With innovative technological advancements, changing customer expectations and regulatory frameworks as key drivers, the insurance sector is required to change, to transform to stay in the game. It is important to navigate the present and anticipate the future. Do you have what it takes to lead the race?
As we look to the future, several emerging trends and technologies promise to further shape the InsurTech sector, challenging Independent Software Vendors (ISVs) to adapt and innovate continually.
Short on time? Here are the key highlights:
- Five key challenges in InsurTech ISV: customer experience, legacy systems, data quality, scalability and integration
- Three technologies that help InsurTech overcome challenges: AI and machine learning, cloud computing and data
- By 2030, the traditional underwriting process as we know today will cease
- Automation has replaced over 50% of claims activities
- Reshaping claims, distribution, underwriting and pricing are several benefits that AI can bring to the table.
- Cloud can help transform InsurTech ISVs by modernising legacy systems and offering scalability
The current challenges in InsurTech ISV
Before looking ahead, it's always necessary to take a step back to review the current situation so that you can be well prepared for the future. As such, InsurTech, like any other emerging field, is facing a range of challenges, including:
- Customer experience: Improving the customer experience is a key goal of many InsurTech companies. As such, ISVs are increasingly focusing on user experience (UX) and user interface (UI) design, ensuring that applications are not only functional but also intuitive and engaging. The emphasis is on simplifying complex insurance processes, making them more accessible to the general public. But, achieving this is not easy. This requires seamless integration across digital channels, optimised and user-friendly platforms, personalised services and responsive customer support.
- Legacy system modernisation: For an InsurTech ISV, the value lies in its applications and systems, as they are the foundation of their operations. However, as technology constantly evolves, there might be the case that several applications operating on legacy systems is no longer compatible with modern technology. As such, modernisation is one of the most significant challenges that ISVs need to tackle to stay ahead of the curve.
- Data quality: Data is the lifeblood of many businesses and InsurTech is no exception. Organisations in the insurance and InsurTech sector rely heavily on data analytics to assess risk, drive decision-making, provide accurate pricing, streamline processes and enhance customer experience. But, ensuring the quality of data and deriving actionable insights from it can be challenging, especially when dealing with unstructured or incomplete data sets.
- Scalability: As InsurTech companies grow, they must ensure that their technology and infrastructure is scalable to meet increasing demand while maintaining performance and reliability. Failing to do so can lead to inefficient business operations and hinder growth.
- Integration and interoperability: The current InsurTech ISVs ecosystem is characterised by a need for seamless integration between different systems and platforms. ISVs need to develop products that can easily integrate with existing insurance platforms, third-party services and APIs. This interoperability is crucial for delivering comprehensive solutions that span across the entire insurance value chain.
Defining the future state of InsurTech ISVs with NashTech
It is undeniable that to overcome these challenges and navigate the future, technology plays a crucial role in helping InsurTech companies. Here's how technology can be utilised:
AI and Machine Learning
The future of InsurTech ISVs will be heavily influenced by advancements in artificial intelligence (AI) and machine learning (ML). These technologies are expected to streamline processes, making them more efficient and cost-effective, elevate customer experience and support InsurTech ISVs in decision-making. Reshaping claims, distribution, underwriting and pricing are several benefits that AI can bring to the table.
- Underwriting: According to McKinsey, by 2030, the traditional underwriting process as we know today will cease for most personal and small-business insurance products. The underwriting process will be streamlined to just a few seconds, thanks to extensive automation supported by a blend of machine learning and deep learning models integrated into the technology framework
- Claims: In the same report from McKinsey, it is highlighted that automation has replaced over 50% of claims activities, with advanced algorithms now handling the initial routing of claims, leading to enhanced efficiency and accuracy
- Elevate customer experience: Moreover, by leveraging AI and natural language processing capabilities, AI-driven chatbots will help InsurTech ISVs improve customer service, ensure round-the-clock availability and effectively handle routine inquiries and transactions. If you're interested in implementing chatbots to your company, meet BonBon, our intelligent chatbot solution and custom virtual assistant that enables a new level of efficiency yet to be attained by organisations
Cloud for modernisation
One of the approaches in tackling the legacy systems and scalability challenge remains in cloud migration.
InsurTech companies that effectively harness the power of cloud technology to walk away from legacy burden can access desirable capabilities, including offering omnichannel experiences to customers, creating a comprehensive portfolio of integrated service, optimising business efficiencies and reducing unwanted operational costs. McKinsey projected that in the next five years, most of the business leaders will migrate more of their environment to public cloud. Additionally, in our 25th Digital Leadership Report, 70% of tech leaders stated that cloud computing is one of technologies that generated most ROI over the last three years.
Moreover, migrating to cloud also enables InsurTech companies to scale rapidly according to their business focus and demand.
From legacy modernisation, cloud migration to cloud ops, NashTech's cloud engineering solutions focus on addressing the challenges and end-to-end needs of InsurTech Independent Software Vendors and helping them achieve desirable goals.
Data analytics
According to the Nash Squared Digital Leadership Report, while data is one of the top technologies that generated most ROI, only one in four digital leaders are confident that they are using their data effectively for insights and this can be partly due to inefficient data management practices. A few tactics that InsurTech ISVs can follow to unlock the full potential of their data:
- Data governance: Data governance is necessary for successful data-driven projects such as digital transformation. It is essential to establish a robust data governance framework that defines roles, responsibilities, policies, and procedures for managing data across the organisation
- Data quality monitoring: ISVs need to establish data quality monitoring processes to continuously monitor and measure data quality over time. Businesses can also set up automated alerts and notifications to flag data quality issues and trigger corrective actions as needed
- Data quality assessment: Regular data quality assessments are also necessary to evaluate the accuracy, completeness, consistency, and reliability of data. Companies can also use data profiling tools and data quality metrics to identify anomalies, errors, and inconsistencies in the data. Leveraging on these insights can help ISVs identify areas that need improvement
- Data validation: Ensuring accurate data input into your systems relies on essential data validation techniques. Implementing checks in format validation, range constraints or referential integrity rules can help prevent incorrect or inconsistent values in your databases
Defining the future state of InsurTech ISVs with NashTech
Whether your business is expanding, or you are going through a process of stabilisation, NashTech's goal is to ensure your data is handled effectively, both now and in the future. Our data solutions help you realise the untapped potential and transform information into knowledge, to effectively optimise your business value.
At NashTech, we stand ready to support InsurTech ISVs in navigating challenges and unlocking new opportunities throughout the transformation journey. Our solutions in cloud engineering, data analytics, and AI enable InsurTech companies to modernise their operations, enhance customer experiences, and achieve sustainable growth. Together, we can define the future state of InsurTech ISVs and pave the way for continued success in this dynamic industry. Contact us now to discuss how we can help prepare your business for the journey ahead!