3 immediate automation opportunities for insurance companies in 2022

Luke Walker
March 4, 2022
5
minutes

Investors and analysts are keeping an eye on the insurance industry in 2022. Technology-first insurance companies, sometimes called Insurtech** or neo-insurance, began appearing as early as 2011, with investment totalling $140 million US dollars globally. The number of innovative companies hasn’t slowed down since. Public markets haven’t been the kindest to insurtech businesses since the beginning of the Coronavirus pandemic in 2022, but private investors have been keeping tabs on the space. In 2021 alone, investors pumped $14.6 billion dollars into the insurtech industry. A giant leap from ten years earlier.

The technological advancements of the last decade have also helped insurtech companies become more competitive. Whether it’s using robo advisers, creating on-demand or micro insurance offerings (for example, Cassava in Nigeria, or Cuvva auto insurance in the UK), or simplifying the onboarding process using automation, insurtech companies are changing the way consumers understand and interact with insurance brokers.

The rise of AI, machine learning and IoT have provided insurance companies with opportunities that hadn’t previously existed. Bundling and unbundling insurance policies, using data input from smart devices in homes and cars to improve maintenance and prevent claims, or providing a digital customer journey are only a few of many. 

Plus, driven in part by the rising number of millennials and Gen Z customers who are taking out insurance for the first time in their lives, insurance companies have been forced to keep up with the expectations of a mobile-first generation. We don’t think that the desire from  customers to take out insurance policies in a matter of minutes directly from their phoneswill be going anywhere, anytime soon.

According to research done by Deloitte, what prompted people to consider life insurance policy was a big life event. 62% of respondents mentioned having children, and 54% mentioned changes to their overall financial situation. In itself, that’s not so surprising — when an expected or unexpected life change happens, people want some assurance as they head into the unknown. 

At its core, insurance is a people-helping-people business, supported by technology and financing. With the Coronavirus pandemic entering its third year, and as countries transition from a pandemic response plan to an endemic one, insurtech companies have a big opportunity to support even more people, as we all learn what we want, and need, in a post-pandemic world.

So what points can Insurtech companies focus on as they move into 2022 in order to  improve their competitiveness on the market and create products customers want to buy? We’ve outlined three opportunities below.

**For the purposes of this article, we’ll refer to Insurtech companies, also including neo-insurance, as those that provide insurance policies to individuals or businesses as brokers or full-stack insurers. This doesn’t include a growing number of companies which create software that focuses on the insurance industry, and helps it to be more efficient with its business, such as digitalization or AI companies.**

Enabling customers to get policies faster and easier

The two-click purchase is part of an integrated customer experience, making it easier than ever for customers to purchase insurance policies with insurance brokers. By harnessing existing data from digital insurance ecosystem partners, customers don’t need to fill in extra forms to purchase an insurance policy. 

As a customer moves through their own life milestones, such as buying a house, getting a job or starting a family, insurers also have an opportunity to upsell additional policies. If customers are happy with their experience and interactions, such as using a mobile app for taking out policies and making claims, they’ll likely stay with the same insurance provider.

Plus, the digitalization of the integrated customer experience both meets changing customers demands and positively impacts the bottom line for Insurtech companies. According to research done by McKinsey, digital leading companies increased their revenues at five times the rate of other companies.

Providing lower cost of insurance for customers

New business models by neo insurance companies are disrupting the ways incumbent insurance companies work. One example is embedded insurance, where insurance is placed in an existing ecosystem, platform, or marketplace. This is predicted to be a $3 trillion opportunity. Not only can embedded insurance allow customers to take out policies faster, but insurance providers may be able to provide a lower cost of insurance to customers because of this new business model.

BCG also says that big data, IoT and data analytics also allow insurance companies to experiment with new business models, such as usage-based plans, as well as estimate risk and willingness for a customer to pay. These new business models can help insurance companies to provide competitively-priced policies to customers, reduce customer churn and increase the lifetime value. 

Finally, automating operations processes can help insurance companies reduce their costs, and pass those savings on to their customers. By reducing the volume of customer support calls and messages, and offering self-service options for certain options is just one way to combine automating operational processes, reduce costs, and provide a great customer experience.

Passively managing processes

Creating a memorable and enjoyable customer experience is one of the things a company can do to positively impact their customer acquisition and retention. Focusing on creating a seamless customer onboarding experience, will actually provide a positive impact on your retention rate. Plus, it costs less to retain a customer than to acquire new ones.

Finding ways to passively manage processes such as customer or partner onboarding, by using automation for example, can provide more time for your employees to build meaningful relationships with your customers.

“Rather than having a team of people working on a process, we can have one person who builds the processes and passively manages them, so the process works on its own,” says Tommy Brown, Operations Program Lead at Branch Insurance. “They can then spend their time doing the things they were hired to do, which is using their critical thinking skills and progressing further in their careers.”

Following this approach, companies like Branch Insurance can have even more human capital to dedicate to creating a seamless customer experience, and their employees get to spend more time on meaningful work that involves critical thinking.

Insurtech is going to continue to grow over the next decade, and will mature as a market. More challenger brands will appear, customers will have more choice of insurance brokers, and the market will become even more competitive (as most growing markets do). Customer experience will be one of the tools companies can rely on to have a competitive advantage. 

Next Matter can provide the software for insurance companies to automate integral processes for their operations. We’re already working with insurance companies to automate things such as partner and customer onboarding, and that’s just the beginning. If you’d like to hear about the processes in your company that will see the biggest bottom-line impact from automation, let’s have a 15 minute virtual coffee today.


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About the author
Luke Walker is the Product Marketing Manager at Next Matter. He is a longtime process hacker, and writes about marketing, business digitization, leadership, and work-life balance. When he's not at work, you can find him listening to records or climbing rocks.

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