Automation, Big Data Will Drive 2019 Insurance Trends

By Alan Dulin

Facing competitive pressure from start-ups and tech giants, traditional insurers are being forced to embrace innovation and change at a rapid pace. Today’s tech-savvy customers expect a seamless and integrated digital experience from their insurers. As a result, the fundamentals of insurance – from policy creation to underwriting to claims processing – continue to be digitized and reimagined accordingly.

The swift pace of change will continue to move forward. In 2019, automation, agile cloud solutions and data management will enable insurers to streamline administration, tailor their offerings to customers and achieve regulatory compliance. Here are some of the top trends to note.

New executive champions.

With innovations arising from traditional tech giants and insurtechs, organizations have embraced that competitive advantages will come from those who can enable an innovative culture, find executive leaders to champion new ideas, and a team who can properly evaluate, promote and implement the idea. The result is what’s referred to as innovation. Traditionally, the chief information officer has championed and sponsored information technology innovations. However, IT sponsorship will continue to broaden to include new executives who will work with the CIO to enable transformational change.

Automation of knowledge workers.
Individual and group insurers are competing more on plan pricing and design. In 2019, automation will help insurers dramatically reduce costs while providing more value, which ultimately differentiates them in the market. Insurers will automate processes such as complex underwriting, fraudulent and high-risk claims detection, performing accurate and consistent claims adjudication, and streamlining customer service interactions. From a group insurer perspective, we will also start to see more automation with enrollment. For example, an insurer can auto enroll a customer based on their individual circumstances, collect and allocate premiums, and provide a low-cost means of retirement provisions.

Big data, machine learning and artificial intelligence.

Something that is quickly making its way into the life insurance space is the integration of health data from consumers to influence premium payment obligation. Much like the trends in the auto insurance space, where telematics have incented good driving habits, in 2019 we will see the adoption of similar programs to encourage healthy lifestyles that will impact insurance premiums. This data will come from outside the walls of the carriers and will be accessed with application programming interfaces to support this vision. Health scores, much like telematics, will deliver new data insights to insurers. The carriers that have ML and AI capabilities will have the advantage to more accurately evaluate portfolio and product risk projections based on health behaviors.

A move toward flexible rules configuration.

In an effort to create new products quickly, insurance policy administration systems will begin moving towards a more flexible rules configuration. In 2019, more business users will be able to configure rules without relying so heavily on their IT departments. Policy administration systems will let users define rules, as well create and modify products and policies, without changing the base code. Flexible rules configuration offers group insurers freedom in many ways. For example, if an employer offers different insurance products or benefit levels based on employee level, the group insurer should be able to easily set up those classifications.

Leverage data to find efficiencies.

Data is increasingly important for examining current processes and probing deeper to reveal inefficiencies. For example, what’s the tipping point for customers who abandon the insurance application process? What percentage of staff time is going toward routine claims adjudication? How many steps are typically involved in data intake? And where are the delays in creating new products? Insurers will increasingly leverage data to identify further improvements and drive an improved customer experience.

Prepare for IFRS 17.

In 2017, the International Accounting Standards Board finalized the much-anticipated International Financial Reporting Standard 17. IFRS 17 will fundamentally change the accounting process for all organizations issuing insurance contracts, and it comes on the heels of recent IFRS 9 and upcoming Current Expected Credit Loss standard requirements. Insurers and other affected firms are currently sizing up the standard, as well as their obligations and options as the January 2022 (previously January 2021) implementation date looms large on the horizon. Organizations will need to adopt both IFRS 9 and 17, as well as CECL in some cases, complicating the challenges ahead. This will mean redoubling efforts to focus on data – and its accuracy, aggregation, governance, transparency and usability – and adopting an end-to-end compliance solution.

This year will undoubtedly be another year of insurers trying to keep up with changing customer demands. The smart application of new technology will enable firms to better satisfy customer needs and fend off new competitors.

Alan Dulin is global head of solution consulting, Oracle Insurance. Alan may be contacted at [email protected].