Technologies such as the Internet of Things (IoT), artificial intelligence and blockchain have sparked the imagination of insurers over the past five years.
In the past, where smart technologies could be adapted, there was too often a lack of profitability, a sparkling business idea or customer acceptance. The view of the insurance industry is therefore characterized by subdued euphoria for 2021 when it comes to the notable breakthrough of technologies. However, leaps in development are to be expected. Some technologies will be used more and more methodically by insurers. Other technologies will at least influence the industry and its business and bring about one or the other novelty.
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Dark processing, both in application processing and claims processing, has the greatest chance of making a mighty leap in 2021. The advantage of RPA over other technology approaches: Insurers do not have to make any drastic interventions in their ongoing processes. Small successes can be achieved quickly without having to set up large IT projects. This brings relief, but no breakthrough in operational efficiency.
In this regard, much greater effects can be achieved with the digitization of application routes and the fully automated cancellation processing. Automated underwriting also has the chance to become more widespread in 2021. Insurers will increasingly rely on standard covers in order to be able to implement end-to-end automation without traditional underwriting. In the case of major risks or tenders, AI solutions are so advanced that they support the process and significantly shorten it.
The Internet of Things, especially the industrial one, has the greatest potential for real market innovations. For example, the IoT is creating new business models such as pay-per-use. These rental models of machine capacity create new risks that have to be insured, such as failure risks. In 2021, more industrial insurers will also calculate usage-based policies – similar to telematics tariffs
The number of e-cars will increase significantly in 2021. This means that insurers will change their car tariffs. It will be more complicated to clarify how components interact and which manufacturer or supplier is liable for a defect or control error. In addition, defective batteries often lead to total write-offs. Insurers, together with manufacturers and authorities, will deal with these challenges more intensively in 2021 than this year. In addition, insurers will jump on the e-car train and start with special safeguards, for example the inclusion of certain components in the insurance cover or the assumption of the disposal costs for the battery.
Even in reporting processes, AI is on the verge of relieving more and more monotonous work. Insurance companies are facing more and deeper tests by BaFin and other authorities. The trigger for this is, for example, the Wirecard affair. Insurers must also provide information on solvency and financial position (SFCR) on a regular basis in a page-long report. The data are unstructured in the insurers’ IT systems. Currently, an average of five employees take care of turning this data into written reports. With the help of NLG, an AI sub-area, natural language text can be automatically generated in very good quality – faster and more efficiently than humans would be able to do. In addition, the technology is suitable
World is facing a boom in investments in digital infrastructure and technologies. These projects are extremely interesting for insurers because they promise reasonably good and, above all, sustainable returns in times of low interest rates. In 2021, these technologies will thus indirectly gain relevance, namely as investment objects.
When using chatbots, insurers go through a maturation process. We’re going to see some small developments. However, completely bot-based communication via the website, as with Lemonade, will hardly establish itself as a standard. However, the lockdown as a result of the corona pandemic has certainly worked like a magnifying glass that changes in communication are necessary and possible. It can be assumed that by 2021 more insurers will not only use chatbots for written communication, but also take more of the workload off their call centers. The real added value will arise when customers complete their concerns together with the bot, i.e. when a chatbot also automatically changes the address, creates the contribution information or provides information on the status of a claim.
One thing is clear: by the end of 2021, insurers will be more digitized than they are now. The progress will probably also be more noticeable than in the previous year. The current corona pandemic has played a major role in this. However, real disruptive effects are not to be expected. Above all, technologies will help improve processes, optimize IT and thus ensure cost efficiency. This competitive advantage will become significantly more relevant in all industries. In addition, technologies will help insurers to evaluate larger amounts of data in real time and thus support them to take existing business to a new level. Real technology-driven market innovations in the form of revolutionary policies and business models will be seen sporadically in 2021.
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