Digitally Challenged Insurance Companies Missing Out on Opportunities if AI Not Embraced
There are many things that have changed since the 1970s and '80s but the way insurance companies evaluate and determine the coverage consumers get isn't one of them.
Insurance is an essential safety net but often the industry relies on outdated legacy business models and systems some based off of mortality tables that were developed in 1971 and 1984.(1) At the same time, industry leaders have refused to embrace technology so much so that now insurance companies rank outdated technology as the greatest threat to their business.(2) According to a McKinsey report, nine of out 10 insurance companies identified legacy software and infrastructure as barriers of digitization.(3)
The current status of the insurance industry is broken and antiquated with many not using cloud-based technology but instead relying on the mentality of, "it's worked for 100 years so why fix it." This became even more evident during the COVID-19 pandemic when many consumers, quarantined at home, turned to digital channels to find solutions to their insurance needs but found a lack of high digital adoption. This doesn't just prevent companies from gaining new clients but also alienates existing ones as consumers who encounter problems in their digital interactions tend to give their insurance provider lower loyalty scores.(4)
As the current landscape shows us, insurance companies who embrace technology will be the ones who succeed in the future. Insure-tech companies--like Traffk--can help companies price products more competitively, create products that consumers want and improve the insurance-buying process making it easier for both the client and the agent.
Most insurance companies analyze dozens of different variables to arrive at their numbers, based on outdated actuarial data. Traffk's cloud-based AI assisted software can process 20 years' worth of mortality, demographic, health and government trends resulting in a totally different, more dynamic algorithm--in fact, they look at thousands of variables simultaneously. With more data comes the need for new and better ways to analyze and process it. To get the most out of the plethora of data, insurance companies need to have a robust data management plan in place.(5) A Data Science-as-a-Service (DSaaS) platform can help insurance companies more precisely determine risk, create better, more appropriate products for their clients and improve customer experiences. This enhanced data can also help insurance companies price products more accurately, be able to understand the demographics of who is ready to buy and get the right risk on their books--making them more profitable in the end.
Data can also help create better products that people need. Traditionally, insurance companies create new products based on already existing ones. Traffk's model, which can work with any insurance carrier, incorporates agents' input. After developing products based on demographic and risk data, Traffk invites agents to help curate and design products ensuring that it is something policyholders need.
In a digital world, data, and the ability to fully analyze it, is critical to insurers' survival. The businesses that will succeed will be the ones who can quickly analyze and adapt to data to make better business decisions and serve their customers better and faster.(6) "Correct data used the right way is essential to a business' survival," said Ford. "But agents will not be left out of the equation. They develop relationships and build personal networks--an agent serves as a place of trust. The startups who are doing this can compete and best traditional insurance carriers. The future of insurance is a hybrid where consumers can choose a digital experience or traditional and move between the two."
About Traffk
Traffk is an innovative insurance underwriting and distribution platform designed to build and launch modern insurance products and brands that scale. With more than 25 years combined leadership in insurance and AI,
1. "Growing Number of Lawsuits Claim 'Old' Mortality Tables Deprive Participants of Benefits – An Update." |
2. Hilton, Andrew, "Insurance Banana Skins 2019: The CSFI survey of the risks facing insurers." |
3. "Insurance Technologies: 13 Disruptive Ideas to Change Insurance Companies with Telematics, Blockchain, Machine Learning, and APIs." |
4. Naujoks, Henrik, Singh, Harshveer, Goosseens, Camille, and Schwedel, Andrew, "A Digital Reckoning for Insurance Companies." |
5. Yohn, Andy, "Top 5 challenges facing the insurance industry." |
6. Katz, Ori, "Explainablity: The Next Frontier for Artificial Intelligence in Insurance and Banking." |
Read the full story at https://www.prweb.com/releases/digitally_challenged_insurance_companies_missing_out_on_opportunities_if_ai_not_embraced/prweb17654192.htm
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