New Trends Shaping the P&C Insurance Sector

BY: RAJESH NAMBIAR – FOUNDER, CHAIRMAN
JANUARY 11, 2022

The post-pandemic transformation of business demands P&C insurance companies stay ever-ready to capitalize on new trends

Key Takeaways:

  • After COVID, P&C Insurance businesses have seen many new developments, including restructuring the way employees work, business interruptions, shifting increasing insurance market share, and more
  • Emerging trends in the P&C sector are based mostly on the intersection of technology and customer experience
  • Customer data analytics and usage-based insurance pricing are expected to gain a lot of traction
  • Increased use of intelligent automation in insurance operations will see wide-scale adoption

Business environments do not remain in the status quo for long. There are always internal and external factors forcing change and introducing dynamism — followed by reforms. The COVID-19 pandemic is one factor that has had a powerful impact on the way businesses must operate.

Like other industries, the COVID phenomena had a tremendous impact on the property and casualty (P&C) insurance sector. Experts believe the innovations that helped us adapt to the new COVID environment have ushered in a new era of business operations.

Among talk of uninsurable risks, such as pandemics and natural disasters, there has been broad adoption of new approaches in the business environment. To be competitive, insurance companies must be aware of the new directions being set in the fast-evolving business landscape.

4 trends changing P&C insurance since the pandemic

These four P&C insurance business developments became broadly visible in 2020 as the pandemic forced insurers to adapt to their new reality.

1. Organizations were forced to think about restructuring the way their employees worked

With insurance organizations having to adopt social distancing measures, more flexible working arrangements allowed them to maintain productivity. These changes brought are also helping organizations better prepare for future disruptions.

New remote work arrangements also meant that physical location was no longer as important of a concern. This opened up the possibility of hiring human resources from anywhere in the world.

The stress of the pandemic also put renewed emphasis on empathy in dealing with employees. The need for remote employees to turn off from work was given due weight. The human side became much more pronounced in management theory and the shared commitments and efforts were acknowledged.

2. Business interruption insurance was able to capture significant market share

Business interruption insurance was a dormant proposition before the pandemic. The pandemic, notwithstanding how devastating it was, instilled new life in this traditionally small-niche insurance product. This development illustrates the fact that crisis can sometimes provide room for new business opportunities to thrive.

3. Serving customers from the comfort of their homes

The pandemic also meant that more customers were inclined to get insurance-related information and services from their homes via the internet. This shift in customer preference made insurance companies invest in tools that could provide optimized remote services to their clients,

The insurance companies that identified this change in customer behavior and adopted remote service tools gained a real competitive edge.

4. A rapid transition toward digital business and digital transformation

Every P&C insurance company started an accelerated pivot to digital transformation during COVID-19. Software to automate and streamline insurance processes is now in high demand. Documentation that was traditionally handled manually is being uploaded to secure digital platforms — immensely simplifying the business.

The benefits of digital transformation further prioritized its wide-scale adoption in the insurance industry. The result was that digital transformation became a requisite strategy to stay competitive.

3 trends that will last beyond the pandemic

It is easy to see that these P&C insurance trends are originating from the intersection of technology and customer experience. The focus is shifting from services and products to streamlining and personalizing the customer experience.

Customer expectations have changed, and they have new demands when it comes to insurance. Insurance companies must upgrade their customer strategy to match the evolving propensities of their target market. Technology has come to the forefront as the single most important tool in attracting and retaining customers.

Here are a few trends that are forecast to shape the future of P&C insurance:

Telematics

Telematics allows the transfer of diagnostic data directly from the customer device to the insurer. Access to these data and insights about customer property usage has the potential to open up possibilities to a wide range of digital insurance products. The data can be used to cut costs, build revenue, and develop more profitable relationships with customers.

For example, telematics can connect to in-home cameras to perform inventories of household items, which simplifies loss remediation by speeding up claims filing. Domestic energy consumption data can also be made available to set optimized dwelling coverage and pricing liability numbers.

On the road, telematics promotes safe driving that can reduce the possibility of accidents, which helps insurance companies reduce claims. When insurers have the ability to analyze individual driving behavior, more information will be available to not only improve underwriting and claims but also sales and retention.

Advanced vehicle crash notifications help insurers have a timely response and determine the triage of claims. Accurate real-time data about an accident also helps detect fraud and settle claims.

Telematics has promising potential. The technology is slowly being adopted, giving primary concern to client privacy.

Usage-based insurance pricing

The traditional method for calculating risk assessment and underwriting is based on geographic profiles and broad demographic data. Usage-based insurance pricing has changed the conventional approach to allow setting policies and premiums based on individual usage.

According to the National Association of Insurance Commissioners, 20% of all vehicle insurance in the US is based on usage-based insurance policies. This is a growing trend that is expected to capture an even bigger slice of the insurance market because of its potential benefits to insurance companies and customers.

The trend has been reported to hold a better say among the younger generation. A Willis Towers Watson survey found that 72% of millennials believe that usage-based insurance is a better way of calculating insurance rates as compared to traditional methods. The interest in this trend is not limited to the millennials. People in the age range of 45 to 64 have also shown their inclination toward the usage-based approach.

Many people are still holding back from enrolling in a user-based insurance pricing program. A Lexis Nexis survey showed that 40% of the people would only enroll if any of their acquaintances enrolled first. 56% of the survey participants said that they would enroll once feedbacks and reviews become available about the program.

Use of intelligent automation in property and casualty insurance operations

The adoption of automation technology is potentially the most promising trend in P&C insurance. AI-enabled technology and intelligent automation tools have tremendous applications in the processes involved in the insurance industry. The technology can help insurers meet the modern customer’s demands and stay competitive.

Here are some of the trending applications of intelligent automation.

1. Business process automation

One of the best uses of intelligent automation in property and casualty insurance is its application to automate business processes. The technology is highly effective at streamlining arduous and repetitive tasks, making things easier both for the client and your employees.

Filing claims can be a particularly lengthy process for the client. Dealing with different points of contact for processes like filing injury or property damage claims can be taxing. That’s where intelligent automation lets you provide swift and simplified services by automatically starting to process the claims, assessing coverage levels, assigning an agent, and creating follow-up tasks the agent can quickly act on.

AI can also help identify fraudulent claims by detecting red flags, which saves insurance companies huge sums of money.

The underwriting process is traditionally done by people and involves data analysis and management. Intelligent automation can be leveraged for faster processing of the underwriting criteria analysis, which results in accurate more risk assessments and pricing results. This doesn’t completely remove humans from the process, but it gives underwriters valuable information that makes their jobs easier and more accurate.

Intelligent automation can gather historical data and use it to monitor policies and generate risk assessments during coverage. This results in improved customer relationships and claims costs. It can also be used to improve internal operations that take place in an insurance company, improving efficiency by providing services to a higher number of clients in a given time.

All these business process areas can be improved by deploying intelligent automation to improve the customer experience. The value that technology brings is primarily based on achieving maximum customer satisfaction. Today’s customers carry high customer-service expectations, and intelligent automation caters to these needs in a hassle-free and cost-effective manner.

2. Chatbots

Chatbots are experiencing rising popularity in different businesses, and P&C insurance companies are no exemption. These chatbots are powered by AI technology that allows them to perform automated interactions with real people. Businesses are using chatbots by incorporating them on their own websites or messaging apps like Facebook messenger and WhatsApp. Survey results from LivePerson show that 60% of people have used a chatbot to message with a brand within the past year.

Insurance companies can use these chatbots to provide better customer service to their clients. Chatbots are a good way to provide immediate, automated responses to frequently asked questions. The bots can also be programmed to walk a customer through a difficult concept or query or direct them to a human agent who can help.

The application of chatbots gives executives the option to redesignate their employees to other more pressing jobs for more productive outcomes.

3. Using data-driven personalization to develop new business

Intelligent automation can also be applied to upsell and cross-sell new customers with a better chance of closing the deal. The data-driven and personalized AI can curate offers designed to present a deal they cannot ignore, which ultimately leads to higher revenue generation.

Intelligent automation can offer coverages based on the individual customer requirements, too, which can be deciphered by automated analysis of previous interactions or buying behaviors. AI can easily interpret customer data and suggest the best possible insurance product within a blink of an eye. These tools are also a great aid to your agent who will have the reports and recommendations to attract and retain a prospective customer.

4. Providing data-based personalized customer experiences

Intelligent automation can amass a wealth of data not only from the client-company interaction but also from external sources, such as the social media footprint or the demographic information of the customer. Based on the available data, algorithms can identify a customer who needs attention, and a reengagement campaign can then be focused on them.

These tools are good at enhancing customer engagement because they can gauge when a customer will be most receptive and which channel of contact will be most effective in getting them to engage. Your intelligent automation can be further optimized to select the right products according to unique customer requirements.

Simply put, the use of intelligent automation in property and casualty insurance is a game-changer that will continue to define the P&C market beyond COVID-19 and for years to come.

RD Global has vast experience in helping insurance organizations achieve AI-based digital transformation according to their individual business requirements. Contact us here to have a thorough discussion about your P&C company’s strategy for the future and the technology you need to make it happen.

"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."

JANUARY 11, 2022
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.