive edge. Further, you will succeed at adding value to your services and solutions.

Intelligent process automation in insurance: final thoughts

Insurtech solutions are a game-changer every insurer should adopt to better manage risk assessment and stay relevant in an unpredictable future. You’re now up to speed on how these solutions and their trends can benefit your business and how to position your entire risk management department and organization to reap the windfall.

What’s the next step? Get in touch with someone to walk you through all these infinite possibilities. Our doors are always open to hold your hand and help you realize every benefit we shared. Go ahead and contact us today to start your journey to true digital transformation.

"Insurance Technology leader and Software entrepreneur with decades of experience leading technology initiatives for fortune 500 organizations. Rajesh Nambiar founded RD Global to create a unique digital consultancy offering high quality software solutions with an extreme commitment to customer experience."

DECEMBER 21, 2021
RD Global Empowers Insurance Companies to optimize total digital experience, unify data, and harmonize processes by developing high impact technology solutions infused with a 5-star customer experience.