The insurance industry is notorious for relying heavily on outdated IT systems. The more conservative approach to data stems from heavy regulations and compliance requirements. For decades, insurers focus on key processes such as underwriting, billing, claims processing, and policy management with little change. But, while these businesses are mostly the same then and now, it's the consumers that have undergone a significant change due to technology.

Recognizing the need to incorporate digital technology

Regardless of how broad the insurance market seems, one thing is for certain - all consumers expect convenience and accessibility that's only possible through digitalization. For instance, business consumers looking for products such as contractor's insurance, commercial auto insurance, and general liability insurance prefer to compare quotes and choose a provider online. The more convenient it is to communicate with a provider using digital tools, the more likely it is for the customer to buy a product.

Fortunately, insurance companies recognize the demand and are keen to adapt to changing consumer behavior. Ultimately, it benefits not only the consumers but the providers as well. Let's take a closer look at the role that IT and digital technology plays in the evolution of the insurance industry.

Artificial intelligence and big data

A lot of the tasks involved in processing applications and claims are repetitive. Artificial intelligence is a natural fit as it can take over most of the menial processes through automation. Smart use of AI technology will help the insurer's process applications and settle claims. Moreover, AI can use historical information to tailor-fit product offerings for repeat customers. And as the insurance company saves on operational costs, consumers can also enjoy lower premiums.

But the use of technology won't render brokers and insurance agents obsolete. Instead, brokers are armed with better skills to assist potential customers. With the help of big data, they can provide better insight and advice to clients in choosing a product that best fits their short-term and long-term needs.

Improved security for consumers and the industry in general

According to data released by the FBI, fraud related to non-health insurance claims reaches $40 billion each year. AI can be a tool for finding unusual patterns and activity, thus discovering fraudulent claims. Not only that, but it can also reduce bogus transactions and speed up the processing of legit claims.

Cloud solutions becoming a standard for insurance companies

Cloud-based solutions have also started replacing legacy insurance systems at a gradual but steady pace. Instead of investing in on-site storage and infrastructure, storing data on the cloud gives the insurance company more opportunities to manage their bottom line. And as insurance providers become more flexible by adapting innovative technology, they become well-equipped in responding to the constantly changing market.

Conclusion

For an insurance company to be considered a leading provider, it's essential to embrace and incorporate technology. Regardless if they're catering to business or individual clients, digitalization not only improves key functions but also helps attract the confidence of future clients. While there isn't a problem with relying on legacy systems, recognizing the importance of technological innovation is a much-needed step to longevity and success in this highly competitive industry.

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Other source: https://www.entrepreneur.com/article/340297